Going Direct


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 ticket providers.

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 intermediaries.

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 with.

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 category?

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 otherwise.


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