Wednesday, January 05, 2011

Sabre vs. American Airlines As Fare-Channel Battle Intensifies

The fare-distribution brawl got hotter today as the global distribution system Sabre busted down American Airlines on its very important fare-distribution network.

Here's Bloomberg on the news.

American started the fight last month when, in an attempt to drive more bookings to its own Web site, it pulled fares from Then on New Year's Day, threw American off its site.

With Sabre's move, we'll see whether American blinks first in this fight. Sabre, not coincidentally, owns, the third of the major online consumer booking sites.

American's move against outside distribution channels is seen as audacious by many in the travel-management business.

"American acts as if it's the country's biggest airline, when it's really number four and falling," said Kevin P. Mitchell, chairman of the Business Travel Coalition.

He added, "American is making a reckless rodeo bet that it can rope its best customers like calves and then push and pull and kick them toward and Direct Connect. Online consumers may not even know American's flights are missing. The ones who will gain the most here are American's competitors United, Southwest and others."

Obviously, eliminating fare information from third-party sites makes it far more (corrected) difficult for customers to easily comparison-shop on fares. On the other hand, to the extent that it increases traffic on, American seems to think that it stands to gain somewhat.

The airline system, rapidly constricting and consolidating, is ripe for review under antitrust concerns, some people think. But with this new Congress, that doesn't seem to be much in the cards.

Sabre and American go way back, of course.

Meanwhile, travel groups are warning that the battle over the distribution systems could lead to bad news for business travelers.

"Today’s news from Sabre represents a serious escalation of the growing conflict around airline-mandated 'direct connects'," said Mike McCormick, executive director of the National Business Travel Association, referring to bookings made directly on an airline Web site. "Business travel buyers will ultimately foot the bill for marketplace fragmentation caused by airline initiatives that push the travel distribution marketplace in the wrong direction – away from transparency and competitiveness and toward confusion and higher costs.”

The business travel trade group said that bypassing outside distribution systems will result in a significant increase in travel costs, especially as travel management companies and agencies will need to build new systems to capture these so-called direct-connect fares on behalf of their business travel clients.

Also, the NBTA said, "Businesses that rely on clear and transparent fare information to negotiate for and maintain airline discount programs will find it far more difficult to track volume and enforce travel policies in a fragmented market."


1 comment:

Anonymous said...

"Obviously, eliminating fare information from third-party sites makes it far less difficult for customers to easily comparison-shop on fares."

I believe you intended to say "makes it far MORE difficult."