Many frequent travelers are nervously waiting on the sidelines to see the lasting impact on cheap fares, whether cheap airplane tickets, discount hotel rooms, or cheap vacation packages of American Airlines fight with online travel companies.
American Airlines pulled its fares from Orbitz just before Christmas. Expedia responded by dropping Americans flights. Sabre, the worlds largest reservation system operator, announced plans to downgrade and ultimately eliminate American flights.
Experts expect the conflicting parties to ultimately reach a compromise which will likely be a reduction in the fees the airlines pay Sabre and other global distribution systems (GDS) to disseminate their fares and schedules to online travel companies as well as traditional travel agents.
American and other airlines want to control what fares get displayed where, with the ultimate goal being to drive more sales through their own websites. An ancillary benefit of customers buying airline tickets through airline websites is that the airlines earn revenues when customers decide to add a hotel or car reservation after booking their airfare.
If the airlines have their way, their GDS fees will be reduced, customers will find it more difficult to compare fares, and airlines will be able to increase ancillary revenue.
Fundamentally airlines want to change fliers perception that seats are interchangeable commodities sold strictly based on price to where airlines cater to individual travelers based on their personal preferences. Airlines want to create a merchant driven market that they control where information is king and the more a provider knows about who is purchasing its products the greater the sales.
Airlines are not positioned to leave GDSs behind since well over 50 percent of all airline sales come via intermediaries, many of which are either GDS subsidiaries or relay on GDS technology. Neither American nor Delta, which recently pull its fares from three smaller online travel companies, has the technology today to successfully sell 100 percent of their seats on their own.
Online travel companies have proven to be nimble, innovative travel sellers offering package deals and flexible date options. GDSs are working feverishly on developing ways of selling airlines ever expanding list of ancillary services.
Online travel companies will continue to play an important role in the future since too many travelers highly value comparison shopping between several airlines which is something no airline website will ever offer. Price remains the prime reason the majority of travelers select a particular flight/airline. Many continue to view a la carte fees as airlines trying to nickel and dime them.
Arguments have been made that pushing travelers to airline websites can counter rising fares by lowering distribution costs or result in higher prices because of less competition. Regardless, travelers going directly to individual airline sites will have to work harder and visit multiple sites as well as calculate additional fees.
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