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January 7th, 2011 — 5:30am
Funny how life works. Just when I was looking for an issue to write about, I received the email below. A note from American Airlines, trying to make me feel better about their recent decision to pull their listings from Orbitz.comDear Scott Wilder,As a valued AAdvantage member, we want to clarify what you may be reading in the press. As a result of a commercial dispute, over the past several weeks there have been changes to how we sell our tickets. American Airlines last month removed its fares and schedules from Orbitz.com, and effective January 1 Expedia.com stopped offering American Airlines fares on its website. Additionally Sabre, a company that distributes airline fares and schedules, made it more difficult for travel agents to find and select American’s flights by moving our fares lower in the display order than they normally would be listed.While there is much misinformation circulating on these matters, rest assured that tickets for travel on American Airlines and American Eagle — including all international and domestic classes of service — are widely available through a number of outlets, including American’s own website, AA.com, which features our Lowest Fare Guarantee. Tickets, fares and schedules are also available through American’s reservations agents, thousands of travel agencies in locations worldwide, other online travel agencies such as Priceline.com, and travel search engines such as Kayak.com. For more information, please visit AA.com.We are committed to working with all distribution channels, including traditional travel agencies, online travel agencies and global distribution systems. We will keep you informed of important updates on these developments.Thank you for giving us the opportunity to address this matter. We appreciate your business very much and look forward to welcoming you aboard soon.Sincerely,Maya LeibmanPresidentAAdvantage® Loyalty ProgramThe note above explains the company’s position for their little tit-for-tat spat with Orbitz.com. Is AA playing Realpolitk here — flexing it’s muscle.If you look at the sentence highlighted in red, you can see that American Airlines broke one of the golden rules in marketing ‘communications’ and legal practices – traditional and digital. Don’t publically bad mouth a competitor or even worse, don’t bad mouth a business partner. An old business partner or a potential new business partner. Or someone who still has some clout in the industry.I am a little confused as to why AA criticized Orbitz in the email above to customers, when one it’s spokespeople, Cory Garner, American’s director of distribution strategy, quoted in Tuesday’s New York Times as “discussions are ongoing” and that he hoped the differences would be resolved since “it is in the best interest of all of us to continue to do business together. To be honest, I also don’t like how AA starts promoting their prices in an apology letter. See the green highlighted copy. So on the one hand they say Orbitz is making it difficult for consumers, and on the other hand, they are saying that it is best for everyone for this issue to be resolved.All this bad press has pundits accusing AA of trying to cut out the middleman. It wouldn’t be the first time this would happen. Personally, I have always been a big believer in ‘going direct.’ But, I have also been believer of participating on those websites and platforms that your customers visit. Maybe that’s just cause I am a digital guy. There’s a lot of AA customer very comfortable with Orbitz! Instead of making what appears to be a knee-jerk reaction (yes, I know they have been talking to Orbitz for a while), why not negotiate a compromise. AA also explains their decision as a way to save customers’ money. It’s cheaper to go direct and purchase a ticket from AA.comAmerican Airlines explains their decision to end their relationship with Orbitz as a way to help their customer’s money. I am sure there are other ways to do this, such as not charging for luggage and other services. They already have a lawsuit over the baggage issue.The real loser here is the consumer. American Airlines just made it a bit more difficult for consumers to get flight information. Yes, there are still some viable options for finding flights (which are highlighted in Green) below, but I have always believed that you participate where your customers are, and reduce the amount of work they need to do to find you. Even if it means reducing the amount of clicks. I also question if this will really save consumers money. As Mike McCormick, executive director of the National Business Travel Association, a trade group for corporate travel managers, pointed out this could result in significant capital increases required to expand their own infrastructure for each airline that by passes a third party distribution system. And these costs would be passed on to the consumer.Plus AA is making approximately 17% of their revenue from the Expedia’s and Orbitz. That’s nothing to sneeze at. It has been suggested that AA was trying to send a message to it’s investors about the high distribution costs associated with a third party. Perhaps there are better ways to do this. Or maybe AA wants to prevent folks from price shopping. But who is to stopped another approach or site or algorithum to show up.AA has a digital issue on their hands. They are washing their laundry in public. (I never really understood that phrase). I am not saying Orbitz is innocent in all this. I just think there are some golden rules being broken.So from a digital crisis perspective, AA should:1. Make sure they are not talking to other airlines about this because that might trigger anti-trust (price fixing,  – especially Delta that has already cut off some third party price listing sites and this could enter ‘interesting waters’ if senior employees from two airline companies discuss the Orbitz issue2. Train their staff  to respond to consumer posts and concerns, without bashing a former business partner (I am going to test them out and see how they respond to my Tweet about this post : )3. Conduct a town hall with key travel related bloggers and customer advocates to create a two way dialogue with their customers vs an email bkast4. Provide info to their customers on the appropriate social networks — being active where their users are instead of just asking them to go to their site.5. Be prepared really meet their low-price guarantee, and think about potential legal action if they don’t meet those obligations (Just to keep them honest, I am sure their will be some bots surfing the web and showing their prices vis a vis sites.6. Even though your legal department probably was informed about AA’s decision, it’s important to think through the consequences. Orbitz is now threatening to take legal action.7. Be prepared to respond to what some experts are calling a massive fragmentation of the airline industry depriving consumers the ability to price shop across multiple airlines an anti-consumer tactic, thus influencing the value of the companies stock.8. Make sure every employee – spokesperson or president or other has the same story. You can’t have one person say bad things about Orbitz and then another person saying we want to work with them.In showing this post to a friend before sending it live, he said ‘I like companies that act like nations. They have interests, not friend or business partners. They believe in Henry Kissinger’s RealPolitik. That doesn’t work in this digital world. Where word of mouth travels fast. Groups can quickly gather steam and boycott or protest.Maybe I am exaggerating a bit – but who knew that one lost guitar could cause so many headaches for United. And that it would cause their stock price to drop 10%, costing shareholders $180MM

Scott Wilder

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