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Northwest Airlines announced steps
Tuesday, to lower its domestic distribution costs by aligning them with those of
the low-cost carriers it increasingly is competing with for today’s domestic travelers. Northwest will offer consumers
and travel agents options that allow them to choose the level of service they desire when purchasing or issuing
tickets for travel within the 50 United States.
Domestic tickets issued through Northwest reservations offices in the U.S. will now include a “Call Center Ticketing
Fee,” and domestic tickets issued through airports in the U.S. and Canada will include an “Airport Ticketing Fee.” In
addition Northwest will reduce the amount of global distribution system (GDS) fees it will absorb on domestic tickets. U.S. and Canada-based travel
agents issuing domestic tickets through GDSs will incur a new “Shared GDS Fee.”
Once fully implemented, the changes are expected to lower Northwest’s annual domestic distribution costs by
approximately $70 million.
Customers using Northwest’s
web site and travel agents using Northwest’s WorldAgent Direct web site or
other technology that bypass GDSs will continue to enjoy the convenience of these services without incurring a
ticketing fee or Shared GDS Fee.
“More than 70% of Northwest’s domestic customers have a low-cost carrier option available to them, and low-cost
carriers continue to grow at a steady pace,” said Tim Griffin, executive vice president of marketing and distribution.
“Since we compete with low-cost carriers on price, it is essential that we take steps to be competitive with them on
distribution costs, where they currently have a clear cost of business advantage over Northwest.” Reservations,
Airport Ticketing Fees
In an effort to reduce its distribution costs, beginning August 27, 2004, Northwest will charge a $5 Call Center
Ticketing Fee for each domestic ticket purchased through one of the airline’s reservations centers in the U.S. In
addition, tickets for domestic travel purchased at Northwest airport locations in the U.S. and Canada will include a
US$10/CAD$13 Airport Ticketing Fee. The charges will be non-refundable, and include domestic WorldPerks
frequent flyer program award tickets. The $5 Call Center Ticketing Fee and US$10/CAD$13 Airport Ticketing Fee will
be per ticket, regardless of whether it is one-way or roundtrip, for travel within the 50 U.S.
Since the fees only apply to new ticket issuance, no fee will be charged to discuss a new or existing reservation with
an airport customer service agent or a telephone reservations sales
agent.
Shared
GDS Fee
Beginning September 1, 2004, Northwest will share part of the GDS expense with U.S. and Canada-based travel
agencies that use a GDS to issue tickets by imposing a US$3.75/CAD$4.75 one-way, US$7.50/CAD$9.50 roundtrip
per-ticket Shared GDS Fee, on tickets for travel within the 50 U.S.
Unlike many low-cost carriers, Northwest pays an average of $12.50 for each ticket booked through a GDS, and has
absorbed 100% of that cost. In 2003 alone, Northwest paid approximately $180 million in GDS fees.
The
airline stated that GDS' take a significant portion of the fees that they collect from airlines and give back up to one third of them to
travel agents as an incentive for subscribing to the GDS’ services.
Since the airline does not incur the same GDS fees on tickets issued through Northwest’s WorldAgent Direct Web
site, developed specifically for travel agents, tickets issued through www.worldagentdirect.com will not incur the
Shared GDS Fee.
In addition, travel agents who issue tickets through lower-cost third parties that use technology to bypass
GDSs, such as Orbitz’s “Supplier Link” affiliate agency program, will also not incur the Shared GDS Fee.
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