he airlines are in such dire financial
straits that they are in a furious rush to lower distribution costs
and to reduce their dependency on a broad array of third-party
The move by Continental to cut out commissions on Internet
bookings is the latest example of the carriers' strategy to force
intermediaries to tack on fees, in the hope that the airlines' less
costly Web outlets will be a more attractive option for a segment
of the flying public.
All third-party distributors of airline tickets, even ones such
as Orbitz and Hotwire in which the carriers have financial
positions, are targets of the drive to reroute business to the
carriers' proprietary sites.
At the same time, the airlines, like any provider of a product
or service, recognize that some distributors are far more important
than others. As they lower the up-front commissions, they continue
to make behind-the-scenes deals with the largest
We don't know what those deals are nor, in my judgment, do we
have the right to know -- any more than we have the right to know
what the largest supermarkets pay for products in relation to the
smaller grocery stores.
What we do know is that airlines are accelerating the process of
narrowing the distribution arena and placing greater pressure than
ever on intermediaries to make money on tickets.
While the carriers' strategy to divert business to their own
sites inevitably will increase the share of business done by those
sites, there still is a joker in the deck the airlines are playing
The joker is the quality of service provided by the carriers. If
the airline sale in question involves a simple point-to-point
ticket with an uncomplicated fare structure, consumers may have
little difficulty completing an online transaction.
But what percentage of airline tickets fall into that
For the remainder of airline tickets, those with complicated
routings and equally complicated fare options, proprietary Web
sites can be maddening places to complete transactions.
One thing is certain: Whatever the airlines' strategy may be, it
will be the consumer who will decide how the distribution system
will evolve. The airlines may prefer that consumers use their
proprietary sites, but the traveling public may choose