A handful of big airlines have signed long-term participation agreements with the key global distribution system firms, but travel managers are not out of the content-fragmentation woods yet. The truth is, they may never be.
For even if no major network airlines reduce inventory access by certain GDSs, as some are contemplating, booking efficiency remains in jeopardy as the likes of JetBlue Airways, Southwest Airlines, Ryanair and others continue along their merry non-GDS ways.
It's not that these carriers are spurning the corporate market, per se. In fact, when systems providers offer something resembling GDS services without GDS prices, non-participating carriers have shown willingness to play. JetBlue, The Beatrevealed this week, is using Galileo to pipe into the Travelport self-booking tool. The carrier also has allowed access by such travel agent desktop systems as AgentWare and Booking Builder. Southwest participates in Booking Builder as well as Expedia Corporate Travel by linking them to its Swabiz corporate portal.
In Europe, Amadeus this week said Copenhagen-based Sterling Airlines is the first user of a new service allowing "ticketless" airlines to list fares and flight information in the GDS alongside "full service" carriers. Created using Extensible Markup Language, the service neither allows agents to book seats nor requires airlines to pay the typical 3 to 5 euro segment to the GDS, Amadeus said.
But because they create inefficiencies, such solutions are typically considered "patches," and something less than ideal.
"A couple years back, when we didn't have all the Air Canada content in Canada, we did an opt-in program where the agencies gave up 50 cents of their incentive to access the airline," said Sabre Travel Network president John Stow. "The big four travel management companies said that was fine because it had been costing them more than 50 cents to integrate [bookings made outside the GDS] into the back office." He said a recent Sabre study showed that if the GDSs lost access to 10 percent of fares and inventory they now reach, that industrywide costs would rise by $1.5 billion a year.
It remains to be seen whether a universal desktop application that accesses multiple sources of inventory, without holes, is possible ( see related story). Even providers of meta-search services and such aggregating tools as AgentWare admit there is no one-stop shop. That's frustrating to travel managers, who prefer having all fares in one place and the peace of mind that comes with it.
"It's like a secret society," said Ciba Vision head of corporate support services Ron Sharer. "It's hard to know how the money transactions work and what it will cost us as a corporation, or if we need to find different solutions."
The situation with Worldspan is particularly muddy right now, as the GDS firm has announced long-term deals with American, Continental and United airlines but told the industry to await details on "optional programs" that presumably could directly alter the payment of incentives that help subsidize managed program costs. Such programs may mean that users who decide against "paying" for access will see fewer options from a given supplier. Along these lines, sources said airlines, during contract negotiations, increasingly are putting their money where their mouths are regarding "preferred distribution" systems.
"Corporate travel buyers should insist that full content be available through GDSs without additional airline-imposed service fee charges," argued the Business Travel Coalition's Kevin Mitchell. "Corporations already pay for these distribution costs in the price of their tickets. Any revisions to the economic model should balance the interests of all industry principals, and not be dictated by airlines to corporations and others." The familiar argument from big network airlines is that they need to compete with the aforementioned and other lower-cost competitors.
Things may yet change slowly. In their recent long-term deals, Cendant (with US Airways and United) and Sabre (with Delta and United) do not appear to be floating a specific alternative incentive program. But industry observers do expect those GDS firms to reduce incentives in ad hoc negotiations with distributors and clients.
It would be difficult for the GDS companies to avoid that scenario, given that "we suspect the airlines are realizing substantial savings in ticket distribution costs," in the latest deals, according to J.P. Morgan credit analyst Mark Streeter.