In a move that is sure to spark discussions within the travel industry, Latam Airlines is rethinking its approach to pricing, particularly concerning how travel advisors book their flights through Global Distribution Systems (GDS). Starting May 12, the airline will impose differentiated surcharges based on the specific GDS used for ticketing. Currently, there is a flat fee of $13 per segment for GDS bookings, but this amount will soon vary, reflecting a nuanced strategy aimed at recouping operational costs more effectively.
This progressive leap comes with a price tag of $15.96 for bookings through Amadeus and $14.19 via Sabre, while Travelport users will benefit from a reduced surcharge of $11 per segment. This tiered structure indicates that Latam is analyzing the costs associated with these platforms closely and making adjustments not only to cover its expenses but also to align itself more competitively within the airline market.
The NDC Paradigm Shift
Moreover, Latam’s integration of New Distribution Capability (NDC) — a modernized approach to distribution — into its booking process is noteworthy. By adopting this technology in its dealings with Sabre since late February, as well as establishing agreements with Amadeus and Travelport, Latam demonstrates its commitment to innovating the way customers interact with air travel. While the idea of NDC is to streamline booking processes and reduce costs, the added complexity of surcharges may confuse some travelers and travel advisors as they navigate their options.
The rationale behind charging surcharges that vary by GDS highlights the operational realities airlines face. By adjusting the fees according to the technology used, Latam can better manage the financial implications of servicing different platforms. For instance, while Sabre allows basic fare bookings to go without surcharge, all other fares will incur a nominal fee of $4. This variance in costs encourages advisors to opt for specific fare classes that could maximize value both for themselves and their clients.
Discovering Opportunity Amid Complexity
It’s crucial to consider both the potential upside and drawbacks for travel advisors navigating these new fees. On the one hand, this could encourage advisors to become more selective and informed about the platforms they utilize, thereby increasing competition and potentially enhancing service quality. This approach could even drive advisors to cultivate deeper relationships with specific airlines, leading to a more tailored booking experience for clients.
On the downside, however, the increased complexity may also alienate some travel agents who find it cumbersome to adjust to multiple surcharges and terms depending on their GDS choice. This could lead to frustration and confusion, particularly for smaller agencies that may lack the resources to adjust their strategy quickly.
Nevertheless, the trend of airline surcharges aligned with GDS usage shows no signs of slowing down. As Latam embraces innovative strategies to balance cost recovery with competitive pricing, it sets a precedent that other airlines may follow. The industry must brace itself for a future of dynamic pricing, where adapting quickly to financial intricacies becomes part and parcel of the travel advisory role.
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