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American & Delta want travel agents to pay the airlines. Say what? PDF Afdrukken E-mail
Travel Industry

A very strange, but significant comment was noted some time ago  from both American Airlines CEO Gerard Arpey and Delta Airlines CEO Richard Anderson. They said that they expect to see a day when distributors will pay airlines for their bookings. Yes, you got it right, there is no mistake in the  text: these gentlemen are talking about a “reversed commission” system, counting on travel agents to pay for the “privilege” of booking seats with AA and Delta. After the commission cut fight, followed by the zero commission decisions, this sounds like a bridge too far. But both gentlemen were dead serious.  Read on to get literal quotes.

 


Trying to clarify his comments, Arpey said: "I was simply making the observation that the paradigm in the airline business has been that historically we pay our distributors to sell our product. And that has been shifting over many years, because we have been able to cut domestic commissions, domestic overrides and booking fees.


"We’ve done that for a lot of reasons, but not the least of which is the fact that our own website, aa.com, has become our largest distribution venue, where our customers can come directly to American and book their ticket and do so without any intermediary.(…)

 I wasn’t trying to lay out a specific plan or a program, except to express the view that if we manage our capacity sensibly in this business, that I could see a day where distributors who want access to our product are paying us instead of them. And that may not come in my working lifetime, but I could see a day where that would be the paradigm."


This shows again that in the US airline business, the old diseases are not 100% cured yet: arrogance, blindness for reality and a self centered world view are still very much present in the board rooms of the heritage carriers. We do not think that this kind of nonsense could ever be coming out of the mouth of a European CEO.

European Travel agents should not forget these threats, though. It is important to realize that the days of “commission on every part of the journey” are over.Whether you like it or not, airlines and other suppliers  will continue to try to cut their cost of sales. In the US, but in Europe as well. If not out of their own initiative, it will be imposed from some overseas head office.   A business model that is too dependent on commissions might soon turn out to be a business model of the past. 

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