Agencies, GDSs Consider AA EveryFare Implications

The corporate travel industry is struggling to grasp the meaning and impact of American Airlines' announcement this week that it will shift some cost of GDS-based bookings to participating travel agencies and their clients in exchange for access to what until now have been Web-only fares. Known as EveryFare, the program resembles other initiatives launched on a narrower scale by GDSs themselves. By eventually allowing agencies to make money on AA bookings made on the carrier's Web site, however, the program goes much further than has any GDS plan.

The program has not been copied by AA's competitors. A rival executive called EveryFare "convoluted," while executives at other carriers--despite acknowledging the potential benefits to airlines of shifting the distribution cost burden to buyers--wondered how travel agencies would derive value.

TQ3 Maritz Travel Solutions, an EveryFare program launch customer, will charge clients volunteering to work in the new model a $1 fee per transaction on all airlines to defray the initial cost increase. "There is a cost risk to us but we have taken that risk in order to provide Web fares to our clients," said Mike Koetting, TQ3 senior vice president. Later on, he said, "There could be a bottom-line savings, depending on volume through aa.com, travel patterns and the general availability of Web fares."

Koetting added that other benefits will range from improved perception by travelers that they are being offered the lowest fare in the market to productivity gains from avoiding "cumbersome" screen-scraping technologies employed by many Web fare search tools. TQ3 itself works closely with Alexandria, Va.-based Outtask using such a solution from FareChase.

TQ3 also will attempt to compensate for the added cost by pressuring GDSs to lower fees.

"TQ3 has the ability to use any GDS, so we can negotiate with them and use a variety," Koetting said. "But there is a net expense as long as we continue to use the GDS." As such, TQ3 will look to book some fares directly through aa.com once the carrier enables agencies to book in that channel. Koetting, however, noted that AA had not informed TQ3 of the specific fee associated with booking through the carrier's Web site.

Corporate Travel Management Group, the other EveryFare program launch agency, expects the carrier to begin the program in 45 to 90 days. CTMG, unlike TQ3, has not announced a plan to collect additional fees from clients. "CTMG is currently analyzing the financial benefits that EveryFare will present. Therefore, we are currently unable to provide specific details regarding associated costs and the offset," said Bonnie Lorefice, the agency's founder and CEO. "At this time, CTMG is planning to offer EveryFare to all of our clients at no additional cost."

The agency will use EveryFare as a complement to existing tools used to seek out Web fares for clients.

Though no other agencies at press time had announced participation in the EveryFare program, TQ3's Koetting said, "It seems other megas will be forced to follow through on this. We also think other carriers will follow suit."

But Rosenbluth International, for one, has opted not to participate, at least for now. "But we are continually evaluating our options," said CEO Hal Rosenbluth.

Senior executives at other corporate travel agencies contacted by Business Travel News had yet to find value in the program. "We're still puzzling over it and trying to figure out why they're doing this," said one. A common sentiment was that the AA-TQ3 relationship involves other unique aspects making it compelling for the agency to participate, but Koetting said other revenues paid to TQ3 by AA would not be affected by this new arrangement.

Meanwhile, some GDSs' initial reaction to the AA move was chilly. "Participating travel agents are set to face significant short-term disruption and long-term benefits remain unclear both for them and the end consumers they serve," Amadeus wrote in a statement to BTN.

"It's pretty clear that it's a move to transfer the cost burden from the airline to the agency and ultimately to the corporation," said Ellen Keszler, senior vice president of North America travel agency solutions for Sabre, which hosts AA's reservations system. "And the key value proposition here is access to Web fares. But there are far less Web fares available in the marketplace than many months ago as airlines have realized what Web fares did to their yields."

As for corporates using aa.com, she said, "We don't believe it's been proven that airlines can offer corporate bookings on their Web sites."

Worldspan, which is part-owned by AA parent AMR Corp., yesterday said it was evaluating the situation.