Airlines Win Distribution Deregulation Battle

The Bush administration has lifted most of the regulations around GDS distribution.

In English, that means that the four global distributions systems (the services travel agents use to make airline reservations) will now be able compete more freely for airline business. As it currently stands, there are a host of rules regulating the relationship between the airlines (which used to, but no longer, own the GDSs) and the GDSs themselves. Among the many rules, GDSs could not bias results—United, for example, could not pay more to be listed first on a flight results page. Another rule forced carriers to participate in all GDSs (though Southwest worked out a deal so they only worked with Sabre).

The end result is that airlines will likely have more leverage with GDSs; distribution costs will not necessarily be lower, though, as airlines spend marketing dollars with the GDSs to shift share on certain routes. And even if it DOES lead to lower segment fees, it is wildly unlikely that airlines would pass the savings on to consumers.

As the Journal reports:
Sabre’s senior vice president for government affairs, Bruce Charendoff, called the administration’ s move “a victory for consumers and the travel industry.”

Um…how is this a victory for consumers? It’s now possible that their travel agent will not have access to all airlines and that the results the travel agents receive are biased in favor of the highest bidder for the 1st spot on the GDS screen. A victory for consumers?

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