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GDS Are Here to Stay
“At the dawn of the internet age, airlines assumed that the middlemen who came between them and their passengers were headed for extinction. Travellers would eventually buy tickets either from the airlines’ own websites or from price-comparison engines which hooked up directly to theairlines’ computers over the web. So why pay commissions to agents? And why continue to own reservation systems, especially since regulators had stopped them from fiddling with travel agents’ GDS screens to place their own flights at the top?”
“However, the loss of direct commission from airlines made travel agents more beholden to the GDSs, which not only slip them a share of fees but also provide their back-office computing. Many online travel agencies have come to resemble physical ones, signing up with a GDS which provides a reservations system and other computing power while handing them a commission (ultimately paid by the airlines) on every booking. Despite airlines’ efforts to make travellers bypass agents and come to their own websites, less than half of flights are booked this way.
Some airlines have thrown in the towel and let a GDS take over the running of all their in-house systems for handling passengers—in some cases, even their websites. Bookings on BA.com, for example, are handled by Amadeus. Some low-cost carriers, such as easyJet, which had at first refused to use GDSs have relented. This is because they want to reach high-value business flyers, who often make bookings through corporate travel agents—which, in turn, use a GDS to compile their itineraries.”
“Hoping to solve these problems, the airlines’ international association, IATA, is working on a grandly titled “new distribution capability”. One of its main elements will be a common technical standard for direct-connect services. The GDSs could make use of such services, so as to sell the airlines’ full range of extras as well as just flights.”
“IATA hopes to have its new technical standards agreed by the end of the year—though as a rule, getting airlines to agree on such things is tricky. Then there would be the problem of implementation; the industry, like every other, has seen ambitious IT projects fail disastrously. Suppose that IATA does persuade hundreds of airlines to agree on the new technical standards, and successfully build computer systems that run on them. Even then, admits Gary Doernhoefer, an IATA official, the GDSs’ grip on the industry may not change much without regulatory action to unpick their cosy agreements with travel agents.”
TTS’ take: From our experience within the industry and seeing the impact our products has, we believe that the future of GDSs is not at stake. Without using a GDS an Airline will have to approach directly each Travel Agent, get the flights’ inventory listed with them, which will eventually lead to more costs and more time consuming implementations for the Airline.
Read more in the full article here.
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