American Airlines this week informed travel management professionals of a plan to charge $3.50 for each segment booked after Sept. 1 through non-preferred distribution channels, including those provided by Amadeus and Sabre.
Bookings made under traditional arrangements with Apollo/Galileo and Worldspan also would generate the fee, although AA exempted new programs that those GDS providers are developing.
In a press statement, Worldspan indicated it would reveal details of two such optional programs late next week. Galileo said it was not surprised by the AA program, and that it "has decided to implement a new optional program" offering "a full spectrum of airline content and services that enable enhanced profitability and growth." The company said it would reveal additional details in the coming days.
These programs theoretically reduce the per-segment incentive payments that GDS firms pay their system subscribers, which sources say are typically between $1 and $2--though they can be higher for the largest distributors. Some travel management company executives have said that lower GDS incentives would force them to consider alternative booking solutions or higher client transaction fees.
AA has not come terms on an agreement with Sabre Travel Network to extend or replace the so-called DCA addendum signed in 2003, which returned then-Web fares to the Sabre GDS in exchange for a discount off segment fees that AA paid to Sabre. Thus, there is no word regarding AA's participation in Sabre's recently announced Efficient Access Solution, which cuts incentives by as much as 80 cents per segment.
According to a Sabre Holdings spokesperson, "We will continue to be patient and will not sign agreements that don't balance the needs of [customers]." AA last week signed a "full content" agreement with Cendant's Galileo--a subsidiary of the soon-to-be sold Travelport division. The airline announced its Worldspan agreement in March.
In a posting to its Web site, AA indicated it may "withhold content" from non-preferred channels that cost it more than "competitive" channels, particularly if the former do not "display American content on neutral terms as compared with other airlines." Exempt from the new fee are "GDS products" from G2 SwitchWorks and Farelogix, AA said.
The carrier's new fee program applies to bookings "originated in or via the United States" by U.S.-based ARC-accredited agencies and corporations with ARC's CTD designation. Such entities would be indicating their agreement with the program simply by booking AA after Sept. 1. AA also said such distributors would be invoiced monthly, with penalties for non-payment ranging from interest assessment to the termination of their ARC appointment.
In September 2004, Northwest Airlines backed offa roughly similar GDS fee scheme, though its rate then was $3.75 for a one-way and $7.50 for a round-trip ticket. AA's per-segment fee could be more or less, depending on the number of flights booked in a single itinerary.
It was American's decision to not match the Northwest fee that ultimately doomed the program, although intense pressure from various companies and organizations also played a role.
Other airlines can be expected to reveal their own new fee schemes in the short term.