Distribution at American Airlines

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Distribution at American Airlines

Question 1

Travel agents use Global Distribution Systems (GDS) which can be configured to only indicate the airline’s flights regardless of the fare charged by others. Therefore, the airline will be able to get customers even if its fare is higher than others. Customers buying through the internet will only go for the cheapest tickets hence the airline will not be able to sell their tickets if their fare is high. Most of the airlines which sold their tickets through the travel agents recorded high profits than those which sold through the internet. This is because a number of business customers still preferred booking their tickets via travel agencies.

Question 2

The huge amount of money spent by the American airlines on GDS fees would mostly be paid by the customers. They charged high fees to cover for the GDS expenses. This clearly explains why fares of the airlines selling their tickets through the internet were slightly low. Economic costs would be paid for by charging the travel agents some fee for every segment.

Question 3

GDS’s can use a number of techniques to maintain and guard its present business model. They should allow the travel agents to change or use different GDS’s respectively. Provision of more services to travels agents will also make GDS’s retain and guard its present business model. GDS’s should also provide more information on their financial arrangements with the TMC’s.

Question 4

It is important to implement the source premium policy because this will assist the travel agents in identifying some of the expensive channels. Therefore, they will be able to make important economic decisions for the customers. Implementing this policy will also help reduce GDS expenses.