easyJet exacts its price

There was always going to be a price to pay if easyJet allowed easier access to its fares through the GDSs. Just as certainly, agents would find that surcharge to be too much.

So there was almost a sense of déjà vu when the UK Guild of Travel Management Companies (GTMCGuild of Travel Management Companies) accused the low cost carrier (LCCLow-cost carrier - LCCs, also know as no-frill airlines, offer low-fare flights with reduced passenger services) of ripping off their members in charging €12 for a return booking.

The summer of 2006 in the US and spring of 2007 in the UK were taken up with rows, slanging matches and threats as the GDSs and airlines tried to reach new agreements with the former demanding full content and the latter reduced fees or even surcharges. After a significant amount of posturing, deals were finally signed assumedly to the satisfaction of both sides.

All that was left was to present the new increased bill to the agents who were to decide whether to absorb it or pass it on to their corporate clients. Some absorbed it; some passed it on.

This is roughly the situation at which easyJet, the GDSs and the UK agents now find themselves. A deal was struck last October and announced in November. easyJet would allow more access to its fares for Travelport (Galileo and Worldspan) and Amadeus. In return there would be a €7.50 charge for single sector bookings, €12 for return bookings and €5 a flight for multi-sector trips.

Unsurprisingly the GTMC does not think much of these charges and has told easyJet in no uncertain terms.
But there is a difference here which sets the easyJet-Amadeus/Travelport deal apart from the agreements with the legacy carriers.

The agents and the GDSs have been trying for six years to coax the LCC onto the GDS system. If they succeeded - and they have - it was bound to come at a price.

Bryan Conway, head of EMEAEurope, Middle East and Africa Travelport, told an interesting story at the Focus Partnership Meeting (the group which represents smaller independent TMCS in the UK) at BA's Waterside HQ at Heathrow yesterday (January 16).

When easyJet was first approached about putting its fares on the GDSs, it replied clearly enough: 'We are not interested.' When the GDSs persisted, said Mr Conway, easyJet's reply was unmistakeable: "Which part of 'We are not interested' do you not understand?" 

But there was, for the agents and GDSs, a major problem: more and more corporate customers were asking for flights on LCCs. In fact, according to some surveys, easyJet was the second most popular airline for business travellers in the UK.  

There was also the nagging hope that while Ryanair would never put fares on the GDSs, easyJet just might. It certainly wanted to attract more business travellers so this was a bait to dangle before it.

Two events in 2005 saw the balance move towards the GDSs. In March easyJet signed a deal with HRG (then BTI) to give the TMC more access to its fares. In September at the PhocusWright conference in Paris, Stelios Haji-Iannou, founder of easyJet, strongly indicated he would put his airline's fares on the GDSs “at the right price.”

As Mr Conway indicated, it has taken some time to negotiate that “right price.”

But he told the Focus agents he did not apologise for making the fares available even with a surcharge. "Most low cost carriers do it (put fares on the GDSs) without an extra fee and I would have preferred easyJet did that," he said.

But he said LCCs were an important part of the aviation market. 29% of all flights in Europe were by LCCs and the sector was growing at three times the industry's global rate.

easyJet also had more leverage than other LCCs in that bookings on its website – the carrier's preferred way of booking – were a success and even to enter into the GDS required the LCC to modify its basic business model.

Obviously eastJet wouild expect compensation for such concessions. But for agents, with cost conscious corporates breathing down their necks, extra costs were decidedly unwelcome.

The set to between easyJet and the GTMC is now likely to continue at meetings between the two this month. It will be interesting to see if the Guild can persuade the LCC to lower its charges.