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Expedia refused to say
whether its corporate travel arm, Egencia, will benefit from a new American
Airlines-Expedia deal that provides for Expedia to use technology from a global distribution system to access fares, schedules and "customized travel products and services" via the airline's direct connection. That's not the
only element of the agreement that has the industry's curiosity piqued.
"There are a lot of details
we'd all like to know," noted TRW Consulting's Tom Wilkinson in a blog
post at TheBeat.travel. "This release clearly supports the idea that the
airlines' push to migrate from the traditional method of distributing
information is not limited by technology. Expedia, and at least one global
distribution system, apparently believe it's workable, which suggests strongly
that it should be possible for other airlines and GDSs to implement the new
But the burning questions are
what technology will be used and for what price. In other words, it is assumed
AA would pay less for distribution through its direct connect, but it's not
publicly known by how much or how that's structured. There are concerns in some
business travel circles that corporate travel buyers will bear a cost burden as
distributing economics shift.
The deal, announced April 4,
ended a three-month impasse and returned AA listings to Expedia.com and
Hotels.com. Egencia had not been impacted by the dispute, at least as of late
December. Additional terms of the deal were not disclosed, but some observers
are calling it a victory for AA's oft-criticized Direct Connect program.
Expedia followed Priceline in confirming plans to use the option.
The companies for now are
communicating inventory and fare information via a traditional GDS connection,
but indicated in a press statement that the direct connect eventually would be
accessed using "aggregation technology provided by a GDS."
An AA spokesperson declined
to address questions about which GDS would be used, when the new integration
would be built or whether it would be governed by a new GDS contract.
Previously a critic of
airline direct connections, the Global Business Travel Association praised AA
and Expedia's "cooperation" and suggested "there is always room for innovation. A collaborative approach that does
not fragment the market is the best possible outcome. In the end, with industry
participants working together, we can improve on current technology and
continue to focus on the tenets that are critical to business travel
procurement: transparency, access, and competition."
Reaching A Compromise
UBS analyst Kevin Crissey
wrote that there is not "nearly enough information in the public realm to
assess which company got the better of negotiations." AA and Expedia, he
added, "were both hurt by not working with each other. Our guess is that
AMR got some concessions from Expedia, but not all of what it wanted."
Wolfe Trahan analyst Hunter
Keay wrote that the deal is "likely a longer-term win-win. It appears the
GDS itself will adopt its technology to utilize AMR's ultimate vision of
'direct connect' though in the near term we believe AMR and Expedia will revert
to the prior business model due to the immediacy of AMR re-listing fares on
"We expect a similar
compromise between AMR and Travelport/Orbitz and Sabre/Travelocity in the near
future," Keay added. "Both have shown the desire to work with AMR's
competitors on similar solutions."
Travelport offers an
XML-aggregating solution called Universal API, and Sabre has connected to
airlines such as easyJet using XML. Expedia works with both of those GDS firms
as well as Amadeus.
Expedia in January and Sabre in March announced agreements to process US Airways' optional services, notably
the carrier's Choice Seats option. US Airways president Scott Kirby this week
said it will take at least nine months to execute those
— Jay Boehmer and Jay Campbell contributed to this