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Northwest backs down: following backlash, carrier rescinds GDS fees, keeps direct focus.

Article Excerpt
Northwest Airlines late last week rescinded a policy to levy fees on travel agent bookings made through global distribution systems. The reversal came after 10 days of sharp criticism from GDS companies, travel agents, trade groups and corporate clients who said they were shifting bookings away front the carrier. Well-known for ruining other airlines' attempts to raise fares by not matching them, Northwest had stood alone during the controversy, which most viewed as a de facto fare bike. Without support from any other major carriers--and facing retaliatory action from all four primary GDSs, a lawsuit and a potential U.S. Department of Justice investigation--Northwest lost the first major distribution battle following the expiration one month ago of federal GDS regulations.

A Northwest official said agencies would not be billed for the GDS fee that was in place last week for less than two days.

Despite the failure, North, vest's move was representative of major airlines' efforts to change distribution economics by pushing corporate and agency clients to use cattier Web sites and other lower-cost, direct-connect technologies. Northwest specifically cited Orbitz Supplier Link and threw support behind G2 SwitchWorks, a Chicago-based startup with letters of intent from at least six other carriers.

Corporate travel managers and other industry sources said they understood Northwest's rationale, but had several problems with the specific policy. For starters, the nonrefundable $7.50 per-ticket fee would had to have been absorbed by some party in the distribution chain.

Northwest vice president of sales and customer relations Fay Beauchine had said, "it's up to the agency to decide" between absorbing the fee and passing it to customers. Agents widely were choosing the latter, resulting in higher per-ticket costs for corporate clients and other end users.

"In a zero-commission environment, where we receive remuneration from customers,...

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