There are a handful of certainties in the business world, and this is one of them: Nobody likes a price hike.

For manufacturers and service providers, rising prices for raw materials and overhead are a source of constant pressure. These costs have to be passed on to price-sensitive consumers, often in a highly competitive environment. As the airlines are demonstrating, it can be a severe challenge.

But at some point, prices have to rise and somebody has to face the music. And that somebody has to be the consumer. We mean that in the imperative sense: It has to be the consumer, rather than the employees, the stockholders, the intermediaries or others in the value chain.

From time to time, one or more firms in that chain may have to suffer a loss and inflict pain on its employees, shareholders or other stakeholders, but eventually and over the long haul, every business has to make a profit on the end-users' money or it goes out of business.

We are witnessing in the travel business today a complex debate about GDS costs, but the underlying story line is relatively simple: The airlines aren't going to pay as much as they have paid in the past, but the marketplace hasn't figured out who's going to pick up the rest.

It is likely that in the short term, the GDSs and agents will share some pain. Ultimately, however, the bill has to be paid by the consumer, and it will be.

 

Everybody knows this, but the airlines, GDSs and agents are so determined to make it look like it's the other guy's fault that they have lost sight of whatever common interests they may have.

Corporate consumers, meanwhile, are not simply sitting on their hands waiting for the bill. They're agitating.

Not long ago, a handful of corporate travel managers called on their professional association, the National Business Travel Association, to enter the fray and put up some resistance.

Antitrust purists might wince at the notion of a trade association getting involved in a debate about the prices people pay, but the incident demonstrates the degree of unrest among big buyers of air transportation.

More recently, the Business Travel Coalition produced another white paper that essentially blames the airlines for the whole mess and calls upon corporate travel managers to resist new fees and demand "full content."

We're not surprised that nobody wants this price hike, but it's here and, somehow or other, a good bit of it has to come out of the pockets of air travelers.

Some big corporations have been the beneficiaries for decades of rebates, kickbacks, discounts and revenue sharing from airlines, GDSs and agents. Good for them.

But that was then. Now it's time to face the music.

A foot in the door

As international airline routes go, New York-London has to be regarded as a crown jewel. It is one of the world's most highly traveled international routes. Notwithstanding the latest terrorist threats, the underlying value of the New York-London market is so high that we were surprised that United decided to sell it to Delta for cash.

If U.S. and EU negotiators can create an open-skies environment, access to London and to Heathrow might soon be less valuable than it was in 1991 when United paid $400 million to get into the market. 

Until then, hats off to Delta. Even though it won't have access to Heathrow, it has finally realized a long-sought corporate aspiration.  

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