Global distribution systems Amadeus and Sabre are jockeying for position in the Middle East and Africa, forging new partnerships with airlines in some markets and ramping up direct-to-agent approaches in others. The two are aiming at Travelport GDS, owner of the Apollo, Galileo and Worldspan distribution systems, which together control about half of the Middle East and African market—a hold competitors said is slipping.
As GDSs report booking softness spreading from the United States to other regions, the Middle East and Africa are beacons of booming growth and battlegrounds for incremental booking revenue.
Sabre Holdings, which controls the least amount of marketshare in the Middle East and Africa, this month made moves to bolster its presence through a 10-year distribution pact with Emirates-owned EmQuest, a travel distributor that works with travel agencies, suppliers and corporate customers. Sabre Travel Network and Airline Solutions president Tom Klein said the deal gives the U.S.-based distribution provider entry into several African countries and further penetration in the rapidly growing Middle Eastern market. The companies would not disclose the deal's financials.
EmQuest will begin distributing Sabre products and services to agents and travel suppliers in January 2009. Sabre gained EmQuest's distributor business from Galileo, which will continue to do business under an agreement with EmQuest until the end of the year.
Travelport GDS president of Middle East and Africa Bryan Conway said Travelport had been in discussions with Emirates to renew the agreement it has held since 1991. "In the end, we just couldn't agree to a foundation for the relationship going forward which makes sense for us," Conway said, adding that Travelport is working to bolster its direct agency relationships in the region, in some cases foregoing agreements with such distributors as EmQuest.
Travelport GDS earlier this year "announced the intent to set up our own direct operations—direct to travel agents—in Egypt, Saudi Arabia and UAE, and to reinvigorate some of our distribution relationships in the region," Conway said. He stressed that the dissolution of its distributor agreement with EmQuest does not impact its global airline content deal with Emirates.
Conway said Travelport by no means is ditching the distributor model in the Middle East, but added, "Saudi Arabia is the largest market in the region, UAE is second and Egypt is third. In those markets, we want to have as much control as possible. We felt we had the best opportunity to do that in a direct distribution model."
Conway said Travelport GDS claims "about 50 percent marketshare in the Middle East" and said the company is "making investments of well over $20 million this year to establish our presence in this region," setting up offices in the largest Middle Eastern markets. "We're not making that level of investment with the plan to lose business. Our plan is to grow in one of the most rapidly growing travel markets in the world," he said.
Amadeus head of Middle East and Africa Fernando Cuesta said the GDS has taken a direct approach to distribution through wholly owned local offices and an indirect approach with airline partners.
While Sabre most recently scored Emirates as its partner, 12 members of the Arab Air Carriers Organization, including Etihad Airways, Qatar Airways and Saudi Arabian Airlines, in June selected Amadeus as "their exclusive distribution partner in their respective home markets for the coming 10 years," beginning in January 2009. AACO said the home markets of the 12 carriers account for 66 percent of Middle Eastern and African bookings.
Amadeus' Cuesta said several other local carriers are in play for GDS distribution business, as carrier contracts are coming under negotiation. Among those, Royal Jordanian has yet to commit to a new GDS pact.
Cuesta claimed the GDS's marketshare in the Middle East and Africa has grown significantly, from 12 percent in 2001 to 35 percent today, adding that Amadeus is active in 72 markets there. "The market has 100 million bookings, and this is the highest growing region across the world, with double-figure growth between 10 and 15 percent for the past seven years in a row," Cuesta told BTN.
Sabre holds the least marketshare in the region, but Klein said, "We've been growing our presence in the Middle East and have been creeping up in the 20 percent range or so with our current book of business," Klein said. "This will greatly enhance that." He said the region relies heavily on the agent market for travel services, and "there's very low online penetration for travel sold."
Klein said the EmQuest agreement also gives Sabre immediate access to five African countries—South Africa, Kenya, Tanzania, Uganda and Zambia—creating untapped access to the region. "We don't play in a meaningful way in Africa today. Starting pretty much immediately, we'll have EmQuest distributing us in Africa. Then in early 2009, they'll be distributing us in this region," Klein said by telephone from Dubai this month.
Klein said some multinational customers, including Oracle and Cisco, "have been pushing us to get into a few of the markets that we're going into. South Africa is a big example."
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