Wednesday, February 16, 2005

Live From the Masters - The True Cost of Distribution

A great panel...Tim Claydon -Jet Blue, Al Lenza- NWA, Dean Sivley -Cendant, John Stow- Sabre, Jeremy Wertheimer-ITA Software,

NWA- Al chided Sam about the $7.50 charge, he said that he would " like to have a bill for his NWA segments at that rate". He commented on $4 , or $5 as the cost.
Cendant - Costs should evolve (following on Sam Katz's themes)
Jet Blue - Out of the GDS completely - not willing to pay GDS pricing
Sabre - $9 range for DCA, Can't focus on simple transactions. If the simple transaction model works, we'll do it. I am worried about integrating it back into the system. Sabre will increase fees if all their left with is complex transactions
ITA- the cost of doing an incremental cost of doing an additional segment is minimal. The ITA software does complex itineraries.
Sabre - changing prices - international airlines is different than SWA. - The key is value based priced
NWA - 2/3 rds of network is competitive with LCCs and thus high GDS fees don't let us compete. The problem is more than price. Disputes like the one with Sabre and diputes are likely to come out. The value of G2 and ITA is an ability to avoid that.
Cendant - echoed value pricing. He rejected Alex's view of another layer
The discussion then shifted to a discussion of service and charge card fees.
NWA - our charge card fees were higher than our GDS fees
ITA - In the old world - the credit card was limited. In the new world direct settlement is needed.

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