If you believe the Business Travel Coalition and industry rumblings, American Airlines is serious about proceeding with plans to make users -- presumably travel management companies, corporations and global distribution systems -- pay for content by leveraging its direct-connect business with Farelogix and perhaps other distributors.
This would turn the traditional airline-GDS-TMC/corporation business model on its head as airlines traditionally pay booking fees to the GDSs, who kick back some incentives to TMCs.
Now, the BTC is circulating a letter -- and soliciting signatures -- which would be sent to all major airline CEOs asking them to work with other parties to formulate "industry standards" [not the tech kind] to safeguard everyone's interests.
BTC chairman Kevin Mitchell says the letter has 70 signatories so far, and it will likely be delivered to airline CEOs early next week.
He says commitments were made not to release the names of the signatories until the letter is delivered.
The BTC says it arrived at this point because in late 2009 corporate travel managers and TMCs reported to the American Society of Travel Agents and the BTC that American was spearheading a drive for a "user-pay model."
The American initiative can be seen in the context of upcoming GDS participation/content negotiations in 2011.
Several major airlines, including American, threatened during the previous round of negotiations several years ago to drop out of GDS systems if the terms were not right.
Is American bluffing again -- or is the time ripe for overturning the business model?
American Airlines hasn't talked in any detail publicly about its plans and the airline didn't immediately respond to a request for comment.
The text of the proposed BTC letter follows:
AIRLINE CEO SIGNATORY LETTER
Mon Apr 5 14:33:25 2010
[name]
Chief Executive Officer, (AA, CO, DL, UA, US, WN, B6, AS)
[address]
Dear Mr. [ ]:
As corporate travel departments, travel management companies (TMCs), online travel agencies (OTAs) and global distribution systems (GDSs), we write you to offer our partnership in extending your ancillary products and services in a manner that is consistent with consumer interests and that works optimally with de facto travel procurement systems and practices. We wish to support you in your efforts to maximize traveler uptake and resulting revenue growth from ancillary products and services. To that end, we ask you to ensure the full scope of your products is made accessible and transparent to all travelers, regardless of channel choice.
Your airline has shown that it values its corporate customers and respects the requirements of modern procurement programs. Your most valuable customers rely on the services of TMCs; together they have invested significant time and money in technologies that enable efficient shopping, booking, payment and reporting for airline products and services. The prime objectives of managed corporate travel programs have been to enable companies to control expenses and to fulfill agreements with airlines through enforceable travel policies.
Going forward, the success of these managed travel efforts is fundamentally dependent upon travel intermediaries having efficient access to the full range of airline options for any particular trip, and being able to monitor and track the comprehensive final cost of airfares plus related services purchased. To illustrate, in order to transact and subsequently report ancillary fees such as seat upgrades and checked baggage, TMCs, and indeed all travel agents, booking air travel must have the ability to deliver such fees transparently in the shopping/booking process. Importantly, the well-established and proven workflow processes of TMCs that feed into corporate clients’ systems rely almost exclusively upon the airline booking and servicing capabilities of GDSs.
Similarly, the millions of consumers who shop and book travel on OTA sites every month, which collectively account for some 16 percent of all U.S. airlines’ bookings, have encountered an increasingly complex landscape of air travel options to evaluate. The current lack of clarity and accessibility of a la carte products prohibits widespread consumer adoption - a hindrance to achieving the revenue generation objectives that predicated your airline’s implementation of an unbundled pricing strategy in the first place.
Your airline, your distribution partners and your biggest customers have a responsibility to enable travelers to compare both the true costs and benefits of their full scope of air travel options. The only path to near-term, broad availability of your airline’s ancillary products is to develop and deploy merchandising capabilities within the existing technology framework of your distribution system partners and corporate customers.
As those partners and customers, we have developed principles and standards which we ask you to review and commit to through a public statement of support. We are requesting that you help us help you by working cooperatively, diligently and in good faith with TMCs, OTAs, GDSs, and corporate travel managers on the rapid development of industry technical standards to ensure that your unbundled products are easily accessible by all travelers via any GDS in which you participate.
We look forward to hearing from you at your earliest opportunity.
Sincerely,
[signatory]
[signatory]
[signatory]