The Simple Economics of Wholesale Price-Parity Agreements: The Case of the Airline Tickets Distribution Industry*

This paper clarifies the differences between retail and wholesale price-parity agreements in vertical industries. In contrast to traditional wide and narrow retail price-parity arrangements, the competitive effects of wholesale price-parity depend on the complexity of the vertical supply chain, the business model operated by sellers and distributors, and the strength of competition between direct and indirect distribution channels. While retail price-parity agreements are almost always anticompetitive, wholesale price-parity agreements may positively affect consumer welfare when direct and indirect distribution channels are close substitutes. To demonstrate the relevance of our analysis for competition policy, we illustrate our findings by referring to an industry that has recently attracted policy and regulatory interest on both sides of the Atlantic: the airline ticket distribution industry. We find that, in this industry, while wholesale price-parity agreements always harm airlines, Global Distribution Systems (GDSs) have preferences more aligned with consumers: when consumers benefit from these provisions, GDSs benefit too. JEL: K21, L13, L40

The trend of multisided platforms (MSPs) in the travel industry: reintermediation of travel agencies (TAs) and global distribution systems (GDSs)

Purpose The purpose of this paper is to shed light on the remarkable trend of multisided platforms (MSPs) in the travel industry with the help of which travel agencies (TAs) and global distribution systems (GDSs) can reinforce their intermediary roles. Orthodox TAs face the threats of disintermediation because of the ever faster-changing developments in information and communication technologies, such as the emergence of metasearch engines, online travel agencies, direct bookings on airline websites and the widespread of mobile applications for travel related bookings. GDSs face similar threats of disintermediation from low-cost carriers and legacy carriers, as these carriers promote and encourage direct bookings via their official websites or via the new distribution capability. Design/methodology/approach This is a casestudy-oriented research, and the case selected is a MSP based in Turkey. The data are gathered using semi-structured interviews conducted from 15 international representatives of this MSP in different countries. Interviews were conducted either physically at the MSP’s headquarters in Antalya, Turkey, or virtually using Zoom application from January to October 2019. Findings The paper portrays the significance of MSPs in terms of their contributions toward the reintermediation of the two important intermediaries, namely, TAs and GDSs in the travel industry supply chain. Both of them are prone to the dangers of disintermediation because of the developments in technology, networking and communication channels; the worldwide accessibility of the stakeholders to the internet; and the direct reach of suppliers to consumers. The deteriorating role of TAs and GDSs is reignited by the successful launch, deployment and adoption of MSPs in the ecosystem of the travel industry. Originality/value This paper offers an insight into the prevailing trend of MSPs in business to business (B2B) trading from the perspective of two main intermediaries, TAs and GDSs, in the supply chain of the travel industry. The paper in a novel way compiles the data from the interviews to shed light on the adoption of MSPs by intermediaries in their business models to reintermediate themselves because the sole reliance of intermediaries on orthodox business models is pushing them on to the verge of disintermediation.

Transport and Logistics Platform for Multimodal Passenger Transportation

The options for increasing the volume of passenger transportation by railway through development of a set of services with other modes of passenger transport based on multimodal transportation are considered as drivers of attraction of customers and of transport efficiency growth. Transport and logistics platform offering various kinds of transport and logistics services based on railway facilities is suggested as a tool for organizing multimodal routes. The suggestion is based on the analysis of commuter bus and rail flows inRussia, of profiling of customers of transportation services, of notions of platform and transport and logistics platform for passenger transportation, comprising its core elements, of the effects and risks of implementation of the concept. Particular attention is paid to possible contribution of the large-scale use of digital and IT-technology, global distribution systems, a set of criteria of assessment of satisfaction of a passenger with transport services is developed.

Online Competition in the Distribution Chain

Until recently, travel agents have been the principal intermediary between travel suppliers and consumers, with information as their primary trade. However, changes to information and communication technology (ICT) and the beginning of the internet have the potential to allow travel suppliers and consumers to interact directly. Today, consumer websites that integrate global distribution systems (GDSs) are no longer only an emerging threat but show fierce global competition between travel agencies and tour operators worldwide. Subsequently, one of the most pertinent questions today is how local, small-scale travel agencies respond to these market changes and what practices do they use to maintain their comparative advantage and offer competitive services? However, despite the relevancy of this issue, literature is generally scarce on travel agency strategies to confront the competition of consumer websites. Thus, in order to address this question, this article provides an analysis on the advantages and disadvantages of new technologies are available to travel agencies and strategies and practices that travel agencies can use to compete with websites.

Financial Implications of Relationship Marketing in Airline Business

Relationship marketing promises a change from vendor, product and price centered marketing concept to a new people, long-term relationships and value centered marketing concept for airline companies in search of a messiah who will rescue them from bleeding to death because of monopolized supply market, duplicated services, financial crises, heavy pressure of competition and low profit margins. In this chapter, definitions and short background of relationship marketing are revised by focusing on components of the concept and relations with customer loyalty, customer value and basic notions. A glance at the airline industry takes place with a focus on relationship marketing and airline business on the basis of implication aspects such as frequent flyer programs, global distribution systems and internet. Specifically, domains of relationship marketing concept on the airline business are analyzed in detail specific to cost and profitability balance.

ADVANTAGES OF USING DYNAMIC PACKAGING OF TOURS FOR INDUSTRY AND BUSINESS

The article is devoted to research on new trends for the Russian market of tourism, dynamic packaging of tours. The dynamic packaging of tours refers to the formation of tours in real time on the same site under the request of a particular user with the updating of prices and places. In contemporary science the concept of dynamic packaging is not designed and is not adequately reflected in the writings of scientists, despite the fact that in the period of crisis and changes of the business models of interactions on the tourism market, innovative forms of relations can have a positive impact as on individual entrepreneurs, as on the industry as a whole. Based on the foregoing, the main objective of the study is the analysis of the applications of dynamic packaging in the Russian tourist activities. On the basis of this analysis there have been identified four types of companies that use the dynamic packaging of tours on the Russian market: 1) companies which use dynamic packaging to extend the range of their services, 2) companies which use dynamic packaging as a basis for their activities: foreign tour operators which work entirely online and for which dynamic packaging is the tool of activities, and finally, global distribution systems, which due to their powerful platform of online booking, use the dynamic packaging of tours to attract new customers and increase sales. The article concludes about the benefits of dynamic packaging in the modern Russian conditions for business and consumers, and the industry as a whole.