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                             THE STANDARD'S
                        T E C H  T R A V E L E R
         Travel and the Travel Industry in the New Millennium
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                                        | http://www.thestandard.com |

Monday, March 5, 2001

NEWS BRIEFS:
* Irreconcilable Differences ... Accidental Tourists ... Look for the
Silver Lining

TOP STORY:
* Commission: Impossible:
After Northwest and KLM's move to eliminate Net commissions last week,
travel agencies brace themselves for a new battle in the treacherous
field of e-retailing.

SITE REVIEW:
* PlanetWare.com

NEWS BRIEFS
~~~~~~~~~~~
IRRECONCILABLE DIFFERENCES: A day after Travelocity.com slapped
Northwest Airlines and KLM Royal Dutch Airlines with $10 surcharges to
counter commission cuts, the world's largest online travel agency
quietly removed another airline - Southwest - from its booking service
last week. The reason? Ticketing problems from the carrier's
"rudimentary" software. Full participation in Travelocity's booking
system would cost Southwest several million dollars, says Southwest
spokeswoman Beth Harbin, and the airline didn't feel the added expense
would pay off because only 1 percent of its online bookings are made
through Travelocity, whereas Southwest books 30 percent of its tickets
directly through its own Web site. A representative for Travelocity
characterized the decision as an amicable divorce, but the action
leaves Southwest, America's leading budget carrier, with no major
online presence other than its own Web site. Read the full story at
TheStandard.com:
http://tm0.com/thestandard/sbct.cgi?s=108739277&i=311402&d=1136038

ACCIDENTAL TOURISTS: After a computer glitch caused United.com to
offer round-trip fares to Europe for as little as $13 during a
55-minute period on Jan. 31, more than 100 shrewd travelers snatched
up the tickets. United originally said it would not honor the tickets,
but the airline reversed course late last month after receiving some
unfavorable publicity. "We believed we were on somewhat solid footing
to legally cancel the tickets, but we realized that's an inappropriate
way to handle the situation," United spokesman Chris Brathwaite told
the San Francisco Chronicle. "We say, 'Bon voyage, and enjoy the trip
of a lifetime.'"
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/02/24/MN142313.DTL

LOOK FOR THE SILVER LINING: Passengers who book Caribbean cruises
through the travel portal iCruise.com between Feb. 1 and May 1 of this
year are eligible for a full refund if they experience too many rainy
days during their voyage. There are some conditions for the refund,
however: The offer applies only from December to August and only if
the ship's crew records at least 0.25 inches of rainfall from 10 a.m.
to 4 p.m. for three to seven days of the cruise, depending on the
itinerary. http://www2.i-cruise.com/weatherrules.htm

A DISCOUNT ALLIANCE: The travel portal Weekends.com has inked a deal
to sell discounted air tickets, last-minute cruises and weekend
vacation packages via Overstock.com, the Internet clearance store that
claims 6.5 million monthly visitors. As with Priceline.com,
Weekends.com's booking engine employs an opaque pricing system for
consolidator air fares, so users do not know what carrier they'll be
flying until after the transaction is complete.

TOP STORY
~~~~~~~~~
Commission: Impossible

After the move by Northwest and KLM to eliminate Net commissions last
week, travel agencies brace themselves for a new battle in the
treacherous field of e-retailing.

By Morris Dye and Michael Shapiro

A high-profile battle was set in motion Wednesday when Northwest
Airlines and KLM Royal Dutch Airlines jointly announced they would no
longer pay commissions on Net ticket sales. The news calls to mind a
similarly momentous announcement in 1995, when Delta Air Lines became
the first U.S. carrier to impose a cap on travel agent commissions for
domestic round-trips. That risky move challenged the industry standard
of percentage-based compensation for travel agents and proved to be a
watershed in the evolution of airline distribution. Other carriers
followed suit, and ultimately, travel agents were forced to sharply
reduce margins on sales of airline tickets.

This time around, it's only the Web-based agencies suffering the
slings and arrows of airline cost-reduction, but the Northwest-KLM
announcement has sent shock waves through an already volatile retail
sector. Travelocity, which leveraged partnerships with AOL and Yahoo
to become the world's largest online travel agency, immediately fired
back by imposing a $10 surcharge on all Northwest and KLM tickets
booked through the company's Web site. Although Expedia has so far
refrained from imposing similar fees, spokeswoman Suzi Levine said
Friday that the company is negotiating with the airlines: "We don't
work for free, and we're not working for free."

Concerns about the potential impact of industry-wide commission cuts
sent the stocks of both e-retailers tumbling in Thursday's trading.
(Shares of Travelocity, closing Thursday down 32.6 percent, to $15,
ended trading Monday at $14.12. Expedia stock, which on Thursday
closed down 17.2 percent, to $12.93, ended Monday on a higher note,
ending at $14.62.) Meanwhile, all eyes are on the big three U.S.
carriers - United Air Lines, American Airlines and Delta - to see if
they too will ax payments to Web-based agencies or even extend the
cuts to traditional offline travel agencies. If more airlines follow
in the footsteps of Northwest and KLM, will more Web-based agencies
join Travelocity in charging extra for non-commissionable tickets? Or
will Northwest and KLM be forced to back down, as Delta was in January
1999 after adding a $2 fee to all round-trip tickets not sold through
its own Web site?

Don't be surprised if consumers end up bearing the brunt. "We think
this is another significant step in a series of predatory practices
the airline industry is engaging in to eliminate the third party,"
Paul Ruden of the American Society of Travel Agents told the
Washington Post.

If travel agents levy additional fees to make up for a lack of
commissions, Ruden suggests, more consumers will go directly to the
airlines and forgo the opportunity to comparison shop. Ironically, the
amount of money Northwest and KLM might save - no more than $10 per
ticket for online transactions - is not likely to make a big dent in
the airlines' overall distribution costs. The change could even raise
some costs if displaced consumers overwhelm the airlines' call centers
and Web site booking engines. Historically, airlines have dictated
consumer prices for all tickets sold through the major computer
reservations systems, with fixed (or in some cases, negotiated)
margins paid to retail agents. If the airlines stop paying commissions
to e-booking sites and continue to chip away at margins for
traditional travel agents, air travelers are likely to see air tickets
sold in much the same way TVs, clothing and other consumer goods are
sold. The airlines' own ticket offices and Internet booking sites
would continue to serve as "factory outlets," where carriers can sell
directly to consumers with no middleman involved.

All of this begs the question: What about Orbitz, the controversial
booking site developed jointly by Northwest and four other airlines?
Orbitz spokeswoman Carol Jouzaitis confirms that if the Northwest-KLM
cuts are still in place when the site launches this summer, Orbitz
will be excluded from receiving commissions from those two airlines.
It would appear, then, that as the travel industry shifts and changes,
Northwest is attacking a distribution channel that it helped to
create.

Read more about the Northwest-KLM announcement at TheStandard.com:
http://tm0.com/thestandard/sbct.cgi?s=108739277&i=311402&d=1136042

Read more about Orbitz:
Orbitz - a Matter of (Anti) Trust
http://tm0.com/thestandard/sbct.cgi?s=108739277&i=311402&d=1136043

SITE REVIEW
~~~~~~~~~~~
PlanetWare.com

So you'd like to take a trip, but you're not sure where to start?
Well, PlanetWare's travel planning resources include 8,500 pictures,
2,000 maps and 50,000 in-depth descriptions to help travelers find new
places to visit. Destination content from Baedeker Guides, one of the
oldest names in travel publishing, is a featured attraction in this
subscription-based trip-planning Web resource. The site combines text
and maps licensed from the venerable guidebook series combined with
PlanetWare's own original content in an interactive database covering
some 8,000 cities and towns in 38 countries. Subscribers who pay $20 a
month or $200 a year gain unlimited access to the database, which is
searchable by destination, keyword or special interest category. New
on the site is a free downloadable Agenda tool that generates
customizable day-by-day itineraries that can be edited and printed
using standard word-processing software. PlanetWare's site won't win
any beauty contests, and some users might find the split-screen
navigation confusing, but the text-heavy format makes for fast
loading, and the cleverly designed Agenda tool makes it easy to
organize information from the site. Just be sure to check the site's
destination list before you subscribe, because its current coverage in
Africa, Asia and the Americas is quite limited.

STAFF        
~~~~~
Written by Michael Shapiro and Morris Dye. Send e-mail to
techtrav@yahoo.com.
Editor: Michele Keller (mkeller@thestandard.com).

Copyright 2001 Standard Media International

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