The first major challenge in the US to the current system for selling and distributing airline tickets has gained antitrust clearance, but it still faces a shaky future.
The US Department of Justice has given the green light to a plan by Business Travel Contractors Corporation (BTTC) to negotiate mileage-based domestic fares net of travel agent commissions, overrides, and most other inducements, and to share the savings with participating airlines and member clients.
With 20 businesses, accounting for $1 billion in annual air travel, already signed up, BTTC hopes to double its membership by the end of the year. In return for an airline's acceptance of the fare proposals, members would agree to book 90 per cent of their travel with those airlines.
But the proposed collective faces a host of obstacles. To avoid 'undue collective power' the Justice Department restricted BTTC to selling no more than 35 per cent of all seats on any city pair. It has also been forced to backtrack on its plan to propose fares without frequent flyer credits after discovering that its members and airlines wanted to retain the benefits of FFPs.
The promised $500 million in savings from the commission cap imposed on travel agents earlier this year looms as BTTC's biggest hurdle as airlines become more sceptical about the advantages of dealing with a collective.
Both Continental and Northwest Airlines have opted out and BTTC concedes it needs at least one of the big three US carriers to make the programme viable. Until United, American, and Delta each declare their intentions, the issue remains in play.
Source: Airline Business
