Reading Between the Lines

As we head into NBTA’s 2006 Convention, the news seems to be coming fast and furious at all of us. 

Last week alone, American announced its “Source Premium Policy.” Next came Galileo’s “Content Continuity Program,” followed by United’s “Distribution Channel Policy.” Worldspan said it will announce its “Optional Product 1” late this week. All of this comes on the heels of Sabre’s announcement of its Efficient Access Solution in June.

What do we make of all of this? What should we be concerned about?

Obviously, it looks like there is no way around cost increases. That’s bad news. But it actually could be worse…the cost increases could actually come without the full content you are paying for. And fragmentation of content would undermine corporate travel programs and raise costs further.

With all the secrecy in the airline-GDS agreements, I’m concerned about fragmentation for two reasons:

1) Airlines’ actions during the past three years tell us that they sign agreements and then try to go around them. Air Canada is the most recent example. So how can we be sure that “full content” really means full content?

2) From what Sabre said in a note to agencies last week, its breakdown in negotiations with American centers on getting air-tight commitments to content protections for agencies. If Sabre – the GDS through which the largest number of American’s bookings flow – can’t get the protections it thinks it needs from American, then we have to wonder whether anyone has secured air tight content protection from American yet.   

Galileo’s note to agencies seemed to indicate that it would rely on Sabre to secure all content, saying that its full content would be “equal to or better than any other GDS system.” That’s code for a most-favored-nation clause, which tells us – given Sabre’s stated concerns about American – that it must not have full protections (yet) written into its contracts with airlines.

Without true full content, things could unravel quickly for corporate travel programs. Travelers could find content on airline Web sites and ignore travel policies, undermining the integrity of the travel program. Then there are security problems: Tracking travelers in Mumbai, Madrid, London or Lower Manhattan would become a nightmare. 

Doing workarounds to include content somehow not included in “full content” could be costly. All of this puts the corporate travel program in jeopardy.

Without a strong corporate travel program managing airline pricing, costs go up. But then again, that seems to be what airlines want…fragmentation, leading to less control by corporations, leading to higher fares.

It’s bad news that costs will go up on the front end. It would be devastating news if costs went up because of fragmentation. 

This week, every travel manager should be pressing their GDS and the airlines at NBTA to ensure that all risks of fragmentation are completely off the table.

Comments

[Mel Volmer]

Does anyone have a plan to combat these airline parctices? ASTA sends letters of condemnation but as they have shown in the past they are usless when it comes to exercising any clout.
Surly there is some way to coordinate the body of travel agents to challenge these and other airline practices. Either we coordinate our clout or we perish.