America West Airlines has broken ranks with fellow airlines, offering some of its discounted “Internet-only” fares to companies that distribute them to brick-and-mortar travel agents.
America West is the first of the major airlines to loosen its grip on the Net fares. The leading airlines sell most of their Net fares exclusively on their own sites or on airline-backed travel site Orbitz
The move comes as the airlines are in a tug-of-war for control of ticket distribution with the powerful fare-distribution companies that for decades have dominated sales of airline tickets. America West`s decision could undermine their efforts, analysts said. Reservation companies such as Sabre, Galileo and Worldspan provide traditional travel agencies with the flight information and the computer systems to book fares for consumers.
America West spokeswoman Patty Nowack said the company made the move earlier this month for competitive reasons. Rival Southwest Airlines had begun offering an Internet fare and America West decided it had to do something to match it.
“We needed to expand our reach rather than just making the fares available over the Net,” Nowack said.
As airlines continue to lose money in a serious industry slump, part of the cost-cutting strategy has been to use the Net to pressure reservation systems into lowering fees, said one airline executive who requested anonymity.
America West`s move indicates that some airlines are willing to deal their Net fares, said Lorraine Sileo, a travel analyst for study group PhoCusWright
. “But obtaining Net fares from one airline is not a panacea for the (reservation systems),” she added.
The Internet, which allows airlines to bypass reservation systems and sell directly to the public, has lifted the airlines into a powerful negotiating position, analysts said.
“The (computer reservation systems) are finally talking to us, offering reduced rates for the first time ever,” the executive said. “All they`ve done for the past decade is hike their fees.”
Other signs have cropped up of late that signal the airlines may want to find some common ground with the reservation systems. In May, Orbitz agreed to give travel agents access to the Net fares on its site through a deal with technology company Aqua, a subsidiary of Navigant International.
At the same time that Orbitz and America West are extending an olive branch to the reservation systems, travel agents have called on Congress to investigate whether the airlines are guilty of anti-competitive practices.
A nine-member panel appointed by the Department of Transportation and Congress is scheduled to hear testimony Wednesday on whether the airlines are acting unfairly by barring traditional travel agents from accessing Net fares.
“I don`t think that (Orbitz and America West) are reacting to political pressure,” said Forrester Research analyst Henry Harteveldt. “Certainly, the congressional hearings are not unrelated but its not the sole reason. Both companies are just trying to sell more tickets.”
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(20/05/2002) America West Announces an Internet Fare Sale