Scott Gutz
British Airways is talking to clientsabout supplier-direct booking optionsas it attempts to exert pressure on global distribution system firms amid negotiations with the carrier, but the industry has heard about such schemes before, and they did not go far. Before Amadeus bought it, e-Travel was a "direct connection" pioneer, developing some of the first options that bypassed the GDSs. Amadeus North America senior vice president of e-commerce Scott Gutz recently talked with Management.travelabout those and other initiatives. An excerpt follows.
Amadeus e-Travel is expecting to soon release a " parallel shopping" mechanism which accesses inventory from GDSs, a Web-search tool and direct booking connections. Can you offer an update?
We're code complete and in quality assurance and integration testing. It will be generally released in the first quarter of 2007. This may further evolve to the point where clients can shop on certain GDSs or other channels, for example to direct all United bookings to take place in Amadeus. Corporate customers with direct contracts are contemplating their options.
What happened with the GDS bypass options that got so much buzz starting in the late 1990s?
Back in 1999 to 2001, e-Travel had built more real direct connections than any provider in the market. There were two car rental companies and two airlines (Continental and Delta) as well as Amtrak. When we went to market it to corporate customers, travel agencies said, "Wait a second--will we be fulfilling this?" We said, "No, that's the carrier." The corporations said they still wanted the quality assurance and back office data, and agencies said they couldn't validate fares. When the carriers thought about it, they said they didn't have the budget to increase their call centers and become the first level of support. So the technology was the easy part--but in the end, the agencies said "Not on my watch" and the airlines said they didn't think this all the way through ... so it never really evolved. There was more progress on the car rental side because it's more simplistic. The concentration on the economics associated with GDS agreements probably didn't make a lot of sense. The initial direct-connect models were the first form of pressure, but as the models evolved and people realized that thousands of direct connects were chaotic and unnecessary, people then turned back to, "Let's drive the best economics through the most efficient model." Now, under the assumption that there is lots of content and the only true direct connects are non-GDS participants, you have corporations saying to themselves that they don't want to be dependent on one GDS.
Where do the car rental deals stand today?
These direct connect programs are fancy names for new economic agreements. In the case of direct connects into multiple different car rental providers, the truth is we're doing some development on top of the Amadeus GDS to take advantage of content in the system, and working through new economic models.
In addition to seeking protection against content fragmentation, was it also the case that the true customer benefit of direct connections was not clear--particularly the economics?
The corporations love to think they are getting a discount of some sort, and yes you always engage in conversations about the expense of different channels, but you're typically talking about miniscule amounts. A real direct connect is about getting content you can't in another source.
Along the lines of the multi-source idea, should travel management companies be developing multiple GDS relationships?
In the past, TMCs for most part were only affiliated with one GDS. But they shouldn't ever put themselves in this position again. On their own, or through a technology provider, they will have to be in a position whereby if major content is removed from their sole GDS, they can make up their content somewhere else. It puts the onus back on them to be sure they are prepared for any future changes. The megas are definitely more advanced because they have invested time and resources. Midsize agencies are looking to technology providers to offer a solution that doesn't require massive, upfront investment.