Delta Air Lines’ new deal with Travelport to sell its ‘Economy Comfort’ product through the travel services company’s Apollo, Galileo and Worldspan global distribution systems is more of an evolution rather than an about-face in the carrier’s strategy to only distribute the product through its own channel delta.com.
At the time Delta rolled-out its 34in-pitch Economy Comfort offering on certain international aircraft roughly a year ago the carrier stated its preference was to sell product directly through its web site. But on 7 June Delta expanded the offering to its domestic narrowbodies and larger two-class regional jets, coinciding with a push later this year to expand the product’s distribution channels to reach key customers — corporate travellers.
The APEX editor’s blog understands that Delta’s agency and corporate customers were requesting access to Economy Comfort through their respective systems that were linked to the GDS platforms.
In essence, Delta is delivering the product to those important customers through their preferred channels, says Atmosphere Research Group chief research officer and co-founder Henry Harteveldt. He believes the agreement with Travelport was a smart move by Delta to ensure the Economy Comfort product is distributed “on the right shelves”.
The deal also marks an interesting turn of events in the evolution of airlines and their product merchandising strategies that are fast becoming a key component of their business. Airlines and the GDS companies have been in a years-long wrangle to thrash out the technology and associated standards to handle merchandising sales and business terms selling those products. Airlines believe GDS companies need to alter their business models, which have partly rested on fees charged to carriers on sales of tickets sold through those distribution channels.
A brewing controversy in the US erupted full-force in early 2011 when American Airlines took its displeasure with the GDS structure public and began touting the benefits of direct-connect technology, which essentially allows travel agents to bypass the traditional GDS platforms to access an airline’s inventory. Both American and US Airways filed anti-trust lawsuits against Sabre, and American also sued Travelport. American has engaged in court-ordered mediation with Sabre in attempt to settle the dispute and is in similar negotiations with Travelport.
Against that backdrop Delta, which has been the least public in voicing its opinions in the disputes between the GDS companies and airlines, has worked out an agreement with Travelport that Harteveldt concludes rested on two important pillars – the right business terms and the right technology interface. He suspects negotiations to reach favourable business terms between the two parties were tougher than ironing out the technological platform to support sales of Economy Plus.
Delta has also done its own dabbling with direct connect technology. It had made Economy Comfort available through the direct connect platform offered by Farelogix
Broadening the sales of Economy Plus through the GDS systems also puts Delta on competitive par with its main rival United Airlines. Prior to the cutover by United to its ‘Shares’ passenger reservations system, the carrier’s Premium Economy offering was available for sale through GDS platforms. United was not immediately available to comment on the status of reconnecting the Premium Economy product to the global distribution systems.
Harteveldt remarks that United’s sale of Premium Economy through wider distribution channels is telling of the value the carrier sees in travel agent demand for the product through the GDS platforms.
While he stresses he has no insider knowledge of Delta’s strategy for wider distribution of its Economy Comfort product, Harteveldt says he suspects the carrier is weighing the value of offering its extra-legroom proposition through other GDS systems.
As GDS companies and airlines continue their behind-the-scenes intense negotiations to craft the right business model for merchandising sales, Delta seems open to working with additional GDS companies, albeit on the right terms. “We are always willing to work with partners such as Travelport, that bring value to the distribution chain and can deliver our product on a cost effective basis,” says the carrier.