Tuesday, December 11, 2012

The Airline Industry crackdown on points aggregators.

(Sub-titled: Why I'm OK with it despite losing functionality)

In what's being billed as David vs. Goliath the airline industry is cracking down on points aggregators such as AwardWallet.com with increasing frequency. Coming as a shock to absolutely no-one, all of the big travel bloggers have taken the stance that this is either the worst business decision since New Coke or proof-positive that the airlines hate you and are constantly devising new ways to make your life more difficult.

This is all well and good except.....They're really not.  And I say this as someone who finds his Award Wallet account to be a useful tool.

What I see right now is a hefty dose of cognitive dissonance on the part of the travel blogging industry.  This is a group that can contort itself into complex geometric patterns defining the value of an airline mile, a hotel point or a credit card (provided you apply by clicking through their referral links that is) but who seem incapable of realizing that the data behind these numbers has a value as well.

The sexy item at the heart of these aggregators is that, for basic functionality, they are free to the end user. Sure, you can pay for some type of upgraded account that (I'm guessing) will give you your points balance equivalence in Drachmas but, for most people, their use is basically free.

In the world of business it's not common for proprietary information to be handed out with no cost attached, especially when the retrieval of such involves data scraping which puts additional load demand (read: costs) on the website being scraped. 

The argument against this is that the airlines are big enough, and making enough money, that this infinitesimal cost should just be accepted and overlooked in the name of "customer service". I disagree.  The same argument is being used for increased business taxes, health care fees etc.  Business should just accept it.  For anyone who's ever worked on the cost control side of things in a corporation you understand how off-base this logic is.  As my good friend Kevin says, "United (and the other airlines) are a BUSINESS".  As a business they're a going concern, and they have a fiduciary responsibility to the share-holders to maximize profit, returns etc.

I realize that, in today's economic/political environment profit is held forth as a dirty word.  Without profits you don't have businesses, you don't have investors and you don't have growth, expansion, and (in the airline industry) the ability to travel around the world on nothing but points and a nominal fee.  Asking the airlines to work against their own self-interest is like asking you to give a room in your house to someone, for free.

Despite all of the wailing and gnashing of teeth, there is a fairly simple solution to this.  Data access agreements. As I stated earlier, the data costs for the airlines dealing with these aggregation sites is fairly small.   I'm confident that agreements could be worked out that would allow these sites to access the airlines data, under agreed-upon terms, for a nominal fee.  What this would mean is that the aggregation sites would have to charge a fee for their service.

(I'll wait a minute until your hair-fire is extinguished)

Now that you're back with me let me explain why this is a good thing for all involved.

IF, and let's run on this assumption, the services provided by these aggregators have real value, then it's better from an economic perspective that they charge a fee for access rather than giving away functionality for free.  It might not be better for those of you who feel that the travel industry is a freebie, but it would be better for the industry as a whole.

I've stated before that, when it comes to utilizing 'loopholes' to my benefit, I'm very risk-averse.  I've been using Award Wallet because I found it to benefit me.  Having a single portal to access all of my accounts is very handy, and I would probably be willing to pay some fee to continue to have that privilege.  That said, as with any other financial decision, what I paid would depend on the level of service I received.  Could the owners of the aggregation sites come to terms with the airlines that made financial sense?  Some would.  Or, if there was sufficient demand, some enterprising company would find a price point that worked and fill the hole in the market.  It's how markets work and it would be a great thing for travelers to have a simple place to go and track all accounts.  An even more enterprising sort might figure out that bookings and other travel necessities could be handled at the portal as well, possibly through a partnership with Kayak or Hipmunk, even Orbitz.

The overriding point I'm making is that the clamor for freebies is threatening to cause long-term damage between the travel industry and the increasing group of amateur pundits who are offering advice to people on how to make it work for them.  If the travel blogging industry is to survive it needs to not poop their big boy pants and realize that they're commenting on an industry and that strengthening that industry is in the best interests of all involved.

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