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AA and Travelport Clash: Who Serves Consumers?

December 17, 2010 By: George Dooley

Travel agents and consumers remained center stage in the ongoing clash between American Airlines and Travelport over distribution strategies. American reacted sharply to Travelport’s decision to include AA’s Booking Source Premium on non-U.S. and non-Caribbean travel agencies into GDS fare displays.

In turn, Travelport reacted angrily to American's statements noting that the AA booking surcharge was implemented only after Travelport increased booking fees on AA flights booked through Galileo and Worldspan. One result: The AA surcharge will be shown in the Travelport GDS’s from Dec. 20.

American argues that Travelport is “deliberately misleading agents and customers by hiding booking surcharge fees within base fares for American Airlines flights that it distributes to travel agencies, including online travel agencies.”

“This deceptive practice falsely inflates the base fares for American Airlines flights, discriminating against American Airlines fares and deliberately misleading agents and consumers into believing that there are fewer choices available for low-cost flights. At the same time, Travelport is pocketing the increased booking fee,” AA said in a statement.

Travelport countered that AA has announced a plan to impose a surcharge on bookings made by agencies that use Travelport in certain markets outside the U.S. and Caribbean after Dec. 20.

“Called a 'Booking Source Premium,' these charges are wholly arbitrary with extremes of variability by country that do not bear any discernible relation to what Travelport charges AA which only varies on a regional basis. Through this action, the very travel agents who deliver valuable revenue to AA in these international markets are being penalized,” Travelport said.

AA said Booking Source Premium is not any kind of passenger fee and should not be portrayed as such: ”It is categorically not part of the fare for air transportation, nor is it related to any other kind of service rendered to the passenger by American or any other charge from American that in any way a passenger can be required to pay in the name of American. To suggest otherwise would be, in our view, an unacceptable deception on consumers for any sales intermediary to engage in this deceptive behaviour while processing tickets for American, without prejudice to the intermediary’s possibility in its own name to ask its customers to bear some portion or all of the intermediary’s own costs separate from the air fare.”

Travelport said it is important to understand that the issue and resulting actions have been precipitated in direct response to AA's actions to withdraw ticketing authority from Orbitz, one of Travelports larger customers, as a result of that customer's refusal to submit to AA’s heavy handed tactic to force Orbitz to use the AA direct connect.

“By embedding the booking surcharge into the base fare, Travelport’s action is patently misleading and strikes a blow against transparency for air travel,” AA said. “ This egregious action once again shows that Travelport is willing to stop at nothing to protect an outdated business model and platform for distribution of airline services from new technologies that are more robust, flexible, and cost effective. Travelport is using its subscribing agents worldwide as vehicles for retaliation against an airline that is looking for better ways of interacting with the agency community, “ the airline continued.

“Travelport has inaccurately told agents on several occasions that American acted on its own in implementing the booking source premium. However, the fact remains that the booking surcharge for American flights was implemented only after Travelport arbitrarily increased booking fees for flights on American Airlines booked through Galileo and Worldspan, the GDSs owned and operated by Travelport.”

Travelport argued that AA is attempting to fundamentally change an existing distribution model that works well for all constituents – airlines, travel agencies, and consumer travelers – and to do so by abandoning a pro-competitive and pro-consumer economic and technology framework.

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