CRS fee hikes ruffle feathers of two airlines

4th Jan 2002

Citing industry conditions, Sabre and Amadeus announced lower-than-normal booking fee increases for 2002, but that didn`t please at least two airlines.

“No, the move is not appreciated,” said Ron Cole, America West`s vice president of sales, explaining that CRS fees keep rising while information technology costs decline.

He added the fee hike “does not do any good for the travel agency community.”

Al Lenza, Northwest`s vice president of distribution planning, also was less than enthusiastic.

“Our view is that the fees are still too high,” he said. “It`s a step in the right direction—only because the other direction is so wrong. It may be the first year in history that the increases are below inflation.”


Sabre, which raised average global booking fees 8.7% in 2001, will increase fees an average of 2.9% on Feb. 1. That will make Sabre`s average segment fee about $4.03 in North America.

“We don`t anticipate additional increases in 2002, but will continue to evaluate and may have to look at it again as the year progresses,” a Sabre spokeswoman said.

Earlier, Amadeus indicated it will hike booking fees to airlines 2% on Jan. 1 and might turn the increase into a 5.4% hike on May 1. Madrid, Spain-based Amadeus increased booking fees around 6.9% in 2001.

Worldspan has yet to reveal its 2002 plans, while Galileo, citing “the unprecedented downturn in the travel marketplace,” said it will continue to assess the business climate before making decisions on 2002 booking fees.

Travel industry attorney Mark Pestronk said the muted level of booking fee increases will have no impact on how the CRS companies negotiate agency contracts.

CRS signing bonuses and fixed annual and segment bonuses for agents “are better than ever and have gone up faster than increases in booking fees,” Pestronk said. “I don`t expect a change.”

Booking fees account for the lion`s share of the CRS companies` revenue. Sabre chief executive officer William Hannigan said he expects fourth-quarter bookings to be down 20% year-over-year. He estimated that bookings in 2002 will be off about 7% compared with 2001 and revenue will grow 1% to 5% in 2002.

With these subpar booking levels on the horizon, Sabre recently completed $100 million in cost-saving measures, including 470 layoffs and reductions in contract labor, advertising and promotion.

Sabre chief financial officer Jeff Jackson said the Feb. 1 fee increase and slowed booking volumes contributed to the 1% to 5% revenue growth for 2002, which he labeled a “big falloff.”

Meanwhile, America West is pushing the Department of Transportation to introduce a rule to limit annual increases in CRS charges. The airline estimated that Sabre, Amadeus, Galileo and Worldspan implemented cumulative booking fee increases from 1997 to 2001 of 26.8%, 21.7%, 30.5% and 32.2%, respectively.

“What we would like to see from CRS vendors is more of a collaborative arrangement where we could work together on productivity issues and pricing,” said America West`s Cole.



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