At the heart of the American Airlines/distribution system battles that are raging in the travel industry today is the bottom line of saving money. AA wants to basically distribute for free and cut out all of the middle men. The other central issue is what American (AA) and other legacy airlines feel is the unjust relegation of their precious seats to the status of a commodity. Unfortunately, no matter what AA does, a legacy airline seat, is an airline seat, is an airline seat. For some reason, AA and other legacy airlines feel that by getting control of their own airline seats again and only selling them through their proprietary data pipelines they will stem the tide of having their airline seats sold as, well, an airline seat between Point A and Point B. I am obviously not a trained MBA or airline executive. For me a legacy carrier non-stop flight in coach from JFK to LAX is just that. The differences might be their frequent flier program and my level of membership. However, the seats are all threadbare, a percentage of the reading lamps don’t work, many seat pockets are filthy, some seats don’t recline, entertainment is limited, there is no food to speak of, tray tables wobble, blankets and pillows cost extra and the flight times are more or less the same. It makes no difference whether I buy the ticket from AA.com, Delta.com, United.com, Expedia.com (except for AA), Travelocity.com, etc. The transcontinental seat is a seat, is a seat. It is a commodity — a perishable commodity. Somehow, AA is making the argument that their direct-connect system that eliminates easy price comparisons between airline seats will allow them to “package” their seats. By “packaging” they plan to offer passengers various combinations of extra services that each cost a fee. They already do this. American now allows passengers to pay a fee to avoid possible future fees. Isn’t that nice. For a relatively reasonable price (they don’t tell you until the time of booking) passengers will be allowed to board early, fly standby on the same day of travel and save $75 off the $150 change fee should they want to change flights. Such a deal AA has for you. From aa.com FAQs: Q: How much does the Boarding and Flexibility package cost? A: Pricing for the Boarding and Flexibility Package varies and will be provided at the time of booking. Through bundles like this, marketing geniuses at AA think they can sell more tickets. Of course, included in this marketing matrix is the elimination of as much competition and price comparisons as possible. Where is the benefit to the consumer? AA’s new system eliminates the ability to create tickets that include connections between different airlines. AA makes it more difficult to compare prices when purchasing tickets. AA still hides their fees “until booking” on their website, making it more difficult to learn the total airline transportation prices. Weeks ago I sent emails to AA requesting three benefits to passengers that their new direct-connect program will provide. I still have not received an answer from this airline. I also hear repeatedly that Southwest Airlines does not work through the GDSs. AA envies the Southwest control of their seats and claims that Southwest seats are not a commodity because they are sold outside of the GDS channel. But, AA is learning the wrong lesson from Southwest who carries far more passengers domestically than AA. Southwest is not the top dog because they don’t work through a GDS. In fact back when Southwest started, AA (who used to own the biggest GDS) probably wouldn’t have allowed them into the GDSs for fear of competition (they tried to stop them every other way). Southwest is a winner and makes money, year after year, because they differentiate their product by providing what consumers want — fair prices, on-time schedules, simplicity in fare structure, honesty and great service. AA and the legacy carriers are in trouble because they have lost sight of the consumer in an MBA frenzy to squeeze profits here and there. The GDSs provide one of the most cost-effective distribution methods of selling a complex, multi-part product that exists in America. CocaCola, General Motors or any publisher would love to have the distribution costs of the airline industry. AA’s actions are misguided. Rather than focusing on customers and truly differentiating their product with quality, AA continues with hidden fees, marketing gimmicks and frequent-flier loyalty. At the same time they provide consumers a lower level of customer service and a dingy, second-class, back-of-the-plane product. Customer service is the way to change the perception of AA’s product. Look at service at Southwest. Look at inflight entertainment at JetBlue and Virgin America. Examine the clean and functional cabins at each of those airlines. Those are some examples of how to differentiate your products. I think every passenger who has experienced a transcontinental flight on JetBlue or Virgin America will choose one of those airlines every time they need to fly across the country. I can’t imagine any coach traveler who has experienced excellence in customer service going back willingly (or without the bribery of frequent flier programs) to any of our legacy carriers.

At the heart of the American Airlines/distribution system battles that are raging in the travel industry today is the bottom line of saving money. AA wants to basically distribute for free and cut out all of the middle men. The other central issue is what American (AA) and other legacy airlines feel is the unjust relegation of their precious seats to the status of a commodity.
Unfortunately, no matter what AA does, a legacy airline seat, is an airline seat, is an airline seat.
For some reason, AA and other legacy airlines feel that by getting control of their own airline seats again and only selling them through their proprietary data pipelines they will stem the tide of having their airline seats sold as, well, an airline seat between Point A and Point B.
I am obviously not a trained MBA or airline executive. For me a legacy carrier non-stop flight in coach from JFK to LAX is just that. The differences might be their frequent flier program and my level of membership. However, the seats are all threadbare, a percentage of the reading lamps don’t work, many seat pockets are filthy, some seats don’t recline, entertainment is limited, there is no food to speak of, tray tables wobble, blankets and pillows cost extra and the flight times are more or less the same.
It makes no difference whether I buy the ticket from AA.com, Delta.com, United.com, Expedia.com (except for AA), Travelocity.com, etc. The transcontinental seat is a seat, is a seat. It is a commodity — a perishable commodity.
Somehow, AA is making the argument that their direct-connect system that eliminates easy price comparisons between airline seats will allow them to “package” their seats. By “packaging” they plan to offer passengers various combinations of extra services that each cost a fee.
They already do this. American now allows passengers to pay a fee to avoid possible future fees. Isn’t that nice.
For a relatively reasonable price (they don’t tell you until the time of booking) passengers will be allowed to board early, fly standby on the same day of travel and save $75 off the $150 change fee should they want to change flights. Such a deal AA has for you.

From aa.com FAQs:
Q: How much does the Boarding and Flexibility package cost?
A: Pricing for the Boarding and Flexibility Package varies and will be provided at the time of booking.

Through bundles like this, marketing geniuses at AA think they can sell more tickets. Of course, included in this marketing matrix is the elimination of as much competition and price comparisons as possible.
Where is the benefit to the consumer?
AA’s new system eliminates the ability to create tickets that include connections between different airlines. AA makes it more difficult to compare prices when purchasing tickets. AA still hides their fees “until booking” on their website, making it more difficult to learn the total airline transportation prices.
Weeks ago I sent emails to AA requesting three benefits to passengers that their new direct-connect program will provide. I still have not received an answer from this airline.
I also hear repeatedly that Southwest Airlines does not work through the GDSs. AA envies the Southwest control of their seats and claims that Southwest seats are not a commodity because they are sold outside of the GDS channel. But, AA is learning the wrong lesson from Southwest who carries far more passengers domestically than AA.
Southwest is not the top dog because they don’t work through a GDS. In fact back when Southwest started, AA (who used to own the biggest GDS) probably wouldn’t have allowed them into the GDSs for fear of competition (they tried to stop them every other way). Southwest is a winner and makes money, year after year, because they differentiate their product by providing what consumers want — fair prices, on-time schedules, simplicity in fare structure, honesty and great service.
AA and the legacy carriers are in trouble because they have lost sight of the consumer in an MBA frenzy to squeeze profits here and there. The GDSs provide one of the most cost-effective distribution methods of selling a complex, multi-part product that exists in America. CocaCola, General Motors or any publisher would love to have the distribution costs of the airline industry.
AA’s actions are misguided. Rather than focusing on customers and truly differentiating their product with quality, AA continues with hidden fees, marketing gimmicks and frequent-flier loyalty. At the same time they provide consumers a lower level of customer service and a dingy, second-class, back-of-the-plane product.
Customer service is the way to change the perception of AA’s product. Look at service at Southwest. Look at inflight entertainment at JetBlue and Virgin America. Examine the clean and functional cabins at each of those airlines. Those are some examples of how to differentiate your products.
I think every passenger who has experienced a transcontinental flight on JetBlue or Virgin America will choose one of those airlines every time they need to fly across the country. I can’t imagine any coach traveler who has experienced excellence in customer service going back willingly (or without the bribery of frequent flier programs) to any of our legacy carriers.

http://www.worldmate.com/travelog/2011/01/12/airline-seats-as-commodities/