AA-Worldspan pact redefines 'full content' for agents, GDS

American Airlines new five-year content agreement with Worldspan allows the airline to offer inventory through its Web sites and call centers that it does not have to make available to Worldspan.

Though the provision could simply reflect weakness in Worldspans market position, it could also signal a sea change in airline distribution models that would leave a gaping hole in agents expectations of getting full content from GDSs.

Either way, it is clear that American, which is still negotiating long-term deals with Sabre, Galileo and Amadeus, is determined to keep its options open regarding Web-only and other non-GDS inventory.

Nonetheless, Sabre apparently is balking at accepting terms similar to the ones Worldspan swallowed. It is believed that those terms are one of two main points holding up a new deal between American and Sabre. The second stumbling block is Americans ongoing opposition to a pact in which Sabre and Amadeus agreed to funnel fare and schedule data to one another if an airline defects from either res system.

Since Sabre announced its Efficient Access Solution several weeks ago and Worldspan outlined broad plans for two new optional programs a few months ago, the industry has focused on how much in incentives agents would have to give up to get full content from airlines.

But under its new Worldspan agreement, effective Aug. 1, American may offer exclusive inventory on AA.com and through its call centers. That stands in stark contrast to the situation three years ago, when major airlines signed full-content agreements with the GDSs pledging that all publicly available fares would be present in the res systems.

It also appears to contradict Worldspans assertions that its agreements with American, Continental, Northwest and United would offer agencies the opportunity to participate in programs that ensure full content.

The American-Worldspan terms came to light after Worldspan filed a redacted version of its contract with American with the Securities and Exchange Commission.

A clause in the content parity section states: The parties recognize that American may continue its existing practice of offering special access to inventory through Americans Web sites or its internal reservations personnel to select individuals based on that individuals value to American, without American being obligated to provide such access generally to Worldspan agencies, so long as American does not provide such access generally to subscribers of another GDS in the territory.

Broad wording

The broad wording enables American to continue distributing certain negotiated corporate and promotional fares through Web sites like CorporateAAccess.com without giving them to Worldspan.

The clause also breaks new ground in giving American the option to unbundle inventory such as premium seat assignments, to offer Admirals Club passes or perks like free check-in of a third bag exclusively on its Web sites or through its internal res staff.

In effect, the provision echoes Air Canadas recent unilateral decision to distribute its Tango fares exclusively through its own Web sites and reservations systems.

Many details of the Worldspan-American agreement were withheld out of confidentiality concerns and filed separately with the SEC, but the territory the contract covers is believed to be the U.S. or North America.

The agreement does not necessarily mean American will offer exclusive inventory on in-house channels, as carriers did in the days of Web-only fares.

But the airline clearly wants to keep its options open as technologies improve and distribution costs warrant.

It is noteworthy, however, that Worldspan ensured that it would not be disadvantaged relative to its competitors.

The contract states: Except as otherwise specified in this agreement ... American will deliver content to Worldspan in a manner that does not intentionally discriminate against or disfavor Worldspan when compared to the manner of delivery or the same or substantially the same types of American content provided to any other GDS in the territory.

Negotiations ongoing with Sabre

Of the six largest U.S. airlines, American alone has not reached a new content agreement with Sabre, the GDS market leader in the U.S.

And the full-content provisions in the Sabres EAS program seem to preclude the kind of Web-only inventory clause that American got from Worldspan.

Chris Kroeger, Sabre Travel Networks senior vice president for North America, said recently that full content in EAS includes all published fares, nondiscriminatory access to negotiated fares, including corporate discounts, and all Web fares. As long as last-minute seat availability is part of these fares, they would be included.

Approval for NWA-Worldspan deal

In other developments, a bankruptcy court in New York approved the Northwest Airlines-Worldspan five-year content agreement, which goes into effect Aug. 1. The agreement gives Worldspan enhanced Northwest Airlines content, resulting in immediate savings in reduced distribution costs, according to the court order.

The June 15 ruling by Judge Allan Gropper in the U.S. Bankruptcy Court, Southern District of New York, also sets the amount of Worldspans unsecured claim against Northwest at $15.6 million.

The Northwest-Worldspan agreement is under seal, so other details of the pact were not disclosed.

To contact reporter Dennis Schaal, send e-mail to [email protected].