American Express today said an agreement with American Airlines no later than next quarter will bring to the mega agency and its clients AA fares now only available through such online channels as Orbitz and aa.com.
The program uses Amex's TravelBahn platform
(BTN, July 29), which can facilitate bookings that do not involve a GDS, but executives from both companies took pains in a conference call to avoid characterizing the arrangement as a GDS bypass. The tool also will process published and corporate fares "through the GDS," officials said. After American vice president of passenger sales Craig Kreeger noted the carrier's GDS costs exceeded $400 million in 2001--and after both companies said the program offers "a new model that helps American reduce distribution costs"--neither would answer repeated questions on just how the program saves AA money, instead attempting to focus reporters on the benefit of Web fare access.
"Unlike other proposed solutions, we're reengineering costs out of the distribution system," said Pam Arway, Amex executive vice president and general manager. "This is not a transfer of costs." Later, she said, TravelBahn is "a very efficient network. The number of scans on the GDSs we do compared to a leisure travel agency is much lower." She did not conclude that an improvement in Amex's efficiency generates lower GDS costs for AA. "Also, we have made a long-term financial commitment to AA to help them lower their costs over time," Arway said. "We can't give you the details on the economic model--you just have to know that it's helping AA and Amex lower the costs. Web fares will be available through the GDSs and loaded into the GDSs through ATPCo," she added. "The booking will be made the same as it's made today through the GDSs. In fact, not much changes." She went on to say the access would come through all four GDSs.
Speaking to
Business Travel News after the press conference, Arway referred to the missing details: "If I reveal how we've constructed the deal, I might as well open the book to our competitors. I'm not about to make life easy for them. We've spent months working on this. Perhaps at a point in time, AA will" elaborate. Asked whether the program allows Amex to help AA reduce GDS segment fees, an AA spokesperson said, "We are not able to tell you where the help is coming from." Referring to AA's more explicit EveryFare program, Kreeger said, "That's a little different than this one, and we're beginning to see some uptick on it. Amex has a different solution that gives us economics that make it attractive."
Given both parties' clout, the deal could involve almost anything. Arway, however, shot down one possibility, saying merchant fees AA pays Amex for its corporate card are not involved.