Amadeus, Galileo raise fees despite analyst forecasts of trouble

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Amadeus Global Travel Distribution S.A. said last week that it will increase its per-ticket reservation charge to airlines by 6.9% next year.

The news follows a separate announcement by rival computer reservation system (CRS) Galileo International Inc. that it will increase its average booking fee by 6%.

Both companies called their services cost-effective and said the increases are being used to build next generation, Internet-based booking systems, but analysts said the increased prices indicate the companies are still doing too much business as usual.

"They've just increased the hatred the airlines have for them six to seven percent," said Henry Harteveldt, an analyst at Forrester Research Inc. in Cambridge, Mass.

Harteveldt praised a move by Atlanta-based Worldspan L.P., which reduced its CRS fees on trips booked through corporate online systems including those of GetThere Inc., e-Travel Inc. and Worldspan's Trip Manager system.

Harteveldt said Worldspan's initiative shows it's taking the savings offered by new technology and passing them along to the company's customers.

The four CRS giants -- Rosemont, Ill.-based Galileo; Madrid-based Amadeus; Worldspan and Fort Worth, Texas-based Sabre Inc. -- built their businesses by controlling the connectivity between travel agencies and travel suppliers.

Harteveldt said direct-link corporate booking tools like those offered by GetThere could easily be spun off to include travel agencies, thus eroding the base of the CRS industry.

"If they don't blow it up and reinvent themselves, they're destined for the history books," Harteveldt said.

Krista Pappas, travel industry advisor at Gomez Inc. in Lincoln, Mass., agreed, saying it's incumbent on the reservations giant to show significant changes in the next year.

"It's fair game for anyone out there to be an intermediary," she said.

PhoCusWright Inc. in Sherman, Conn. released a study in October that praised the initiative of the CRS companies to evolve from pure reservation-based tech suppliers to companies that dabble in every area of travel technology. PhoCusWright analyst Lorraine Sileo noted that those companies are becoming increasingly less dependent on booking fees.

Amadeus and Sabre have made major strides in supplying airline and airport IT infrastructure during the past year. Many now host or provide inventory for consumer travel Web sites.

And all of the companies are building new Internet-based reservations systems for their traditional travel-agency customers.

"They seem to all understand that they're in the midst of a changing industry," she said.

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