A feud between American Airlines and several companies that sell its tickets shows new determination by airlines to lower costs and could spell new business challenges for online travel agents.
American is steering those third-party sellers toward its in-house technology that the airline says will save it money and allow customers to shop for flights based on more factors than just fares. This is needed, the airline says, because carriers now charge separately for so many travel-related perks and items such as bag checks, meals and priority seating.
But a shift to new technology operated by American and its peers could disrupt the lucrative business model now favored by travel agencies like Orbitz Worldwide and Expedia Inc and the companies that provide the data they publish.
AMR is leading the charge to cut distribution costs because several of its key distribution contracts expire in 2011. Other airlines may follow suit and force more changes to the business model, said Andrew Watterson, an airline consultant at Oliver Wyman, a management consulting company.
“This dust-up will change the economic landscape of this relationship,” Watterson said.
“There are sophisticated actors trying to change, improve and benefit from how we search. We can’t even imagine what our experience is going to be like in five years,” he said. “But we do know over the next year or two the economic, behind-the-scenes, who-gets-paid-what will change dramatically.”
Delta Air Lines announced last month that it removed its flight listings from smaller online sites CheapOAir.com, OneTravel.com, and Bookit.com. Last week, the Atlanta based carrier said it has notified Airfare.com, CheapAir.com, Vegas.com, AirGorilla.com and Globester.com that it would end participation on its websites in the United States and Canada Jan. 7.
“Delta continues to evaluate its online distributors, and intends to be more selective in its use of online travel sites in the future,” spokesman Trebor Banstetter said in a statement.