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Delta chief also sees day when travel agents will pay airlines

April 21, 2009

Anderson, RichardTrekking down the same path as American CEO Gerard Arpey, Delta CEO Richard Anderson said he, too, sees a day when distributors will pay airlines to make bookings.

"Over time, the industry will evolve," Anderson told analysts on Tuesday during a conference call to report first-quarter financial results. "People will pay us for our content."

Anderson’s comments came after Arpey voiced a similar prediction, also in a quarterly call with analysts.

Anderson acknowledged that online travel agencies play a significant role in distribution, especially when it comes to corporate accounts.

But GDS costs, he said, will continue to come down. Ultimately, GDSs will pay for content, as is done for hotel bookings, Anderson said.

Later clarifying his comments about his views on distributor payments during the conference call segment with reporters on quarterly results, Arpey said, "I was simply making the observation that the paradigm in the airline business has been that historically we pay our distributors to sell our product. And that has been shifting over many years, because we have been able to cut domestic commissions, domestic overrides and booking fees.

"We’ve done that for a lot of reasons, but not the least of which is the fact that our own website, aa.com, has become our largest distribution venue, where our customers can come directly to American and book their ticket and do so without any intermediary."

Arpey said, "I wasn’t trying to lay out a specific plan or a program, except to express the view that if we manage our capacity sensibly in this business, that I could see a day where distributors who want access to our product are paying us instead of them. And that may not come in my working lifetime, but I could see a day where that would be the paradigm."

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#145April 23, 2009
I think they BOTH need to have the guts to do what the guy did yesterday who totally screwed up Fannie Mae and commit suicide...That is where both AA & DL are headed if they belive that travel agents are actually going to pay them for the preiveledge of dong all their work for them!
#144April 23, 2009
what does "respect" have to do with anything? They're running a business, and their goal will always be to send as many customers as possible through their lowest cost channel. Travel agents need to realize that flights won't be part of their value-add anymore. It's a pure commodity. They need to focus on tours, packages and other more complex products. It's like GM and cars --- get on board with the changes to the market or go bankrupt...
#143April 23, 2009
The business paradigm is that the manufacture (the Airlines) distributes their product though a network of distributors, wholesalers and retailers. The price paid by each is determined by market forces and reflects the buying public's desire for each product and the value thereof. If the Airlines would like to join this business model and not sell direct to the public, then they should set up a like distribution system and remove themselves from the retail system. There could be a business model like the insurance industry where the Airlines either sell direct or use agencies, but not both, as is the case at the present time.
#142April 23, 2009
OOOPS, sorry, that Delta loss figure..??? $ 794 million, my mistake!
#141April 23, 2009
And Delta just lost what...? 387 million 1st Q??!! These statements may well be the meteor that knocks them out of Orbit!
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