Airline purchase tickets regulations"AIRLINE PURCHASE TICKETS" Can't find what you need? Try a Google Web Search in the box below!
1/19/2004 Jan. 19--Jan. 31 will be a new day for the travel industry. That's when federal regulations that have governed the sale of airline tickets for 20 years -- and essentially the relationships among airlines, travel agents and computer reservation systems such as Sabre -- will end. Consumers probably won't see any change in the way they airline purchase tickets or make hotel reservations with travel agents or over the Internet, industry analysts say. But the businesses handling those transactions will face a more competitive marketplace as airlines and reservation systems are able to individually negotiate the fees associated with ticket sales. Airlines sell and distribute tickets through computer reservation systems -- also known as global distribution systems. Travel agents connect to the reservation systems to book airline tickets for consumers. Can't find what you need? Try a Google Web Search in the box below!
AIRLINE PURCHASE TICKETS "This is the best news that, frankly, Sabre and its competitors could have gotten, because it will allow them to become market-based companies," said Henry Harteveldt, an analyst with market research firm Forrester Research. "The airlines will be able to use the [reservation systems] as much as a marketing tool as a distribution tool." Previously, reservation systems were not allowed to offer different booking fee rates to individual airlines. And if an airline owned a stake in a reservation system, federal rules required the airline to participate in all the ticket systems to prevent bias. AIRLINE PURCHASE TICKETS As booking fees steadily increased, airlines began looking for alternative ways to sell tickets, including encouraging passengers to purchase tickets directly through the airlines' Web sites, bypassing the independent reservation systems. "We have been subjected to a regulatory straitjacket for 20 years that limited our ability to negotiate with travel agents and airlines," said David Schwarte, general counsel for Southlake-based Sabre Holdings, which operates the largest reservation system in the United States, with a 50 percent market share. "When these rules lapse, we'll be free to individually negotiate prices and abandon the one-size-fits-all approach." AIRLINE PURCHASE TICKETS Travel agencies will also be able to negotiate longer or shorter contracts with the reservation systems as well as volume-based incentive payments, Schwarte said. The elimination of the rules clearly favors the larger airlines and bigger distribution systems such as Sabre, said Paul Keung, an analyst with CIBC. But it is uncertain how the industry will take advantage of deregulation in the long term. AIRLINE PURCHASE TICKETS "The next step is to see how all of the relationships evolve," Keung said. Most reservation systems, airlines and travel agents applauded the Department of Transportation for abolishing the rules in an announcement made Dec. 31. Many had already been preparing for deregulation, and some industry executives suggest that three-year contracts introduced last year demonstrated to regulators how the industry would address pricing. AIRLINE PURCHASE TICKETS "The whole uncertainty and back-and-forth around the rules led to a good market solution with us and the carriers working out discounts in exchange for the full content," said Sam Katz, chief executive of Galileo, a global distribution system owned by Cendant Corp. Starting last year, Galileo and Sabre introduced programs that offered carriers lower booking fees in exchange for the right to post the airlines' Web fares. Katz said Galileo has about 70 percent of its booking fee revenue tied up in these three-year contracts. AIRLINE PURCHASE TICKETS Sabre has about 55 percent of its booking fee revenues in similar contracts with the six major U.S. airlines. Although most of the federal rules will disappear in coming weeks, two rules will remain in place until July 31: a rule that requires airlines that own reservation systems to participate in other systems and a rule that requires reservation systems to display content without bias. Some analysts say the reservation systems' ability to sell premium listings to airlines may force travel agents and consumers to search in a variety of places to find the cheapest airfares. But industry executives say it is unlikely that bias will become prevalent, as airlines are more concerned with lowering their overall distribution costs. AIRLINE PURCHASE TICKETS "My personal prediction is, once that [rule] goes away, you won't see much screen bias," said Mike Parks, senior vice president and general manager of worldwide travel distribution at Worldspan, the second-largest reservation system in the United States. "I don't expect that there is going to be, on July 31, a list of airlines knocking on our door to pay us more for bias." Can't find what you need? Try a Google Web Search in the box below!
AIRLINE PURCHASE TICKETS For travel agencies, which have seen commissions from airlines cut in the past few years, the rule changes are likely to provide more access to cheap Web fares as well as a wider range of hotel, cruise and vacation packages offered through the reservation systems that traditionally only offered airfares. AIRLINE PURCHASE TICKETS "There will be much more information available online and offline with the [reservation systems], and the traveling public is going to get the benefit of that," said Richard Copland, president of the American Society of Travel Agents. IMPACT OF FEDERAL RULE CHANGES ON AIRLINE TICKET SALES: --Airlines: Will be able to negotiate lower distribution fees that they pay to reservation systems such as Sabre. --Reservation systems: Can tailor contract agreements to individual airlines. --Travel agents: Can sign longer or shorter contracts with the computer reservation systems and have access to more travel products. --Consumers: Should expect to see little change in how they purchase airline tickets online or through travel agents....... Compare airline purchase tickets here /cheap airfares home |