Deal Or No Deal, BA Nears GDS Decisions

British Airways' agreements with the major global distribution systems expire Feb. 28, and though it has not yet agreed to new deals, talks are continuing and a resolution is understood to be near, but perhaps not for every GDS, sources today told BTN. "We are still in talks, which is a good sign," said one negotiator.

Meanwhile, British Airways executive vice president of the Americas Robin Hayes today told BTN, "I'm almost certain that we won't get deals with all of them, but I think we might get deals with some. I can't say whom. We want to have agreements with all of them, but we're only prepared to do that if we can find deals that make sense." Hayes said for those distributors with which BA may not reach an accord, the carrier's content still would be distributed, but the carrier would be charged standard rates by the GDS. Additionally, Hayes said, "We'd be free to make decisions on how we're distributed and whether we'd charge a surcharge, or whatever you want to call it." However, if mutual terms are met, Hayes said, the possibility of surcharges goes away.

Hayes said the deadlines of the current contracts are firm and would not be extended to facilitate further negotiations.

This round of negotiations is considered to be an important indicator of how relations between other European flag-carriers and GDSs will develop following last year's overhaul of the distribution model in the United States. In recent weeks, theories circulated suggesting BA is insisting on a non-negotiable discount from the GDSs of 50 percent because the airline would prefer to withdraw many fares and distribute them exclusively through its own Web site. The source involved in the talks said: "The scaremongering going on is predominantly fiction."

Meanwhile, the Business Travel Coalition today sent a letter signed by 117 BA corporate customers to British Airways CEO Willie Walsh, expressing concern about BA's "intentions to undermine the existing corporate travel procurement process by imposing new surcharges and withholding content from the global distribution systems."

A well-informed senior source said he anticipated BA and the GDSs compromising on the airline's original pricing demands. As a result, the GDSs will recoup some of their price cuts by implementing a surcharge to travel management companies. "I expect a U.S.-style type of resolution," he said. "BA can't do without the GDSs. They have agreed to the bones of it. They are just sorting out the details."

In such an eventuality, TMCs inevitably would pass on the surcharges to their corporate clients. BA has indicated that it would ease some of this burden for its leading customers.

Meanwhile, the European Commission has issued a fresh consultation paper on whether to deregulate its computer reservations system code of conduct. Responses to the nine questions in the document are invited by April 27.

Isabelle Leroy, legal adviser to the Guild of European Business Travel Agents and European travel agents' association ECTAA, said it is important for all relevant stakeholders, including travel buyers, to respond to the document. "Much will depend on the outcome of the consultation," she said. "It will form the main basis of the Commission's opinion because they don't seem to have fixed ideas on this subject."

The Commission originally consulted on this subject in 2002. It also commissioned a report from Brattle Group and Norton Rose that recommended full deregulation other than for certain limitations on GDSs that have airline ownership. However, the issue was kicked into the long grass by a lack of industry consensus and a series of mood changes in the Commission on its philosophical approach towards deregulation in general.

C-Fare, a coalition of assorted travel industry stakeholders led by the Business Travel Coalition and also including Sabre, Galileo and Dutch buyers' group Cortas, has marked the consultation launch by opening a petition urging adoption of the recommendations made by Brattle Group and Norton Rose. The curbs on deregulation would apply almost entirely to Sabre's and Galileo's competitor, Amadeus.