Op-Ed: Airlines' GDS Alternative Push Premature

When I review any kind of offer, I'm inevitably reminded of two classic pieces of advice: "If something seems too good to be true, it probably is" and "let the buyer beware."

Corporate travel professionals would do well to keep that advice in mind as we try to make sense of the looming changes within the airlines' distribution models. Everyone agrees that this is a tumultuous time for the airline industry. Load factors are at an all-time high, and new routes are being added. Yet, at the same time, legacy carriers are struggling with pension, cash flow and labor issues. Spiraling fuel prices are also churning the waters. Airlines, particularly legacy carriers, are understandably seizing on every opportunity to cut or reduce costs. As these carriers chase productivity savings, it's only logical that they look at the distribution channel and consider new models.

We are now approaching a critical juncture in the industry with some carriers moving away from legacy global distribution systems to new technologies like G2 SwitchWorks and ITA Software or direct-connect channels. No one can argue that the reduced segment fees these new technologies bring to the airlines aren't an attractive cost benefit for them, but we're venturing into unknown territory. As good stewards of our company programs and assets, we need to evaluate the "benefits" of these technologies.

There are major hurdles that need to be addressed to integrate new booking channels with legacy systems and processes successfully. They include:

•Providing consistent content regardless of channel to multiple requestors, such as travel agents, travelers via online self-service booking tools, fulfillment centers and/or emergency reservation support teams

•Processing changes, exchanges and voids/refunds within various systems

•Developing automated functions, such as ticketing, invoicing, upgrades, seat improvements, etc.

•Ongoing synchronization of reservation data for billing, pre-trip and post-trip reporting.

Beyond these hurdles, we also need to consider the user experience. We're certainly adding another level of complexity to the booking process. Travel agents using both existing and new global distribution systems will have to toggle back and forth between them while monitoring existing GDS agreements and GDS passive segments required to complete an itinerary and reconciling airfare discrepancies. That's in addition to our expectation that the systems will keep track of our travelers around the world and provide updated and accurate back-office reporting. Apart from the issue of diminished productivity within our corporate travel programs, I question the disruption of the traditional revenue models for agencies, which will lose income and be required to invest in new technologies. The shift to these technologies almost inevitably will result in new transaction fees finding their way to corporate travel managers' profit and loss statements.

This leads me back to that classic advice: If something seems too good to be true, it probably is. These new technologies have the potential to change global travel programs and traditional agency relationships dramatically, and that concerns me. My concern is based upon the history of this industry when there has been disruption in the normal revenue models. Do you remember when the airlines posted lower fares on their Internet sites before DCA3? That fracas lasted almost two years.

As representatives of our companies, corporate travel managers have an obligation to ask the questions needed to understand a value proposition that requires us to manage programs with multiple content sources. The strategies and systems being endorsed by carriers could segment the customer base and add complexity in controlling or managing programs. They also will add cost as segment fees are passed on to travel management companies and the customer.

We could not function in this industry if we did not embrace change, but we need all industry players to move together and include customers in designing solutions for these issues. Let's not forget the lessons of the past.

I suggest that we continue to define and question the impact that direct-connect or GDS-bypass technology options have on our travel programs, but as buyers, beware, because management continues to scrutinize our programs and we need to deliver many levels of value.

As my children would say early into a long road trip, "Are we there yet?" When it comes to the proven customer value of what the airlines are proposing, the answer to that question is clearly "no."

Tom Barrett is global strategic sourcing director for American Standard Companies, based in Piscataway, N.J.