Are the Travel dotComs on their way out?

By | January 9, 2011
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It was over ten years ago that online ticket purchases were in their infancy. We remember ordering tickets from these new online travel agents and having the tickets mailed to us, even a few years into the e-ticket revolution, when it was still advised that paper was safer.

Now, it is starting to look as if the age of online travel agents may come to an end. Maybe that is overly pessimistic, but airlines are looking to cut out the high cost associated with selling tickets through a Global Distribution System(GDS). There are problems with these systems. One of the largest is cost for the airline, but from the consumer point of view, the features/functions that airline web sites offer are not usually duplicated on third-party sites. This includes fee collection. Third party sites are not set up for the myriad of prepaid bag fees, seating fees, etc that airlines want to offer.

GDS systems are trying to catch up, but this is a hard road for them, as you have to find a methodology that all airlines will use to distribute information on their fee platform.

American Airlines removed its listings from Orbitz and Expedia, Delta withdrew its fares from CheapoAir, OneTravel, and Bookit. Sabre has announced it will terminate with American this summer. That is somewhat ironic considering SABRE was spun off from American Airlines.

Specifically with American, this fight has come to a head because of American’s Direct Connect system, where American would offer direct XML links into its reservations system. American wants its partners to connect directly to American and not through a third-party. GDSes cut into the airline’s profit with fixed listing costs. It is why many lower fares are direct sale only.

Tnooz reports that few are using the Direct Connect system, or have expressed interest in using it. The ones who might be interested are reluctant while the GDSes they rely on are in conflict over the issue. They fear retaliation.

The closest thing there is to an open standard is Open AXIS, a group formed to promote an XML messaging structure. XML is the eXtensible Markup Language, which is similar to the markup used to create websites and other rich information systems. There would be a cost issue to implementing new standards, but if every airline uses a different standard instead of a industry-wide specifications, costs would skyrocket.

Some airlines, such as Southwest, have opted to only peripherally list in the GDS systems, and are not sold through these travel dotcoms. They seem to do pretty well for themselves without. And American thinks it can do without as well.

For the typical leisure traveller, it may make little difference. But this will have an effect on package deals, as well as the industry’s bread and butter…business travel. Business travel services generally book using traditional GDS tools, as opposed to direct website booking. American may be chasing away a profitable segment of its customer base.

That said, it is hard to say where we recommend you go in the absence of these big sites. We often recommend metasearch engines. We realized that we hadn’t done an extensive review of them in a while, and stayed with the familiar Kayak. We intend to rectify that going forward and looking at more. We do recommend full research, and emphasize direct booking in the end over third-parties. This is mostly to eliminate the middle man. In a problem, having a middle man is either a wonderful or a horrible thing. A competent travel agent can be hard to find.

We see a world quickly approaching where more travel sites work on commission/referrals than actual sales. Where tour companies and hotels pay the airline for placement over the other way round. This already happens in some areas. But if Google succeeds in getting into the airline business with its purchase of ITA software, it could be that closely protected airline distribution data will become as easy to access as anything else Google has. And that could mean a serious blow to the global distribution system.

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