Showing posts from August, 2012

The ineluctable middlemen

Everyone else in the travel business makes money off airlines. The carriers are trying to fight back. AIRLINES are wonderful generators of profit—for everyone except themselves. Even in good times their margins are as thin as a boarding pass, and in recent years they have more often lost money (see chart). Averaged over the past four decades, the net profit margin of the world’s airlines, taken together, has been a measly 0.1%. By contrast, other bits of the travel business that depend on the airlines—such as aircraft-makers, travel agents, airports, caterers and maintenance firms—have done very nicely. Some of the tastiest margins in the travel business are enjoyed by the “global distribution systems” (GDSs), a fancy name for computerised-reservations services. These were originally created by several of the largest airlines to distribute their flights through travel agencies but have since become independent firms. Most flights booked through a physical or online travel age