American Airlines distribution

[Hartington]

I'm surprised we're not discussing the current fight between AA and Orbitz, Expedia and Sabre. For those that don't know AA pulled it's flights from Orbitz because they refuse to use "AA Direct Connect" and insist on using their existing connection via the GDS. Expedia then stopped selling AA because AA was insisting on the use of Direct Connect. Finally Sabre pulled AA flights, again over the use of Direct Connect although AA got a temporary injunction.

The fight is a bit confusing. Over the past 5 years IATA and ATPCO have been developing ways by which the airlines at large can file all their new fees so that the agencies (be they bricks or clicks) can book and then charge for those fees as part of the selling process. AA have participated in those discussions but now seem to have decided they want more "control" over the sales process. I think, but can't confirm, that part of what they mean is that they want to be able to tailor their offering to you and me. In other words they might look at my booking and say "you're booking economy and if you take all these options it will cost you Z but if you upgrade a class you'll get all that thrown in and it will only cost an extra 1 currency unit" which might be attractive but they could also decide to load your offering. Unless the GDS and agencies pick up on Direct Connect it will make it just that little more difficult to compare AA prices (to whose disadvantage?) because you'll have to go to AA like you have to go to Ryanair.

It also seems to me that AA have their eye on what I sometimes think of as confuser pricing. It's almost impossible to compare mobile phone tariffs and I can't help feeling that's where AA want to go.

Actually, maybe I'm looking for someone to bring some clarity for me. :)

[Hartington]

Here is an article from the Economist which might take the debate forward alittle

Online travel firms: The coming travel-website consolidation | The Economist (http://www.economist.com/blogs/gulliver/2011/01/online_travel_firms&fsrc=nwl)

[PAXboy]

The reason that we are NOT discussing the current fight between AA and the others is that no one seems to be interested!! I posted this story in this forum at least three weeks ago but it generated zero interest and I cannot even find the thread now. It might have been longer ago.

For myself, I think it IS an interesting new development but only to be expected in the continuing re-arrangement of the legacy carriers as they try to change everything whilst pretending to stay the same. IIRC, there were some similar clashes in the UK when BA started scaling back the Travel Agent's commission, once the Net started to bite.

[davidjohnson6]

PAXboy - I beg to differ on nobody being interested - it's just that being interested and feeling able to express an opinion on a public forum are not the same thing. If you don't know the facts, nobody can blame you for keeping your mouth shut !

Opinion seems to fall into 2 camps - one that the likes of Sabre are just dinosaurs who need to be put out of their misery, while the other camp says that AA have over-reached themselves and will be forced to backtrack when revenues collaps

Has AA published any traffic figures yet in a way which are comparable to other major US airlines, and include a significant period of time during which their fares were not listed on one or more GDS ?

Until we can see some hard data - either revenues or even just plain old load factor, it's very difficult for anyone without access to the commercially sensitive date of AA to form a solid opinion.

[PAXboy]

That's a vary fair comment davidjohnson6. I certainly cannot venture any opinion on it other than that: the usual form is for both positions to dig themselves further in to what they know - so they miss the new kids on the block who on a new road and overtaking them! (To mix my metaphors) In Europe the leader is RyanAir.

[WHBM]

The likes of Expedia don't deliver a lot of good premium traffic; the bulk of this comes from corporate agreements, travel agents (still), and the airline's own website. Most of what Expedia can deliver is bottom-priced stuff. It's not inconsequential, but it's also what airlines can most easily get out of.

American have lost some headway in the "general" US market in recent years, but are still ahead in good, big corporate agreements. One of the few things that came good for them from the TWA acquisition was the marketing agreements with the media business in New York and Los Angeles which lingered with TWA from their former great years, which is part of why AA still dominate this particular city pair, and why you will still find more media personalities on board an AA flight than any other. You'll find the same with the heavy business traffic between Miami and Latin America. The bottom-price trade down here is on board the local South American carriers.

Different focus.

[Hartington]

Here's my view.

The legacy airlines in the USA have found they can make more money by unbundling their fares and charging fees for things like baggage that used to be included. But, particularly on international, not eveyone has fallen in line.

Whether you agree with what the unbundlers have done, or not, there is a vociferous lobby in the USA that claims this has all made the comparison of fares more complex. They argue that the airlines should distribute the fees data via the GDS allowing agencies (on and offline) to factor the fees into their calculations without having to run around searching websites etc. The arguement then goes this will allow agencies to quote a "complete air fare".

I'm not totally convinced that's a solution. With so many people looking blindly for "the cheapest" fare how many agencies will include fees up front? So you'll get a fare and then be asked what fees you want to add from a menu and only then will you get your complete charge.

The AA approach doesn't stop that happening, just changes the method and requires the agency to connect to AA direct. It would be interesting to know what, if any, rules AA are trying to impose about how data from their direct route can be merged with data from he GDS.

But the AA approach allows them to recognise the passenger (if that is available early enough in the booking process) and return a complete price based on previous purchasing patterns and negotiated agreements. This wouldn't simply add the fees to the fare. I can see them (particularly in the corportae environment) offering a bundle where you get (for example) the lounge, one piece of baggage and priorty security/boarding for a fee that is less than the whole.

Which brings me to "confuser pricing" as in "this mobile phone tarriff includes n free minutes and nn free texts and this free phone". Despite the existence of price comparison websites that try and make sense of and compare such prices (not just phones, insurance, energy.....) I defy anyone to say they KNOW they have the cheapest price for such services. I can't help feeling that AA are wondering/planning to take their pricing in that direction.

If they're going to follow that route they would either have to come to rather complex (and potentially expensive) agreements with GDS who will do almost anything if you pay them or follow the route that AA are ploughing which, in turn, saves them GDS fees.