Much of the seemingly epic struggle between the airlines and the distribution channels is about content. Full content to be exact.
So in looking for analogies to try and explain to the general public what the battle is all about, I have happened on TV as the analogy. Allow me to explain.
TV channels are like airlines: They have valuable content that some users -- not all -- want to have access to. TV channels are supported via a wide range of commercial models, including advertising-based, license based (e.g. in the UK), subscription-based or even government subsidy. Their content can be premium content or general content available to all.
Content in TV programming is very complicated. It takes many hours to develop content and in many cases, such as news programming and live broadcasting, it has a limited shelf life. Sometimes the programming even has one-time use – broadcast it and it’s done.
The consumer is subject to a bewildering array of content types and options. These are driven by opportunity (such as when I can watch) or desire (what I want especially to watch). There are times when content is deliberately locked out from a particular viewing group. Sometimes content, such as programming for sports in a particular market, is embargoed.
Some viewers might get premium content for free while their neighbors get it only when they pay a premium price.
For example, during the Vancouver 2010 Winter Olympic Games, some of the programming that was only available on premium channels in the US was freely available on Canadian stations to Canadians. Also, this same content was available at no charge when these channels were delivered via a cable system inside the USA (e.g. in Seattle and Maine).
The cable companies charge to carry the content on TV channels for their subscribers. When the TV Channels, as content distributors, don’t pay, they won’t get carried, unless of course the cable company wants to do so or is obliged to do so in certain instances for local programming. Cable companies also have to live up to local obligations by providing access to subscribers for free via public access.
Let’s now see if we can draw the analogy between this TV content model and that of airlines.
There are the content owners: in TV, they are the chaps who created and paid for the original content. Some distribute these to the broadcast media or they may even package these for other channels such as cinemas, DVDs or on-demand. There are a lot of options and models.
With airlines, the content owners are the people who own the assets – i.e. the planes. Some are owned and operated, some leased, some borrowed. Some seats are sold individually or in groups.
There are the TV channels: These are the folks who put together programming and create schedules and then push these to the distributers.
In the airline industry, this is the airline brand. The airline might acquire content – products and seats -- from different partner or feeder airlines under common branding.
There are satellite and cable companies such as DirecTV and Comcast, which carry the packages of different content providers to the user communities.
With airlines, these are the companies which aggregate content as a service to the user community. These are the GDSs (similar to cable companies) and direct connect distribution through private distribution networks or aggregators such as Farelogix and LUTE Technologies.
Finally there are the users. In TV, these are the corporate (e.g. campus wide) or private individual subscribers. They pay an access fee at varying levels depending on the content they access and consume.
In the airline industry these users are travel intermediaries, such as travel agencies, whether online or offline. Here the analogy diverges because it is rare in any marketplace that you can buy product through a mandated “one size fits everything” model.
So let’s ask some questions.
Should the channels carry all content? Should the cable/satellite providers carry all content?
And, do the content owners have to make all content available all of the time?
What about the search/guide process? Most local newspapers carry a TV guide. Do they list all of the items about the content 100% of the time?
The last time I sat through a blockbuster film, there may have been 500 people getting screen credits. Should we list all of them and the full copyright information every time we mention an item in a guide (which in travel distribution is either search or the GDS)?
And as we all know some of these “creators” -- i.e. the “talent” -- end up with rights concerning where the content goes and they collect money for the distribution long after they got paid for just showing up and performing. (For those who have never worked in the media, these are called residuals and artists love them).
Now, use your imagination and apply this same logic to airline content.
Ultimately, in broadcasting, for a variety of reasons such as copyright, there is a very strict set of rules that ultimately stem from the content owners and their decision to control the distribution of that content.
Surely the same strict set of applies to the airline world?
Perry Flint, editorial director and associate publisher of Air Transport World, writing in this month’s edition (June 2011), opined in an editorial that the airline industry seems to be held to a different standard. The telling statements are in the final two paragraphs:
We also continue to be perplexed by the fact that government regulators on both sides of the Atlantic seem intent on holding the airline industry to a standard of behavior that they rarely if ever pursue for other private sector activities. It is one thing for Brussels and Washington to require that airlines operate to the highest levels of safety -- which carriers willingly accept. But it is another entirely to meddle constantly in their commercial activities and to, for example, demand that every airline’s fares and charges be presented in an identical fashion and (as some argue) displayed together in a common storefront.
We recall that before the advent of smartphones and iPads, one US big box retailer used to remove customers forcibly from its stores if they were observed jotting down pricing information for comparison shopping -- and government regulators did nothing. Yet airlines are expected to accept willingly that it is incumbent upon them to make sure their fares and those of their competitors are displayed together and easily comparable for the convenience of shoppers. We’d like to see someone do that with automobiles: Why isn’t Toyota required to combine and price its options packages in the same manner as GM or Honda or BMW? And as for paying for things that used to be “free,” you can check an awful lot of bags for the cost of one copy of MS Word, which used to be “bundled” in the operating software as part of virtually any home PC purchase.
I concur. Are we about to be subject to a whole amount of government regulation to support what now amounts to the less than half of the market that chooses to use GDS-based distribution?
In the U.S., less than 50% of all airline seats sold come through GDS-based channels, according to ARC and the U.S. Department of Transportation.
What about those airlines who, by luck or choice, are not participating in GDSs? Will they be forced to participate in all channels, creating a hidden tax that the consumer must pay?
Or do these airlines get off scott free without having to pay a distribution fee even though they are competing head to head in the market with other airlines who do? Do they get a free pass and not have to participate in the GDSs?
Must there be complete uniformity of product, as in a totalitarian regime state where everyone is forced to participate whether they want to or not?
Surely not?
If so, I don’t want to live in a society that prevents choice and options by allowing forced arbitrary participation.
The only place (other than airline safety mandates) where participation should be forced, is in voting. Then we can always say we get the government we voted for rather than the government we deserve due to apathy. We should have a government that ensures we have a framework based on freewill instead of who has the best lawyers.
In a normal capitalist marketplace, suppliers should be free to sell their products honestly and ethically through channels of their choosing.
Most decidedly, consumers need to be able to buy products in channels of their choosing and in the manner they prefer and not when someone else makes the decisions and enjoins us through a process in which we had no say and for which we will be forced to pay a hidden tax.
Fair enough?
Note: Timothy O'Neil-Dunne is a Tnooz node and acting CTO of LUTE Technologies.