When entire subsections of our business culture begin to behave irrationally, there is a tendency to question ones own rational thought. Many of us experienced this during the economic bubble of the late 90s: Not only were heretofore smart people running around saying that profitability was no longer an important factor when investing in companies, but they were getting rich acting on that improbable insight.

The sane -- clutching their moribund old economy portfolios to their bosoms -- began questioning their own sanity. But then the bubble burst, and the temporarily insane wondered how they could have been so foolish as to entertain notions that were so absurd on the surface.

For some time now, the airlines have been promoting the quite irrational notion that people should sell airline seats without compensation simply because a) the airlines survival requires cutting out the cost of distribution, and b) demand for seats means that seats will sell whether sellers are compensated or not.

I dont know of any other industry anywhere in the world that has successfully sold wares without either building a direct-sales force or giving an outside sales force some type of compensation. And, at some level, the airlines must know this to be true because they actually do compensate their distributors. They pay commissions to high producers, but more importantly, they indirectly pay many, many travel sellers via GDS incentives.

But now the airline attack on GDS incentives, which has been building for several years, has reached a crescendo.

Some airlines have all but said theyre going to bury a GDS as an example to the others.

But the threat is irrational. What is a GDS to do when it hears Commit suicide. Or else ? The GDSs are not about to comply -- they, like some airlines, might die because theyve chosen to follow poor strategic directions or because alternatives come along that are superior, but none is about to fall on its own sword.

The GDSs are themselves behaving in ways that defy the accepted notions of rational competition. Its a bit creepy watching these once sharp-elbowed rivals strike insurance policy alliances and nod in unison during their debates with the new-entrant GDSs.

More and more often I hear otherwise rational people resign themselves to irrational thought, accepting that the path to returning airlines to health must accommodate their desire for free distribution (and reneging on pension promises -- but thats another column).

Imagine someone seriously proposing a new business paradigm as follows: Manufacturers should no longer create incentives for retailers to sell their wares. In fact, retailers should be required to help pay to have the unprofitable wares shipped to their stores.

Manufacturers should abandon their comprehensive approach to distribution and subsidize a more fragmented model.

Long-time competitors should cease being critical of each other and instead make supportive comments and look for ways to cooperate.

At the manufacturing level, sharp elbows and aggressive posturing should be reserved only for customers and those partners upon whom one depends most.

Its a brave new world. Ready to sign up?

Im not suggesting that airlines shouldnt try to reduce costs wherever they can. And I dont oppose their charging for exit row seats, meals or power ports under the seats if people will pay for them.

Charging for service is a time-honored tradition. Refusing to pay for essentials, such as a distribution network and sales force, does not have quite the same track record.


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