Ticket Dispute Could Make Flight Comparisons Harder
RENEE MONTAGNE, host:
As you might've heard, the friction between some popular travel websites and the airline industry has caused American Airlines to fly off on its own. The result is that someone using Orbitz or Expedia to search for a flight from, say, Chicago to Dallas won't find a single fare on those sites from American.
And this dispute in the airline industry could make it harder in the future to make side-by-side fare and flight comparisons. NPR's Brett Neely explains what it's all about.
BRETT NEELY: This is a story about trying to cut out the middleman. At the center of this dispute is a company called Sabre. Sabre takes fares and flight information from airlines and provides that information to another set of middlemen - travel agents and websites. Airlines pay fees to Sabre, and other so-called global distribution system companies, for every ticket booked through those systems.
Henry Harteveldt is an airline analyst with Forrester Research.
Mr. HENRY HARTEVELDT (Principal Analyst, Travel Industry, Forrester Research): The business model American is unhappy with is one that it created back in the 1970s.
NEELY: That's right, American Airlines created Sabre to computerize travel bookings and is now fighting with its offspring. Harteveldt says the business model made sense in the '70s, when computers were big and expensive and travel agents ruled the industry. But those days have passed and today Sabre is independent of American.
It also now handles things like car rentals, hotel reservations and cruise bookings. But American says Sabre's fees for booking air travel are too high.
The airline industry looks with corporate jealousy at Southwest Airlines, which rarely puts its fares on other websites.
Even though consumers spend billions on airline tickets every year, margins are very thin in the business. Any money American saves on those ticketing fees flows straight to its bottom-line.
In addition, analyst Henry Harteveldt says airlines increasingly make money by up-selling things that used to be free.
Mr. HARTEVELDT: American would like a travel agent to be able to offer that customer maybe a bundle that includes priority boarding, access to a priority screening line, and maybe a seat in the front of the economy cabin.
NEELY: And American Airlines executives think travelers would buy more of those bundles if travel agents and websites connected directly to American's computers, instead of going through Sabre.
But Orbitz and Expedia don't want their users to have that direct link. Chris Kroeger is a senior vice president at Sabre, and says those bundles American wants to offer undermine the apples-to-apples price comparison that the Sabre system offers.
Mr. CHRIS KROEGER (Senior Vice President, Sabre Travel Network): Travelers want and demand to see a full price and they want to be able to easily compare options.
NEELY: While American says it's happy to show prices, it also wants to show potential passengers what else it has to offer, like fancy upgrades - for an additional fee, of course.
American Airlines executive Cory Garner says the airline is sick of being viewed as nothing more than a flying bus.
Mr. CORY GARNER (Director of Distribution Strategy, American Airlines): Our view is that the airline product is not a commodity and hasn't been a commodity. But the way the displays are sorted and oriented today, it portrays a picture as if all airlines are exactly the same.
NEELY: So what does this dispute mean for travelers? Analyst Henry Harteveldt thinks the reservation system will certainly get more fragmented, as airlines keep trying to cut out the middlemen and get passengers to book through their own websites.
Mr. HARTEVELDT: The way this could affect us as consumers may mean more searching for flights, where you'd have to go to different websites to be able compare the flights and prices between airlines, and then going to different websites to buy them.
NEELY: As expected, the airline industry is watching this fight closely because the winner, Sabre or American, will probably set the terms for much of the rest of the industry.
Brett Neely, NPR News.
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