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 technology."
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 Expedia.
"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 Januaryand Sabre in Marchannounced 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 plans.
~ Jay Boehmer and Jay Campbell contributed to this report
The article originally was published in Business Travel News.