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Posted Dec 20, 2009
The recent distribution arrangement between Travelport and British Airways should come as no shock to anyone. As widely reported several weeks ago, BA is determined to adjust its distribution mode; the UK airline has re-signed with Travelport. It is also reported to be near an agreement with Amadeus (who also hosts the British carrier). Despite being somewhat battered in the recent downturn, the British carrier is driving to a beat where it lowers its costs for distribution. So lets briefly examine what is has agreed to with Travelport and what it wants to get from the other GDS companies.
Posted Nov 9, 2009
For years airlines have made statements that the merchant fees that they pay when they accept cards as a form of payment were ‘next on the list’ of distribution costs that would be in focus. And more recently we are beginning to see evidence that this is true with examples such as United Airlines' reported change of policy when it comes to [some] travel management companies' use of their merchant agreement and KLM’s announcement of a credit card surcharge of EUR 7.50 being debated.
Posted Jul 21, 2009
Here are some comments by UAL Corp. executives, from their second-quarter financial conference call this afternoon, about distribution and risk ...
Posted Jul 21, 2009
The only thing that surprises me about all this is that anybody is surprised. This has been a nailed-on certainty for the past few years and ties in neatly with other significant costs which many airlines have passed on via their intermediaries. In fact, this is the greatest value agents give airlines at the moment--the ability to transfer cost indirectly. Except, finally, they have gone for a big one that is visibly less stealthy than the others!
Posted Apr 21, 2009
Though they weren't the sort of comments that would raise hackles around the industry--the way American Airlines' Gerard Arpey's and Delta Air Lines' Richard Anderson's did--United Airlines COO John Tague discussed distribution costs today with analysts. "Ultimately, we've got to have capacity low enough to be able to have some commercial courage in attacking distribution costs," he said. "If we are constantly terrorized by excess capacity, the chances of improving the economics around these key cost components in the business are not very high."
Posted Apr 18, 2009
As I ponder American Airlines' stated view of the future of distribution, I can't help but go back to my original analogy of distribution economics. Indulge me Mr. Arpey. And please, tell me where I have missed the mark!
Imagine if you will, a manufacturer of goods - a soap manufacturer will do nicely for this story.
Posted Apr 17, 2009
AMR CEO Gerard Arpey didn't want "to be too dramatic" with his comments about something that may not happen during his "working lifetime." But his comments, published here in The Beat, about "a day--and maybe I am dreaming here--where those folks who are the intermediary between us and our customers have to pay for access to our product rather than us paying them to distribute our product" did not make friends in the travel agent community. Check out the debate at Travel Weekly's site here.
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