As expected, changes are coming fast and furious this year with
the global distribution systems. From opt-in programs to segment
fees, the developments are the latest in an industry under growing
competitive and economic pressures. Experts say that far from being
the last, these changes are likely to only be the first in an
ongoing and accelerating evolution.
“In a nutshell, what I think is going on now is you’re seeing
action to the talk,” said Jim Davidson, chief executive of
Farelogix. “The last six months there’s been a lot of talk about
control over channels. Now it’s manifesting in true action.”
“I think the airlines will basically sign the deals with all
GDS, but I do think they will circumvent and get true desirable
content private content,” said Davidson. “That’s the layer of the
onion no one has peeled back yet. Private fares are the sleeping
giant right now. Read between the lines & all the talks are
about published fare access. The idea of private fares will take
off in six to nine months.”
Others predict changes in a variety of areas.
“I think you will see airlines continue to innovate ways to
differentiate their products and prices,” says John Ische,
president and CEO of Trisept Solutions. And Eric Maryanov,
president and founder of All-Travel, predicts increased integration
of GDS competitors into the agency environment.
“While GDSs have long served as the technology bridge between
the travel agency industry and the airlines, the GNEs are the
result of changes in technology, which does encourage the agency
industry to carefully review their booking methods and business
models,” he said.
Ellen Lee, co-founder and vice president of G2Switchworks one of
those GNEs which distributes G2Agent platform that offers access to
nine U.S. airlines’ fares believes the current GDS changes are here
to stay.
“If you look back to what Northwest did in August 2004 which is
very similar to the airline programs being announced today the
difference was there was no GDS support of the idea in 2004. The
GDSs [particularly Sabre] fought Northwest, and Northwest backed
down.
“In 2006, the GDSs led with announcements and rumors of opt-in
programs before airlines indicated their plans ... ,” she said. “I
believe this approach will make all the difference and penalties
for booking in ‘high-cost’ channels will stick this time
around.”
Other changes in the future of GDS/airline evolution could include
further reductions or elimination of incentives over time (much as
commission caps turned to zero commission), said Ellie Knight,
director of agency automation and training at Signature Travel
Network.
“There will be far fewer individual GDS contracts as smaller
agencies will host out these services to other larger agencies.
Both the GDS vendors and airlines will have to deal with fewer
entities but more powerful ones,” Knight said. “In addition, GNEs
will take a larger market share, especially as these engines
improve their airline share and capacities over time.”
Owen Wild, director of marketing at Amadeus, said the company is
in discussion about creating its own opt-in program.
“What I think is becoming clear is that there will not be a
single solution that fits every customer today, and that’s a good
thing. Development of new technology has increased a lot of things
that are good about the industry. But it also creates a lot more
complexity and challenge. I doubt it will get any easier to make
decisions on behalf of the customer. But the customer also now has
the ability to look at very new options,” he said.
Ultimately, experts continue to say agencies need to evaluate
all options carefully.
“Insulate yourself,” said David Cerino, chief marketing and
product officer of Farelogix, “so you have technology in place and
no matter what, you have the ability to source where you need to in
an efficient and productive manner.”
Adds Maryanov: “Basically, as the game changes, we need to
continually review our own business models. Rather than ‘coping,’
agencies must continue to adapt and develop dynamic business models
that are prepared to change and adapt and innovate within the
continually changing environment.”
