United Signals It Wants a Better Deal with Reservation Middlemen - Skift - 0 views
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The reservation services that middlemen technology companies provide to travel agency networks and online travel agencies are a particular sore spot for airlines.
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Overall worldwide, airline lobbying groups say they pay $7 billion in fees a year to these reservation systems.
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In the past, non-standard products like that have posed challenges for Sabre, Amadeus, Travelport, and Travelsky to display and distribute to travel agencies.
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But beyond monetary concerns, there were antitrust issues at play, with the airlines contending that Sabre had a stranglehold on the domestic U.S. market
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The distributors say they can accommodate technological requests from the airlines, despite the public skepticism expressed by some airline executives.
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This article demonstrates the way how relationship between the airlines (United) and the technology companies which serve as middlemen is build. According to the estimations, the airlines pay to the gds's about $18 per round trip ticket reservation, which results in 7 billion in fees that are payed to the gds's annually. The air companies consider these fees unfair in regard of the gds' performance. To compensate for these payments as well as to promote direct bookings, the airlines (namely, Lufthansa) have added a surcharge for any external bookings. GDS's, however, fight back and start litigations against Lufthansa. The decision on this case will either stop such a practice, or force other airlines to follow LH and add surcharges for gds's too. Another problem that airlines experience with GDS's is the presentation of non-standard products that the airlines offer. For example, it took the GDS's several years to correctly display the Ecomy Skycouch by Air New Zealand (buy 3 seats at the price of 2 to sleep across all of them during the long-haul flight). United is going to introduce its Basic Economy Seats with no carry-on luggage and no qualifying miles. However, they are not sure that the GDS' s will be able to display this product to the customers in a proper way so that they could fully understand what they are buying. The reason for that is that GDS's are mainly reluctant to invest in technologies that are focused on product differentation. In this regard, it becomes more difficult to compare fares since different set of services is included in different products. Thus, the customers might be mislead. Moreover, there are antitrust issues with the gds's. The airlines claim that Sabre has a stranlehold on the US domestic market. Such position allows it to ultimatum the airlines and voluntary decide on search display order. The airlines expect the GDS's to be more prone to partnership ralations. This would imply the fair compensation for what they add to the