American Airlines is rolling the dice by cutting the middleman out between itself and agencies who bring it customers
American Airlines made a bold shift, working to cut out the middleman who has long taken a cut of airfares booked between travel agencies and sites and the airlines themselves. It’s doing this through a partnership with Priceline.com, and hoping not only other airlines, but other travel outlets will follow suit.
Traditionally, travel agencies and their agents have used global distribution systems or GDSs to get access to airline schedules and fares. The GDS gets the information from hundreds of airlines, aggregates it, then makes it available to travel agents through proprietary feeds. When a booking is made, the GDS charges the airline receiving the booking a fee which it then splits with the booking travel agent.
American Airlines is hoping to change the whole process by sending it’s data directly to travel outlets starting with online travel sites like Priceline.com.
The carrier is facing some challenges, though, as it’s already been turned down by popular travel sites Orbitz and Expedia. Both are no longer offering American flights on their sites, as they refused to bypass the GDS to work with American directly. It’s likely similar responses will be seen from brick and mortar agencies that accounted for 45% of all airfare bookings last year.
A lot is at stake with airfares amounting to about $110 billion in 2010 alone.
