American Airlines this week announced three additional travel agency participants in its EveryFare program, bringing the announced total to eight. A carrier spokesman said those eight "represent just a fraction of the total," but he would not disclose the overall number for competitive reasons.
"The aggressive sales effort continues. Signed EveryFare contracts are coming in at an increasing rate," the spokesman added. "We're encouraged by the growing acceptance."
"With the recent changes in corporate and group/incentive discount programs, EveryFare will allow us to compete more effectively than ever," said Tyler Peak, president of Silicon Valley-based Peak Travel Group.
Two Dallas/Fort Worth-based agencies--Gulliver's Travel and Executive Travel Service Inc., which has 14 employees--also joined the program this week.
EveryFare
(BTN, Oct. 7) provides AA's Web fares in return for shifting the burden of global distribution booking fees from American to the travel agency. American pays agencies an allowance credit--currently about $4 per flight coupon--and travel agents then pay to American an amount equal to their own GDS fees. The allowance gradually declines during the term of the contract.
According to Steve Weiner, COO of Chicago-area EveryFare participant Bannockburn Travel, "We felt we had been losing up to 8 percent of transactions, even from loyal clients, to the Web. We expect this program to recapture a large percentage of that leakage. After three days, we're seeing about 2 percent of transactions are on these fares, and the average savings per ticket appears to be $80 to $100, compared with the GDS.
"We also analyzed the potential new business opportunities because others are not using the EveryFare program," Weiner added. "There are things in EveryFare that are not just Web fares. For example, you get 5 percent of full coach fares in addition to corporate discounts. Also there are 'EveryFare specials' that change from time to time."
Agency skeptics remain, with the most common beef addressing the economics.
"Yes, if you look at the whole five-year program, you can get nervous because there are cost elements to deal with down the road, but that's also assuming you don't get any business because of it," Weiner said. "We see the opportunities more than offsetting what the program would cost us, even after the first 24 months when the cost is minimal." Weiner said other agencies and airlines have contacted him with questions, including one carrier that he said is "viewing this as a competitive disadvantage at the point of sale."
Nevertheless, no other carrier has yet formalized a program similar to AA's EveryFare. US Airways this fall took a different approach to the challenges of rising distribution costs and channel fragmentation. The carrier agreed to new three-year programs with both Sabre and Galileo that provide those GDSs with virtually all fares in exchange for frozen, discounted per-segment fees.
"The GDS is a better way to get at the cost than from the people who benefit mostly from the fee," US Airways senior vice president of marketing and planning B. Ben Baldanza explained, noting that the EveryFare program calls on travel agencies and, in turn, their clients to handle the cost burden. "We say, make the GDS pay, somewhat." Baldanza added that US Airways overall has been selling more Web-type fares than before the GDS agreements. "We are seeing Sabre and Galileo selling quite a few, so there has been a shift."