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Gorilla Warfare
Kirby's Korner · November 26, 1999

Q: What do you get when you put four 500-pound gorillas together in a cage?

A: A hysterical reaction from the travel industry.

This week four of the five largest U.S. airlines said they would create an online travel agency Web site, planned for launch during the first half of 2000.

This is good for consumers. With Preview Travel being absorbed by Travelocity.com in the coming months, the only major online agency competitor is Expedia, fresh off an initial public offering of stock that saw the asking price quadruple on the first day of trading.

The planned airline site will have regular air, car, and hotel bookings and will let consumers buy discounted travel they can get elsewhere only by visiting individual airline Web sites. The four airlines -- Continental Airlines, Delta Air Lines, Northwest Airlines, and United Airlines -- said they will invite other carriers to participate fully in the venture.

The reaction from the travel sector was amazing.

The American Society of Travel Agents immediately called for a Justice Department investigation into this "cartel by another name." Industry observers who apparently can't read plain English pronounced the enterprise a way for the airlines to get around the Global Distribution Systems (GDSs) that connect travel agents to airlines and hotel chains.

The four airlines, meanwhile, said they would connect their online agency to a GDS, although they cautioned that they would drive a hard bargain and try to get favorable rates for the connection.

I'm usually cynical when it comes to what airlines say. How many can offer the best rates or best service, even though most say they do?

Just this once, I'm taking them at their word. The reason for the new Web site isn't to stifle brick-and-mortar agents or eliminate the middlemen.

It's to make money.

The major travel agency Web sites are not yet profitable. It takes a lot of money to develop the needed technology and even more money to attract and retain customers, especially when those customers can get to competitors by clicking a mouse.

Travelocity and Expedia, in fact, expect to spend more money before they try to turn a profit, primarily on promoting themselves to Web users.

But there's light at the end of the tunnel. Smaller online agencies are already profitable, and the combined Travelocity/Preview Travel could sell as much as $30 million a week in reservations.

The four airlines simply saw the lay of the land, held out a porridge bowl, and said, "I'd like some, too, sir."

Some airlines are doing terrific business on their individual Web sites. American Airlines may be the best example, but -- being owned by the same company that owns Travelocity -- it is missing from this new "cartel."

Continental et al. recognized, as I've pointed out before, that some people don't like to use airline-specific Web sites.

The Airlines Reporting Corp. says there are nearly 33,000 retail locations in the United States that sell airline tickets. Surely the World Wide Web can stand a little more competition.

So you in the travel business, give this new venture a chance to get off the ground before pointing fingers. If it turns out the four carriers don't open the site up to all players, then you'll have something to yell about.

And you who couldn't care less about industry intrigue, celebrate the announcement. There will be one more place to go online to buy travel.

David Kirby is the editor of the Interactive Travel Report. His column appears on Friday. You can reach him at david@ticked.com.