April 6, 2010
In late 2009 travel agents and corporate travel managers began informing the American Society of Travel Advisors and Business Travel Coalition that American Airlines was exploring with them in meetings a “direct-connect” strategy that would flip the distribution system economic model from one where the airline funds its unbundling, merchandising and selling activities to a “user-pays” model.
In addition to layering on significant new cofmplexities and costs to corporate managed travel programs, a “user-pays” model would result in high-value unbundled and repackaged content being available - for no channel fee - only through American’s direct-connect pipeline and for the airline to otherwise charge for the merchandizing and sale of its content through alternative channels. In other words, virtually all merchandising and distribution costs would be shifted to TMCs, and ultimately onto the backs of the airline’s best customers. Managed travel efficiencies would be substantially degraded.
Of course, in recent years numerous airlines have attempted to shift costs and other distribution burdens to the customer, but a unified supply chain has repeatedly and successfully pushed back by reminding airlines that it is agencies’ corporate customers who keeps the lights on at airlines’ headquarters and that their managed travel needs must be respected. Unfortunately, we are faced with another one of these challenges to the investments of significant time and money in technologies that enable TMCs and corporate travel departments to shop for, purchase and report on airline products and services efficiently. (See background paper here.)
I invite you to consider joining dozens of TMCs and corporate travel managers in sending a signatory letter (see attached) to all major U.S. airline CEOs encouraging them to work cooperatively and in good faith with GDSs, TMCs and corporate travel managers on the rapid development of industry standards that safeguard all participants’ interests. If after reviewing the letter below you can support this initiative please authorize us to list you and your organization as a signatory to this most important letter. I would appreciate if you could do this by the close of business on Friday, April 9. Together, we can create a more hopeful future for travel procurement.
Rest assured that the CEO letter will not go out with just one or two names on it. We will have at least 20 TMC names and an equal number of corporate travel managers before sending the letter. In addition, the names of the three top online agencies will be on the letter. Finally, ASTA, BTC and the Interactive Travel Services Association will also sign individually. We will have a powerful statement or no statement at all.
Please feel free to contact me with any questions, concerns or ideas.
President and Chair
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