Responding To Commentary On AA Direct Connect

Travel Weekly yesterday published comments from travel industry lawyer Mark Pestronk on American Airlines' Direct Connect program. I like Mark. He has helped out over the years, and much of what he said in that Travel Weekly piece seems about right to me. But not all of it. I felt compelled to respond. [more]

Pestronk: "The insurmountable problem for AA is that the GDS vendors have already made peace with United, Delta and US Airways."

Hardly. Just ask US Airways what it thinks of Sabre these days. Also, as far as we know, Continental's pre-existing deal with Sabre--signed well before the United merger--expires this year (we have not received confirmation that anything has changed, but if United has in fact folded in Continental's GDS deals, someone please let us know!). And yes, Delta's deals with Sabre and Travelport run until 2013, but we already know that Delta wants to take on similar strategies to that of AA. When it starts selling international premium class tickets only through direct channels, for example, won't GDS operators argue that Delta has violated any full-content agreement that is in place? United, meanwhile, started selling ancillary stuff like priority security and boarding only via direct channels well before the AA fireworks began. If you ask the GDS operators, they may say they are entitled to sell such stuff in their channels. But shortly after those options were announced in 2009, United Airlines director of distribution Kathleen Bennett, speaking at The Beat Live said, "In the ideal state, we would like everyone to come to, book what they want, purchase what they want, and keep it all in house." Though much has changed in the past two years, I can't imagine that particular sentiment has changed much at United headquarters.

Pestronk: "It is hardly likely Southwest would start charging travel agencies a big fee for GDS bookings."

I don't know what constitutes "big," but Travelport agencies already have to pay a fee to book SWA tickets through the GDS. If that arrangement is working for Southwest (last time we asked specifically, admittedly two years ago already, Southwest CEO Gary Kelly sounded coy, and more recently, in November 2010, neither Travelport nor Southwest seemed willing to discuss details), one could guess they may want to pursue a similar arrangement with Sabre.

Pestronk: "No major U.S. carrier is going to match [AA in pushing a direct connect]."

I am not sure about that. Though none has stuck its neck out the way AA has, several major carriers have discussed a desire to boost ancillary revenue and also cut distribution costs. Delta, in particular, in telling the U.S. Department of Transportation that it would like to personalize fares and products, cited technology available via the Farelogix option.

Pestronk: "Apparently, it has never occurred to AA to incentivize agencies to use Direct Connect."

I am pretty sure that is just plain wrong. AA execs have said time and again that they'll have such discussions--individually--with agencies. Whether their incentives are attractive to agencies is another matter, as is whether they have presented such incentives to few, some, many or all agency partners. But to say it never occurred to AA? C'mon now.