Distribution evolves in North America as airlines reveal new deals

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Newly-announced direct connection agreements reached by two major North American operators with separate travel distributors highlight how distribution is evolving on the continent.

Oneworld member American Airlines says it has inked a pact with online travel agency Priceline, whereby the latter firm will use the carrier's "Direct Connect" technology to access fares as well as customized travel products and services. Priceline expects to begin issuing American tickets through the link in the near future.

Separately, Star Alliance operator Air Canada has reached a deal with global distribution system (GDS) Travelport under which the GDS will integrate the airline's so-called "New AC2U" direct connect portal into its system to enable travel agencies to sell Air Canada's full range of fares and ancillary services.

Additionally, Travelport has agreed to launch an enhanced version of its agent desktop product, Agencia, enabling Air Canada's products and services to be displayed and sold according to Air Canada's requirements.

"Supporting a single connectivity distribution strategy through multiple indirect channels, including the GDS and other third parties, in a similar fashion to how we distribute through our direct channels is key for Air Canada," says Air Canada senior director, product distribution Graham Wareham.

Carriers have been pushing direct connect models for years. But the issue grew thorny at the end of 2010 when American removed its inventory from Orbitz, after failing to reach a pact that would have increased the amount of American tickets processed through a direct connection with the online travel agency.

Orbitz is 48% owned by Travelport, and Travelport "did not want to see more business than necessary" going through the supplier link that was put in place over a decade ago, when American was still co-owner of Orbitz with other US majors, notes Forrester Research analyst Henry Harteveldt.

The carrier's decision to drop Orbitz set off a chain reaction in the industry that saw rival online travel agency Expedia, a Sabre user, cease offering American's fares on its site when its contract expired on 31 December, in an apparent show of solidarity with Orbitz and in retaliation against American's Direct Connect strategy.

Sabre then opted to disfavour American's fare offerings from its GDS listings and eliminate booking fee discounts, prompting the carrier to file a lawsuit against the firm in Texas court. A temporary restraining order prohibiting Sabre from biasing the display of its flights was quickly issued by the court.

Jim Davidson, the CEO of FareLogix, American's technology partner in Direct Connect, believes a hybrid distribution model is emerging in the industry.

"Air Canada and Travelport have just announced a deal that is good for both of them so maybe that could be the template, where, in a sense, Air Canada said 'here I my great content through direct connect and it has all these ancillary services, and I don't want to go around the GDS because that's inefficient, and I don't want to support this directly, so Travelport takes direct connect, and I'm sure Air Canada is paying Travelport for doing that," he says.

American and Priceline, meanwhile, have not disclosed the terms of their new Direct Connect agreement.