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.

Tuesday's Travel InsideOut

Months after pitched allegations surfaced that it manipulated reviews on TripAdvisor's Cruise Critic by wooing frequent cruisers, Royal Caribbean has chucked its Royal Champions program in favor of blogs, Facebook and Twitter.

Travel Weekly: Royal Caribbean disbands Royal Champions: Royal Caribbean International ended its Royal Champions program, saying that it has supplanted the program with new social networking outlets. Read more

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When Google bobs, the travel industry weaves. The betting here is that Google is not about to launch another Expedia any time soon, but Steve Hafner of Kayak believes that Google is poised to build out its content to cache-in on hotel pricing.

Dennis Schaal Blog: Kayak's Hafner Awaits Google Hotels: Kayak CEO Steve Hafner thinks "it's only a question of time" before Google begins displaying hotel pricing, a move that could change the online-travel ecosystem. Read more

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Online travel companies, from Travelzoo and Expedia to Priceline and Orbitz Worldwide, are the darlings of the stock market...this week. In down economic times, goes the thinking, these babies can find travelers deals and get some revenue and profits going.

Seeking Alpha: Online Travel Companies: Good Places to Book Some Profits: Online travel booking companies have been taking off lately especially in the wake of Travelzoo (TZOO) and Expedia (EXPE) both posting solid revenues last week. Wall Street analysts yesterday decided to hop aboard the online travel express by upgrading both Orbitz Worldwide (OWW) and Priceline.com (PCLN) probably so they don’t look like idiots when those companies beat their upcoming earnings estimates. Read more

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Expedia’s affiliate network replaced metasearch company travelsupermarket.com in powering travel offerings for The Guardian. The travel pages on the newspaper’s website attract a few eyeballs….around 2 million or, conventionally speaking, some 1 million unique visitors. Score one for the OTCs over the metas.

Travolution: Expedia to expand white label scheme as meta sites pull out: Expedia Affiliate Network president Henrik Kjellberg says there is “no technical limit” to how many websites the business can work with, and that cannibalization of customers from the core Expedia Inc. brands is not an issue. Read more

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HRG is downsizing with a twist. Through its Options for Change program, the travel management company is giving employees a measure of customization in the concessions and cutbacks they accept. No reports yet about whether the staff is, well, hog-wild about the idea.

e-tid.com: HRG seeks concessions from staff: Hogg Robinson Group chief executive David Radcliffe has agreed a 5% pay cut as part of a move to protect the business in the current economic climate. The rest of the HRG board will take the same pay cut, which is effective from 1 September. Read more

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Hawaiian Airlines arrived with the top on-time performance in June while American Airlines, JetBlue and regional carrier Comair were unfashionably late, according to the Dept. of Transportation. Overall,on-time performance improved from a year ago, but slid compared with May.

Dow Jones Newswires: US Airlines' On-Time Performance Improves In June From Year Ago: U.S. airlines' on-time and baggage-handling performance improved from a year earlier in June but worsened from May, the U.S. Department of Transportation said Tuesday.

Air traffic has been easing in recent months as carriers continue to cut back capacity amid slack demand. 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.

Monday's Travel InsideOut

American Airlines is becoming so hip. If you are tired of Facebook applications like online Scrabble or Mafia wars, users of the social-networking site can now conduct flight searches using American’s beta fare finder.

Chicago Tribune: Search for airfares on Facebook? Yes, you can: American Airlines has added a fare-finding feature to its Travel Bag application within Facebook. The Travel Bag application lets Facebook fans share travel experiences, photos, reviews and comments with friends and other Travel Bag users. The new feature – American is holding a contest to name it – lets customers search for the lowest fares on American without leaving Facebook, and allows them to share their searches with friends in their network. Read more

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Google already may be the most comprehensive “hotel website,” and now Kayak CEO Steve Hafner believes Bing-struck Google may introduce hotel pricing as its entry-point to an enhanced travel offering.

Dennis Schaal Blog: Kayak's Hafner Awaits Google Hotels: Kayak CEO Steve Hafner thinks "it's only a question of time" before Google begins displaying hotel pricing, a move that could change the online-travel ecosystem. Read more

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There’s nothing like a few new ancillary services and fees to increase cash levels and cheer airline execs’ summer blues.

Travel Weekly: For airlines, ancillary fees help ease summertime blues: It’s summertime, and airlines are trying, as they always do, to build up their cash reserves to survive the winter. This year, though, they’re also trying to survive a recession.

As the airlines cut capacity, their revenue streams have dwindled, so they are relying more on ancillary fees to make up the balance. Airline executives also said the economic stress and recovery uncertainty were pushing them to consider consolidation or some other type of union to survive over the long term. Read more

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Through an acquisition in Europe, Concur is said to have improved its services on the Continent.

Business Travel News: Concur Buys European Expense Competitor Etap-On-Line: Expense management technology supplier Concur today announced it has acquired European competitor Etap-On-Line, doubling its European operations. Read more

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If you are looking for the movers and shakers in hotel blogdom, this list would be a great place to start.

UpTake Travel Industry Blog: Top 15 Hotel Blogs & Bloggers: Like every other sector, the hotel industry too has its own set of A-list bloggers who lead the conversation. These 15 hotel blogs and their bloggers listed here offer their readers the best hospitality experience, so to speak. Read more

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.

Thursday's Travel InsideOut

Oh, those doubters. Both the street and TheStreet.com express doubts about the Yahoo-Microsoft partnership, pointing to the distraction factor and the lack of “boatloads” of dough up-front payment for Yahoo. As the process unfolds, will travel companies place their confidence in Yahoo/Bing advertising?

The Street.com: Against the Grain: Buy Google: Marek Fuchs tells traders not to punish Google reflexively. View It

The Wall Street Journal: For Bartz, Some Potential Pitfalls Arise: Yahoo Inc. confirmed it will replace its search and search-advertising technology with offerings from Microsoft Corp., a long-awaited deal that could help the companies more effectively compete with Google Inc. Read more

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Now that Microsoft and Yahoo are cozying up to take on Google, what will that mean for Yahoo partner Travelocity and Microsoft subsidiary Bing Travel? Will it lead to a clash of online travel agency versus metasearch engine?

Dennis Schaal Blog: Bing-Yahoo Alliance Could Be Long-Term Issue for Travelocity: The ink barely is dry on the Yahoo-Microsoft search partnership in which Yahoo will use Bing technology as the default search engine on Yahoo websites and will lead both companies' sales efforts on CPC advertising. Read more

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Was it overkill when American Airlines filed suit against a former middle manager who took a similar job at Delta? After an adverse opinion, American moved to dismiss its own suit.

Travel Weekly: American moves to dismiss lawsuit against former employee: American filed a court motion to dismiss a lawsuit against a former corporate manager who left the airline to work for Delta in a similar position. Read more

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In fallout from the swine flu mess, Mexico City is offering travelers an unusual perk -– medical coverage.

Los Angeles Times: Mexico City offers travel insurance for tourists: Officials in Mexico City hope to lure skittish tourists with unusual bait: complimentary health insurance. Under a new program, tourists who stay in the city’s hotels are eligible for free coverage for emergency medical care, hospital stays, prescription drugs and ambulance services. Read more

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IATA says the outline for airlines appears "bleak" as cargo loads fell even faster than passenger numbers in June.

Yahoo Finance/Reuters: UPDATE 1-Airlines carry less cargo, fewer people in June-IATA: GENEVA, July 30 (Reuters) - Airlines carried 16.5 percent less cargo and 7.2 percent fewer people in June than the same month a year ago, with no sign yet of the global recession lifting, an industry body said on Thursday. Read more

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Major carrier Continental Airlines, playing catch-up with its low cost carrier rivals, is channeling some new mojo by installing satellite TV in seatbacks.

USA Today: Continental installing live satellite TV on planes: Venturing where only low-cost carriers have gone before, Continental (CAL) has become the first big legacy airline to offer satellite TV, a move that could push its peers to follow suit at a time when competition is the fiercest it's been in years. Read more

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.

Monday's Travel InsideOut

Twitter, the social media site with the nebulous business model, apparently is getting set to make good on its pledge to start charging for premium services, including business accounts. In a move widely interpreted as a step in that direction, every Twitter page now has a Business link on the bottom, leading to Twitter 101, a business guide to Twitter. The business guide includes case studies, including the following one tracing the evolution of JetBlue’s use of Twitter.

Twitter: @JetBlue: It's Fun, But Does it Scale?: When JetBlue joined Twitter in the spring of 2007, it was one of the first major brands to do so. Today, the company has nearly a million of followers, and its account is often cited as an example of smart corporate twittering. But the company started out on Twitter with modest goals. It wanted to help customers. Read more

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Getaroom.com’s unpublished hotel discounts over the phone sound like a great idea so I dialed for dollars, so to speak, and put its value proposition to the test.

Dennis Schaal Blog: Getaroom.com's Phone Rates and Manner Fall Flat: I briefly and unscientifically tested the getaroom.com call center experience and wasn't impressed with its unpublished rates over the phone and its customer-service style.

Hotwire offered much steeper discounts for properties with the same star ratings and city areas in two instances, while getaroom.com's phone rate bested Hotwire's opaque rate by a few bucks in a third test. Read more

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With their Star Alliance collaboration given the green light, United and Continental plan to get very cozy in their technology relationship.

Travel Weekly: Continental, United to seek shared technology platform: Continental and United plan to forge a common information technology system as part of their new relationship as Star Alliance partners, Continental CEO Larry Kellner said. Read more

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Yahoo and Microsoft reportedly are moving closer to a search deal, an alliance that could positively impact Bing Travel if the partnership makes Bing a stronger competitor against Google.

Advertising Age: Do You Bing? Yahooers May Soon Search With Microsoft: NEW YORK (AdAge.com) -- Yahoo is close to making Microsoft's Bing its search provider. The deal, which would make Microsoft a more credible competitor to Google, is likely to be announced this week, and seems likely to be based on a revenue share, not on a big fat check upfront, as some at Yahoo had hoped. Read more

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Times are tough for the airline industry. But is it prudent to gouge your customers a bit more during the height of a recession by increasing checked bag fees?

Yahoo Finance/Reuters: AMR raises bag check fees for domestic flights: CHICAGO (Reuters) - AMR Corp (NYSE:AMR - News), parent of American Airlines, said on Friday it would raise by $5 the fee it charges to check a first or second bag on domestic flights. Read more

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Global distribution systems have their developer agreements, enabling third parties to build applications to their systems. But Farelogix, in making its Hawkeye point of sale application available for public download, did something completely different -- it released the application’s source code. Here's an update.

Dennis Schaal Blog: Open Source Experiment in Travel Industry a Modest Success: I was reading about open source Mozilla's challenges now that Google has entered the browser market with Google Chrome, and that reminded me that it was time to get an update about the travel industry's own open-source experiment. Read more

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In some quarters, swine flu concerns have subsided, but the problem promises still to be a thorn in the travel industry’s side. Britain recorded “a huge rise” in cases and started screening cruise passengers.

Times Online: Swine flu screening at UK airports amid fear that NHS could be overwhelmed: NHS intensive care services could be overwhelmed by a huge rise in swine flu cases, researchers have warned, as Britain’s port authorities started screening incoming passengers for the first time. 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.

Friday's Travel InsideOut

It's probably not that effective for its marketing reputation that Orbitz lost two top marketing executives in the past two weeks.

AdAge: Orbitz Loses Its Two Top Marketing Execs: CHICAGO (AdAge.com) -- The top two marketing executives at Orbitz have left the company only weeks after it named a new creative agency of record, an Orbitz spokeswoman confirmed. Read more

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The guff that TripAdvisor has received about fake reviews hasn’t dissuaded a tourism promotional body in the U.K. from talking to TripAdvisor about a new review initiative.

Travolution: TripAdvisor and VisitEngland in talks over user review strategy: VisitEngland has held discussions with TripAdvisor as part of its strategy to review the current accommodation grading scheme. Read more

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In an earlier proceeding, a judge found that $184.5 million was "warranted" in an Expedia breach of contract case. If a proposed settlement is half of that amount, then we’re still talking substantial dollars in Washington State.

Dennis Schaal Blog: Expedia Reaches Proposed Settlement in Washington State Consumer Class-Action: Expedia Inc. reached a proposed settlement with a certified class of consumers in Washington State related to hotel taxes and service fees.

The amount of the proposed settlement was not disclosed, but in late May, Superior Court Judge Monica Benton found that $184.5 million in damages, allegedly covering "services fees" collected from Feb. 18, 2003, to Dec. 11, 2006, "based on Expedia's breach of contract is warranted." Read more

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Are leisure destinations like Las Vegas and Orlando on some sort of governmental-meetings blacklist? What happens in Washington stays in …. Well, this sort of policy would be ridiculous.

UpTake Travel Industry Blog: Congress calls for Investigation of Federal Travel Blacklist: US House Representatives from Florida and Nevada have asked for an investigation to find out whether a travel blacklist bans government agencies from holding meetings in certain leisure-oriented and holiday resort cities. Read more

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With traffic down amidst a capacity cut, JetBlue notched a second quarter profit and expects to remain flying in the black for the rest of the year.

ATW Daily News: JetBlue finds profitable formula, expects full-year surplus: JetBlue Airways yesterday reported a $20 million second-quarter profit, reversed from a $9 million loss in the year-ago period, and said it expects to remain in the black in both the third and fourth quarters. Read more

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The FAA proposed mandatory repairs to some Boeing 777 aircraft, many of which are operated by American Airlines.

Wall Street Journal: FAA Seeks Mandatory Engine Fixes on Certain Boeing 777 Jets: U.S. aviation regulators, prompted by the 2008 crash landing of a British Airways Plc jetliner near London, proposed mandatory safety fixes Thursday intended to prevent ice accumulation inside the fuel systems of certain Boeing 777 aircraft. Such problems can lead to dangerous reductions in engine thrust. 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.

Thursday's Travel InsideOut

Orbitz -- she of pressurized travel transactions -- hopped onto the media/advertising bandwagon in a super-charged way with the relaunch of Trip.com. For those of you who remember the ill-fated and nebulous Trip.com brand under former owner Cendant, we can say that at last Trip.com has a raison d’etre.

Dennis Schaal Blog: Mega, Not Meta, Move: Orbitz Enters Search Business: I wrote several weeks ago that Orbitz would attempt to maximize all of those lookers perusing its shop, take its media business a leap forward and get into the search business, possibly through a merger of some sort with Kayak.

Well, Orbitz, has entered the search business on its own, for now, by relaunching Trip.com as a search business. This fairly huge development was brought to my attention by Tom Botts of the Hudson Crossing Travel Industry Insight blog. Read more

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There are more warnings that this could be the Winter of our discontent, with airline bankruptcy filings looming.

Wall Street Journal: Loss at AMR Narrows: American Airlines parent AMR Corp. on Wednesday reported a $390 million second-quarter loss as collapsing travel demand continued to erase gains from lower fuel costs.

The results are the latest evidence that the airline industry is flying through one of its toughest summers ever. The other four large U.S. hub-and-spoke carriers -- Delta Air Lines Inc., UAL Corp.'s United Airlines, Continental Airlines Inc. and US Airways Group Inc. -- also are expected to announce second-quarter losses when they report next week. Read more

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United is not alone, of course, in feeling the pinch from and lack of control over credit card fees. Even federal agencies haven’t been able to negotiate lower fees from the banking kingmakers of plastic. (Note: the story below inaccurately says that United “last month” began passing along its fees to some travel agencies. Actually, the initiative is slated to begin July 20.)

New York Times: Card Fees Pit Retailers Against Banks: The most profitable item at Patricia Orzano’s 7-Eleven store on Long Island is coffee. Slurpees are a distant second.

But as more customers use plastic to pay for even small purchases like these, she has watched a growing share of her revenue vanish in a stream of credit and debit card fees that retailers say raise the price of goods and sharply lift the cost of doing business. Read more

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AirTran claims it’s the first carrier to install Wi-Fi throughout its fleet, and it offers tips about onboard-surfing protocol. I can’t wait until airlines allow passengers to use their cellphones during flights, and I’m looking forward to those yakety-yak-yak do’s and don’ts, too.

Yapta: AirTran the First to Establish "Internetiquette": AirTran Airways announced on Tuesday that it’s the first airline to equip its entire fleet (136 aircraft) with Wi-Fi. The cost for access is $9.95 for flights under three hours, $12.95 for flights longer than that and $7.95 for Blackberry/iPhone access. Read more

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Kayak, Airfarewatchdog.com, Hotwire and Yapta good, says Consumer Reports. Expedia and Orbitz price guarantees, not so much.

Consumer Reports: Travel Price Guarantees Come Up Short: Whether it's for a hotel, a cruise, or the fare to get you there, many travel sites offer a "best price guarantee," and will "refund you the difference" to match any lower price you can find. Some sites, such as Delta, will also throw in a travel voucher for up to $100. Read more

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Arthur Frommer looks askance at cruising. After all, it’s not “travel,” he sniffs.

TravelMole: Cruising? That's not traveling:
Don’t get him wrong. Arthur Frommer likes cruises but “travel, it’s not.” 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.

Legacy Carrier American Airlines Gets Downright Inspirational -- Who Knew?

In recent weeks, this blog has fielded some pretty great discussions on innovation -- or lack thereof -- in the planning, or the inspirational phase, of the travel-booking continuum.

In a recent post , "Travel's Best and Brightest on 'Legacy OTAs' and State of Online Travel 2009," and several related posts, the following execs and analysts, among others, commented on inspiration and other issues in the travel-planning lifecycle: Kevin Fliess, Henry Harteveldt, Gregg Brockway, Joe Buhler, Lorraine Sileo, Valyn Perini, Elliott Ng, Robert K. Cole, Rick Seaney, Tom Lewis Katie Deines, Douglas Quinby, Jeff DeKorte, Josh Steinitz ,and Sarah Kennedy.

So, it took me by surprise when an American Airlines AAdvantage Program e-mail, with this video link, featuring travel to Madrid, popped into my in-box.

An image of Madrid, with the video link embedded, was prominently displayed on the top of the e-mail, running across its entire width. The image highlighted "New DFW to Madrid" service, and "Destination Madrid. Tapas, Flamenco, The Prado -- come see what makes Spain's capital city such an intriguing destination."

I have received plenty of AAdvantage promotional e-mails before and many of them have touted various destinations, but I don't recall such effective use of video in them.

When you follow the link to the American Airlines AAdvantage Milestones page, you can access additional Madrid videos on nightlife and off-the-beaten path locales, as well as videos about American Airlines' new One-Way Flex Awards in English and Spanish.

The Milestones page has social-media features, too, including a link to view and share your photos, and some forums, which look a little old-school for my tastes.

I am not a great fan of American Airlines' service and would much rather fly Continental or JetBlue out of my home airport, Newark.

But, I have to give American Airlines credit for going beyond an all-consuming transaction focus, and getting out there and trying to inspire some travel for AAdvantage members, who may have some miles to burn, but may not know up-front what destination they'd like to visit.

Speaking of 'Legacy OTAs,' it's a great sign for the travel industry that a legacy airline puts some energy into the inspiration phase of travel planning.

You can even say it is stimulating.

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.

EU Probes Coziness of Star Alliance, Oneworld Airlines

Continental plans to exit the SkyTeam Alliance "promptly" and join the Star Alliance, according to a Continental email I received, when the airline's last flights are on the ground Oct. 24.

But, now comes word that the European Commission launched two investigations of Air Canada, Continental, Lufthansa and United regarding their agreements in the Star Alliance, and the EC also is probing American Airlines, British Airways and Iberia over similar issues in Oneworld.

The Reuters story quoted EU spokesman Jonathan Todd as saying: “When you have cooperation between airlines in such areas as pricing, schedules and capacity, we have to make sure that the consumer actually benefits."

Reports indicated that the level of cooperation/coordination envisioned in some of these agreements exceeds what has been the norm in airline alliances.

Continental's email to OnePass members stated: "In June 2008, Continental announced plans for extensive commercial cooperation with United Airlines and Star Alliance, linking our networks and services worldwide to deliver new benefits to our customers. On April 7, 2009, the U.S. Department of Transportation tentatively approved the application for Continental to join the existing antitrust immunized alliance between United and eight other Star Alliance member carriers on international routes."

It doesn't appear that the EC probes would endanger Continental's planned "smooth as possible" transition from SkyTeam to the Star Alliance.

But, it remains to be seen -- and the EC investigations reinforce the urgency of the issue -- whether this alleged degree of "extensive commercial cooperation" among the airlines in question actually will benefit travelers or give the airlines more power to reduce competition.

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.

Airlines, OTAs in in Metasearch Gridlock

Now, the real work begins.
There is so much sameness to metasearch these days, now that Expedia and Travelocity removed, at least temporarily, their consumer booking fees on flights.
For example, when I compared Delta fares on JFK-Dallas flights for the end of March, I found the following uniformity in a side-by-side grid display of fare offerings using the TripAdvisor flight-search tool: Delta, Expedia and Travelocity all were selling the Delta flight for $369.
Why click on one over the other?
Until recently, Delta, or most other carriers, probably would have offered the cheaper fare because Travelocity and Expedia tacked on their booking fees.
So, with the booking fees on hold, how are airlines -- and the OTAs, for that matter -- going to distinguish themselves in this, ahem, metasearch gridlock?
It is an important question for the airlines because in the past few years metasearch has evolved in the carriers' planning from an experiment into a mandatory part of their distribution strategies. They need to be where the customers are -- and about 18 percent of U.S. online-travel bookers use metasearch to plan and shop, according to Forrester Research.
In a well-publicized battle with Kayak last year, American Airlines figured out one way to stand out. Kayak and others agreed to display American Airline's fares alone, without any side-by-side comparisons to Orbitz or anyone else.
I believe it is likely that other airlines will put renewed pressure on the metasearch companies to do likewise now that the playing field has been leveled.
Will that be enough?
Billy Sanez, an American spokesman, tells me there already is differentiation beyond the solitary displays. Once consumers click on an AA fare in a metasearch engine, they usually get deep-linked into AA.com, which offers a potpouri of ways to search -- by price, schedules, flights with available seats, and flights regardless of availabilties etc. You even can download a complete American or Oneworld timetable. "The job's being done," Sanez says, meaning AA is converting an attractive number of these metasearch-delivered shoppers.
But, is AA and are other airlines getting this message out to consumers in a strong enough way? If cost-conscious consumers scour a metasearch grid and see the same American or Delta fares at the same price on the airline sites, Expedia and Travelocity, will the travelers be aware enough to know that they should book on the airline link because there is all kinds of beneficial razmataz going on over there?
How can the airlines further differentiate themselves in the metasearch gridlock beyond the solitaray displays and get their message out in more clearly defined ways?
Did someone just say "Twitter?"