Airline Plans To Cancel All Flights Booked Through 3rd Party Websites

from the piss-off-your-customers-much? dept

And people wonder why airlines have so much trouble staying in business? We were already confused enough by American Airlines' desire not to be listed on the sites where people search for airfare, and easyJet's plan to sue the sites that send it customers, but Irish-based airline Ryanair is taking this all to a new level. Beyond just being upset about those 3rd party sites (i.e., sites that send it business!), it's planning to cancel the flights for everyone who booked through one of those services (thanks to Sean for the link).

Yes, we understand that these airlines prefer people to purchase flights from the airlines directly, but it still seems bizarre to try to cut off a great promotional channel. People already know to go look at 3rd party sites for airfare, so actively working against having your flights promoted doesn't make much sense. Then actively pissing off a bunch of your customers who booked through those sites by canceling their flights is even more braindead, as you've just formed a huge group of customers who will complain about your airline and spread the word about how you canceled their legitimately purchased flight for no reason other than spite and a confusion over business models. When Ryanair started promoting how some of its seats might come with sexual gratification, I'd bet many passengers didn't realize it would end with them getting screwed.

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The Airlines' Ongoing Struggle With Price Aggregation Sites

from the airlines-vs.-aggregators? dept

It's proving pretty difficult to figure out exactly what happened between American Airlines and Kayak last week. Last Wednesday TechCrunch reported that American Airlines was pulling its listings from the airfare search engine. Comments left by Kayak's CEO Steve Hafner and VP Keith Melnick chalked the split up to Kayak's display of AA fares from Orbitz: American had demanded that Kayak suppress the Orbitz listings, and Kayak refused.

Presumably one of two things is making American want to avoid comparison to Orbitz prices: either, as TechCrunch speculates, users clicking the Orbitz option put AA on the hook for two referral fees -- one to Kayak and one to Orbitz; or AA has struck a deal with Orbitz that provides the latter's users with cheaper fares than can be found on aa.com.

Either way, the news doesn't appear to be as dire as it first sounded. It doesn't seem that AA flights will be disappearing from Kayak -- it's just the links to buy them at aa.com that will go missing. As Jaunted points out this might wind up costing flyers a few more dollars, but it shouldn't be a major inconvenience for Kayak customers.

The more interesting aspect of this episode is how it reveals the stresses at play in the relationship between the airlines and travel search engines like Kayak. It's no secret, of course, that the airlines are having a rough time as rising fuel prices put even more pressure on their perennially-failing business model. But while an airline attempting to control the distribution of its prices is nothing new, one can't help but wonder whether ever-narrowing margins might lead to a shakeup of this market.

Kayak, like most travel search sites, gets its data from one of a handful of Global Distribution Services: businesses that charge airlines a fee to aggregate price and reservation information. Some airlines, like Southwest, opt out of the GDS system in order to avoid those fees. Others, like American, participate in the system but try to send as much online business as possible to their own sites. Presumably each airline tries to find an equilibrium point at which the business brought in by participation in a GDS and the payments associated with it add up to the most profit.

But so long as the financial temptation to retreat from the GDSes persists, GDS data will be less than complete. And that creates an opportunity for another kind of fare-aggregation business -- one based upon scraping the data from the airlines' websites. It's been done before, after all, albeit on a limited scale. And since most people recognize that prices can't be copyrighted, there doesn't seem to be any legal barrier stopping such an aggregator from stepping in (nothing besides the need to write a lot of tedious screen-scraping software, that is). Though, of course, that won't stop airlines from suing, but the legal basis for their argument seems pretty weak.

Whether such a business is likely to emerge and succeed, I couldn't say. But it does seem certain that as fuel prices rise we'll be seeing more and more travel industry infighting -- and more and more hoops for online fare-shoppers to jump through.

Tom Lee is an expert at the Insight Community. To get insight and analysis from Tom Lee and other experts on challenges your company faces, click here.

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