Assessing GDSs, airlines and agents


Gary Doernhoefer While the temptation to resist changes to the travel distribution model is understandable, Mark Pestronks call to action [Legal Briefs, Worldspan deals a sign of bad things to come for agencies, April 24] is a waste of time at best and legally risky at worst.

Instead of proposing what might be seen as a group boycott disguised as a letter-writing campaign, what travel agents need from legal and business advisors is a brutally honest assessment of current economic reality. 

Electronic ticketing and the Internet reduced the airlines need for ticket distribution. In contrast, airlines will always need, and will pay for, marketing. Marketing means adding value by moving travelers, particularly high-value travelers, to a particular airline and increasing its market share and revenue. Successful marketing services will continue to earn override commissions.

Perennially asserting some vast conspiracy among the airlines is reckless. No conspiracy is necessary for the airlines to independently respond to the opportunity to lower costs. Technology has enabled travelers to do it themselves, lowered costs and changed the demand for travel agent services, especially on simple itineraries. 

Claiming that the airlines are conspiring to change the business model is like bank tellers claiming that a conspiracy caused the spread of ATMs.

This new economic reality affected travel agents first, but the GDSs are next. Deregulation, combined with the new technology, gives airlines the bargaining leverage to withhold or grant access to inventory in return for lower costs. The GDSs will have to be more responsive to their airline customers. This new leverage will lead to participating carrier agreements with lower total booking fees. As booking fees go down, travel agent incentive fees from GDSs will have to be reduced or even eliminated.

But the new market conditions are not all bad news. While the travel agent may provide fewer services for an airline, the professional travel agents value to consumers increases with the growing complexity of buying and managing travel.

And despite the new technology, or maybe because of it, travel is becoming more complex. To name just a few complicating factors: low-fare carriers that only sell directly, additional fees for aisle seats or other amenities, bankruptcies, variable online travel agency fees, upgrade availability, frequent flyer mileage managements, codeshare confusion and mind-boggling fare structures. These present a daunting labyrinth to many travelers. While airlines may pay less in some areas, many consumers should be willing to pay a little more if they appreciate the value of the assistance a professional travel agent can provide.

Ironically, Mr. Pestronks call for action is an effort to preserve the status quo despite dramatic changes in the commercial environment, and it risks being perceived as the solicitation of an unlawful boycott. A much better strategy for todays travel agents is to embrace economic reality with a creative and entrepreneurial search for new value-added services that are still in demand by suppliers and consumers.

Gary Doernhoefer is a former vice president and general counsel of Orbitz. He is currently living in Sweden and will return to a consulting practice with his own company, Skylarc LLC, this summer.


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