Starting 1 October, China will relax its regulations and allow foreign global distribution systems (GDSs) to help Chinese travel agents issue tickets for international flights.
Up until now, China’s travel agents had to rely only on the state-run GDS, TravelSky.
Foreign airlines will also now be able to use GDSs to distribute their airfares to travel agents in China. China’s domestic airlines will not, however, have this option regarding computerised reservation systems (CRS).
Many GDSs already had partnered with state-run Travelsky on hotel content, and those relationships won’t change for now.
The new regulations from the Civil Aviation Administration of China (CAAC) were announced late last week.
In major cities, computerization is fully underway, though Internet-based solutions are nearly non-existent. Outside of major cities, most of China’s travel agents still use paper and carbon-paper to process transactions.
The opportunity to help agencies switch to technological solutions is great.
Amadeus plans its moves
To take advantage of the liberalization of the market, Amadeus China plans to roll out products for local travel agencies.
Its sales pitch will focus heavily on streamlining accounting procedures and strengthening credit line control.
Products will be sold as sparing Chinese agencies from having to memorize long commands to book flights and issue point-to-point fare tickets, one of the burdens local agents face.
Amadeus China has appointed Bart Tompkins as managing director, who will be based in Beijing to oversee Amadeus’s expansion into the China market as a GDS. Tomkins previously handled market launches in Japan, Russia, and Eastern Europe.
Sabre, Abacus, and Travelport respond, too
Speaking for Sabre Holdings, Hans Belle, vice president and general manager for Sabre Travel Network in Asia, says by e-mail:
“These new regulations are the green light that many airlines, agencies, suppliers and technology companies have been waiting for, and we expect to see the industry evolve as new travel services become available.
Sabre has a considerable presence in China as the technology partner to many Chinese carriers, and partner to TravelSky for hotel content.
We will now work closely with our travel partners including Abacus, to bring new travel shopping, pricing, mobile and distribution capabilities that support China’s rapidly growing tourism industry, their prosperity and success.”
Abacus International, which is Sabre’s partner in Asia, already has strong partnerships with Singapore Airlines, Dragon Air, China Airlines, and Cathay Pacific, and serves as distributors of their travel products outside of the Middle Kingdom.
Abacus’s own stable of airlines also includes EVA Airways, Malaysia Airlines, Garuda Indonesia, Philippine Airlines, All Nippon Airways, Royal Brunei Airlines, and Silk Air. It claims a 75% market share of the combined Hong Kong and Taiwan markets
The GDS already has offices in Beijing, Shanghai, Guangzhou, Shenzhen, and Chengdu — more than its rival GDSs. It is also negotiating deals with local travel agencies, such as Beijing Everlasting.
Travelport is also eyeing China
Today Travelport China said it welcomes China’s “partial liberalization.”
Kurt Ekert, Chief Commercial Officer for Travelport said in a statement:
“We’ve developed a number of significant strategic partnerships in the country. This news very much plays to our partnership approach.
“By working closely with CAAC and our partners, including TravelSky, we’ll now plan how to heighten our investment and grow our business in line with the new policy.”
Travelport recently announced full content agreements with Air China and China Southern.
NB: Image of Chinese flag on a computer screen courtesy of Shutterstock.
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About Sean O'Neill
I’d like to talk more to some local agents about this because I’m not sure I understand the funding model here.
I don’t see Chinese travel agents switching form Travelsky for domestic fares and booking any time soon. Domestic fares in China generally only available on Travelsky and many aren’t even filed in APTCO format. Large TAs/OTAs like CTrip etc. have to work with Travelsky. So to get best fares for local traffic agents will have to continue using Travelsky, maybe using GDS for international bookings.
I do agree GDS have a lot to offer besides booking, especially when it comes to office automation, back office, etc. The open question in my mind is whether these technology services will work for domestic (Travelsky PNRs) as well as international (GDS PNRs), and if so, what the funding model will be for Travelsky segments, especially if they have to be duplicated onto GDS PNR.
I can’t see Chinese airlines (current shareholders in Travelsky) jumping into FCAs which include domestic fares and agreeing to pay segment fees that US and European carriers pay. Travelsky costs about $1 – no matter what the distribution model.
Nor do I see them all switching to ATPCO (or ATPCO compatible) fare filing, as long as Travelsky is the primary PSS.
October 1st might be an interesting date in the removal of a legal hurdle but there’s a long road of technological and logistical hurdles ahead.
Hi, Mark,
Thanks for your informed commentary.
Clearly October 1st is the removal of a regulatory hurdle, but there is — as you say — a lot of other work yet to be done.
Best,
Sean
Yeah, I was on “2012 China Travel Distribution Summit” and met many people from local airlines, international GDS-es and OTA. Everybody was talking about new GDS regulations, but they all understand, that it will take at least 1-2 years for big changes. And these laws is also kinda tricky and have a lot of limitations.
Definitely not an overnight change. Thanks for your comment, Alexander!