Galileo International, a of Cendant Corp. announced its 2003 global pricing for participating airlines, effective…
Galileo International, a of Cendant Corp. announced its 2003 global pricing for participating airlines, effective March 1, 2003, which will reflect an average 2.2 percent increase worldwide over 2002 rates.
The increase, partly driven by higher processing and network costs related to sophisticated shopping and faring programs, will vary by market, and will range between 1 and 3.5 percent. In 2002, Galileo`s worldwide price-per-segment increased by less than 0.5 percent.
Simultaneous with the pricing implementation, the company also noted it will change its pricing methodology in North America and Japan to a format more consistent with industry standards of charging for issued tickets. This change is in response to airline interest in processing tickets more efficiently, and will result in Galileo processing fewer segments at a higher average price, but will have no effect on the total cost of issuing tickets. The average cost to an airline for issuing a ticket in North America will remain between $10 and $13.
Also effective March 1, Galileo announced it will begin offering airlines an Internet booking fee for tickets processed by major North America-based online agencies, such as CheapTickets.com and Trip.com. The Internet fee of $3.50 per segment, or $8 to $11 ticket, will be lower than the average fee for tickets booked through traditional travel agencies. Previously, Galileo maintained only one pricing structure, regardless of whether a ticket was processed through a traditional, full-service agency, or through an online agency. Galileo`s new Internet booking price acknowledges Internet transactions typically cost airlines less than those processed by full-service agencies due to the restrictive nature of many online tickets that result in fewer changes and charges.
The new methodology and Internet price have no adverse financial impact to Galileo and are already reflected in its 2.2 percent worldwide increase.
Our changes to 2003 pricing and methodology reflect the interests of our key airline customers to better align Galileo`s fees with the overall value and services provided to airlines while ensuring we remain cost-competitive in the global distribution market, said Robert Coggin, executive vice president of airline services for Galileo International and Cendant Travel Distribution Services. Our introduction of an online pricing fee and a new program called Momentum, are further evidence we`re listening to our airline and agency customers, and creating a more efficient GDS to help the viability of all industry participants over the long-term.
In a separate press release issued today, Galileo jointly announced a new, optional Momentum pricing program, which offers airlines the ability to lock-in Galileo booking fees for the next three years at reductions of approximately 20 percent from the adjusted 2003 rates. The reduction applies to bookings processed through participating travel agencies, and is in exchange for providing Galileo access to all participating airlines` content. In turn, participating travel agencies agree to a reduction in financial incentives for three years in exchange for greater access to content and other special Cendant-related discounts.
The net effect of Galileo`s 2003 pricing adjustment and the Momentum program have been factored into the 2003 outlook for Cendant`s Travel Distribution Services Division and are not expected to impact Cendant`s 2003 earnings-per-share (EPS) guidance issued December 17, 2002.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
