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Northwest’s Fees Revisited

In case you were wondering (and I’m sure you were) why Northwest Airlines changed its mind about the $7.50 GDS (travel agent) service fees it implemented, the carrier’s CEO explained what happened in a message to employees yesterday. In short, travel agency bookings decreased dramatically when the GDSs started displaying NW’s fares with the $7.50 tacked on, moving Northwest’s flights to the bottom of the results pages. Just as bad (and possibly worse), Sabre removed NW’s international business-class seats from its system for travel agents, making it impossible for agents to book these high fare seats. So, when more than 50% of your sales come from travel agents, and travel agents are unable to book your most profitable tickets, the writing was on the wall. I expect Northwest will come up with another plan within the year to reduce travel agency distribution costs.

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