The American Society of Travel Agents today advised members to carefully consider the costs of using Travelport's Galileo/Apollo system to book Southwest Airlines, following a participation agreement the airline and global distribution system provider signed earlier this year. ASTA issued the comments after The Beatreported on Tuesday that Galileo's previously undisclosed fee--which users would pay for each booked Southwest segment--is $1.25. The fee is waived until year-end.
"Galileo's pay-for-content program is the first to shift practically all of an airline's GDS costs directly to agents, and ultimately their customers," according to ASTA. "While subscribers may appreciate having integrated desktop access to Southwest's flight schedules, paying to book Southwest inventory while servicing Southwest's customers for no compensation needs to be compared by each agency against its continuing ability to book Southwest seats using other available methods. These include 'ticketless travel' by telephone, BookingBuilder and Sabre."
A number of travel management company executives told The Beatthey would not participate in the Galileo-Southwest program, which had been billed as an element of Southwest's strategy to obtain more corporate travel business. Before the deal, Southwest's only GDS participation was with Sabre. A Worldspan agreement also is in the offing, according to Southwest.
World Travel Inc. president Jim Wells said his company would "definitely not" book Southwest through Galileo. "They are talking about the 'ease of booking' for a Galileo agent, but cost eventually has to go to the customer and that's not a viable solution," he added. Like several other TMC execs quoted in the article, World Travel Inc. chief information officer George Gadebusch noted his concern about what the new model could mean for the future: "I view the Southwest pricing through Travelport as a threat to our overall TMC model, because if it succeeds in any form, others will be sure to follow in the next round of negotiations."
The executives said they supported Travelport's effort to access Southwest, but not the price they would have to pay for it. On most airline bookings (including those made on Southwest via Sabre), TMCs receive from GDS firms booking incentives rather than pay them fees. In 2006, those incoming payments were reduced as part of agreements between big carriers and GDS companies, which prompted some TMCs to charge their clients.
According to a Southwest official, "Galileo sets its own rates and charges and we don't have influence over that. They have to do what they feel is best for their business. Corporate travel managers have pleaded with us for years to make additional booking channels available, and we have, and then some. When this agreement is complete, Galileo will offer more Southwest content than any other channel, besides its own Web site. Based on the many requests over many years, we feel there is value in finally making content available. As for the program or model itself, this is not unlike other industries where the end user pays for content, such as downloading a song or movie from a Web site."
A Travelport spokesperson declined to confirm the $1.25 figure, which was cited by multiple sources including industry attorney Mark Pestronk and ASTA. "Travelport's Southwest GDS partnership is off to an excellent start," the official wrote by email. "Since implementation of Southwest in mid-November, we are pleased with both the number of agencies who have signed on and the number of Southwest bookings. Securing Southwest content has been at the top of our customers' wish list for several years and we are delighted to be able to offer our customers functionality that provides more information at the point of sale on Southwest than is currently offered by other competitors."
"Access to Southwest's inventory in Galileo is not automatic, as subscribers must register to receive Southwest's content," ASTA noted. "Even though a fee is charged in this pay-for-content arrangement, the inventory offered in Galileo is not 'full content.' Southwest has excluded some of its Web fares from displaying in Galileo. Additionally, reservations cannot be ticketed in a traditional manner and reported through an agent's ARC report. Instead, agents must provide payment information to Southwest via the passenger name record, which Southwest will use to produce an electronic ticket. For now, Southwest ticket numbers are not returned to the PNR. However, at some point early in 2008, Galileo plans to enhance the process so that the Southwest-issued ticket numbers are returned and Southwest frequent traveler numbers are transmitted via the PNR."
Travelport noted other enhancements, but TMC sources were not impressed--at least relative to the prospect of paying for access to fares and inventory. Adding to their concerns are recent comments by officials with KLM Royal Dutch Airlines and Northwest Airlinesindicating that they are interested in exploring models in which the user rather than the supplier pays for GDS use.
"If American or Northwest pay for participation, why should Southwest get a free ride?" asked John Lewis, president and CEO of Travel Management Partners. "After 30 years with no direct access to Southwest, we have alternatives--we don't have to pay for it."