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New rules could be a game changer for online travel sites

0 24 January 2014

Russia’s two biggest airlines Aeroflot and Transaero are trying to ban ticket agencies from selling flights for less than the prices setting by the airlines themselves. Agencies that fail to comply would be denied the right to sell tickets. 

The move comes in the wake of the Eviterra scandal, which broke over New Year and threatened to leave thousands of passengers stranded and out of pocket. Eviterra sold discounted flights on its website and app but uses other travel agencies as intermediaries. On 31st December one such agency - Avia Center - voided all the tickets issued to Eviterra clients after Eviterra failed to pay for ten days worth of services. 

After negotiations, Avia Center agreed to re-issue tickets for flights from 5th January onwards. However, according to Eviterra’s website the process is not automatic and ticket holders are requested to write to Avia Center on an individual basis. A fraud investigation has now been opened into the stricken project. 

Transaero and Aeroflot sent a joint letter to all travel agencies selling flights instructing them not to set prices lower than those charged by the airlines (namely, those stated on airline websites). It also said that sanctions would be imposed on any agencies offering discounts to passengers in order to obtain commissions, promising that this would make any contract void. 

Experts predict that more online ticket sellers could go the same way as Eviterra unless they can increase their competitiveness with additional services (like Oktogo has done by acquiring and customer loyalty. 

Here is the views of travel startup founders Alex Zaretsky and Kirill Podolsky on the Transaero/Aeroflot move.

Alex Zaretski - CEO and co-founder of Travelata

This is a normal practice in most of the world. In other countries airlines and tour operators monitor the discounts offered by agencies to make sure that they are based on a set minimum price. Mass discounts in pursuit of commissions leads to a price war, and subsequently the destabilization of the market. It’s obvious how to avoid this - by not offering discounts on airline prices, but by offering customers comfort, reliability and additional services. 

Kirill Podolski - Founder of Anywayanyday 

I welcome this move, because it will make life more difficult for the small players who don’t really belong on the market. I think that online travel is the strongest trend on the Russian internet, and it has the most traffic. Anything that toughens the market plays into our hands, because it increases trust in our services. Online agencies are a distribution system for airlines. Agencies should therefore operate as agencies, and not as mega-discount services cutting prices and hoping that future investment will cover their costs, which is what Eviterra was doing. 

Top image via Shutterstock

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