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In lieu of resolutions with Air France and KLM, Travelport GDS plans to absorb the €4.50 per segment fare increase the airlines are prepared to levy on Travelport global distribution system users in France and the Netherlands. Set for 1 June in France and mid-July in Holland, the increases are Air France KLM's answer to what its distribution executives described as a 20 percent price premium at Travelport, compared with Amadeus and Sabre, for a "full content" participation deal that requires fare and inventory parity with the airlines' Web sites.
Air France KLM executives also said the airlines might withhold content, but Travelport chief commercial officer Armin Meier said there had been "no indication" of that "so far. That would be illogical to do." He said Travelport would "completely" compensate its agency users for the airlines' increase for as long as there is a "nonagreement." Amadeus recently stopped absorbing a surcharge created by Lufthansa in Austria and Germany.
"Frankly, agencies can't afford that in these times of crisis," said Meier. "The easiest way for them would be to roll this over to their customers, but customers don't like that. We firmly believe in the value of the distribution network that both GDSs and travel agencies continue to provide to airlines, and we also believe these actions proposed by Air France and KLM are against our agencies, unreasonable and anticompetitive. We feel it necessary, therefore, to take measures to protect our business and the businesses of our agencies.
"At the end of the negotiations, there has to be a solution and I don't know what it will be," Meier added. "Will it be a more value-based pricing model? I don't really know. We will find a solution, but I don't know what it will look like or how long it will take to get there."
Air France KLM last month announced its planned increase, or "cost-recovery program," for fares booked through Travelport, following the expiration of Air France's discount agreement with the GDS provider. The KLM agreement is due this summer. "It's not in our habit to make this noise for a small stake," Air France KLM vice president for corporate and distribution Henri Hourcade told The Beatlast week. "It creates issues with travel agencies and customers, etc. [But] we have several tens of millions of euros at stake, just because of a difference of price for the same product, more or less. We have concluded long-term partnerships with Sabre and Amadeus, and Travelport [offers] a higher cost for us with the same conditions and commitments."
It's "pessimistic," said Hourcade, but "the positions are not getting closer."
According to Travelport's Meier, "We're still in discussions with Air France KLM, and we believe we have not yet exhausted the possibilities. Our view is, we have to continue and work hard, and I'm hoping we would find an agreement." Still, he added, "There's no guarantee for it."
"We get lots of support from the trade, our online and offline partners, and Amadeus customers who don't want Amadeus to be the only GDS in the French market," Meier continued. "The trade expects competition and the carriers expect competition, so we believe Air France is not doing a good thing for itself mid- and long-term."
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