Several US majors plan to hit large corporate travel agencies with a $3.50 per flight segment fee unless flights are booked on specific designated, lower-cost "preferred" channels. Led by American Airlines, four major network carriers plan to charge the $3.50 fee from September, effectively eliminating the commissions they pay for booking tickets.
The fees, which American calls a "source premium", do not apply in American's case to bookings made through the premium programmes of Worldspan and Galileo, the Farelogix Global Distribution System (GDS) products or the G2 Switchworks programme. Continental, Northwest, and United have similar exceptions, including United's for Amadeus bookings.
Neither Delta nor US Airways had adopted such plans as of mid-August.
Some observers are waiting to see if the fees plan sticks or if it would be withdrawn in the context of breakthroughs in long-stalled GDS contract negotiations between American and Sabre and between Delta and Worldspan. But Business Travel Coalition founder Kevin Mitchell says the fees schemes represent "the F Word" - fragmentation, in which corporate managed travel programmes lose the ability to access all fares on all airlines, which in effect takes away much of their leverage.
Mitchell has called for corporate travel managers to align with the GDSs to pressure airlines. Christopher Dane, the managing director of a $2.5 billion consortium called the Travel Management Alliance, laments American's inability to reach a deal with Sabre.
"It would seem that a carrier as established as American would understand how devastating travel content fragmentation is to travel management companies, corporations, and business travellers alike," he says.
In turn, agencies are looking for ways to exercise leverage. Dane says: "If carriers cannot reach agreement with the prevailing GDSs, frankly it will be easier to change air carriers than the GDSs. Corporate travel organisations simply cannot absorb a $3.50 hit."
Indeed, Carlson Wagonlit (CWT) says it is considering a $2 per ticket charge. CWT is the second largest corporate travel management firm in the world and second in US corporate booking volume after American Express.
Meanwhile, three of the four major GDSs are fighting back with optional programmes intended to protect agencies from the airline fees - at a cost. To get full access without the extra airline fees, the agencies have to agree to a drastic decrease in the incentives they earn for bookings. These fees are often the major source of profit.
Amadeus is the only major GDS not offering an opt-in plan but has gone to court to block the airlines' plans. ■
Source: Airline Business
