Five major U.S. airlines have candidly revealed their distribution strategy about optional services -- these bag and meal fees are one of the few bargaining chips the airlines have to compel global distribution systems "to reduce their unreasonably high fees."
American Airlines, Continental Airlines, Delta Air Lines, United Airlines and US Airways filed a joint statement with the U.S. Department of Transportation as it considers a new rule on optional services and transparency issues.
The airlines' statement came in response to filed comments by the Interactive Travel Services Association, which called on the DOT to mandate that airlines make their ancillary services data available to the GDSs and travel agencies.
The airlines contend that such DOT intervention in the marketplace would harm competition, lead to higher airfares for consumers and violate the spirit of GDS deregulation.
American Airlines has been outspoken in trying to get travel agencies and GDSs to tie into AA Direct Connect if they want to access the airline's optional services. In return for that access, it is clear that American would try to get the GDSs to agree to reduced fees and distribution costs.
But, in their joint statement, the airlines hint that American won't be the lone public advocate of direct connects for long.
"... Carriers are developing Direct Connect systems that will enable travel agents to bypass GDS channels, reducing carrier costs and creating new efficiencies that will benefit consumers," the airlines stated.
The airlines noted how their optional services strategy took inspiration from Dell and other technology companies, where the basic product is available at a fixed price and extra features, including memory or a larger display, can be purchased as add-ons.
"Today, carriers choose to make their 'basic' product available through GDSs," the airlines stated. "If GDSs want to play a role in the emerging market for optional fee products, they will need to negotiate with carriers and lower their booking fees in return."
The airlines urge the DOT to decline to force the airlines to make their optional services available through the GDSs.
"By requiring GDSs to negotiate for optional fee data, the Department will be acting in the interests of consumers who stand to benefit from lower fares that would be made possible by lower GDS booking fees," the airlines stated.
ITSA, which includes GDSs and online travel agencies, argues that allowing airlines to retain optional services data on their own websites without wider distribution harms transparency, GDSs, corporations, travel agencies and consumers.
In addition to the DOT's rulemaking efforts, ITSA is pushing for airline optional services distribution through GDSs as part of FAA reauthorization legislation.