OP ED: Industry Trends Raise Crucial Issues

Recent events in the travel industry have raised a number of questions. Unfortunately, in some instances, these questions do not have readily apparent answers. Among the noteworthy industry developments :

<B>Electronic tickets.</B> The electronic ticket revolution has been somewhat tarnished by the threatened American Airlines strike, when holders of electronic tickets found out they needed a paper ticket in order to be transferred to another air carrier. I do not see any resolution to this issue on the horizon because it is logistically impossible to assign an electronic ticket to another carrier. In our opinion, the possibility of having to be assigned to another carrier, particularly when traveling on a full-fare ticket that would not have any penalty attached to it, is a compelling reason for a passenger to request a paper ticket as opposed to an electronic ticket.

<B>AA strike.</B> Regarding the strike itself, is it not likely that if American is successful in converting pilot jobs to American Eagle at substantially lower salaries, the American mechanics, reservationists and other support personnel will ultimately follow the same route, leading to dramatic cost savings for the company? If so, why wasn't there more support for the pilot's union by other American employees?

Is not a related and equally interesting secondary issue the fact that American and American Eagle are represented by different unions? ALPA would have substantial gains if American Eagle were to fly the commuter jets instead of the American pilots represented by APA.

<B>Industry consolidation.</B> We anticipate continuing concentration in various segments of the travel industry and believe that several major tour operators will be acquired sometime during 1997 by an existing tour operator. With further consolidation in the car rental, cruise and hotel industries, isn't it likely that more reliance will be based upon preferred relationships, particularly when different segments of the industry are owned by the same company? It appears that Richard Ferris' Allegis concept was one decade ahead of its time, as we have companies such as HFS that own car rental companies, hotels and related industries cross-selling their products to and through the travel industry.

<B>CRS vendors/airlines/corporate accounts.</B> Within the past several weeks, System One has filed suit against Sabre in Dade County, Fla., alleging tortuous interference with a contractual relationship under Florida law. It is our understanding that System One was installed at a very large corporate account in Miami. The corporation was told that in order to keep its corporate arrangement with American Airlines, it needed to generate the reservations through Sabre. As most readers might recall, the Department of Transportation regulations do not address relationships between CRS vendors and corporations but rather only between CRS vendors and travel agencies. Thus, there would be no restrictions as far as DOT is concerned with regard to what type of arrangements exist between corporations and CRS vendors.

However, if the facts are proven as alleged, it certainly would not be the first time a vendor has taken such steps to solidify the relationship between the CRS and the affiliated air carriers. Without a doubt, if the case continues to trial, the discovery should be enlightening with regard to the corporate relationships and general business practices of the parties involved. These relationships would be very representative of the existing ones between corporations, CRSs and airlines.

<B>Southwest performance.</B> Has anyone wondered why Southwest consistently leads the DOT surveys with regard to on-time performance and customer satisfaction, while at the same time being at or near the top with regard to overbooking? Could it be that Southwest passengers will gladly take a free ticket to be voluntarily bumped off an aircraft because of denied boarding? The carrier has more of a leisure customer who is more likely to want to be voluntarily bumped than a business traveler.

<I>Jeffrey Miller is a travel industry attorney in Ellicott City, Md.