25 December 2010

Expedia's Actions Strike Fear and Loathing Into Many Suppliers

At first glance - the Expedia decision to kick AA out of the shopping displays was portrayed as a gesture of solidarity with its friends over at Sabre and Travelocity/Orbitz.

However perhaps there is a more sinister reason why Expedia took this action now.

After chatting with some colleagues who are in both the air and non-air space there is a very strong sense of disquiet on the supply community.

If Expedia wins and AA is forced to back down - then Expedia will have demonstrated that is has HUGE power to control the supply chain.

For smaller airlines and hotel chains in particular this strikes fear and loathing on their part. They fear that Expedia will start to throw its weight around with the supply chain and that could really hurt marginal suppliers who depend on Expedia for a large percentage of their business. In the US Market we are coming up on the quiet season when there is much lower volume of transaction. Many of these same suppliers fear that Expedia will now threaten them with punitive action unless they go along with higher yields to the company.

Even if Expedia doesn't prevail - there are few suppliers who could afford a protracted battle with the Bellevue based OTA giant.

Thus many of these players are secretly quaking in their boots over holiday season and looking at Expedia as the Evil GRINCH for stealing Christmas.


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