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Five reasons why you're wrong about American Airlines and the booking battle
Everyone seems to think this is about the passengers. It's not. In true airline industry fashion, nobody cares about the customer.Okay, now that I have your attention, an analyst note from Avondale Partners was sent to me last night. While most people don't get excited about this sort of thing, I have to admit that I still do. Nerdy, maybe. Insightful ... in this case, it definitely is.
The analyst note gets to the heart of the matter pretty quickly. What's the deal with American Airlines and the online travel agencies (e.g., Orbitz and Expedia)? Well, here it is in five straightforward points:
1. It's the economy, stupid: remember that saying? Well, it holds true here. According to Avondale Partners, many press accounts of the dispute "confuse the relationships of the players and miss the underlying economics driving the dispute." Stop thinking about people and start thinking about how American can save up to $9 per ticket in fees.
2. American will lose before it wins: according to Avondale Partners, "AMR [the airline's parent company] eventually prevails." But, it's going to take some time. Along the way, the analyst note explains, the airline will lose some of its online travel agency customers to its competitors. However, it continues, "should pick up the spilled traffic, given current loads."
3. Ultimately, it's a break-even: AMR will wind up with the same amount of traffic it has now, Avondale believes, but it will come at lower net costs. Translation: for the same amount of passengers, American will make more money. For a business, that's never a bad thing.
4. "I like to watch": that seems to be what the other airlines are thinking. Avondale Partners believes they'll jump on the bandwagon. As it is, Delta has already pulled out of three smaller online travel agencies – CheapOair, OneTravel and BookIt – though for slightly different reasons. When big, bold moves like this happen, you better believe that everybody's thinking about it.
5. And, the folks with the most risk are ...: it isn't American Airlines, apparently. Rather, Avondale believes that Travelport and Sabre "have the most to lose," though stock prices for online travel agencies, according to Avondale, "should continue to suffer from the press." Translation: this won't be fun for any of the parties involved for quite a while.
Here's the full report:
Analyst Note From Avondale Partners Re AA Distribution, 1-6-11
4. "I like to watch": that seems to be what the other airlines are thinking. Avondale Partners believes they'll jump on the bandwagon. As it is, Delta has already pulled out of three smaller online travel agencies – CheapOair, OneTravel and BookIt – though for slightly different reasons. When big, bold moves like this happen, you better believe that everybody's thinking about it.
5. And, the folks with the most risk are ...: it isn't American Airlines, apparently. Rather, Avondale believes that Travelport and Sabre "have the most to lose," though stock prices for online travel agencies, according to Avondale, "should continue to suffer from the press." Translation: this won't be fun for any of the parties involved for quite a while.
Here's the full report:
Analyst Note From Avondale Partners Re AA Distribution, 1-6-11
Filed under: Business, North America, United States, Airlines
Reader Comments (Page 1 of 1)
Eagertraveler Jan 7th 2011 7:35PM
Just another reason to avoid disinterested checkin agents, rude gate agents, distasteful flight attendants and crappy & dirty airplanes with rewards that are difficult to cash in.
Chris G Jan 10th 2011 11:40AM
I disagree EagerTraveler. I just had a weekend of flying with American where almost everyone I interacted with was happy, smiling, pleasant and making an honest effort to help me out in any way they could.
We got out of the snow in BDL about 45 minutes late with a 45 minute connection in Dallas. They made up the time in the air and got us in 6 minutes early. Then it went bad. Next flight was canceled and that is where the agents I dealt with really had a shine. It was among the best day dealing with the airline I've ever had.
So the front line people are out there and many are worth having their jobs. I know I wouldn't take their job.
As for rewards, if you are a frequent enough flyer to have miles balances that will get you an award ticket, you'll have the status with the airline to help you easily get what you need. If they're all credit card churning bonus miles, well, you get what you pay for.