RealTime IT News

ebookers.com Shrugs Off Northwest, KLM Decision

[London, ENGLAND] European online travel agency ebookers.com has shrugged off the decision by Northwest Airlines and KLM Royal Dutch airlines to stop paying commission for online ticket sales, saying that its business will be completely unaffected.

The reason for ebookers.com's confidence is firstly that the ruling by the two airlines applies only to North America, secondly that it deals with published air fares -- whereas ebookers' sales are mostly negotiated or late booking air fares -- and thirdly that ebookers deals with so many airlines that a move by just two of them will not make much difference.

The response by ebookers.com has been made because, on hearing the news of the Northwest/KLM decision, investors and the media jumped to the conclusion that independent online airfare dealers will be squeezed out of the market when airlines act together.

"Due to complexities of fare types in the travel industry, ebookers.com can sometimes be associated with fare change speculation that in reality bears little or no relation to our business. This recent announcement is one such case," said ebookers.com Managing Director Sanjiv Talwar.

"Even in the unlikely event that such announcements are mirrored by these two airlines in Europe for published fares, over 99 per cent of our business would remain unaffected," he continued, adding this was not the case with some travel sites that are more reliant on published fares.

However, ebookers.com certainly sells published tickets -- and in fact offers published tickets for over 500 airlines as opposed to the negotiated tickets it sells for 120 airlines. Currently the agency's business is split 80-20 in favor of negotiated or late booking air fares.

The shock decision by Northwest and KLM, while hitting some American travel sites hard, has highlighted differences between the U.S. and European travel markets.

It is much more difficult for airlines to act independently of travel agents in Europe, where a higher proportion of sales are made via agents. For example, far from shunning the online operator, British Airways actually selected ebookers.com as a "preferred travel online partner" in August last year.

Nonetheless, even European airlines may begin to see advantages in dealing direct with the consumer, harnessing the power of the Internet to overcome such informational problems as communicating "which airline flies where."

ebookers.com operates across Europe in eleven countries: Denmark, Finland, France, Germany, Ireland, Netherlands, Norway, Spain, Sweden, Switzerland and the U.K.