17 April 2009

Arpey Awarded Golden Foot Award

Today's winner of the Golden Foot Award goes to the CEO of AA - Gerard Arpey. But there is a catch... he is not wrong.

For the lively debate on the subject go to Travel Weekly to see him being skewered royally.


Now why do I say he is not wrong?

Well AA is paying for commissions and Booking fees in total, so it is a semantic use of words. But the fact is that there is a cost for distribution that the Airline is paying and that he thinks that is too much. Despite the removal of TRAVEL AGENT standard commissions from the lexicon (at least in most major markets), it doesn't mean that some agencies - particularly larger Corporate Agencies, OTAs and their ilk who are not in receipt of "commissions and booking fees" in some shape or form.

Can AA do anything about this? Yes they can and to a large extent they are attempting to do this. I need not re-hash some of the initiatives but there are a number of them out there.

All airlines are paying distribution costs. Not only is this true but there are new costs for distribution which have arrived and these are not cheap. For example at the recent CASMA conference last month the CPA for a reservation via Google was quoted at $20. That is more costly than a conventional GDS based booking. Yes there is an elephant in the room called Google. Perhaps Mr Arpey should have a look at those costs.

Still - AA's PR folks must be reaching for the heartburn medicine today and doing damage control.

So Mr Arpey - Your virtual Golden Foot award is hereby awarded for bravery in the face of adversity and perhaps for not being explicit enough in your comments.


PS thanks to whoever owns this image...


Dennis Schaal said...

I agree about the award. However, I think he articulated out loud a strategy that many of his peers at other airlines hope to implement in the next few years. They not only want to lower their distribution costs, but, as I wrote about in my blog, they want to turn distribution on its head and make the distributors -- the travel agents and GDSs -- pay to distribute flights. Here you go -- another new revenue stream for the airlines. Might even be better for them than checked-bag fees.

Jack Kennard said...

This must be a new type of business plan, I can't wait to see all the perks to make this a win-win.