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  • Game-Changer For Airline Fees?
    Posted by Andrew Compart 9:20 PM on Sep 24, 2010

    The problem with turning points, in business or personal life, is that you often are not aware of them until months or even years after they happen. Nonetheless, I’m going to declare that the Sabre Travel Network launch of its Air Total Pricing product on Sept. 17 is a turning point for the selling of airline fee-based ancillary services.

    Whether this is for the airline industry’s good or ill will depend on the airline, and whether it resists or embraces the changes that Air Total Pricing and similar products under development at other global distribution systems (GDS) and ITA Software will engender.

    Here is what Air Total Pricing will do from the start for travel agencies using the Sabre GDS, assuming the product works as advertised. It will let agents check off the optional services their client wants or believes he might need for the trip, and whether that traveler has a high enough status in an airline’s frequent-flier program to be exempted from certain fees.

    The search results will show the fare and also the total price inclusive of fees. At the start, Sabre will be providing this fee information for nine categories, including baggage, inflight entertainment, Wi-Fi access, meals, beverages, preferred coach seats and airport lounge usage.

    Up to now, airline officials and industry consultants have been skeptical of the distribution companies’ ability to create a product that can navigate the complex world of airline fees to provide a fee-inclusive price comparison for consumers.

    Crucially, Sabre is manually collecting publicly available information on fees to fill its database. That’s important because it indicates GDS do not have to wait for airlines to provide this information voluntarily.

    For airlines, it means they risk having incomplete or dated information in the comparison shopping slot, so they would be better served if they provided the information themselves. That’s how Sabre and the other distribution companies would prefer to receive it anyway: Sabre’s system, for example, is set up to accept the data via ATPCO, the global conduit for real-time fares, or via XML-encoded direct connections with the airlines.

    Airlines have been moving slowly toward fee transparency on every distribution system. For about two years they have been working with ATPCO (and have sometimes been cajoled by it), creating more than 130 standardized codes for the various categories and subcategories of fees. More than 25 U.S. and European airlines are vetting this system, but none have committed to it beyond the testing phase, which is why the U.S. Transportation Department might compel them to participate. Sabre’s product launch should provide another impetus for airlines to get moving.

    The biggest reason this is a turning point is the impact it will have on how fees are priced, marketed and sold.

    Many airline executives scoff at the notion of consumer ire regarding fees—airlines have not been abandoned en masse—and some believe consumers already comparison shop based on total price. But what I’ve seen and heard from consumers, agencies and corporate travel managers indicates that this is wishful thinking. With total price comparisons readily available, airlines may be forced to lower some of their fees to remain competitive.

    On the other hand, an airline could benefit from more widespread distribution of its ancillary service offerings.

    Initially, the Sabre tool is solely for price comparison. But within a few months, Sabre expects to have the capability to issue electronic miscellaneous documents (EMD) for ancillary services, which means these can be purchased by customers using the GDS, just as with an e-ticket.

    “The easier it is for the buy side to buy, the easier it is for the sell side to sell,” notes Chris Kroeger, senior vice president of marketing for Sabre Travel Network.

    The Sabre system—and others to come, I’m assuming—also will let airlines create more customized pricing. For example, the ATPCO coding allows for about 10 different levels of frequent-flier status that can impact the fee, and airlines could include corporate contract agreements for discounts on fees or fee-service bundles.

    “It allows them to splice and dice the marketplace with a whole lot more specificity than they’ve ever been able to do,” says Kyle Moore, vice president for marketing at Sabre Holdings. “That’s why I believe the airlines ultimately will embrace this.

    Tags: tw99, AWCOL, fees, Sabre

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