Special Report: The future of airline distribution

Special Report The future of airline distribution

The airline-GDS distribution battle threatens growing fragmentation.

Smaller agents are stuck in the middle of a battle over distribution between airlines and GDSs and being denied access to full fare content while they lack the resources to pay for new distribution capability (NDC) technology that is still in development.

Heavyweight travel management companies (TMCs) and some leisure agencies have signed deals with British Airways, Iberia, Air France-KLM and Lufthansa Group airlines to avoid the GDS charges all three airline groups now impose.

Smaller businesses not only face the GDS booking fees and ancillary charges, but also a lack of information.

Ken McLeod, Advantage Travel Partnership director for industry affairs, blames both airlines and GDSs for the impasse.

He told a Travel Weekly Business Breakfast on The Future of Airline Distribution: “The airlines want the Amazonisation of travel. We understand that and want to be part of it. [But] we want to use a GDS.

“Remember, it’s not just airlines in the GDS – the GDSs have hotels. We book two to three million room nights [a year at Advantage]. They have car rental, rail, all the processes that sit behind the GDS and until someone else offers that commercial solution why would we move?”

McLeod insisted: “All we want is access to content. We’ll sell as many ancillaries as we can so long as we’re commercially rewarded. But that is not available to us now – partially [due to] the airlines but also partially due to the GDSs. Both have a lot to answer for because we’re their customer and we’re pretty much in the dark.

“The airlines are meant to be our partners, yet we get very little cooperation. Most of this [NDC] technology we talk about is not actually working, and that is a challenge. Going back five years even I thought something would have developed to the point where it works [by now].

“It will work, and we understand why airlines want it, but we don’t have a level playing field. Very little information is available and it’s only available to those with deals [with the airlines] in place. There is a group of agents who are the ‘haves’ and a group who are ‘have nots’.”

McLeod added: “The GDSs are able to promote more ancillaries, but it is still a clunky way of doing it. The airlines are forcing the GDSs’ hand and agents in the middle wondering what the hell is happening.

“We know NDC is a game changer. We accept we’re going to have change. We’re very keen to work with airlines and want to work with technology companies. But we will only do it when it works – because we have to pay for it – and when it works within the processes of a system that has been around for 40-50 years.”

Andreas Koester, Lufthansa senior sales director for the UK and Ireland, urged agents: “Don’t wait for the solution. It won’t fall out of the sky. You have to work with us and the GDSs.”
But Deloitte consulting partner Andy Gauld warned: “There is going to be a period of fragmentation across the industry for two, three, maybe five years.”

GDSs reject carriers’ tech claims

Airline claims that GDSs “have not evolved” to allow carriers to sell fares through agents as they do online are “fundamentally flawed”, according to Travelport UK and Ireland managing director Paul Broughton.

Read rest of the article at Travel Weekly

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