Amex Eyes Subsidizing European AIrlines To Use GDSsAmerican Express as part of its TravelBahn program is talking to low-cost airlines in Europe about subsidizing them to sell their inventory through the global distribution systems. It is also looking at subsidizing traditional carriers in distributing Web-only fares through GDSs. American Express already uses the practice in the United States, said Ron DiLeo, the company's head of business travel for Europe, the Middle East and Africa. "We might be willing to subsidize the entry of airlines into GDSs," he said. "It is a model that we have done in the United States that we are looking at for other parts of the world. If you double your inventory in the GDS, you cut in half your cost of distribution."
NWA Tests Charging For Preferential Coach SeatingNorthwest Airlines last week launched an "open-ended" test to see if travelers would pay a premium for reserved aisle and exit row seats. It is testing its Coach Choice concept on 5 percent of its U.S. seat inventory, allowing customers to reserve such favored assignments 24 hours prior to departure for $15 per flight. WorldPerks and SkyTeam Elite members can access the service 36 hours ahead of departure. NWA said the new offering is available only through its Web site or at checkin kiosks. If passengers elect not to pay a premium for such seats, Northwest said, "Coach Choice seats will be free of charge if there are no other remaining seats." "It is not available on certain regional jet aircraft or on international itineraries," the carrier said on its Web site. "Coach Choice seats are being phased in over time so availability may be limited the first two months after launch on March 14." Northwest last week also confirmed it has entered into an agreement to purchase the operating certificate and related assets from recently defunct Independence Air, in hopes of launching a subsidiary. Northwest in a statement said the tentative agreement "is subject to certain conditions which have yet to be met." In a filing with a Delaware bankruptcy court this month, Independence parent company FlyI Inc. said, "Northwest's bid for the acquired assets was the highest and best offer." For $2 million, Northwest would take on Department of Transportation certificates, Federal Aviation Administration certificates, Federal Communications Commission licenses and "assumed contracts," among other assets.
Volkswagen sells Europcar to private investorVolkswagen AG's supervisory board last week approved the sale of its rental car subsidiary Europcar for a net E1.26 billion (US$1.53 billion) to a Paris-based private equity group, Eurazeo. The sale is expected to become legally effective during the first half of this year, pending approval of cartel authorities in France, Germany and Italy. Europcar has a fleet of more than 200,000 vehicles at more than 2,900 offices in more than 145 countries, and Eurazeo plans to grow the business further. Its locations cover Europe, Asia, Africa, the Middle East, the Caribbean, Central America and Mexico. Volkswagen executives said that the sale of Europcar would let them continue to focus on their core business while reducing capital tie-ups. The German automaker's move is similar to Ford Motor Co.'s sale of rental car unit Hertz Corp. last year in a $15 billion deal to a group of investors that included Clayton, Dubilier & Rice, Carlyle Group and Merrill Lynch Global Private Equity
(BTN, Sept. 19, 2005).Star Alliance Moves GDS Alternative Plan ForwardThrough partnerships with Farelogix and Lufthansa Systems, Star Alliance last week announced plans this year to create and launch in Europe "alternative distribution channels," with the goal of cutting global distribution system costs. Its new Alternative Content Access Platform would expand "to a global presence, including markets in Asia-Pacific," Star Alliance said. Officials last week said rollouts in other regions, including North America, remain to be determined. Officials said the platform can interface with current systems or operate as a standalone. SkyTeam last month said it is meeting with technology providers to develop a portal to "achieve better efficiencies through both direct and indirect distribution channels for its nine member airlines." SkyTeam airlines, "with a combined distribution spend of $1.2 billion per year, estimate that up to 15 percent of external distribution expense is generated from unproductive booking activity." Star Alliance said the GDS bill for its 16 member carriers is about $2 billion. On April 1, the number will reach 17 as Swiss International Air Lines officially joins. In the past year, Swiss has been working closely with Star Alliance members, including code share agreements with United Airlines and Lufthansa, which last year merged with Swiss
(BTN, April 18, 2005).