Amadeus Common IT Platform May Have Been Too Common for American Airlines

On the same day, Aug. 26, that Amadeus IT Group President and CEO David Jones was introducing former President Bill Clinton at the high-profile NBTA conference in San Diego, Amadeus was forced to issue a statement reinforcing its commitment "to airline IT in the North American marketplace..."

The awkward juxtaposition occurred because American Airlines chose that day to announce that HP had signed a letter of intent to develop a new passenger service system, Jetstream, for American, replacing the Sabre host system.

For months, Sabre knew it had been out of the running to get the new contract, and the competition had been narrowed down to HP and Amadeus.

The timing of the HP-AA announcement has people scratching their heads.

Was there a pointed message there for Amadeus? Seemingly so.

While the impetus for American's decision undoubtedly was complex and based on numerous factors, one reason making the rounds is that the Amadeus common IT platform, adopted by Star Alliance carriers and used by some of American's partners in Oneworld, including BA and Iberia, takes a sort of community-governance approach.

In other words, airlines using the platform, which is based on the Amadeus Altea Suite, have a say in establishing development priorities, even voting on major platform decisions.

And, American, according to a source, bristled at the idea of being somewhat of a commoner in this regard within the Amadeus common IT platform set-up.

One little matter starkly absent in Amadeus' statement on its ongoing commitment to the North American market was mention of its 2005 deal to replace Travelport's Apollo system as the host for United Airlines.

Forrester Research analyst Henry Harteveldt said United decided some time ago to go slow on the transition to Amadeus out of cost concerns and on-again, off-again banter about merging with Continental.

Harteveldt said United's move to Amadeus may never take place and the absence of an established carrier client in North America hurt Amadeus' wooing of American.

Harteveldt wrote an excellent piece in the Forrester Blog, detailing the context of American's move to HP.

As we know from United's stilted transition to Amadeus, replacing an airline reservations system is a gargantuan, problematic task, and so far HP merely has signed a letter of intent to get the ball rolling with American.

Another example of host-system interruptus was Air Canada's recent decision to put the brakes on its host-system development contract with ITA Software.

Meanwhile, Sabre, born out of American Airlines and still counting the carrier as among its largest customers, can take solace that any transition to HP will be protracted.

But, as any kid will tell you, it still really hurts to be shunned by a parent.

Friday's Travel InsideOut

Hold onto your hats because Microsoft's take in the Yahoo deal may be less than meets the eye. And, anyway, as travel advertisers mull the value proposition, does anyone know how to spell d-i-s-t-r-a-c-t-i-o-n?

Advertising Age: Sorry, Microsoft Will Not 'Own 30% of the Search Market:' Now that the Yahoo deal is finally done, many observers seem to think Microsoft's new search business will be just like Google's -- only a bit smaller.

Specifically, they think that Google has 65% of the market and Microsoft will have 30%, so Microsoft's search business will basically be half the size of Google's. Read more

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TripAdvisor, like everyone else, realizes that organic is the trend in almost every supermarket that you see, but does it translate into a tasty growth strategy for TripAdvisor Flights?

Dennis Schaal Blog: TripAdvisor Answers Back, Infers Fly.com Who?: Brian Saltzburg, a former Travelocity guy who is general manager of new initiatives at TripAdvisor, took great umbrage at my post yesterday, Fly.com Toe-to-To With TripAdvisor Flights. Read more

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Orbitz Worldwide’s ebookers re-upped with Amadeus through the end of 2012 for global distribution system (GDS) services, complete with the usual array of incentive agreements and shortfall penalties.

Securities and Exchange Commission Item 1.01. Entry Into A Material Definitive Agreement: On July 28, 2009, ebookers Limited, a wholly-owned, indirect subsidiary of Orbitz Worldwide, Inc. (the “Company”), and Amadeus IT Group S.A. (“Amadeus”) entered into an amendment (the “Amendment”) to the Global Access Agreement, dated January 1, 2004 (the “Agreement”), extending the term of the Agreement to December 31, 2012. Under the Agreement, as amended, Amadeus provides certain of the Company’s ebookers websites with access to travel supplier content, including air, hotel and car reservation information. The Company receives incentive payments based on the number of reservation segments it processes annually through Amadeus. Read more

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So, with its bid for Frontier Airlines, Southwest Airlines not only would cross a new frontier with a bunch of additional routes, but an acquisition could also be a big headache for United Airlines.

USA Today: United, beware! Southwest's bid for Frontier spells trouble, analysts say: United, beware. That's what several industry observers are saying after yesterday's surprise announcement that Southwest would make a bid to acquire Frontier Airlines. If its bid is successful, Southwest's acquisition of Frontier would eliminate a pesky competitor and give it access to new domestic and international routes Southwest does not currently fly. Still, "the biggest impact of Southwest’s potential bid to buy bankrupt Frontier Airlines may fall on United Airlines," writes Scott McCartney, "The Middle Seat" columnist at The Wall Street Journal. Read more

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Segmentation and re-packaging are the names of the game, as Rentalo.com evidently believes with its launch of three lodging websites with varied twists.

Arthur Frommer Online: Rentalo.com Creates 3 New Websites to Deal With 3 Kinds of Accommodations: Time was when international travelers made their lodgings choices from among either hotels or guesthouses -- nothing more. That process of selection has apparently become far more complex, and the big accommodations website, Rentalo.com (www.rentalo.com), has this week split its internet services into three different categories of housing. Though they have retained an overall website of all their products for those who can understand it, they have created three different subsidiary websites, each one containing several detailed groupings of accommodations that fall under each of the three headings. So if you're still able to follow me, here are the three new websites for you to consult, apparently an improvement on the former single site. Read more

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Travel InsideOut is a Dennis Schaal Blog daily feature. Get a thorough-going look at the day's travel industry top and tangentially interesting stories. Feel free to comment on them below.

Travel InsideOut is Copyright (c) 2009 by Dennis Schaal. All rights reserved.

Expedia Not So Happy About United's Credit-Card Plan

Major online travel agencies have been missing-in-action about their take on United Airlines' plan to make some travel agencies foot the airline's credit card fees, beginning July 20.

Expedia recently broke the silence, if you read between the lines.

Expedia Inc. spokeswoman Katie Deines, noting that Expedia.com had not been included in the United plan yet, said: "Expedia has not received a letter on this topic from United. We won't speculate on how hypothetical actions taken by our supply partners may or may not impact Expedia's business, but we are unsupportive of actions by travel suppliers that increase costs to consumers. We are closely monitoring the developments and have no further comment at this time."

So, Expedia is "unsupportive of actions by travel suppliers that increase costs to consumers."

This means that if United forced Expedia.com to pay United's credit card fees when Expedia.com customers book a United flight, then Expedia.com likely would pass on the cost to travelers.

The development occurs just as the dust has settled on the move by Expedia.com and its competitors to eliminate consumer booking fees on flights, and could force them to reinstitute the booking fees, implement new fees of some sort or eat the costs.

PhoCusWright financial analyst Jake Fuller has estimated that Expedia and Orbitz earn about $10 per ticket in GDS incentives and commissions, while Priceline gets about $2 on retail flights. Paying the airlines’ credit card fees would cost the online agencies about $6 to $8 per ticket, effectively wiping out the bulk of their GDS incentives and commissions.

The other OTAs have been reluctant to step into the line of fire on the sensitive topic.

In late June, Travelocity stated: "We are engaged with United to understand their planned actions regarding payment processes, but aside from that we don’t have anything else to say on the matter at this time. Thanks for understanding."

And, Orbitz Worldwide and Priceline both declined to comment on the issue.

Likewise, Amadeus has been the lone global distribution system (GDS) vendor taking a stance.

Amadeus North America spokeswoman Debbie Iannaci told me: "Airlines need to be cautious about adopting policies which could potentially have a detrimental affect on travel demand in the current environment. And we have always believed that the marketplace ultimately determines the success of any model. This action could potentially shift significant costs and risk to travel agencies at a time when they can least afford the burden. That cost could also inevitably be passed on to the traveler. Those additional costs and inefficiencies could have a detrimental effect on demand at a time when the industry needs travelers traveling."

Behind the scenes, I'm sure the OTAs and GDSs have plenty to say to United on the credit card issue.

It's good to see Expedia and Amadeus, at least, having the guts to be public about it.

The Overhead-Bin Wars

The Overhead-Bin Wars are coming as airlines intend to squeeze revenue out of this storage area for passengers' carry-on bags.

In The Middle Seat Terminal blog, Matt Phillips outlines how US Airways recently altered its boarding procedures to give priority boarding to travelers who purchased Choice Seats.

US Airways says that these passengers, who purchased aisle and window seats in the first few rows of coach, will get to board in Zone 2. Of course, Dividend Miles Preferred customers get first dibs on free access to Choice Seats and exit-rows seats.

So, this is what the new boarding roll-call looks like at US Airways, and aren't most airlines' boarding procedures beginning to look like a caste system?

The order, according to Phillips, is first-class passengers, pre-boarding for passengers with kiddies or who need assistance, elite-status passengers, travelers with US Airways-branded credit cards, and then Choice Seat buyers.

Oh, yeah, I almost forgot. The last group of passengers to board are the rabble -- you and me -- who just booked an ordinary coach seat.

Of course, with US Airways charging $15 for a first-checked bag and $25 for the second, the boarding priority that gives star treatment to what I'll refer to as the new elite, means they will get first crack at storing their luggage, laptops, strollers and jackets in the overhead bins.

And, that leaves Joe and Susie Traveler battling the new elite for any leftover space in overhead bins by the time their seat is finally called for boarding.

Oh, it's going to get ugly. There will be plenty of scrunched up jackets, crushed souvenir packages, and carry-on luggage bound for baggage check-in because of the overhead-bin squeeze.

And, with airlines, Amadeus and ITA Software testing optional services feeds , one of the things on some airlines' agenda is to charge for such premier access to overhead bins.

You know, pay $10 and reserve your overhead bin. That's coming, for sure.

If there is a revenue opportunity out there, count on the airlines to try to exploit it.

Airline Optional Services: TripAdvisor, Kayak, Farecast, FareCompare, OTAs to Get the Data

Before the end of 2009, metasearch engines powered by ITA Software, and online travel agencies (OTAs) and airline websites pumped up by Amadeus and Travelport, likely will get the optional services data necessary to transform the flight-shopping process.

As I reported in Travel Weekly today, more than a dozen airlines, ITA Software and Amadeus are testing airline-fed data through ATPCO for services like checked bags, Internet access, premium seats, lounge access, onboard gin and tonics, and even portable oxygen. Travelport GDS, too, says it will get the feeds by the end of the year.

This bit of travel news is huge.

Here's why:

ITA Software is part of the metasearch guts behind Farecast, TripAdvisor, Kayak and FareCompare, and it also powers Hotwire and a host of airline websites, including Continental's and United's. These metasearch sites use ITA to get fare, schedule and availability data so they won't have to scrape airline websites and get into new legal scrapes.

And, Amadeus powers some of Kayak's and Expedia's global sites, as well as ebookers, Opodo and LastMinute.com. Travelport GDS, including Worldspan and Apollo, provides booking engines for Orbitz, CheapTickets, Priceline and many others.

With standards for optional services in place and ATPCO finished writing the code and transmitting the data to ITA Software and the GDSs by the end of the year, the way travel agents and consumers search for flights will be transformed.

A bit of the complexity in flight shopping will get simplified.

So, if enough airlines go ahead and agree to file their optional services information and the metasearch sites and OTAs take advantage of this data bonanza, consumers would be able to shop for flights by preferences.

Travelers would be able to search for flights, for instance, that offer pay-as-you-go exit-row seats, lounge access and Internet service and compare these to flights that offer similar services.

Metasearch engines that don't offer these apples-to-apples comparisons in their search-results grids, could use the data to enhance transparency in their fee-translators, such as TripAdvisor's Fees Estimator.

And, the OTAs could come up with similar solutions, although access to the same standardized data from the airlines doesn't mean that all the displays will be identical.

Access to the data is just an enabler. There is plenty of room for innovation, and at least one prominent metasearch site is working on its unique solution as of this writing.

OK, shopping for flights still will be complex and a pain in the butt, but access to the optional-services data at least will be a major step forward in navigating the fog of helter-skelter service offerings.

Next on the docket, the airlines and ATPCO will be working on filing data on branded fares, or fare families, but that is stage 2 in the process, and probably won't get implemented until 2010.

The American Dream: AA to Try to Turn Distribution Costs Into Distribution Revenue

In AMR Corp.'s first quarter earnings call yesterday, CEO Gerard Arpey spoke of his "long-term vision" to make travel agencies and global distribution systems (GDSs) pay for the privilege of distributing American Airlines' flights rather than the reverse.

And, even short of that goal, the move could be, well, priceless.

Arpey was quoted as saying: "Tom [CFO Thomas Horton] can jump in here, but I think the same approach that we’ve taken here in the U.S. certainly lends itself to the international distribution of our tickets where we’re still paying much higher levels of commission and booking fees, etc., and I think a lot that hinges on the use of technology and the competitive environment because a lot of those commissions or overrides or booking fees are paid in order to stimulate traffic and if we can, as an industry, do a better job keeping the supply of seats in line with the demand, I think that will help us on those fronts."

Warming to the topic, Arpey spoke of his dream: "So I think there are significant opportunities around the world to make the kind of progress that we’ve made here in the U.S. and not to be too dramatic but I can see a day, and maybe I’m dreaming here, where those folks who are the intermediary between us and our customer, have to pay for access to our product rather than us paying them to distribute our product. So that would be my long-term vision."

Any airline, GDS or travel agency executive in the U.S. recalls the distribution dramatics of 2005 and 2006, when the airlines threatened surcharges and radically cut the distribution fees they paid to GDSs and the incentives that Sabre, Galileo, Worldspan and Amadeus passed on to travel agencies.

Well, Arpey is signalling two things:

1) American Airlines, and others no doubt, are set and already are trying to export to the international arena the slash- and-burn distribution tactics that they successfully employed in the U.S. several years ago.

2) In the U.S., the next round of GDS-airlines booking-fee negotiations in a couple of years may make the prior face-off look like amateur night.

Airlines, of course, have every right to trim their distribution costs to reasonable levels. Before GDS deregulation, the GDSs used their clout and virtual monopoly power to tack on excessive fees to airlines that had little bearing to actual costs.

But now, as Arpey's comments show, the airlines are poised to try to force intermediaries to distribute flights to airline customers for free -- or, taking it to dream-like proportions -- to make online travel agencies, traditional agencies and GDSs pay for access to flights, which, of course, the airlines control.

Between Sabre, with its still-sizable distribution grip, terminating its relationship with Farelogix, and airlines poised to wield their hold over flight inventory to pummel intermediaries, it almost -- but not quite -- makes one wax nostalgiac about the days when these sectors were regulated.

The disruption that the travel industry faced in 2005 and 2006 would be considered a tremor compared with the earthquake that would occur if the airlines succeed in forcing through payless distribution in the next round of contract talks.

These days, the brouhaha may not sell a lot of newspapers, but it would drive a lot of traffic to travel news websites.

Meanwhile, another interesting point about American's first quarter results, is that although AMR's revenue declined 15 percent to $4.8 billion, those checked bag fees and other ancillary services indeed are paying off.

American's revenue from change fees, on-board meals and checked bag fees jumped 6.9 percent to $558 million in the quarter.

In the American (Airlines) Dream, those feels increasingly will be in the picture.