The big travel technology question: is the industry ready for the IT Spring?

Long term IT contracts were once the norm around the travel industry – but with the rapid change of IT structure occurring today, especially with the evolution of Big Data, this is beginning to change.

In particular, airline passenger service system (PSS) contracts and GDS contracts, which generally tend to be long term agreements, are two examples where there will be a change of thinking.

Vendors and users, indeed all stakeholders, will need to consider the ramfications of such shifts. So what should customers with large scale IT systems be considering?

The current mainframe-based technology platforms such as PSS and GDS systems are looking a little long in the tooth. That doesn’t make them necessarily bad but it does create challenges.

So let’s start with a positive perspective.

A long term IT contract results in stability for both the vendor who is assured a long term revenue stream and for the customer who is assured support and stability.

There is a lot of discussion, of course, around the longevity of the GDS-based systems. Yet the user community, particularly travel agents who know and use them for screen based interaction, love them, although it is worth noting that the main GDSs are all pushing non-green screen, Windows-style interfaces now.

But for some agents the concept of giving up the beloved green screen has long been regarded as a no-no. That mainframe-based systems are mature and reliable in a very complex world of travel is a very good thing.

However, long term contracts need to have a degree of future-proofing built in. For a core architecture that has changed little since it was first released from IBM’s labs in the 1950s, there are a large number of contracts that will be expiring over the next few years, with suppliers who will presumably be asking their distribution partners what is likely to change, or if it needs to.

What about the PSS side of the house. Each supplier and in particular each airline likes to think they are different. All distribution systems face a difficult challenge: How to develop technology for broad based adoption for what could easily be described as a commodity (ie an airline seat), versus providing differentiated product based on unbundled pricing and different product attributes.

Until now, a PSS contract has generally been a ten-year partnership. So airline technology buyers face a hard challenge of choosing the right system that will indeed last that long.

In the past this did not matter as the air based ecosystem was stable and reliable and, to a large extent, homogenous. Is that still the case?

The answer is “no” on many levels. For example, if the current erosion of GDS-based market share is to continue for the next, say 10 years, then at the end of the current contract the GDSs will have been reduced to serving essentially only 20% of airline distribution channels.

We spend a lot of time advising on systems architecture and helping our clients to make smart decisions on their technology platforms. In the last few years there have been three trends that have driven our thinking for these big decisions:

• The impact of social and collaborative interaction.
• The move for a single primary screen (PC-based) to a multiple screens – full screen TV, Lean forward PC, portable light weight light interaction, tablet and untethered small screen pocket based devices.
• The arrival of big data, cloud-based infrastructure which is dirt cheap and, for once, within the grasp of any programmer.

With the convergence and sheer magnitude of these changes, safe decisions don’t seem to be particularly safe anymore.

And this is exactly the advice we give. Understanding the impact requires unconventional thinking. Fast forward to 2022, when your PSS contract will be expiring, what will you be seeing?

For the first time since the dawn of the PC age, core travel distribution is experiencing a radical change. Unlike the PC era, and the internet era which followed some ten years later, there are now these three incredibly powerful forces at work.

Further we are no longer dealing with the Pax Microsoft that kept us all humming to the same tune – we now have three opposing forces who are fighting for the control of the hearts and minds of the consumers.

The Facebook/Apple/Google wars are spilling into every facet of our day to day existence. Each one of these has an avowed interest in disrupting and changing the way we think, collaborate, search, shop, buy, experience and then tell our travel stories.

And this is not bad, actually far from it – it’s great, providing we can take advantage of these tools and services.

We know all this why will affect us but why now? We are experiencing a generational change whereby the Baby Boomers are leaving the marketplace and will no longer define travel in its many facets shapes and forms.

The newcomers to the market – the Gen Y/Millenials – are the ones who will drive this change.

It is also worth pondering the idea of the gatekeeper again. The anti-Google alliance, Fairsearch, has argued arguing that Google has gone from gateway to gatekeeper. And I believe this is right – but for me the model does not stop there.

Many former gateway providers have decided to do this, Google in travel is just replicating what so many have done before.

What I do believe is that the so-called IT Spring we are now starting to experience will change all of that and sweep away anyone who purports to be or acts like a gatekeeper.

And this is the key question, as a consumer of travel IT products and services, which you have to ask yourself. Is your IT provider truly your business partner or is he out to control you and be a constraining gatekeeper to your business?

As you start your RFP process and review your contracts, think about that.

Related posts:

1. How rail is evolving and why travel websites need to be ready
2. Qantas grounds flights, industry gasps, technology tries to catch up
3. Looking at airline distribution as part of an overall travel industry strategy