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Airlines, ticket firms battle over booking system
Question of the Day
BEIJING (AP) - A guaranteed aisle seat, special meals, access to the VIP lounge _ and tickets to a musical?
Airlines want to raise new revenues by selling such extras alongside tickets and are locked in a battle with three companies that dominate the bookings industry over the introduction of a new global reservation system.
Carriers complain the current system is a costly 1970s throwback without Internet-era convenience. They want to cut out the global ticket booking systems _ Sabre Holdings, Travelport Ltd. and Amadeus IT Group _ that some reject as obsolete middlemen who add costs. A former chief of the global aviation industry group called them “leeches.”
The booking companies retort that they have invested to upgrade services and are working hard to meet carriers’ needs.
The battle highlights how crucial fees from add-ons are to a struggling industry that is being squeezed by high fuel costs and a global economic slowdown. Airline profits are forecast at $3 billion this year, a wafer thin margin of just 0.5 percent on projected revenues of $631 billion, according to the International Air Transport Association.
“They will either adapt to be able to support our product or we will find a different way of selling it,” he said.
Fyfe cited his airline’s “Economy Skycouch,” which allows passengers to pay for three adjacent seats and turn them into a sleeping platform. He said Air New Zealand can sell the service only through its own website. It’s “very difficult” to sell through travel agents using the traditional systems, he said.
But for travelers, a new reservation system might not be all good news even as airlines promise they’ll be able to offer their customers greater choice.
While airlines can make more money from selling extras, it also means more travelers are getting squeezed as they’re forced to pay for things that used to come with the ticket such as seat assignments. U.S. airlines, for example, are setting aside more economy seats requiring an extra fee because they come with more legroom or are closer to the front.
The premium seats can be booked through an airline’s own website, but are more difficult to book through travel sites using distributor information, such as Expedia, Orbitz and Travelocity. A new global reservation system could eliminate those problems for airlines.
IATA, the industry group, says it wants to find a solution that benefits everyone but tension over tickets and how to split up revenues has led to legal battles in the United States.
An antitrust lawsuit by American Airlines, a unit of AMR Corp., against Sabre Holdings and Travelport, and online travel site Orbitz is due to go to trial this fall in Texas. American accused the companies of monopolizing distribution of flight information to travel agencies and trying to control ticket distribution.
The extra revenue from add-ons such as seat assignments and priority check-in could total $30-$60 billion over the next five years, said Yanik Hoyles, director of business development for IATA, citing industry estimates.
The bookings industry has invested some $500 million over the past three to four years to develop technology to support the services sought by airlines, but travel agencies have been slow to adopt it due in part to the cost of switching, said Gillian Gibson, executive vice president of Travelport.
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