Q: In recent columns, you have
harshly criticized the standard terms and conditions of the
so-called optional programs of Sabre [Sabres Efficient Access program is no big win for
agencies, June 19] and Worldspan [Worldspan optional program is risky business for
agencies, Aug. 14]. What about the terms and
conditions of Galileos Content Continuity Program? Is there any way
my travel agency can use the program to get out of our Galileo
contract? What about Amadeus?
A:
The Galileo amendments legal terms are less one-sided than those of
Sabre and Worldspan, in three ways:
First, you can take
your time in deciding whether to participate, as your decision to
opt out will be effective at the start of business on the day after
you notify Galileo of your decision, as will any future decision to
opt back in.
So, unlike Sabre
and Worldspan, Galileo is not using contract terms to pressure
agencies to hurry up and make an irrevocable choice this
month.
Second, Galileo
promises not to cut your incentives beyond the 80 cents for the
rest of your contract. Both Sabre and Worldspan reserve the right
to change the programs terms and conditions, including making the
financial terms worse.
Third, unlike Sabre
and Worldspan, Galileos allows participating agencies to drop out
of the optional program any time, without any reason or advance
notice.
On the other hand,
for agencies that average less than $1 in segment incentives, the
Galileo program is worse than Sabres, as the latter allows every
agency to keep at least 20 cents, which increases to 35 cents in
some cases. Galileo has no publicly announced exceptions to the
80-cent cut for everybody.
Another drawback to
Galileos program is that the full content you get does not include
private fares such as corporate discounts or agency-negotiated
fares, so the participating airlines can withhold that content from
Galileo-wired agencies unless they book through another
channel.
Sabres definition
of full content includes those fares, which may be why American had
still not come to terms with Sabre as of this writing.
It may be possible
for Galileo-wired agencies to terminate their contracts under the
material revenue change clause that has been used in standard
Galileo contracts since early 2005.
Under that clause,
when average supplier booking fees drop by 10% or more, the agency
and Galileo are required to use best efforts for the next 90 days
to negotiate an appropriate new deal. Then, either party may
terminate if there is no new deal, unless Galileo decides to
reinstate the old deal.
If Galileo refuses
to proceed under this clause, it would be in breach of contract,
allowing you to terminate under the default clause. Of course, you
need to weigh the legal and financial risks of such a strategy very
carefully, obtain sound legal advice and be careful to follow the
contracts requirements to the letter.
As of this writing,
Amadeus had not issued an optional program amendment, so it is
still in a position to pick up significant market share if it can
offer a no-fee, no-cut program to converting agencies.
Mark Pestronk
is a Washington-based attorney specializing in travel
law.