The U.S. Department of Transportation's plan to allow global distribution system providers to bias their displays beginning in July
(BTN, Jan. 19) is generating discussion about possibilities ranging from some airlines paying GDSs for preferred displays to others entirely leaving certain systems.
"Because of deregulation, people think something new has happened where they can think about dropping out of a GDS, but airlines cannot afford to lose customers," said Worldspan chairman, president and CEO Rakesh Gangwal in a February interview. "Which marketing guy goes out and tries to figure out how to take his product away from the store shelf? That is what you're hearing some people talk about. People are saying, 'Oh, deregulation happened, I must do something.' That thought process may make people do something just for change's sake. Will an airline make a mistake along the way? Of course."
Many airlines have been free from regulatory barriers to pull out of GDSs for years. Short of that, Gangwal said, most airlines are more likely to tinker with their displays.
"As a buyer, you want something that is not biased, unless you choose what the bias is," said Travel Tech Consulting president Norm Rose. "If you want to bias for your preferred relationships, that's one thing, but this is an example of bias you may not even be aware of. I remember the days when an agency was encouraged to switch from one GDS to another by an airline offering incentives or overrides. Will we see different fees charged by GDSs to suppliers that represent different positioning in the system?"
Asked on a January conference call with financial analysts whether its three-year content deals with carriers limits Sabre's flexibility in pricing for bias, Sabre Holdings president and CEO Sam Gilliland said, "We'll be looking at new business models as opportunities arise to build deeper and more profitable relationships. We clearly have three-year contracts in place, but there may be opportunities for each of us to improve upon those relationships. If we find that beneficial, we may enter into a new relationship. We have not lost flexibility." Sabre indicated in its 2003 annual report that it may pay agencies higher incentives for bookings on preferred carriers.
"If the GDSs' pricing policies result in loss of substantial supplier participation and inventory, then most of their value disappears," said Management Alternatives consultant John Heilner. "I believe that at least one, and probably more, of the GDSs will retain a strictly unbiased display."
Another observer was not so sure. "The GDSs will be forced to offer a new bias marketing alternative to the airlines to sustain the GDS revenue base," said Eastman Group president Richard Eastman. "It is quite possible that one or two of the GDSs may opt to provide some sort of 'unbiased' display alternative to those desiring it, but these possible new unbiased offerings will still be able to be manipulated by the algorithms within the legacy host systems. The interesting thing to consider is that few travel agents, let alone consumers, would know or even care about GDS biasing. Most travelers know who and what they want when they reach out to the automated aspect of the distribution system, so biased or unbiased displays are almost irrelevant."