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Article Excerpt
Philadelphia - Rosenbluth International late last month joined Galileo International, United Airlines and US Airways in an effort to proliferate the exchange of airline Web-only fares for distribution cost savings. The mega agency is sacrificing 50 cents per segment in incentives paid to it by Galileo, while Galileo also is forfeiting 50 cents a segment, for a total of $1 in per-segment savings for the carriers.
Rosenbluth is betting that improvements lowering the cost of such functions as refunds, debit memos and negotiated fare filings--as well as some new volume from previously unavailable fares--will recoup the incentives it is surrendering. Galileo also sees the agreement as slowing disintermediation, which it calculates will erode 3 percent of its segments this year.
Other U.S.-based Galileo agencies, as well as airlines that participate in Galileo's highest level of connectivity, are invited to adopt the new program, dubbed Momentum. As part of Momentum, which begins March 1 for United and US Airways, carriers enjoy a three-year lock on Galileo pricing, mitigating the effect of a 2003 price increase that averages 2.2 percent, Galileo said.
As usual, corporate buyers are skeptical. "It all sounds good," said Mark Vilcsek, senior purchasing manager for travel services at National Semiconductor in Santa Clara, Calif. "But how long will it take before the agency passes along those fees to their clients?"
"We're not planning on changing our pricing," asserted Rosenbluth president and COO Alex Wasilov. Asked how the mega could forgo 50 cents on each segment booked with two of its top carriers through its top...
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