In October, the airline industry will ask the four mammoth Global Distribution Systems – Abacus, Amadeus, Sabre, and Travelport – to adopt new capability standards.
Lest we forget, these GDSs help to process about six out of every ten air tickets worldwide, so this is potentially a pretty big deal for the world of airline distribution.
The major airline industry group International Air Transport Association (IATA) will push for a revamp of digital operations by recommending a foundation standard for a new distribution capability (NDC) being held this year in Abu Dhabi, United Arab Emirates.
The standard won’t be revealed for discussion until the World Passenger Symposium 2012.
But it will likely bring the industry closer to displaying airline products to all travelersâ€”not just those who shop on airlines’ own websitesâ€”in a way that suits each airline’s brand, product, and sales proposition.
Some say IATA-led, XML-based “direct connect” links are likely along with improved capabilities for serving mobile platforms.
In a speech, Tony Tyler, IATAâ€™s CEO, said:
“I understand that airlines cannot afford to miss any more business opportunities while waiting for the GDSs to meet their needs. GDSs and others are of course welcome partners in the process. Our target is to complete the foundation standard for a new distribution capability for approval during the World Passenger Symposium this October.”
In a statement, Tyler added:
“Multi-million dollar airline product investments cannot break free of product descriptions limited to booking classes like F, C, or Y and their derivatives. And personalized offers based on availability, customer needs, preferences or histories are effectively impractical.”
As Timothy O’Neil-Dunne has noted in a Tnooz post before, “change is coming to travel technology, driven by access to data and eager developers.”
The GDSs respond
We contacted the major GDSs for their reactions. Sabre Holdings declined the opportunity. But Abacus, Amadeus and Travelport spoke out. Their views are listed below, in alphabetical order.
Abacus says through a spokesperson:
“Abacus welcomes IATA’s move to create a new distribution platform and looks forward to working together with them to ensure that the end product meets the needs of travel players so that they can better serve their customers. We await the launch of the final platform and to working closely with IATA to improve the travel industry.”
“Amadeus welcomes all constructive debate and suggestions on ways to improve and evolve the travel distribution system in the best interests of the whole travel industryâ€”not least from IATA itself.
“Already we are closely considering this news and can confirm that we will participate in the IATA workshop to develop the future standards for the industry, which is important given our role as distribution and IT partner for over 400 airlines.
“Once again we would like to emphasise that we remain committed to working closely with airlines to help them differentiate and personalise their content, and that we share their goal of creating the most efficient and cost-effective method of distribution for all stakeholders in the value chain.
“We would also like to state that we believe it is important to involve travel agencies and corporate clients in the standard-setting process, especially in the area of managed travel, which is the most important source of airline revenue and depends on GDS technology.
“However, further information is not yet available and currently is not planned to be announced until the World Passenger Symposium in Abu Dhabi in October. Therefore at this early stage, before even the foundation standard or roadmap are outlined, it would not be appropriate to speculate or make further public comment.
“Nonetheless, we would like to stress that Amadeus believes that global distribution systems continue to be unmatched as the most efficient, proven means of distribution between airlines and travel agents to travellers.
“GDSs are the best and most effective aggregators of content to the benefit of travel agents in terms of costs, efficiency and reliability.
“Equally, GDSs represent the best value and most efficient means for airlines to distribute their tickets to the largest possible market. Just as importantly, GDSs provide the most transparent, comprehensive choice and comparison of airlinesâ€™ travel options to consumers.
“We also believe that the Amadeus technology offering is both world leading and competitive, allowing airlines to display products and fares, including for ancillary services, to travel agents and travellers
“Proof of this is that the Amadeus Ancillary Services solution already has 43 customers contracted, many of whom have chosen to implement the service into the Amadeus GDS.
“We continue to develop new technologies and functionalities such as Amadeus Flight Features, which allows airlines to provide additional service information to travel consultants and differentiate their offering. We feel that this reflects how central innovation is to the Amadeus business strategy and that is why since 2004 we have invested over 2 billion euros in R&D to develop the most advanced and competitive offering for our customers.”
“Travelport has consistently been an advocate of the need for industry standards in travel distribution and believes this to be in the interest of all parties involved in the travel supply chain.
“We have recently met with IATA to better understand their plans and have emphasised the importance of ensuring that the requirements of all participants in the industry supply chain are fairly represented and included in any standards initiative.
“We understand that IATA is looking to establish amongst its airline members a set of technology standards for API-based means of distribution.
“We have been at the forefront of enabling connectivity solutions for travel supplier customers, including API-based means of connection for airlines, and welcome any initiative which supports the industry in the delivery of products and services to travellers in all channels.
“Our priority continues to be to work in close partnership with our airline customers to enable them to distribute and retail their content the way they want to, in a highly cost-effective and efficient manner.”
Many airlines say they value their relationships with the GDSs but are disappointed at the pace of innovation. While this may be changing, up until now the power of the GDSs has stifled ancillary sales.
Meanwhile travel agents are locked into long-term agreements that make switching suppliers difficult, and therefore reducing any marketplace pressure that could spur innovation. These contracts may also forbid the agency from establishing a direct channel to an airline.
Airlines and consumers pay for the lack of competition in ever rising transaction fees, say some critics.
Either way, there is a fascinating collision potentially around the corner, as the airline body IATA attempts to satisfy its members and develop the distribution model along its own lines, while battling with existing protocols and technology under the auspices of the GDSs.