veryFare, it appears, is not going to
save American Airlines president Don Carty the $400 million he
hoped it would. Perhaps he was thinking too small. He could have
saved a billion or two if he had come up with a program that
offered agencies even lower fares if agents would agree to pick up
contractual obligation for the airline's jet fuel, maintenance, new
equipment, leasing, labor, airport facility charges, insurance,
G&A and catering expenses. It could have been called EveryCost.
Accepting GDS costs -- until now, a supplier's cost of doing
business -- is simply not an attractive proposition for most
While I argued in this space two weeks ago that agents'
interests lie, in this case, more closely with the GDSs than with
the airline, it should be noted that the EveryFare plan is only a
slight variation of two earlier GDS plans that landed with equally
In the past, the GDSs have shown themselves to be more
frightened by the airlines' distaste for res system fees than they
were comforted by the thought of solidarity with agents.
Last year Worldspan, and, earlier this year, Sabre (and its
subsidiary GetThere), nervously observed that it's not written in
stone that suppliers had to carry the full weight of segment fees.
Each floated proposals that agencies could give up some of the
incentive payments they receive from the GDS to offset income the
GDSs would lose if they reduced airline segment fees. Agents, they
suggested, could make up for their loss by adding fees to
But unlike EveryFare and its access to Web fares, there was no
carrot for agents in these plans, and the proposals were greeted
with profound disinterest.
As everyone tries to get someone else to shoulder the segment
fee, it should be remembered that none of the three parties to this
dance -- airlines, GDSs, agents -- currently pays the cost of a
segment fee. The customer does. This is a fight about who gets to
break the bad news to the consumer: the airline or the travel
The GDSs cannot be disinterested observers in this fight because
the airlines have declared war on segment fees, and they must have
noticed the results after the airlines declared war on travel agent
commissions. They may be saved, however, through an interesting
confluence of aligned interests.
Web fares are popular with consumers. Travel agents have said
that they're very interested in having Web fares in the GDSs, for
the benefit of their clients, for convenience and so they can meet
GDS productivity clauses. Airlines say they don't object to putting
Web fares in the GDSs in theory -- but they won't put them in if
they have to pay the regular segment fees to book them.
The GDSs don't really profit by having Web fares excluded from
their inventory -- these are seats that, when sold on the Web
direct, don't generate revenue for them.
So far, the GDSs have addressed the problem of their survival
with little more than fretting. They need to sit down with travel
agents -- their natural allies, who also benefit from an
independent supplier distribution system -- airlines, large
corporate travel managers and perhaps the Department of
Together they might actually come up with a (lower) segment fee
structure that applies specifically to Web fares. Corporate
customers and agents might even indicate they'd pay a small but,
percentage-wise, meaningful piece of the lowered segment fee to
have access to Web fares.
The GDSs and airlines can spin their wheels on programs like
EveryFare for a long time without accomplishing a thing. Or they
can decide to focus on the bucks themselves, not on who's passing