Delta Air Lines (DL) stunned some folks in the travel and travel affiliate marketing industries on May 6th when it announced that they would pay a special 10% commission on all flights and fare classes on bookings made by June 30th for travel through December 15th, 2009 from New York City area airports to Mexico, the Caribbean and Central and South America.

What made Delta’s announcement ‘stunning’ is that this is the same airline that first cut travel agent commissions back in 1994, setting in motion what proved to be the global airline industry’s ruinous strategy of attempting to disintermediate all of their indirect marketing channels in favor of consumer-direct distribution.  We think the word ‘ruinous’ aptly describes the outcome of DL’s strategy – and virtually every other airline around the world that copied it during the ensuing months – because when combined with the airline industry’s misuse of the then promising potential of the Internet as the source for a more effective distribution channel, they wrought the commoditization of airline travel that exists today.

While one can debate whether these two forces led to the commoditization of air travel, there are few travel industry mavens (if any) who would argue that DL’s singular move to cut travel agency commissions back in 1995 proved to be a tipping point in the volatile and often crazy world of travel distribution.  Travel Dividends remembers this day in 1995 as if it were yesterday (well, maybe not exactly like yesterday, but it is still quite fresh in our memory, as we were literally ‘there’ at DL’s headquarters that morning, being briefed about DL’s ‘new strategy’ hours before the policy was officially made public).

So here we are in 2009, some fourteen years later, with the same airline taking a similarly bold initiative regarding its distribution strategy (though admittedly, one that is 180 degree reversal from its predecessor), and which, in our opinion, could result in yet another tipping point for the travel distribution industry.

Travel Dividends figured there would be significant coverage of this story in the travel press, but so far, it has received scant coverage – and even less analysis (unsurprisingly, we have not come across any references of Delta’s announcement in the affiliate marketing press).

Here are two examples of the depth of analysis given by the trade press thus far:

Asked by George Dooley, a reporter with Travel Agent magazine, to elaborate on the parameters of its ‘new’ program, a Delta spokesperson cryptically replied:

“Delta Air Lines is offering a limited term promotional campaign on selected routes with targeted accounts that have an existing relationship with the company.  This specific promotion targets flights originating in the New York area to Delta’s Latin America region only.”

Michael Fabey and Gay Nagle Myers, both with Travel Weekly, the travel agency industry’s top news source, asked DL a similar question, to which they received the following response:

“From time to time, Delta will issue limited-term promotional campaigns on selected routes with targeted accounts that have an existing sales relationship with the company,” the airline said. “This specific promotion targets flights originating in the NYC area to Delta’s Latin America region.”

Curiously, each of the reporters neglected to ask their Delta sources what strikes us as the three most logical follow-on questions (certainly from a travel affiliate perspective):

1. What is your definition of “targeted accounts that have an existing relationship with the company?”

2. Do these targeted accounts include entities other than travel agencies?

3. If not, why?

Since they cover the travel agency industry – and not the affiliate marketing industry  – in some ways, these reporters can be excused for not asking the first question.  Had they asked, however, they may have learned that unlike in 1995, today Delta’s distribution strategy isn’t limited solely to travel agents – it also includes travel affiliate marketers.  Indeed, Delta is one of only four US airlines that distribute their products through the affiliate marketing channel!

Assuming they asked the first question, one of them may have then followed-up with our second and third questions – and ascertained whether some (if not all) Delta travel affiliates are ‘targeted accounts that have existing relationships with the company’, and if the answer is ‘no’, then determine the reasons ‘why they’re not’.

Come to think of it, there are a lot of other questions we would have asked about DL’s ‘new’ program, like:

  • If as a Delta Affiliate, I haven’t been notified about this program, can I still participate?
  • If yes, whom should I contact?
  • Assuming this program is successful, will you extend it beyond the validity dates currently in effect?
  • If successful, would Delta consider replicating the program in other O/Ds?
  • etc…

Travel Dividends recognizes that Delta’s action has been taken not out of altruism, but because of dire necessity (let’s face it, how many people are traveling to Mexico, the Caribbean and Central/Latin America these days  all of the hoopla surrounding the swine flu ‘epidemic’).  Nonetheless, it is during times like this that change often occurs in an industry.  We’ve seen it happen several times during our careers in the travel industry.  We believe that Delta’s ‘new’ program could presage such a time for travel affiliate marketing – a true ‘tipping point’ as far as US airline participation in affiliate marketing is concerned.

For if Delta is successful in this program – and if travel affiliates play a role in its success - other airlines currently not distributing through the affiliate channel (like American, United, USAir and Continental), will likely do what airlines have always historically done – match their competitors market moves step-by-step.  The ‘herd mentality’ has always prevailed in the airline industry…we don’t see any reason why things should be any different this time around.

For us, Delta’s ‘new’ strategy is ‘déjà vu all over again’…we’ll be watching this program closely during the next six weeks, and provide you with updates as we learn how the program and its performance unfolds.

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