Airlines and GDSs haggle over content

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David Field / Washington

The latest round, a move by Air Canada to withhold some of its most attractive fares from the GDSs and so from corporate travel departments, comes as the industry is still trying to digest an unprecedented content-sharing agreement between Amadeus and Sabre.

The content issue is the central act in the increasingly high-level crossfire between airlines and the distribution systems as one side or the other withholds content – fare, flight, and availability information – from the other or threatens to share it with a third party. The disputes also raise the thorny question of who ultimately controls content – the carrier, the distributor, or sellers.

As the major carriers intensify their bargaining with the GDSs over how much content should be available to whom and for how much in their new agreements, these moves have snared travel agents and corporate travel departments. Jay Campbell, editor of the ProMedia.travel group and an authority on distribution, says: “They are trying to influence perceptions because, in the long-running contract negotiations and fight over the balance of power, industry opinion does count.”

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The proposed Amadeus-Sabre content-sharing agreement, officially an “insurance” pact in case one or the other cannot access content from a given airline, continues to rile the industry. American, Continental, Northwest, and United Airlines individually, and the Star Alliance collectively, have denounced the plan. Star said its member airlines were conducting assessments of the regulatory and legal implications of the Amadeus-Sabre agreement and would report back as early as this month.

The alliance said it would continue distribution-cost savings including consummating its contracts with two alternative content access providers, G2 SwitchWorks and ITA Software. Star will doubtless tread carefully as Amadeus has a strategic relationship with the alliance to build a common IT platform for the Star carriers, but American and Continental have both said litigation is likely on the grounds that the “back-up” agreement would amount to unauthorised, and uncompensated, content-sharing.

Some groups, including the Business Travel Coalition (BTC) that represents US corporate travel buyers, believe they could benefit from the “Sabredeus” pact. BTC’s Kevin Mitchell called the pact “forward-thinking”. Other travel groups endorsed it as protection in the increasingly rumoured event that a major carrier chooses not to sign up for full participation in all four GDSs. But distribution executives questioned the content sharing. At the Association of Corporate Travel Executives (ACTE) meeting in Atlanta in early May, WorldSpan’s Cheryl Weldon, vice-president of major accounts, said that she “didn’t see the need for such an agreement”, while Cendant’s Kurt Ekert, vice-president for strategy, questioned its value.

But many at the ACTE meeting were more exercised over the early May decision by Air Canada to pull its Tango fares – popular in the Canada-Florida market – from the major GDSs and from its own website dedicated to travel agents. Instead it is selling them through its public website.

The Tango fares, Air Canada’s lowest, represent a new level of unbundling. For instance, an advance seat-selection costs a Tango buyer C$15 ($13) more, while the fare offers a C$10 discount each way if the flyer agrees not to make any changes to the reservation and to fly without checked baggage. Tango fares give only half the miles to Aeroplan frequent flyer members. Air Canada chief executive Monte Brewer says it took the step for technical reasons after the GDSs “didn’t seem interested in helping us find ways” to distribute Tango.

In response, two of the GDSs, Sabre and Cendant’s Galileo, acted to make it harder to retrieve the Tango content through regular GDS fare-searching in the US. Those steps do not apply in the European Union, where the distribution systems are still regulated.

Association of Canadian Travel Agents executive Christiane Theberge called the technology claim “a smokescreen. They’re using it to try to get corporate agencies to buy up” to higher fares still on the GDSs. She said the airline had not consulted with agencies and “took the action in the middle of the night without consulting anyone”.

Tom McCabe, travel director for PerkinElmer, a major technology and medical suppler, said corporate travel departments frequently used leisure-oriented fares such as Tango “since the distinction between a business traveller and a backpacker isn’t meaningful any longer”. And recalling the moves four years ago by some airlines to withhold web-only fares from the GDSs, said that “ill-conceived content-withholding merely antagonised the best customers”. Airlines reversed that widely protested policy when they signed the so-called DCA or Direct Connect Agreements with the GDSs that are now expiring,

New multi-year contracts are currently being signed. One of the longest seen to date is that between Delta and Cendant, which is a seven-year, full content deal. The arrangement includes a new marketing agreement between Delta and CheapTickets, an online subsidiary of Cendant. Delta’s Lee Macenczak, executive vice-president of sales, says the deal will grow revenue and manage its distribution costs.

Meanwhile, some see Air Canada’s action as a sign of things to come. PhoCusWright consultant Norm Rose predicts “increased efforts by airlines to more effectively execute a multi-faceted channel pricing strategy to drive more business through specific channels”.

And at the ACTE conference, an electronic poll showed that more than half of the delegates in some of the sessions expect similar “preferencing” moves by carriers to favour some channels. A similar poll suggested that they expect corporate travel buyers to face charges for access to content. ■