April 15, 2024

Expedia and American in a Fare Agreement

“This is good news for both organizations,” said Henry H. Harteveldt, a travel industry analyst at Forrester Research in San Francisco. “The good news for Expedia is that it has obviously regained the inventory of one of the largest airlines. And the good news for American is that it regained access to a travel agency that in 2010 accounted for more than 5 percent of its sales.”

About three months ago, American said that it wanted to bypass the central reservation system that now delivers information to online travel agents like Expedia and Orbitz, and instead deliver that information directly.

It developed a direct connection distribution technology that would eventually tailor offers to a traveler’s individual needs, like more legroom. Using its own direct system would reduce the fees American pays to list its fares on travel agents’ sites.

Expedia, the top online travel agency, however, chose not to renew its contract with American when it expired on Dec. 31 because it did not want to use the new technology.

Under the recent agreement between the companies, Expedia will initially use the existing global distribution system technology.

In the near future, however, the online travel company will have access to American’s fares, schedules and travel products through American’s direct connect technology, using aggregation technology provided by a global distribution system, which would eventually allow for more customized offers. Additional terms were not disclosed.

Mr. Harteveldt said the companies had reached an agreement that both parties could tolerate. American “wanted a more cost-effective distribution model,” he said, but “Expedia wouldn’t have agreed to this if American Airlines did not agree to business terms that would allow them to earn revenue from the sales of those tickets.”

Article source: http://feeds.nytimes.com/click.phdo?i=94fd391f2761af5891454a6bff02b291

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