How Soon They Forget
by Bruce Bishins, CTC
President and Chief Executive Officer
Association of Retail Travel Agents - Canada
There are two things I've learned about airline distribution over the years: One, that there are two sides to every tale of woe as to why sudden booking changes need to be made; and, two, that travel agents almost always get caught squarely in the middle, financially and functionally.
The recent fracas between American Airlines, Orbitz, and Travelport (which is major owner of Orbitz) is yet another case in point.
No one is happy when travel agents are put into the middle of a dispute such as this one, particularly with lawsuits flying from both sides, and agents in Canada (and elsewhere) paying a financial premium to book American Airlines in Travelport's Galileo GDS (Galileo and Worldspan elsewhere). Travel agents want to book airline products efficiently, effectively, and profitability. Airlines want their products and services to be sold through cost-justifiable technology. GDSs want to maintain their platforms as essential, almost indispensable, as the brokering tool between seller and buyer.
Knowing that there is more here than meets the eye, ARTA Canada (and ARTA) reached out to AA to discuss the matter. Our public commentary was measured and optimistic that dialogue might help agencies and AA come to terms on the underlying issues and review options and alternatives. AA accepted ARTA Canada's offer to meet, and I look forward to sitting down with AA on Wednesday, 08 December 2010 to listen and to contribute what I can to possible solutions.
At the same time, it is hard to ignore ACTA's vitriolic assault on AA which does nothing more than to set airline/agent relations back years against an ever-improving climate of cooperation between travel agencies and air carriers. ACTA's knee-jerk reaction to AA's distribution dispute with Travelport fails to fully disclose key facts; facts which provide both context and clarity as to how and why the dispute at hand gathered steam.
Getting the Facts
Key among those facts is that AA wanted Travelport to use AA's more cost effective direct connect platform in much the same way that Travelport, only weeks earlier, agreed to use Southwest Airlines' version of that carrier's own direct connect platform. Travelport allegedly refused AA's request. Without taking sides, one can appreciate that AA does have a point in finding a huge cost and functional imbalance when its major competitor, Southwest, is allowed to provide content to Travelport in a way in which AA has been shut out.
ACTA also fails to mention that it was Travelport which allegedly first raised fees on AA before AA sought to recover those higher fees from Travelport's agency subscribers.
How Soon ACTA Forgets
However, all of this fee and content mayhem can hardly come as a surprise to ACTA, which, in February 2004, reversed course on objecting to unfettered airline content and GDS distribution liberalization in Canada. Agents may recall that ACTA's Charlebois (president at the time) and McCaig (VP for Western Canada at the time) surprisingly changed ACTA's position at the 11th hour, much to the amazement of travel agents and the Government.
I had met with the former ACTA president and David McCaig a week before the public hearings, and we were in total agreement that airlines must maintain participation and content in GDS platforms. But, when the hearing was held in Toronto, ACTA shocked us all, including Parliamentary Secretary Jim Karygiannis, when ACTA said that it fully supported airlines' rights to distribute products where, when, and how they saw fit.
GDS deregulation followed and set the book here-book there ball rolling. Web-only fares evolved, Tango-type fares were in then out, commission incentives flourished for airline.com bookings, and the entire distribution landscape changed literally overnight. Agents adapted and changed with it. I too have adapted.
Are there efficiencies when booking in a GDS? Sure there are. But, my view has always been that every "more than necessary" dollar spent by airlines for GDS distribution is one less dollar available to stimulate and remunerate agency sales. Striking a balance between agency profitability and GDS profitability became more an issue for agents than it was for airlines because GDSs were also paying agents "commissions" (so-called financial assistance segment incentives).
Distribution technology is changing and the handwriting for much-needed innovation has long been on the wall. Seven major North American airlines, including Air Canada, have joined forces to marshal better booking process work flows, content efficiencies, and ancillary merchandising though major enhancements to XML-based architecture (www.openaxisgroup.org). GDSs surely have a role to play; but they too must adapt to these new technology advances and the new price points which come with them.
Instead of ACTA raking WestJet's new transborder partner over the coals, shouldn't ACTA be hearing what American has to say? And what now with US Airways? That carrier too has revealed a direct connect strategy for 2011. Shouldn't ACTA understand more about what direct connect actually means before it starts shooting (off at the mouth)?
Sitting down with AA is an important first step in creating mutually beneficial dialogue; ACTA's premature and very public flogging of AA only makes ARTA Canada's job more difficult and portrays Canadian travel agencies in the worst possible way.
Bruce Bishins, CTC
22 November 2010