|Where friends are foes and partners enemies; How a court case may change the way travel does business|
Tuesday, 17th December 2013
Source : Martin Kelly
The lid has been lifted on the shadow world of airline travel agency negotiation in a sensational case that has just concluded in Brisbane, Australia – the home of Flight Centre, one of the world’s largest and most powerful travel agents.
Flight Centre was found guilty of attempting “to induce specified airlines to make collusive arrangements in relation to retail air fares for international air travel” – a Federal Court decision it immediately appealed.
Right: Graham Turner, Flight Centre
This case goes to the very heart of how the global travel industry operates, where friends can be enemies, and so-called partners fight tooth and nail for the same customer.
Some would argue that this judgement sets a disturbing precedent with potentially widespread ramifications on the way travel does business, determining that it's not ok for retailers to pressure suppliers for access to all its deals because that reduces competition.
Ergo, price parity, which is an especially big issue for hoteliers and certain online travel agents, is wrong.
In this case, the “collusive arrangements” revolved around Flight Centre trying to gain access to airfares that Singapore Airlines, Emirates and Malaysia Airlines were selling exclusively through their own websites, in some cases AUD500 less than via Global Distribution Systems, during the period from 2005-2009.
So Flight Centre blew up and requested access to these fares or deals.
“It is difficult to be both friend and foe,” read one email. “We are not a charity,” said another.
Further inflaming the situation was Flight Centre’s ‘Flight Beat Guarantee’ which meant its consultants – who make 50% of their wage through commission – were obligated to beat the web fares by $1 despite not having access to the rate.