Rearden Commerce and Southwest Airlines struck a deal in which mutual customers will be able to search the airline’s schedules and fares and book Southwest flights using the Rearden Personal Assistant.

The partnership is slated to be implemented late in 2010, the companies say.

Rearden clients would need their own relationships with Southwest to access the airline’s schedules and fares through the Rearden Personal Assistant.

When booking Southwest through the Rearden Personal Assistant, travelers’ Southwest itineraries would automatically populate in their Lotus Notes or Outlook calendars and can opt to receive alerts about flight and gate status on their mobile devices.

The Rearden-Southwest partnership highlights Southwest’s strategy in recent years to broaden its number of approved distributors. Several corporate booking tools as well as the Travelport GDS in recent years have reached agreements with Southwest to access and book its flights.

Rearden clients will be able to integrate booking and ticketing that supports Southwest’s Rapid Rewards loyalty program at the time of booking; live availability and last seat inventory, as well as features including deferred ticketing, cancellations and exchanges.

In other news, Rearden partnered with IBM to give Rearden clients the ability to integrate IBM’s Global Expense Reporting Solution into the Rearden Commerce Platform.

The partnership gives Rearden clients another option for handling expense management and online procurement.

Arguments vary over the best route to customers on the technical side, whether it’s distributed marketing, distribution of transactions or some other method.

But perhaps when you run a classic Long Tail product like Temple Safari, the most powerful tool of distribution is inspiration and people you know. Or so says Nick Ray of Hanuman Tourism, Cambodia.

“If you can inspire travel companies and travel journalists to believe in your ideas, then the product will take off.”

As such, Ray has been cultivating contacts and connections that can help them spread the word.

“Hanuman has been very fortunate in this respect. We partner a number of market leaders in the UK, US and France and their growth has helped fuel our growth over the years. We also have a very good relationship with journalists and travel writers in general as we are used to VIP hosting through our work with Hanuman Films.”

One of its most recent guests was the feisty celebrity chef Gordon Ramsay.

According to the Hanuman blog, executive director Kulikar Sotho, whose family is behind Hanuman Tourism, was the Cambodian Fixer for Ramsey’s television series Gordon’s Great Escape – in which he travels all over the world learning about and cooking local cuisines.

Other celebrities it’s hosted include Angelina Jolie, Daniel Craig and Jeremy Clarkson, “so we get the word out through our partner travel agents and international journalists who are inspired by the original concepts we are promoting”, reckons Ray.

In its Temple Safaris, it takes visitors out to the jungle temples of Northern Cambodia where luxury tents are pitched close to ancient cultural sites and guests can enjoy the quiet of the wilderness away from mass tourism. The product is the company’s signature trip was conceived on a trip to Uganda and Rwanda by Kulikar.

Currently, most of its customers come from the UK with some from the US. One of its strongest promoters has been Audley Travel, in the UK. Other supporters include Cox & Kings, Indochina Travel and Bamboo Travel.

In a good year, the company takes about 250-500 people a year on safari. Ray estimates the price to be about US$300 per day per person, covering four-wheel drives, tour guide and all meals. “It is not a budget product due to the mobile nature of the camps and the support team this requires.”

Because it works through partners, it does limited direct marketing other than the public relations work it does with journalists and celebrities. However it is giving its website a massive overhaul. Currently, 70% of its business come through its partners and 30% through the website.

Every time I attend events such as the Mekong Tourism Forum, I end up with two main thoughts.

I wish I had more time to travel to experience all the wonderful things I learnt about and how does one, as a traveller, find all these products in the crowded, cluttered, confusing web?

From zip lining, tiger spotting and communing with gibbons in Laos, to temple safaris in Cambodia and sleeping in Tibetan-style tents in Yunnan, these are the products that make the Mekong region such a tourism jewel – but unless you are a traveller with very specific interests, and you go searching for them, how do you find these products?

Often, they are created by people who are passionate about authenticity and committed to conservation but don’t have the budgets to stand out in the crowded marketplace and they also don’t have the ability to scale – nor do they necessarily want to.

As Jef Reumaux who founded The Gibbon Experience in Bokeo, Northern Laos, says proudly: “We have no potential to be replicated.”

[In The Gibbon Experience, customers sleep in tree houses 40 metres high and there’s a network of cable bridges to help scout the canopy for the gibbons whose distinct calls are heard throughout the forest every morning]

The theory is that the internet is able to help guys in the Long Tail reach customers they wouldn’t normally be able to – but what if the Long Tail is extremely long and awesomely big as it is in tourism, where the heartbeat and lifeblood of the industry is often not in the big brands in the big cities but in the small parts that make the whole?

Talking to the more experienced operators in the Mekong, there is the acknowledgement that they know how to create authentic experiences to delight customers – the missing piece of the puzzle is often how to get these customers in the first place.

In a region where the mix of travellers is also changing – the share of arrivals from the ASEAN region to the Greater Mekong Subregion has grown from 24% to 56% in the last eight years – it’s become even more critical for these operators to seek out new segments of customers that will continue to want to pay for these experiences.

Social media is cited as one of the new tools that could help these small operators.

Passionate travellers tend to be passionate about sharing as well although there may be some customers who don’t wish to share because it’s getting harder and harder to find places where you can get away from the mainstream.

Jia Liming of Wild China, acknowledged as China’s leading cultural and sustainable tour operator, says her company is directing more efforts towards its website and social media to spread the company’s message.

The website has a TripAdvisor recommendation and tools by which customers can connect with through Facebook, YouTube, Flickr and Twitter.

At Green Discovery Laos, managing director Vianney Catteau says walk-in sales through its seven offices in Laos account for 70% of its business but 15% comes through the internet, an increasingly important channel for the company.

It’s a channel small operators know is their future. But for as long as they are reliant on tour operators, their margins will always be restricted.

At the other end of the value chain are the traditional tour operators whose margins are being squeezed on all fronts and who may see the potential to own such Long Tail supply in destinations.

The challenge is in aggregration, physically and virtually. Several Asian operators have tried to combine forces under alliances and marketing partnerships – they have had limited success. The intent may be noble but the challenge is always human – often these companies are run by independent-minded entrepreneurs who find it hard to see a greater purpose beyond their own ego.

Then there are companies who have tried to do it on their own – Asian Oasis in Thailand, for example, builds, owns and operates its own products under one brand. But again, hard to scale and difficult to bring in like-minded players who may not want to go under another company’s brand, especially if they see it as a competitor.

Then there’s the thought that perhaps they could all band together and come under an Expedia-like umbrella and then I say, perish the thought.

Unlike books that can all be bought under Amazon, the idea somehow doesn’t work as well in tourism – surely, unique, authentic experiences cannot be commoditised?

And then I wonder if a Worldhotels-like organisation can exist for unique, independent hotels, why not for these small adventure and ecotourism operators?

And again, I abandon the thought because as Reumaux of The Gibbon Experience says, when asked to share the secrets of his project’s success:

“Stay free-minded and passionate. Postpone marketing when possible. Respect local culture. Renounce excessive conformism. Question the industry’s mainstreams. Enforce your dreams.”

Yes, perhaps the answer to finding the Long Tail in travel is allowing it to swing free and wild as with the gibbons, and only those who seek shall find.

NB: The Bokeo Nature Reserve consists of 123,000 hectares of mix-deciduous forest in a mountainous terrain ranging from 500m to 1500m in elevation.

It was established by the Lao Forestry Authorities and Animo, the company that runs The Gibbon Experience, with a practical approach and no external funds.

In 2004, Animo was given a government mandate to protect this rich asset of Northern Laos that borders the Nam Ha Protected Area.

With margins being squeezed at every point of the supply chain, the future for traditional outbound tour operators is apparently in destination management and to own Long Tail supply.

Hans Lerch, vice chairman of the Migros Group of Switzerland, which owns Hotelplan, who was recently appointed caretaker global CEO of Hotelplan, says this is a logical step.

“Just look at yourself when you buy something – you may not buy at the cheapest price, what you want is the best value for money. And when you go to a destination, it does not matter if you spend $20 or $30 for a meal – what you want is the experience. People, when they are in-destination, will not bargain as hard and tend to spend more.”

Lerch reckons disintermediation has taken out the margins in all parts of the value chain, adding:

“Tour operators give less margin to the travel agent, and you are earning less and less as you bring the product to the client.”

This was why tour operating groups like Hotelplan are looking at buying suppliers of in-destination products such as ski operators or dive companies.

Lerch says:

“These kind of services add to the experience of a destination and customers will pay on the ground for these services.”

Owning such Long Tail supply also means more control over destination services given stricter legislation makes tour operators like Hotelplan liable for accidents that happen to customers when using sub-contracted suppliers.

It’s a model that has been tried before, with tour operators starting up their own hotel operations. But Lerch says this is difficult, claiming that running a hotel “is a different business” from running a tour operator.

But niche, specialty products and services are different, he says, and these cannot be copied by online travel agencies, adding: “Virtuality stops somewhere.”

As caretaker CEO, Lerch aims to reposition Hotelplan. He says: “In 1965, it [Hotelplan] was substantially bigger than Kuoni, but Kuoni is now two-and-half times bigger.”

Indeed, it was Lerch who was responsible for building up Kuoni’s global operations.

Asked if he intends to do with Hotelplan what he did with Kuoni, Lerch says: “That took over 40 years to build. That train has left the station.”

Instead, Lerch sees four ways traditional tour operator can grow in the new marketplace:

1. Continuing to grow the legacy model “which still pays the salaries”.
2. Invest in the online channel. Every tour operator has to take part in this. “The good news is that Expedia did not knock out the legacy tour operators within two years like they said they would and was feared. Many legacy tour operators have made good investments in the online channel and have built good businesses.”
3. Through companies that cannot be copied in their content and brand or the way it is packaged. For example, Abercrombie & Kent in UK or Intrepid Travel in Australia. “These continue to enjoy good organic growth.”
4. Expansion by geographic markets. “Where is business going to grow quicker and how can you attack these markets?”

Read the headline again… That’s right, the UK’s official body which represents the interests of travel organisations and consumers has a rather interesting idea.

But first, some background: two key distribution models are emerging in consumer-facing online travel.

Firstly, there is the distributed transaction model – supplier places product, price and availability information into some form of distribution system, consumer buys from an agent (online or off), the transaction details are transmitted to the supplier.

Secondly, media models are coming to the fore. Awareness of the product (including perhaps price/availability) is on a 3rd party website, but ultimately the consumer books with the supplier directly.

Media models are simply a form of advertising with rich data. It is a marketing process, not a sales process.

With flights, hotels and other commodity products distributed transactions work well.

Most leading OTAs sell flights/hotels and consumers are happy enough to book these products via OTAs.

One reason is that collectively we as an industry have worked out what product information the consumer needs in order to make a purchase decision on a 3rd party website.

For flights/hotels the hot news is the media model websites (including meta search, trip planning sites etc).

For escorted tours, activities and some ground arrangements the story is quite the opposite. Take the example of a customer looking to book a white water rafting holiday.

The consumer will want to communicate with the supplier prior to booking. It is the nature of the product. Hence for these products distributed transaction websites have never really taken off and, I argue, are unlikely to.

Instead of automation tour companies focus on efficiency. You know you are going to have human-to-human contact as part of the sales and booking process – how can that be made efficient?

For these kinds of products the media models are king as ultimately it ensures consumer-to-supplier communication takes place directly.

The hot news is where you see distributed transaction models being given a go.

Trouble ahead

In the UK at least, distributed transactions are a core part of what a travel agent does. In flight/hotel sales the travel agents are competing not only against strong online distributed transaction players but with media model sites that don’t need any complex technology nor any consumer protection mechanisms. Is that fair?

Seems the agents don’t believe so and they want to even up the playing field.

What we may have here is the start of a proxy war between the smaller agents who want to maintain the distributed transaction model and the media model people.

However the media model people haven’t really woken up to it yet (probably because the trade press tend to write from a travel agent perspective!).

The proxy war will be fought within the new Package Travel Directive (a European-wide proposal that is under consultation at the moment).

From an ABTA statement this week:

“The ABTA submission to the European consultation advocates that the scope of customer protection should be extended to include all linked leisure travel arrangements, including “click-through” arrangements bought on the internet.”

Now I am not quite sure what this means yet. Does it mean that if you are a travel website and you have an affiliate banner to sell a hotel – and an affiliate banner to sell a flight – you need to be offering consumer protection?

That would be troubling. It would also be troubling to all non-travel websites who have travel advertisers and, if finally incorporated into the new directive, break the media model at least in Europe.

ABTA asked their members the following question:

If a new Package Travel Directive were introduced, indicate which of the following travel-related products or arrangements you think should be within the scope (tick all that apply).

One of the answers was:

• Accommodation, transport andor other tourist services purchased on the internet from different sites which are clearly linked on their web pages.

105 out of the 141 responses (74%) ticked that this should be in scope.

I am somewhat surprised by this position taken by ABTA. Last year when the ABTA chairman was being elected there was a great discussion on the Musings blog about this very topic. John McEwan (now ABTA chairman) stated:

“My view is that ABTA is best placed to represent the industry as a whole and that should include non transactional companies such as Cheapflights, Google etc. The methods of purchasing travel have evolved and ABTA needs to evolve accordingly.”

The European Union is still accepting responses to the open consultation (until 7th February 2010). Consultation website.

If you believe that websites should be able to link to travel companies without taking responsibility for consumer protection then make your voice heard!

NB: I am taking part in a debate about these two models in tour distribution as part of Travel Technology Europe (London, February 9th 2010). Seminar A1. I will be debating these two models with Deepak Jha from Isango.

As revealed on Tnooz two weeks ago – although heavily denied at the time – British Airways and Amadeus have reached agreement to extend their distribution deal until 2013.

Press released today, Amadeus says it has achieved a “full content” partnership with BA to give agents access to the same information that consumers going direct to BA.com would have.

This includes, according to the release, “fares, schedules and inventory” for bookings will be the same as those offered through any “direct or indirect channel, distribution provider or website”.

Only Sabre of the big three GDS networks remains un-signed, although the contract officially runs out at the end of Q1 2010.

The speed in which the two agreements so far (Amadeus and Travelport) have been signed has surprised some seasoned industry watchers behind the scenes – many of which expected a long drawn out process of negotiation as airlines attempted to squeeze the GDSs for better rates and less access.

The reality is that airlines – at least in the case of BA – are probably eager to stabilise their distribution agreements before heading into what could be another tough 12 months.

With the U.S. Dept. of Justice making inquiries into allegations by Farelogix that Sabre engaged in anti-competitive practices, Farelogix President and CEO Jim Davidson answered counter-charges by Sabre that Farelogix was encouraging “content fragmentation” and seeking a “free ride” on the back of the Sabre global distribution system.

Davidson says Sabre’s content fragmentation argument actually is a smokescreen for Sabre’s abhorrence of “lower-cost competition.”

But, before providing Davidson’s statement below, some context is necessary. In the run-up to airline-GDS negotiations in the U.S. in 2006-2007, major airlines threatened to drop out of GDSs or to levy exhorbitant surcharges on travel agencies if they didn’t agree to givebacks of part of their incentives.

Alternative distributors, such as Farelogix, emerged and travel management companies and consolidators began signing contracts with them as a form of content insurance and as a way to lower their distribution costs. Farelogix and others needed access to the GDSs so the TMCs could integrate GDS and non-GDS bookings and keep their back-office systems zipping along.

Farelogix signed a developer’s agreement with Sabre to accomplish these ends, and Sabre terminated the agreement in March.

Farelogix alleged to the DOJ that Sabre was using its market dominance in the U.S. to wipe out a much-smaller competitor. With no developer’s agreement, TMCs that use Sabre content would be highly reluctant to do business with Farelogix, the company contends.

This week, when informed that the DOJ was contacting Farelogix customers, some of which are also Sabre customers, about the issue, Sabre spokeswoman Nancy St. Pierre said Sabre had not been contacted by the DOJ. St. Pierre stated:

“However, as we said earlier this year, the termination of the developer agreement with Farelogix only affected a handful of Sabre subscribers and we have worked hard to ensure their needs have been taken care of. Our action was taken in light of the evolution of the Farelogix business model to one of content fragmentation, and what became clear was an attempt to free ride off of our database and systems.   The termination was fully compliant with the terms of the agreement and with any applicable law. Sabre has not told any of its subscribers not to do business with Farelogix.”

The following is a statement by Davidson of Farelogix in response to Sabre. Davidson says:

“I landed in the Middle East on Tuesday morning (local time) and my Blackberry awoke to a surge of messages about an article published by Tnooz about the DOJ making calls to certain Farelogix customers.  After reading the article, I felt compelled to respond to the comments made by the Sabre representative.

To the Sabre comment about the “evolution of the Farelogix business model to one of content fragmentation,” I offer the following 3 points:

• I can confidently say that the Farelogix business model has been consistent from the first day I joined the company, over four years ago.  As a matter of fact, on two separate occasions, Farelogix invited and hosted Sabre product managers and executives in our Miami office where we provided full-disclosure product demos. We clearly reviewed with Sabre how the FLX Platform technology accesses and manages multiple content sources, including all GDS, Web, private fares, and direct supplier content.  So maybe the “evolution” comment was related to the fact that since that time, Farelogix has actually developed some solid customer traction with our business model. Perhaps “fragmentation” is simply a code word for “lower cost competition.”

• The Farelogix FLX Platform for travel agencies doesn’t create fragmentation…rather, it is a response to it. The FLX platform provides a low-cost solution to solve the challenge of industry content fragmentation, which by the way has existed in our industry for years, despite the “GDS single-source claims.” Managing multi-content sources is a high-cost and complex challenge faced by literally every travel agency, TMC, and consolidator who is attempting to do business on a global scale.  To say otherwise, is simply a slight to those companies struggling with this challenge every day. Each year, these travel management companies spend hundreds of thousands of dollars in added personnel and technology overhead that must be passed on to corporate and leisure consumers as higher service and support costs.

• Let’s face it, content fragmentation is only going to get worse, especially with suppliers and agencies working diligently to differentiate themselves and their products.  And, for anyone to assume that Farelogix is a major cause of this increased industry fragmentation, however flattering it would be, is simply quite overreaching to say the least.

And, as response to the Sabre comment, “what became clear was an attempt to free ride off our database and systems,” my initial response is: “I don’t understand the comment.” Perhaps there is perception out there that somehow Farelogix is utilizing the Sabre system to shop and search, gather content, and then use that data to make bookings in another source system? Or that the Farelogix system integrates as a “sniffer” application connected to the Sabre GDS and only “activates” when certain agency transactions are requested? If any of this were the case, I would actually agree with Sabre that those actions, in my opinion, would in fact constitute a “free ride.” But, the reality is that the Farelogix FLX Platform technology does none of the above.

Simply stated, FLX does not and is not “free-riding” on either the Sabre content or any Sabre investment in the Sabre product. In fact, the Farelogix software does not use nor in any way depend upon Sabre or any GDS.  FLX’s simple objective is to be able to operate side-by-side existing GDS solutions by providing value-added service and functionality. Instead of serving its customers better and more efficiently, Sabre’s response to this enhanced competition from FLX was to harm its customers by stifling competition–and Sabre is now trying to justify it by claiming that FLX is “free-riding.”

Lastly, for the record, let me state what the Farelogix FLX Platform actually does in its simplest form:  it connects to the customer-requested content sources (GDS, web, direct, private) in a well documented, consistent, legal, and normalized manner allowing the user to apply a predetermined and dynamic set of business rules to the data. It provides a superPNR to manage bookings and reservations from multiple sources, and provides a way for agencies to get all this information into their back office systems.  All of this results in a quantifiable increase in TMC productivity levels and reduced costs for the travel agencies, and not to mention more content choices for the consumer or corporate traveler.

The marketplace impact of the FLX product has been to reduce the ability of the legacy GDSs to lock-in customers due to their incumbency, particularly Sabre’s.  It gives to customers a significantly lower-cost solution that allows them to be more responsive to their consumer needs.  By terminating the developer agreement with FLX, Sabre revealed its true purpose and intent–to protect and maintain its market dominance at the expense of Sabre’s customers and their consumers.”

Sabre declined to comment on Davidson’s statement.

Perhaps the next move is the DOJ’s.

The U.S. Dept. of Justice has begun looking into allegations by Farelogix that Sabre engaged in anti-competitive practices when it terminated a Farelogix developers’ agreement in March.

The Farelogix FLX Platform enables major travel management companies, including Carlson Wagonlit Travel, American Express Business Travel and others, to tap into Farelogix’s direct-connects with airlines, apparently at a cheaper price than the TMCs would get from the established global distribution systems. In this era of GDS deregulation in the U.S., distributors such as Farelogix also serve as a content hedge against carriers dropping out of some of the major GDSs.

Farelogix alleges that when Sabre terminated the Farelogix developers’ agreement with the Sabre GDS that Sabre was using its imposing market clout in the U.S. market to snuff out a competitor. When that agreement ended, it made it much more difficult for Farelogix customers to integrate their Farelogix bookings with other reservations made through Sabre.

And, Farelogix also alleges that Sabre used its persuasive powers to dissuade existing or potential customers from dealing with Farelogix.

Tnooz has learned that the Dept. of Justice has recently begun contacting Farelogix customers about the allegations. Farelogix partner Pass Consulting, as well as Globus and Vayama (also known as Air Trade International), confirmed they have been contacted.

William Niejadlik, chief technology officer of Vayama, says the DOJ contacted the company, and sought information relating to the timelines of its dealings with Farelogix and Sabre. Niejadlik says Vayama is a Farelogix customer and had been seeking to establish a relationship with Sabre, as well.

Major travel companies often use multiple GDSs because when a particular GDS also hosts an airline, there may be advantages on the availability front to using that GDS. Cutting off Farelogix’s access to Sabre, or so the argument goes, proves disadvantageous to Farelogix customers who also want to access the Sabre system.

I contacted the DOJ about the inquiry, and am awaiting a response from the government agency.

When contacted over the weekend, Farelogix President and CEO Jim Davidson confirmed that he has met with DOJ officials several times over the allegations, but he declined further comment.

Sabre spokeswoman Nancy St. Pierre said Saturday that Sabre has not yet been contacted by the DOJ about the matter.

“However, as we said earlier this year, the termination of the developer agreement with Farelogix only affected a handful of Sabre subscribers and we have worked hard to ensure their needs have been taken care of,” St. Pierre says. ” Our action was taken in light of the evolution of the Farelogix business model to one of content fragmentation, and what became clear was an attempt to free ride off of our database and systems.   The termination was fully compliant with the terms of the agreement and with any applicable law.   Sabre has not told any of its subscribers not to do business with Farelogix.”

Farelogix is the surviving “alternate distributor” in the U.S. among three new-entrants of a few years ago. ITA Software gave up its distribution aspirations and turned to airline hosting. And, G2 SwitchWorks, founded by some Orbitz expatriots, was acquired by Travelport, which is using G2 know-how for travel agency desktop development.