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Sabre Blasts AA Policy, ASTA Joins Battle, BTC Cites Risks to Agents and Industry

January 5, 2011 By: George Dooley

Sabre said today it was taking steps to protect the transparency and efficiency of its services and blasted American Airlines for withholding fare content from Sabre. The move also drew an immediate reaction from ASTA and the Business Travel Coalition (BTC), which were both critical of AA’s policy.

“For a number of months, American Airlines has taken actions in an attempt to impose a costly, unproven and unnecessary system on agencies and corporations, including withholding fare content from Sabre. We believe these actions are harmful to our agency and corporate customers, as well as consumers, making it harder and more costly to comparison shop. Sabre is taking actions to protect its interests and those of its customers by supporting airlines who value the transparency and efficiency of the proven system we provide,” Sabre said.

In response to Sabre Holdings’ announced action that it will “de-preference” the information of American airlines in some of the systems it feeds, ASTA responded sharply:

“ASTA has seen no convincing evidence that it will contribute to more optimal buying by consumers. We hope that other airlines will think very carefully before going down a similar path. ASTA has been a longstanding advocate for assuring that consumers and the travel agents who service them have full and timely access to comparative fare and schedule information so they can make informed decisions when buying air travel. To that end, ASTA has filed comments in the Department of Transportation (DOT) rulemaking on enhanced passenger protections, arguing for a rule that would assure airlines provide travel agents with timely and transactable information about ancillary fees now being added to the price of most air tickets. ASTA also worked to facilitate input from consumers, which led to the filing of a petition with DOT by more than 50,000 consumers supporting full price transparency," ASTA said in a statement.

“ASTA believes the technology is available to accomplish the newest airline marketing objectives without sacrificing comparative price transparency and without imposing new costs on travel agents, and ultimately on consumers. The Airline Tariff Publishing Company, through its filing with DOT, and the Airlines Reporting Corp., through its work on the Electronic Miscellaneous Document, both owned by the airlines, appear to agree.

"We have been watching with deepening concern the evolving conflict between American Airlines and the online travel agency community regarding American’s Direct Connect program. This program is claimed to be necessary to enable the marketing objectives of American, but, based on the limited information available regarding the program, it threatens to produce expensive and complex “de-integration” of efficient information flows that have benefited consumers of air travel for decades.”

“Our efforts to obtain information about the program from American have largely been rebuffed. And, there is no tangible evidence that the claimed benefits of Direct Connect have been accepted by either customers or travel management companies,” ASTA continued.

“The underlying concerns that have led to the open conflict between American and the online agencies thus appear to be valid and very serious. It was probably inevitable that the next logical step would be the extension of the conflict to regular travel agents. Travel distribution is not a spectator sport, and no one will be spared if an appropriate resolution is not reached that recognizes the burden that this so-called innovation in distribution will produce.

“Travel agents generally have benefited from technological innovation over the years, and ASTA squarely supports innovation that produces true efficiencies. But technological change that simply moves costs from one party to another is just a solution looking for a problem to solve. Any firm that would reverse the beneficial process of information integration and comparative pricing for consumers has a huge burden of persuasion. While much rhetoric has been expended in promoting Direct Connect in the media, ASTA has seen no convincing evidence that it will contribute to more optimal buying by consumers. We hope that other airlines will think very carefully before going down a similar path.” ASTA said.

The BTC said the battle was now on for “the future of low-cost, consumer-centered travel.” Sabre’s move, BTC said, seeked to “protect the interests of an independent travel distribution system from American Airlines attempt to impose a new model that heaps huge new costs on the travel industry and diminishes comparison shopping for consumers.”

According to its press statement, Sabre has downgraded AAs offerings in most of its displays, eliminated booking fee discounts and delivered notice of termination of its agreement with AA, the BTC said.

“This development puts to rest that this battle, which began with AA’s unprovoked assault on Orbitz late last year, is not a skirmish between AA and online travel agencies, but rather an all out war for the future of both airline and all travel distribution in the U.S. and around the world,” said the BTC.

“At risk are important benefits generated by the current distribution system including: (1) robust comparison shopping among airlines offerings for consumers as well as corporate travelers using online booking tools; (2) efficiencies inherent in one integrated workflow process of shopping, purchasing, capturing data, assuring travel policy compliance and auditing for products and services from more that 100,000 airline, hotel, rental car, ferry and rail companies as well as other suppliers; and (3) transparency and pricing discipline that tens of thousands of independent online and offline travel agents bring to all offerings on suppliers own websites and other distribution channels," the BTC said in a statement.

“The stakes in this conflict are clear: either an improved airline industry and distribution marketplace centered around the consumer, or one that subordinates consumer interests to the self-serving motivations of individual airlines endeavoring to shift costs and impose their wills on consumers and the other participants in the travel industry,” said BTC Chairman Kevin Mitchell. “Single-supplier direct connect proposals, like the one advanced by American Airlines, can significantly increase costs for all distribution participants and cause massive fragmentation of airfares and ancillary fees depriving consumers of the ability to compare the total cost of air travel options across all airlines."

Mitchell also cited interim results from a currently open BTC survey of corporate travel managers that points to an “overwhelming rejection of AA’s attempts to change the distribution system model to its unique advantage while driving corporate travel departments costs up and undermining their ability to adequately service their travelers.”

A vast majority (94%) of surveyed travel managers indicate access to all airfare and ancillary fee information is either indispensably important or very important for their corporate managed travel programs.

A large number (87%) believe that in advocating its Direct Connect strategy AA is endeavoring to secure higher fares, which would be paid by undermining the independent travel distribution system and corporate managed travel programs and by driving more consumers to, where comparison-shopping, expert advice and corporate travel policies might not be as prevalent.

Some 88% of travel managers who oppose AA Direct Connect believed that the program will result in fragmentation of airfares and fees and that without access to all air travel options travelers will pay higher prices. And a total of 98% do not support American Airlines Direct Connect strategy.

“Since the U.S. global distribution system industry segment was deregulated in late 2003, the strategic interests among GDSs, travel agencies, travel management companies, corporate travel managers and consumers have evolved into near-perfect alignment,” said Mitchell. “Because the airline industry is one where competitors often follow one another, it is of paramount importance that corporate travel managers, individual supply chain participants, including the associations that represent them, stand up and very clearly communicate to the airlines what their distribution system requirements are."

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By George Dooley | January 5, 2011
Sabre move to protect industry wins support from ASTA and BTC.
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