Agents Look Past GDS: Reinventing Distribution Technology, Part One

Sabre Holdings Corp.'s latest pricing model recognizes the legitimacy of industry efforts to seek sources other than Sabre and its ilk for travel reservations, a search corporate travel management companies are conducting with vigor.

The shift away from GDS dependence is a significant one for the mega agencies, which not only are among the GDSs' most vital partners, but also are the recipients of millions of dollars annually in GDS incentives.

Sabre's initiative, announced this month, allows corporate buyers to opt out of those incentive payments in return for having airlines pay Sabre less on bookings made through the GetThere self-booking tool.

"It's a reasonable baby step," said Worldspan CEO Paul Blackney, whose Atlanta-based company initiated a roughly similar program two years ago. "But it's only a portion of online, managed business travel. It's not going to offer that big an effect for suppliers." Blackney said Worldspan this fall would produce different models for broader pricing structures after careful deliberation with vendor and buyer customers.

These GDSs, as well as Galileo, see changes to the pricing of their services—which, simplistically, means breaking GDS costs out of the airfare to be paid separately—as a way to boost their value to both agencies and suppliers. Sabre even called the move a preemptive strike against "so-called direct connections" now in development by agencies, which are beginning to test new platforms that set up increased independence from the GDSs.

Recasting the long-awaited movement toward direct connections as a supplement to, rather than a bypass of, the GDSs, these agencies are acting to simplify the agent interface, address the frenzy around Web-only fares, overcome the difficulties of GDS-based profile and unused ticket management and create new customer relationship tools.

American Express and Rosenbluth International are among the mega travel agencies that claim to have made progress in creating the platforms required to, for example, house traveler profiles and passenger name records outside of the GDSs to open up previously unheard of possibilities for personalized customer service.

These technologies are recreating the point-of-sale user interface for agents, reducing training time and costs and allowing never before-seen possibilities for point-of-sale preferencing to support marketshare shifts. Meanwhile, these agencies are opening up access to non-GDS inventory and fares—including bookings made directly with suppliers.

Such players join the airlines and the GDSs in seeking ways to reinvent the dusty mainframe technology that once was the only choice for e-commerce in the travel industry. All GDSs are in the midst of initiatives designed to move various functions to more open platforms, add value and recover a bit of lost luster. One example is GetThere's recently announced Multi Source Engine, which provides access to the GDSs, Web fares and some direct supplier channels. The airlines' answer is Orbitz (see story, page 1), which is establishing direct links with American, Continental and Northwest airlines.

Some travel management companies and their technology developers are not waiting for the GDSs to reinvent themselves and have no delusions about whether Orbitz, or Expedia, are competitors. Many agencies have taken ownership of the hardware, networks and certain functions that traditionally were a standard part of the GDS relationship.

Both Rosenbluth International and WorldTravel BTI are funding the development by Atlanta-based TRX Technology Services of its Project Trinity, which executive vice president and general manager Steve Reynolds described as "TRX's version of a GDS." Trinity grew out of TRX's work for more than a year on a super passenger name record for its ResAssist self-booking tool. Reynolds said the needs described by the two mega agencies prompted it to turn to developing a "professional version" for agents.

"We're now scoping out the delivery of high-priority requirements, including direct connections, the super PNR, the ability to switch GDSs at will and Web fares, while also automating policy compliance and negotiated rates," Reynolds said. He added that TRX's "short-term answer" on direct connections is to partner with Navitaire, a Minneapolis-based company that offers low-cost direct bookings with most major U.S. carriers. Among the general goals for the Trinity Project are to reduce agent training costs and build on profiles to a point where they can, for example, issue alerts about expiring passports.

As for timing, Reynolds said 80 percent of the work is done and the parties involved are seeking to deliver version one in the fourth quarter. He noted, however, that version two will be far more concrete. A controlled pilot group is being developed now.

Rosenbluth at the National Business Travel Association convention was showing the prototype of its version of Trinity, which it will pilot test by year-end. Rosenbluth's new graphical user interface will enable agents to see travelers' historical trips and contacts with the agency, helping preserve, even within a call center environment, some aspects of the one-to-one relationships shared by corporate travelers and agents. Such personalization could, for example, alert the traveler to logistical issues affecting their destination or perhaps an expiring passport.

Asked about the possibility of making bookings with suppliers without using a GDS, CIO John Dabek said, "There is more to the tool than direct connects. It has to be able to address customer relationship management and capture data to service the customer rather than the transaction. There are a lot of other components to direct connects that we are looking at in our strategy."

Rosenbluth plans to integrate with Trinity its own Dacoda software for contract optimization. For Web fares, meanwhile, Rosenbluth is using TRX's Xpedition.

American Express was nearly as dodgy about the direct connection aspect of its TravelBahn initiative, but one executive hinted that such connections already may be underway. "There's nothing technical stopping us from getting Orbitz or direct connections," he said. For Web fares, Amex is using a number of solutions, including New York-based FareChase, which also works with Sabre and others.

Web Fares is one application New York-based Amex said "rides the TravelBahn" infrastructure, which has been rolled out in North America and 13 European countries, with Latin America due to join the party by the fourth quarter and Asia/Pacific targeted for next year. Others among a handful of applications for TravelBahn include a new GUI, a nonrefundable ticket tracking solution and a profile database.

Amex would not name other third-party suppliers for TravelBahn, but Business Travel News learned that San Diego-based Peregrine Systems is one provider. Peregrine, which significantly has restructured its business of late, had purchased some assets of Xtra On-Line, a defunct travel technology firm that sold its Powertrip online booking system to Frankfurt-based I:FAO a year ago.

Amex's investment in TravelBahn, which one executive described as "several million" dollars, brings multiple forms of inventory and "all four GDSs simultaneously to the same desktop," said Michael Laughlin, American Express Corporate Travel Solutions vice president and CTO. He said the Web fares and profile components of the system now are live and rolling out to Amex counselors. The GUI, called TravelBahn Gateway, went into beta test this month with six clients. "It's proven to be not so effective," said Laughlin of past attempts to lay a GUI over the GDS screen in order to save on training. "Agents' core competency is formats, so they resisted. But we asked them to design it for us. It will reduce training, so we're now looking for customer service people."

Meanwhile, five clients now are testing the TravelBahn Portal, which offers a single sign-on to view self-updatable travel profiles, plans and bookings, and another 10 are about to pilot for two months the Ticket Trax NR module. Amex said its original Ticket Trax product has refunded more than $54 million to clients over four years. Amex charges a fee based on a percentage applied to the refunded amount.

Officials with Carlson Wagonlit Travel in Minneapolis said the company's Symphonie products—which are in complete use by more than 40 clients—tracks unused tickets, offers a GUI and databases for PNRs and profiles that are separate from the GDS.

St. Louis-based TQ3 Maritz's Ticket Minder tracking product is six months old, while the company's ProView GUI has been in place for five years. "We don't find much value in accessing all four GDSs," said corporate vice president of information technology Richard Spradling. "By having our own network in place, we've got a GDS-independent platform with policy built in to highlight preferreds."

Atlanta-based WorldTravel BTI also offers unused ticket tracking as part of its mid-office software provided by TRX.

Regarding Project Trinity, WorldTravel CEO and TRX chairman Mike Buckman, said, "TRX felt it was important to have more than one launch customer, and they're pleased to have both Rosenbluth and WorldTravel involved. We may each choose to apply the product differently, but we're encouraged it has the interest."

For WorldTravel, Buckman said, "Trinity is one of the possible solutions for the super PNR, but while we rely on TRX for a lot of things, we're not going to rely on them for everything. Today, at least, our solutions are not to bypass the GDS because we feel we need the GDS' capability. These are merely first-generation tools, but the second or third might be better."

"This is about taking out of the GDS the simple transactions for which the GDS doesn't add value, and to make it access-of-last-resort," TQ3 Maritz's Spradling said. "I don't think booking direct makes sense with every supplier, but this changes the economics of the business."

"Of course, GDSs are not sitting on their duff doing nothing," WT BTI's Buckman said. Still, carriers see little progress in the moves made thus far.

According to Al Lenza, vice president of e-commerce and distribution at Worldspan part-owner Northwest Airlines, "Regrettably, the new Sabre booking fee scheme does nothing to address existing booking fees." Northwest issued a statement that said that Worldspan's similar plan "to date has had no real affect on reducing GDS/CRS fees."

Northwest said its GDS costs will exceed $200 million, and a new Orbitz-sponsored study estimated 2002 airline payments to GDSs to total $2.2 billion.

"Whether the solutions are realistic or not, the perception of the problem is very real," said Worldspan's Blackney. "Whether they can do bookings outside the GDS is not the issue—what's broken is the perception of the economics of the process. We have to be attentive to the perception of suppliers that believe the model isn't working to their advantage. I don't see why there can't be a model that works to everyone's advantage."

Sabre chairman and CEO Bill Hannigan, however, told investors he sees "No change in our pricing strategy for the traditional channel."