That optional airline services for the most part can be neither booked nor tracked using established managed-travel channels is "unacceptable" and "undermining corporate travel programs," according to a June report by the Institute of Travel & Meetings. As for solutions, the British and Irish trade association advocated "the GDS route" as the best option "for now."
ITM estimated that "non-base fare items"--including ancillary fees and charges for fuel, payment and distribution--in the short and medium term will raise total travel costs by 10.4 percent, according to the report. "Businesses are losing sight of their travel spend and the inability of travelers to complete their travel arrangements through the managed process is encouraging them to switch to unmanaged channels," ITM warned. "All this is happening at a time when compliance with managed travel channels is more critical than ever for corporate strategies because of the need not only to manage cost but also risk, most particularly traveler security. The situation must be improved."
The report described "the GDS route" as including ATPCo's Optional Services fare filing standards and the IATA Electronic Miscellaneous Document for point-of-sale issuance and settlement. ITM "encourages all stakeholders in the supply chain to get behind" this model. Although ITM "has no objection in principle to distribution which does not involve a GDS, either for base fares or ancillary items," the group indicated that "despite several requests," American Airlines "has yet to show ITM officials its Direct Connect process working in practice ... so to us the airline's case is not proven."
The group suggested that corporate buyers "keep talking" about this issue, negotiate ancillary spending when it can be measured, contract for "mandatory filing of ancillary fees through existing distribution processes," adjust travel policies to help "manage demand and payment of ancillary fees," prepare for distribution fees since "ultimately, more of the cost of distribution is coming buyers' way," engage with travel management companies and "pressure preferred suppliers for change."
Other comments included a recognition "that the supply chain, especially the airlines, have concerns about the cost of GDS distribution, and that some crucial negotiations between airlines and GDSs are in play," but also an argument that corporate buyers "should not be held to ransom by this financial confrontation. ... ITM is open to change but not if it will involve workarounds that may lead to more cost and potentially more errors through increased manual processing."
In the report, ITM contrasted American Airlines and Sabre commentary on the former's Direct Connect program. "AA claims all the following criticisms of its model are untrue: TMCs will no longer be able to compare prices between airlines; AA will no longer distribute through GDSs; aggregation other than through a GDS will be unreliable and inefficient; every API created by a supplier creates significant extra work for aggregators and TMCs; AA will not use EMDs."
According to ITM's citations of Sabre, "Only a handful of North American airlines, most specifically AA, are challenging the GDS-based ancillary fees solution; it would be impossible to integrate conventional fare filings from other airlines with self-assembled packages from what Sabre describes as AA's 'walled garden environment' without significant investment; AA's Direct Connect strategy adds needless complexity and would require far greater investment by TMCs, self-booking tools and other third-party technology providers; this is not a technical issue--GDSs can offer the solutions AA is looking for."
Written in May, the report indicated Sabre "had built a significant proportion of its capability to offer a shopping, pricing, booking and fulfillment facility, and expected to make this full solution available from July 2011."
The article originally was published in The Beat.