WASHINGTON -- Amadeus unveiled a booking fee system for 2004 and
beyond that will not provide its agents with immediate access to
Web fares, but which it insisted will provide a better solution for
agents, airlines and Amadeus in the long run.
David Jones, the company's executive vice president, commercial,
said he believes Amadeus is setting the standard with its new
"value-pricing" system.
The system will differentiate the booking fee charged to
airlines based on the fare, point of sale and itinerary as well as
the services an airline chooses to use from an itemized list.
The basic idea is that a route like New York-Miami is an easier
sell for a U.S. carrier than a more complicated international
itinerary and that an airline will want the option to pay only for
the GDS services it most values.
"A revolution has to start with a small step. And this is just a
small step designed to point to what we believe is the way
forward," Jones said in a conference call with reporters.
The strategy is not without some risk.
In North America, for example, Amadeus will be trying to sell
its system to agents who are increasingly getting access to Web
fares within Sabre, Worldspan and Galileo.
Sabre discounted its booking fees across the board and froze
them in place for three years for any airline that provides access
to its Web fares, and Worldspan and Galileo essentially matched
that method.
Amadeus officials dismissed those deals as a short-term fix.
"A three-year truce has been achieved. But in the meantime, the
arms race continues," Jones said, asking what will happen when the
three years are up.
Amadeus is trying something different.
For Web fares and other "low-fare content," its value-based
pricing system entails offering airlines a bigger booking fee
discount that would apply to the low-fare content bookings only.
Amadeus still is in discussions with carriers to determine who will
participate in a "selective experiment" of the concept in 2004.
U.S. agents wouldn't lose incentive pay or pay a fee to access
the Web fares -- at least for now -- although the global GDS said
it plans to do that in other countries where agents don't rely as
much on incentives.
Amadeus officials insisted the difference in access to Web fares
will not put Amadeus at a competitive disadvantage.
Their argument was twofold.
First, Amadeus said Web fares are not as important as some
people believe. They said Amadeus conducted a survey of agents,
representing all GDSs, and more than two-thirds of them said Web
fares account for 5% or less of their business.
Those same officials said they recognize agents still need
access to as many fares as possible. But they suggested a
sufficient, interim alternative is the FareChase screen-scraper it
provides via the Web on its Amadeus AgentNet portal.
They said FareChase will be integrated into the Amadeus
front-office platform in the first quarter of next year.
The details of how it will work
n January, Amadeus will begin
charging airlines a booking fee in two categories: standard value
and premium value.
The standard-value fee will apply to bookings made by agents in
the airline's self-identified prime market for domestic or
intracontinental itineraries. U.S. airlines, for example, seem
certain to choose the U.S. as their prime market, so they would pay
standard value for a U.S. agent booking a New York-Los Angeles or
New York-Toronto flight.
The premium-value fee will apply to all other reservations -- in
other words, intercontinental itineraries or any reservation made
by agencies outside the airline's prime market.
For North American carriers, the standard-value fee in 2004 will
be 5% lower than Amadeus' 2003 fee; the premium-value fee will be
5% higher.
For Web fares and other "low-fare content," airlines will be
offered a big booking fee discount that would apply to the low-fare
content bookings only. That's going to be done on a test basis with
a limited number of airlines in 2004.
Fees will continue to vary by level of airline participation in
the GDS. Each of the three participation levels offers a bundle of
Amadeus services.
Beginning in 2005, however, some items will be pulled from those
bundles and offered separately. Airlines will be able to pick from
four to six itemized services in 2005, including, for example, a
yield-management tool called "married segment control." In 2005 or
a future year, interactive seat mapping also might be put on the
itemized list. -- A.C.
To contact reporter Andrew Compart, send e-mail to [email protected].