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Travelport and AA Clash Over Direct ConnectNovember 4, 2010 By: George Dooley
Travel agents and travel management firms are at the center of a clash between global distribution giant Travelport and American Airlines (AA) over AA’s Direct Connect program.
Travelport said AA’s decision to implement Direct Connect is “anti-consumer and anti-competitive” and that Travelport will take action to “defend travel agents and consumers.”
Travelport is also communicating its position to travel agents and asking for comments. A detailed backgrounder on the issue was also sent to agents.
According to AA, the AA Direct Connect provides a direct link into AA’s host reservation system to facilitate the availability, shopping and pricing, booking, ticketing, and post-ticketing servicing transactions.
"The AA Direct Connect utilizes modern technology links and XML messaging, which can handle more robust and flexible transactions," AA said. "The AA Direct Connect is designed to support future merchandising and ancillary services." AA has invited agents’ participation in the program. Visit http://directconnect.aa.com.
Travelport counters by arguing that it "strongly supports the consumers’ right to maximum transparency and the ability to shop, compare, and book travel services wherever they choose," and believes that AA’s action to coerce a more restrictive model under threat would violate AA’s contractual obligations with Travelport.
"AA’s plans and the resulting inefficiencies and associated costs would be detrimental to airline customers, travel agencies and consumers," Travelport said. "Travelport’s dispute is solely with AA. Travelport hopes to resolve this dispute to the benefit of consumers and travel agents."
Travelport’s ‘Myth- Busting’ communication with travel agents urged agents to look behind the myths and separate facts from fiction. Travelport’s position:
Myth: Direct Connect makes the best economic sense for agencies.
Fact: Travelport understands that AA wants to drastically reduce agency distribution payments even though those payments already represent a very small percentage of the value of the tickets sold. AA is aggressively trying to persuade agencies to bypass the GDSs by offering agencies short-term incentives to shift AA bookings to a direct connection. But a successful direct connection will result in the 100 percent long-term loss of an agency’s financial assistance (FA) through the GDS for all of its AA bookings. Also, even if AA offers an agency an increased incentive to offset the lost FA for some period, the agency is still left with the inefficiencies of booking most airlines through the GDS, and having to book AA through a direct channel. If some additional carriers require the same, then the inefficiencies will be even worse.
Myth: Direct Connect is efficient.
Fact: Direct Connect would require agencies to connect directly to AA’s systems to book a flight. Direct Connect would therefore require an agency to spend time and money to change its computer systems to allow the booking to be made on AA’s internal system. Direct Connect would also generate multiple travel records that agents would be required to coordinate, thereby creating still more inefficiencies. Additionally, typical GDS processing (i.e. availability, pricing, shopping, PNR creation, and ticketing) would be moved within AA’s platform, causing the agency to create duplicate steps in day-to-day processes. The Direct Connect process will not allow shopping and booking to be completed in the GDS which eliminates the tremendous one-stop efficiencies that led to the creation of the GDSs by the airlines in the first place. Again, if additional carriers follow AA’s lead, these inefficiencies will be compounded.
Myth: Direct Connect is the best alternative for consumers.
Fact: American Airlines says it would like to offer individual customization so each customer would receive a fare or bundle of services based on the individual customer’s travel patterns, preferences, etc. Travelport would be pleased to work with AA to deliver additional customization functionality to our agency customers, and our evolving technology platforms are fully capable of delivering customized offers. But AA’s proposed Direct Connect solution is really confusing because you will be forced to use multiple systems thereby causing great difficulties in providing your customers informed choices. The comparisons you make every day to serve customers’ best interests – to match their preferred flight times and find the best routings and fares – will be dramatically more difficult.
Myth: The GDS can’t support the individual customization that American Airlines wants.
Fact: Travelport is ready, willing and able to work with AA to deliver the customization AA is talking about. The Travelport Universal Desktop and Travelport Universal API products demonstrate commitment to invest in new technology that solves for individual customization and aggregation of new content not historically available within the GDS, while creating an efficient desktop for travel agents that also allows suppliers to customize and differentiate their content. While Travelport would be pleased to work with American Airlines to deliver these products to our agency customers, AA apparently intends to limit all GDS agencies’ access to full content such as low fares and ancillary services based solely upon AA’s own criteria. Travelport will not support discrimination against its agency customers.”
Travelport said it is actively leading industry efforts to "deploy new technology and new economic models," as evidenced by its existing long term full content agreements with most of the other major U.S. carriers including Continental, United, and Delta.
"The GDS infrastructure is exceptionally reliable and capable of delivering on all the carriers’ requirements and customization initiatives," Travelport said in its analysis. "Forcing airlines and agencies to spend tens of millions of dollars to build an entirely new system is simply unnecessary, and your business should not be subjected to such disruption. The most efficient course to enhance your business, provide broad distribution, and ensure consumer choice and transparency is for us to continue to work closely together and with economics that are beneficial for all participants in the distribution network. We at Travelport are always open to your thoughts and concerns."