Priceline Defection from OTA Allies
Proves Direct Connect Can Work
Naysayers Continue to Lose Ground and are Becoming Obstacles
to Agents Earning New Revenues Through Ancillary Sales
Toronto, 19 January 2011: Canada's Association of Retail Travel Agents (ARTA Canada) advised today that the announced deal between Priceline.com and American Airlines is further evidence that AA's direct connect platform will not only facilitate the price transparency AA promises, but also will continue to enable comparison shopping in a multi-carrier setting so critical to the business model of a high profile Online Travel Agency (OTA) like Priceline.
"What more needs to be said? Priceline would have much to lose if direct connect would have pigeonholed its airline offerings in the manner which the Open Allies continue to claim. The Priceline agreement with AA proves that direct connect can work seamlessly, and if it can work for Priceline, then why not for other agencies?", stated ARTA Canada President Bruce Bishins, CTC.
The Priceline agreement comes at the heels of another AA direct connect agreement with a large OTA, Vegas.com, which has been test-driving AA direct connect for the past five months, according to media reports: "Implementing AA Direct Connect through Farelogix wasn't especially difficult, Hippler says, adding that it's been 'very stable and worked very well for us.'" Dan Hippler is Vice President of Marketing for Vegas.com, the largest city destination travel website in the world.
The latest agreements to deploy AA direct connect are proof positive that the ASTA, ACTA, BTC, and Open Allies critics of direct connect have had their veil of opposition pulled back and exposed for what it really is: maintaining the revenue status quo for the GDSs and themselves.
"We are more persuaded now than ever before that AA's direct connect platform is both trend-setting and a poster child for the way airlines and other suppliers will interact with the travel agency community. While we encourage the GDSs to drop their baseless opposition to direct connect and to get on with negotiating a new, cost-effective connectivity model with AA and others, we will continue to support the creation and deployment of platforms which use these new messaging standards and interaction to bring more content, services, and enhancements to the retail travel agent. The Forrester-Amadeus white paper on the enormous opportunity for travel agencies to earn more by up-selling clients through ancillary services underscores our ardent support for these important platform modifications", added Bishins.
Bishins was referring to the recently released report by Forrester Consulting, commissioned by Amadeus, which details the wealth of opportunity waiting to be tapped by travel retailers to earn more income from intermediary sales of suppliers' ancillary products and services. The report predicts that revenues from third-party ancillary sales are set to grow 30% by 2015, 10 times faster than general sales, and that third-party ancillary services will represent 2.5% of total revenues by 2015 - representing $25 million per year for every $1 billion in general sales.
ARTA Canada is of the view that the loss of "financial assistance" offered by way of GDS segment fee inducements will be more than offset by agents having far more lucrative income opportunities from ancillary sales. The association feels that the GDSs are not doing enough to reach price point agreements with AA for direct connect, and in turn, the GDSs are becoming an obstacle for agents to access these new merchandising options.
A copy of the report can be downloaded by clicking here.
About ARTA Canada
ARTA Canada is the largest non-profit federally incorporated professional association of travel retailers in Canada, the members of which consist exclusively of travel agencies and travel agents. In addition to advocating fair and equitable treatment of travel consumers, ARTA Canada represents the commercial and strategic interests of its member travel agencies and travel agents in a variety of national and provincial domains including regulatory and legislative matters, automation, technology, sales and marketing, and distribution.
ARTA Canada is the strategic partner in Canada of the U.S.-based Association of Retail Travel Agents (ARTA). ARTA Canada is the Canadian member of UFTAA, the United Federation of Travel Agents' Associations. For complete details about ARTA Canada's new $99 membership campaign or to join ARTA Canada, including secure payment on our web site, please visit www.artacanada.ca/join.