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September 1, 2001
NEXT IS A HIGH FIVE...
It’s the American way Buddy, free enterprise takes care of everything.
Well...don’t you think “everything” is a little strong? As for “everyone’...something is wrong somewhere.
AMERICAN AIRLINES’ recent announcement of $10 commission for one way flights and $20 for roundtrips regardless of the cost of the tickets, is one more slap in the face of their old friends...you!
Was I shocked? No. Were you? Probably not. Will other airlines follow suit? Is the Pope a Roman Catholic?
Of course many have been waiting for the other shoe to drop ever since the last round of commission cuts came. There are those who believe that commissions will disappear altogether AND only net prices will be available to travel agencies...AND...perhaps not to all travel agencies at that...they’ll be lucky to get a high five!
Why not all?
Rumour has it that volume will play an even larger role in an agency’s ability to sell certain airline tickets.
Most of you know that I’ve been around the travel biz for quite sometime now...so I called members of the ‘enemy’ to get their read on AA’s latest news.
Let me preface this by saying that the thoughts and feelings of the various airline DSMs is, of course, their own viewpoint...goodness knows these guys have no say in the Corporate Airline world...a world in which, apparently only ‘TOP’ airline execs and their Wall Street “bosses” live.
Here are just a few things that I heard.
“Well, first they (the TAs) hated Delta, then United and now it will be American. The truth is travel agents continued to sell both the tickets and packages of airlines that had just lowered commissions...why will this be any different?”
“If travel agents had really fought back early on and not sold ABC Air’s tickets when they could avoid it, things may have turned out differently.”
“Sorry D, but TAs have simply not proven that they can make a difference in market share.”
“D, just see if the support to sell US Airway’s tickets by ASTA materalizes...AND... if it does, will it be enough to save them?”
“Hey, they charge Service Fees so you have to add that to the airline commissions...don’t you think the airlines have taken ‘Service Fees’ into consideration when planning their strategy?”
“Do I think other airlines will follow? Yes!”
Anyway friends, although sympathetic in some ways, I have to tell you that my contacts emphasized that they had to be realistic...and...make their judgements on happenings over the past few years.
I understand that there are many times when travel agents have little or no choice which airline they have to sell to meet their client’s demands &/or wishes...however...if you can offer an option, do so.
Options occur more in the selling of ‘packages’ than the fulfillment of a biz trip to wherever. It was only days ago that I was reading...in a travel trade magazine...the wonders and advantages of American Airlines’ packages. I trust the 10-20 Rule will fly you in a different direction now.
Airlines seem to be in disarray at present and they certainly are not doing better in any phase of their business since weaning themselves away from the ‘old-fashioned’ travel agency distribution system!
On-Line? Hey, if EXPEDIA (child of Microsoft) can’t make money selling airline tickets, what makes airlines think that they can?
They are stranding ‘fly-alone’ children all over the country, cancelling more flights than Canadian geese flights to Canada and assume that the public really likes to spend longer than planned in the airports.
UNITED Airlines & US Airways called off their $4.3 billion merger, MIDWAY Airlines filed for Chapter 11...AND...revenue from domestic air travel fell for the third month in a row...it fell more than 10% in July.
So midst all this turmoil what do the airlines do?
Well, one comes out with a 10-20 rule and they all decide to lower airfares...to make more money. Why? Everyone knows that ‘yield’ is the name of the game and not just market share.
European airlines are taking a somewhat different approach. KLM is seeking to lower seating capacity in their fleet, as is LUFTHANSA. BRITISH AIRWAYS with their ‘4’ class offerings, is improving yield...and bottom line.
There was a great headline on a recent ‘Technology’ article in the press it read, “Gates shows how artificial intelligence is not so smart.”
That’s Gates, as in ‘Bill’, local Seattle boy who made good!
Dare I suggest...nay...even believe, that today’s airlines are being run by ‘Artificial Intelligence’?
David (High-Five) Bond
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