Tuesday, April 21, 2009

Delta Joins American in Pay-To-Play Distribution Drumbeat

Delta Air Lines CEO Richard Anderson, waxing poetic about the future of travel distribution, today echoed earlier comments by American Airlines CEO Gerard Arpey that global distribution systems (GDSs) and travel agencies would one day pay for flight inventory instead of airlines paying distributors and intermediaries.

A Travel Weekly story by Michael Fabey quotes Anderson as telling analysts during Delta's first-quarter financial results conference call: "Over time, the industry will evolve. People will pay us for our content."

As I wrote in the Dennis Schaal Blog several days ago, Arpey of American Airlines articulated a similar plan, one that might be dubbed, "The American Dream."

Well, revolutionizing the distribution formula "over time," as Anderson put it and Arpey apparently also believes, can take quite awhile.

Anderson's comments came the same day as Travelport GDS announced that it reached a content agreement with Air France KLM that runs through March 2013.

And, in November Sabre announced that it had extended its current agreement with United Airlines through 2013.

Unless Delta and American want GDSs and travel agencies to preference United's flights instead of Delta and American itineraries, something else is going on here.

Major airlines undoubtedly will push hard for lower distribution costs when the next round of negotiations over content agreements gets under way in a couple of years.

And, they probably will succeed in lowering their costs even more than they did in the previous round.

But, making the GDSs and travel agents pay for the right to distribute -- this isn't on the agenda in the real world.

However, airlines' posturing as a precursor to negotiations always is on the agenda and certainly can't hurt the carriers' negotiating stances.

With these comments in the last few days, Delta and American are laying the groundwork.

Expect additional airline CEOs to chime-in likewise.

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