Rob, here it is.
Airlines Take Risk With Priceline.com, Crandall Says (Update1) (Closes share
prices.)
Chicago, May 13 (Bloomberg) -- Airlines that sell tickets through Priceline.com
Inc., an Internet retailer, are cannibalizing their own sales, said Robert Crandall, the
former chief executive of American Airlines parent AMR Corp.
Priceline.com lets customers submit bids for airline tickets and hotel rooms through
the Internet. It has relationships with 18 airlines but not with UAL Corp.'s United
Airlines and American, the two largest carriers. ''I don't know why any airline would
choose to make seats available off-tariff,'' Crandall said after a speech in Chicago
at a conference about travel and the Internet. ''The whole notion of undercutting
the tariff doesn't make any business sense.''
Major U.S. airlines, including United and American, all have revenue-management
systems that allow the companies to sell a mix of full-fare and discount tickets that
almost always ensures a profitable flight. By further discounting seats sold through
companies such as Priceline.com, the airlines risk losing demand for regular fare
tickets, Crandall said. ''If you start selling $90 seats,'' everyone's going to want $90
seats, AMR's former chairman said.
Among the airlines working with Priceline.com are Delta Air Lines Inc. and
Northwest Airlines Corp., the third- and fourth- biggest U.S. carriers.
Priceline.com fell 4 1/2 to 121 1/2 and AMR fell 5/16 to 74.
Regards,
Tom |
