Airlines, ticket firms battle over booking system

Discussion in 'General Discussion | Travel' started by rwoman, Jun 17, 2012.  |  Print Topic

  1. rwoman
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    rwoman Gold Member

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    The Detroit News: Airlines, ticket firms battle over booking system

    Are Sabre/Travelport/Amadeus obsolete? This is not a part of the industry that I am not overly familiar with other than knowing AA's action last year, but IIRC, their software is used by most.
    Do the airlines really need them? Would this impact consumers if they were to go away and bookings were dealt with directly?
    :)

     
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  2. MX

    MX Gold Member

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    Getting rid of middlemen, who deliver no added value to consumers, should eventually be a good thing.
     
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  3. uggboy
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    uggboy Gold Member

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    Good thinking, but the problem will be that the airlines themselves will keep the profit from the middlemen IMHO, there will be no differences in price for passengers.
     
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  4. Blue Skye
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    Blue Skye Silver Member

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    the part that caught my eye was: Airline profits are forecast at $3 billion this year, a wafer thin margin of just 0.5 percent on projected revenues of $631 billion

    how exactly is $3 billion "wafer thin"? :confused: while i get that their costs (doing the basic math) are $628 billion, making any profit is a good thing, even if it is "only" $3 billion. LOL!

    not familiar with the different booking systems either, though i do know that each does have certain limitations. what those are? no idea. ;)
     
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  5. LETTERBOY
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    LETTERBOY Gold Member

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    Who cares what they do with it? It would be nice if they'd pass those savings on to the customers, but even if they don't, those savings will make the airlines more profiable by cutting some of the fat out of the system. That's good, isn't it?
     
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  6. uggboy
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    uggboy Gold Member

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    I have no problem with airlines being more and more profitable and stable, that's obviously better for passengers as well, but my real problem is that the cost which could be saved by not participating in such booking systems is simply not passed on to the passengers. As I see it right now, airlines have definitively cut their " fat " and many nickel and dime fliers right now, so their is no need to be " too concerned " about the airlines themselves, they are also " not too concerned " about fare affordability for customers either, and lets face it, a good price = higher demand = more passengers = more profits and not the other way around will make both sides happier in the long run. Fat or not, many airlines are getting leaner all the time. Some would say " too lean " towards customer service, value, overall standards, capacity and integrity.
     
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  7. paladin87
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    paladin87 Silver Member

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    I was going to post exactly this but you beat me to it.
     
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  8. uggboy
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    uggboy Gold Member

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    Glad you thought so too!
     
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  9. iolaire
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    iolaire Gold Member

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    But it’s my understanding (could be wrong) that the airline's backend revenue management and general operations come from those same companies? Is it getting their fares listed that cost big money, or the fact that their IT operations are so dependent on the global ticket booking systems (and the corresponding consulting contracts)?
     
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  10. LETTERBOY
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    LETTERBOY Gold Member

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    If people are still buying tickets, why should they be concerned about it?
     
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  11. uggboy
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    uggboy Gold Member

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    C'mon, there is often no " real " alternative to flying, the airlines know this, you know this, I know this!
     
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  12. MX

    MX Gold Member

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    I was actually thinking that the major benefit will be a more immediate interaction between the consumers and service providers (the airlines). I see the middlemen bearing the primary responsibility in reducing airline seats to the commodity status. As a result, the airlines were left with a strong incentive to provide the worst acceptable service, and little incentive to innovate or improve - as that would not show up during the booking process. Alternatively, as Southwest did, the airlines could withdraw from the booking system alltogether.

    There's no guarantee that an alternative system would bring an immediate satisfaction to the flying public, but the current system definitely had major flaws and needs to go.
     
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  13. LETTERBOY
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    LETTERBOY Gold Member

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    So what? My point still holds - people are still buying tickets. And if people are willing to buy tickets, then the airlines don't have much incentive to reduce costs for the consumer or provide better service, do they? It might suck (depending on your point of view), but people are still buying tickets.
     
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  14. NYBanker
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    NYBanker Gold Member

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    You might say "only," but absolute profit is not a meaningful number. Rather, profit relative to the capital required to earn the profit is what is the relevant measure.

    If you can invest $1bn and earn $3bn, the question to ask is - how many times can I do this? If you need to invest $300bn to earn $3bn, and took equity risk along the way, the question to ask is - does anyone know a good muni bond salesman?

    The numbers may seem big, but they are only meaningful in context. Airline profits, in aggregate, are anemic, at best.
     
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  15. NYBanker
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    NYBanker Gold Member

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    Consumers in the US have trained airlines how to sell tickets: offer the lowest optical fare. Prospective customers go to Expedia/Orbitz/etc, and sort by price.

    Service, legroom, amenities and even the fee charged for baggage are not material factors at the time of purchase for the vast majority of US travelers. Pax may lament these attributes during (and after) the journey, but they seem to play little factor in the buying decision.

    The one exception to this rule is JetBlue. Their consistently-offered in-flight TV is the one differentiation that some Americans seem to give credit to. Americans love TV. Compare this to Delta, which also offers live TV in flight - on less than 10% of their fleet. That creates no value/pricing power for Delta due to the limited availability and frankly is a waste for them. (The product is there from legacy Song days.)
     
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  16. LizzyDragon84
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    LizzyDragon84 Gold Member

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    I wouldn't be so sure of this. I know people who would be willing to pay for extras like more legroom or to check a bag. But under the current GDSs, there's no easy way to find or compare these options without visiting airline websites individually. And then we're seeing more products like premium economy seats and the Air NZ sky couches where the product varies so much that there's no one-to-one comparison.

    Consumers need a way to know what their options are, and the GDSs aren't showing them. I don't blame the airlines for wanting to cut the middleman out at this point.
     
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