Last week we wrote about American Airlines' escalating battle with Online Travel Agencies (OTAs) and its potential effect on internet travel booking. American has truly waded into a full-scale war now that former offshoot Sabre, a prominent GDS (Global Distribution System) has obscured American's listings in its sytem and increased the fees American pays to Sabre for exposure to travel agents. American has sued Sabre and earned a temporary injunction, travel agents are beginning to fear the worst, and the industry as a whole has its eye squarely on the building tension between American and, as it turns out, the entire travel-booking industry.
American's push has been all about control. The company would like to control the entire booking experience from start to finish to provide their passengers with a "customized travel experience" by funneling all web traffic to their own website. Ultimately, though, the chief concern for American is cost; with increasing demands for profits after three years in recession, American is looking to save the cost of the percentage of each ticket that OTAs generate and even perhaps save or reduce the costs paid to the GDS systems to be listed in their databases.
Delta, meanwhile, is moving in the same direction, although they have done so with little fanfare. Delta has slid in under the radar with a few subtle moves that, while they garnered some news coverage, basically registered as a small footnote to the nasty struggle American now finds itself in. Starting with the smaller OTAs, the airline has quietly been cutting ties with various online booking sites for the last six months in the hope of shifting market share to their own website. They have, however, maintained their relationship with the larger OTAs (Expedia, Orbitz, Travelocity, Priceline), and these less noticeable moves have the advantage of being less noticeable to the consumer. Delta compares its new policies to Apple selling iPhones and iPads through Best Buy, an apt comparison as it emphasizes the "big box store" mentality that allows them to work with a smaller group of distributors to control the customer experience while at the same time achieving maximum exposure.
Will Delta's recent moves result in the same sort of complete abandonment of OTAs that it seems American is heading towards? Maybe, but it certainly will not be with the same sort of acrimony and gamesmanship that has erupted in the battle over American's fares. Before we know what Delta's next move may be, we will probably see one or more of the remaining major carriers enter the fray as well, and the tactics they use will tell us more about the direction as a whole.
The public battle playing out over American's tactics means that travelers are keenly aware of American's actions; regardless of how the airline tries to spin their move towards independence from the OTAs, it will no doubt be perceived by the majority of consumers as a calculated move to reduce their own fees and boost their profit that will result in a more complicated and less transparent process to comparison shop for airfares. Taking away the convenience of booking through OTAs and regular travel agents (through the GDS), means consumers are destined to waste time searching for the best rate or not including American in their search at all. The point for American is to drive travelers to their brand website, wow them with their "customized travel experience," and increase brand loyalty; if consumers never visit their website, though, the plan backfires.
Delta's plan looks brilliant by comparison. They are making cuts slowly and in smaller places, enabling them to: a) carefully track production, b) slowly funnel more bookings to their website and the larger OTAs rather than doing so en masse, c) stay under the radar and not alarm consumers, and d) watch the American fracas from afar and gauge the success or failure of those efforts while contemplating their next move.
While American failed to anticipate the level of pushback if they went after the big fish first, Delta has used the news feed from American to take a different route to the same result: smart, stealthy, and, ultimately, effective. Delta is poised for big changes, but they have shown the ability to make them in measured and thoughtful steps. While we don't believe this bodes well for travelers, the landscape of air travel is likely to be forever altered over the next year.
Scott
Are you a frequent flier on either airline or a bargain fare shopper? What do you think of these developments? Let us know at hgimayfaire@gmail.com!
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