WHY PRIVATE MARKETING AGREEMENTS BETWEEN AIRLINES AND INDEPENDENT TRAVEL SITES ARE GOOD…

…And Why The Absence of Them Is Bad

     Travelocity, as an independent travel site, has negotiated marketing agreements with airlines for years. When negotiating these agreements, Travelocity aggressively bargains for consumer benefits such as low fares, access to Web fares and other competitive content. The airlines negotiate for merchandising opportunities through Travelocity, via targeted e-mails, sweepstakes advertising and other promotions.

     These private deals help drive down prices and increase the level of services - all to the benefit of consumers. This is a prime example of our free market economy at work, and it is a foundation for consumer friendly retail models everywhere, online and offline. It's great for consumers, since it opens up competition and forces prices downward.

     Travel Web sites that are not truly independent claim that private marketing agreements are bad for the marketplace. They would apparently prefer a marketplace where all the big travel suppliers know what each other are doing and are obligated by contracts - rather than being motivated by competition - to provide information to supplier-owned sites. But that discourages free, creative and open competition.

     Fortunately for consumers, independent sites such as Travelocity remain a force. As turbulent times in the airline industry continue, airlines know that their competitors will be trying to gain any possible advantage in the marketplace, despite their ownership ties to supplier-owned sites. Shrewd airlines know that if they ignore Travelocity's savvy members, they run the risk of losing the opportunity to build their brand and their business through a low-cost distribution channel.

     Travelocity and other independent sites continue to aggressively engage the airlines for the benefit of consumers. And because these agreements between independent Web sites and airlines are private, airlines are forced to keep guessing what their competitors are doing, and more choices and lower prices are created for consumers in the long term.

     It's free market competition at its finest.