Air Canada (AIDIF, AC.B.T) and Travelport on Tuesday announced a new pact for selling tickets that could provide a template for resolving an escalating conflict between airlines and third-party travel distributors.

The multiyear deal will see Air Canada continue to sell tickets through the three global distribution systems, or GDS, run by Travelport, as well as the ancillary services, such as preferred seat assignments, that make up an increasing portion of airline revenues.

The deal comes as American Airlines spearheads an industry revolt against the way that GDS operators stand as intermediaries between carriers and travel agents, which still account for two-thirds of ticket sales despite the rise of direct online bookings.

Air Canada's new "multiyear contract" with Travelport will be closely scrutinized by rivals as the flag carrier had in the past been a vociferous critic of the technology used by GDS operators because it limited its ability to segment fares and services.

The airline had negotiated what became known in the industry as the "Air Canada clause" when it inked its last deals with GDS providers in 2006, securing the right to withhold fares that couldn't be properly displayed to travel agents because of technology issues.

Travelport said the new "full content" deal with Air Canada was an industry first, covering all fare classes and including the ability for travel agents to include extras such as lounge access and pre-paid meals when booking on behalf of a passenger through its GDS.

While this segmentation is routinely available on airlines' own websites, the GDS providers have found it tougher to rework systems to segment these extras for corporate-travel departments.

Travelport, which is controlled by The Blackstone Group, One Equity Partners and Technology Crossover Ventures, runs the Apollo, Galileo and Worldspan GDS platforms, three of the five systems that dominate global airline bookings.

The systems consolidate fares and schedules and act as an intermediary for travel agents, charging airlines a fee for the service. American and others want to reduce or eliminate such payments and route more bookings directly through internal systems to cut costs and, they argue, provide passengers with more choice.

Critics among the GDS providers claim the move by American, a unit of AMR Corp. (AMR), reduces customer choice by reducing the fares and services they provide to online and offline travel agents.

It is unusual for either party to publicize the multicontent agreements between airlines and GDS providers, which typically run for five years.

Travelport announced the Air Canada deal in a statement, though the airline made no announcement and declined a request for further information.

"Air Canada is pleased to continue its close and ongoing collaboration with Travelport and to provide Travelport-connected travel agents with the ability to sell all of Air Canada's product features and fares," Graham Wareham, the airline's senior director, product distribution, said in the statement.

Most of the long-term deals between Travelport's GDS platforms and their two rivals--Sabre Inc and Amadeus IT Holding SA (AMS.MC)--expire over the next two years.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135;

doug.cameron@dowjones.com
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