Lessons from the American Airlines, Sabre, Expedia and Orbitz Dispute

The conflict arising from the dispute between American, Sabre, Expedia and Orbitz should prompt us to reflect on the changes the hotel sector will need to make in the coming years.   In my view, we are witnessing nothing more than the resurgence of old conflicts over control of distribution, reducing intermediary costs and increasing interaction with the customer in order to make full use of CRM strategies. Ultimately, nothing that a hotel or hotel chain would not want for itself. We already know that the cost of GDS intermediation is at far from competitive levels. Seeking to force an airline to accept such costs in order to be present on certain distribution channels is quite another matter. In fact, if the conflict stems from American Airlines wanting to be disconnected from the GDSs used by Expedia and Orbitz so that these portals would transact through its own Direct Connect system, then in my opinion it is a fair and commendable decision on the part of American Airlines. This has been done in hospitality for years, and among airlines it is not unusual for some carriers not to distribute via GDSs, requiring online agencies to integrate their Web Services into their flight search engines. Certainly, the step taken by American Airlines is a clear move towards controlling its distribution, just as European low-cost airlines have done through measures involving greater or lesser pressure, and with greater or lesser success. Why would American Airlines want direct contact with its customers, beyond saving on intermediary costs? Clearly, to offer direct deals to passengers whenever the airline considers it necessary, without undermining its distribution channel, since it aims not to depend on it. Honestly, a perfect world—perhaps utopian, perhaps not—but one that undoubtedly leads us once again towards:

• Direct sales.
• Disintermediation.
• Price disparity across certain channels.

The coming months will be crucial, and we will need to learn from this, as customers are being educated.