Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
AA-OTA Wars: Next Round  
User currently offlinecommavia From United States of America, joined Apr 2005, 11559 posts, RR: 61
Posted (3 years 7 months 1 week 6 days 7 hours ago) and read 2254 times:

Two interesting developments today in the ongoing "war" between AA and the Online Travel Agencies (OTAs) over A's proposal to transition global airline third-party distribution from a model dominated by Global Distribution Systems (GDSs) like Sabre to a new model built on direct connections between web-based booking and fare aggregation platforms like Orbitz, Expedia, etc. and the airlines' own proprietary systems (bypassing the GDSs).

First, Priceline.com today confirmed what many in the industry have suspected for weeks: it is the only one of the "Big 3" OTAs (the others being Orbitz and Expedia) to sign up for American's proprietary Direct Connect system. Priceline still maintains a link with GDS provider Worldspan for its other fare content, and it is still unclear what punitive reaction - if any - Worldspan may take on Priceline for "stepping out of line" and implicitly allying with - or at least tacitly accepting - AA's argument.

Second, on a conference call today with analysts, Wall Street talking heads discussing the ongoing AA-OTA spat signaled that they believe, ultimately, other major U.S. carriers will be lured into moving more in AA's direction rather than sitting on the sidelines, which is what - to date - other big market players like Delta and United have been doing. Interestingly, it was suggested that AA may be taking advantage here of its ability to devote resources to investments in this Direct Connect platform while Delta and United are tied up devoting IT resources to merger integration. Not sure of the validity of that, but an interesting suggestion.

Never a dull moment ...

5 replies: All unread, jump to last
 
User currently offlineAABB777 From United States of America, joined Oct 2007, 542 posts, RR: 2
Reply 1, posted (3 years 7 months 1 week 5 days 22 hours ago) and read 1926 times:
Support Airliners.net - become a First Class Member!

I've also noticed AA banner ads across the internet stating that AA tickets are not available on Orbitz and Travelocity and that AA's lowest fares can be found at AA.com. They definitely purchased a large ad network and are getting the word out to consumers. Smart move.

User currently offlinegoldenstate From United States of America, joined Feb 2010, 571 posts, RR: 4
Reply 2, posted (3 years 7 months 1 week 5 days 22 hours ago) and read 1917 times:
Support Airliners.net - become a First Class Member!

Quoting commavia (Thread starter):
other major U.S. carriers will be lured into moving more in AA's direction rather than sitting on the sidelines, which is what - to date - other big market players like Delta and United have been doing.

I haven't been following United's moves in this area, but I don't think it's exactly true that Delta is sitting on the sidelines. DL has terminated agreements with several OTAs and eliminated the ability of remaining OTAs to bundle lower tier one way Delta fares with one way fares of other airlines.

DL certainly has not been as aggressive in its approach as AA has, but the changes made so far are with the same ultimate goal in mind--drive more traffic to delta.com and thus, the lowest cost distribution channel. Additionally, as DL continues to move upmarket in unit revenue and yield performance, it has new leverage to walk away from distribution channels that primarily feed high volume, very low yield leisure traffic.

AA is really out ahead of the rest of the industry on this one and I would speculate that it's at least partially a result of a "leave no stone unturned" strategy to try to offset their structural cost disadvantage as much as possible. I agree that everyone else will follow suit and shift the booking model to drive as much traffic as possible through their own websites and reservations systems--but not necessarily on the same timeline and not necessarily using the same tactics.

I think the big wild card is what impact Google-ITA--assuming it happens--will have on this evolving scenario.


User currently offlinePlaneAdmirer From United States of America, joined Jul 2009, 562 posts, RR: 0
Reply 3, posted (3 years 7 months 1 week 5 days 21 hours ago) and read 1847 times:

Quoting commavia (Thread starter):
Second, on a conference call today with analysts, Wall Street talking heads discussing the ongoing AA-OTA spat signaled that they believe, ultimately, other major U.S. carriers will be lured into moving more in AA's direction rather than sitting on the sidelines, which is what - to date - other big market players like Delta and United have been doing.

When do the contracts that the other legacies have with the OTA's expire? That maybe what is holding them back from entering the fight. For the OTA's this seems like a life or death fight so it's not a surprise that they are fighting it as such. But because of AA, both DL & UA will now have better leverage when their contracts expire.


User currently offlineWA707atMSP From United States of America, joined Oct 2006, 2221 posts, RR: 8
Reply 4, posted (3 years 7 months 1 week 5 days 20 hours ago) and read 1760 times:

Quoting PlaneAdmirer (Reply 3):
Quoting commavia (Thread starter):
Second, on a conference call today with analysts, Wall Street talking heads discussing the ongoing AA-OTA spat signaled that they believe, ultimately, other major U.S. carriers will be lured into moving more in AA's direction rather than sitting on the sidelines, which is what - to date - other big market players like Delta and United have been doing.

When do the contracts that the other legacies have with the OTA's expire? That maybe what is holding them back from entering the fight. For the OTA's this seems like a life or death fight so it's not a surprise that they are fighting it as such. But because of AA, both DL & UA will now have better leverage when their contracts expire.

The Wall Street Journal said earlier this month that AA's contracts with the OTAs expired before DL's and UA's did, so AA was forced to address the OTA issues before the other two airlines.

When DL's and UA's contracts expire, it will be very interesting to see what happens!



Seaholm Maples are #1!
User currently offlinecommavia From United States of America, joined Apr 2005, 11559 posts, RR: 61
Reply 5, posted (3 years 7 months 1 week 5 days 11 hours ago) and read 1532 times:

Quoting WA707atMSP (Reply 4):
When DL's and UA's contracts expire, it will be very interesting to see what happens!

Agreed.

It is my personal belief that if either one of them - let alone both of them - were to follow what AA is doing, that would be check mate for the GDSs. They would have no choice but to cave and accept the airlines' direct connection channels.


Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
The Next Round Of Skybus Destinations? posted Thu Oct 4 2007 18:04:05 by FWAERJ
Would AA Be The Next EAL? 2008 Contracts! posted Thu Aug 23 2007 00:28:58 by PRAirbus
Midwest's Next Round With AirTran - 7/16/2007 posted Mon Jul 16 2007 00:47:41 by KarlB737
China: Next Round posted Thu Jan 11 2007 07:31:22 by Centrair
Next Round Of Mergers, Your WAG? posted Wed Nov 15 2006 17:36:02 by AA787823
Next Round: Air Canada Vs GDSs Re: Tango Fares posted Tue May 16 2006 07:42:11 by ETStar
AA To Go Year-round On MIA-MVD posted Sun Apr 17 2005 20:54:25 by MAH4546
AA To Go Year-round On BOS-MSY posted Wed Apr 13 2005 06:33:28 by MAH4546
AA To Introduce Next Generation Bose Headsets posted Sat Mar 27 2004 01:34:40 by KKMolokai
European Consolidation: Next Round posted Tue Nov 25 2003 14:27:13 by Hscav01
Midwest's Next Round With AirTran - 7/16/2007 posted Mon Jul 16 2007 00:47:41 by KarlB737
China: Next Round posted Thu Jan 11 2007 07:31:22 by Centrair
Next Round Of Mergers, Your WAG? posted Wed Nov 15 2006 17:36:02 by AA787823
Next Round: Air Canada Vs GDSs Re: Tango Fares posted Tue May 16 2006 07:42:11 by ETStar
AA To Go Year-round On MIA-MVD posted Sun Apr 17 2005 20:54:25 by MAH4546
AA To Go Year-round On BOS-MSY posted Wed Apr 13 2005 06:33:28 by MAH4546
AA To Introduce Next Generation Bose Headsets posted Sat Mar 27 2004 01:34:40 by KKMolokai
European Consolidation: Next Round posted Tue Nov 25 2003 14:27:13 by Hscav01