Global distribution system operator Amadeus this morning announced new details of its 2005 pricing model, which further differentiates booking fees and offers new content options for participating airlines. Amadeus last year was the first of the four primary GDS companies to formalize a value-based pricing structure
(BTN, Dec. 8, 2003), while the other three recently indicated plans to explore a variety of economic arrangements following GDS deregulation
(BTN, Nov. 8).
Effective Jan. 1, Amadeus will add two booking fee categories to the two established for 2004 pricing. Standard, standard plus, premium and premium plus categories will create a distinction between prime market and out-of-market bookings and between short-haul and long-haul bookings. The company said per-segment fees will range from €2.67 to €4.90 and will vary by airline.
Amadeus director of marketing Owen Wild said it is difficult to compare those average figures to current average figures. "There are new factors taken into account to derive those numbers that do not exist today," he said. "In some aspects, value-based pricing makes things more simplified in how airlines are viewing things but more difficult to communicate the end result because each airline is starting at a different basis point."
Wild said participating carriers have responded positively to value-based pricing. "Fundamentally, suppliers have bought into the concept that not all air segments are created equal," he said. "It becomes more viable with acceptance of similar approaches from other GDSs. We are onto something that should become an industry standard."
Amadeus also will offer low-fare and full content distribution options to carriers based outside of North America. One such program has been in the pilot phase with British Airways since earlier this month and requires travel agencies to opt into an arrangement in which they obtain access to all the carrier's content in exchange for defraying some of the GDS costs. Similar opt-in programs are available from other GDS companies in other markets, such as Canada
(BTNonline, Oct. 14).
Meanwhile, Amadeus also is developing an "a la carte" concept that would allow any participating airline to customize additional services, solutions or product packages. The company plans to test the model in 2005 and implement it in early 2006.
In other Amadeus news, the company's board of directors recently confirmed that airline shareholders narrowed the field of bidders to four as part of a leveraged buy-out process that would see a financial investor restructure Amadeus' capital. The finalists include BC Partners, Cinven, Citigroup Venture Capital US-a co-owner of GDS company Worldspan-and Carlyle, jointly with CVC Europe. Final offers are expected by early next year with no definitive timeframe for the remainder of the process. Amadeus has not indicated how much of the company would be sold to the winning bidder. Air France, Iberia Airlines and Lufthansa German Airlines combined currently own just under half of Amadeus.
Speculation on consolidation in the GDS realm has mounted in recent months. Worldspan CEO Rakesh Gangwal this month told analysts and investors that "consolidation is a natural" due to similar fixed costs across the four primary rivals. "I believe that two GDSs that get together will be able to bring down their costs, which means a lower cost per booking and lower booking fee ultimately benefiting the customer at large," he said. "That is the game that ultimately will play out over the next number of years."