2 months ago
 

Agencies warn of slow creep of non-transparent airline distribution

The European Commission is being asked to tackle “dangerous developments” in airline distribution around discrimination against so-called neutral channels.

Regulators in Brussels received a letter this week from a large array of travel agency groups and lobbying organisations, such as the European Travel & Technology Services Association which has the GDSs and a number of online travel agencies as members.

In it, EC officials are warned that the recent decision by British Airways to alter its distribution strategy is a sign that large airlines are looking to “make competition a matter of designing clever, non-transparent distribution mechanisms, rather than competing on price and service”.

BA parent group IAG is to introduce a surcharge later this year that will hit bookings that are not made through NDC-based connections.

This followed a similar programme first announced two years ago by Lufthansa to impose a fee on fares bought through GDSs.

The letter says:

“The more large airlines join this practice, the more difficult it will be to sustain an independent and neutral distribution channel where consumers can compare airlines objectively.”

The Commission, the letter adds, has been told that such a situation would only get worse without intervention but for two years there has been no response.

Regulators have the “tools to defend transparency and neutrality in airline distribution”, namely the existing EU Code of Conduct for airline computer reservation systems.

The letter concludes with a plea to enforce existing legislation, adding:

“Those rules were precisely adopted to avoid a situation where large carriers take distribution hostage to promote their own offers as opposed to those of their competitors to the detriment of competition and consumer choice.”

Signatories to the letter include the GTMC, European Passengers Federation, GBTA and ECTAA.

Share on FacebookTweet about this on TwitterShare on LinkedInEmail to someone
 
 
Kevin May

About the Writer :: Kevin May

Kevin May was a co-founder and member of the editorial team from September 2009 to June 2017.

 

Comments

Your email address will not be published. Required fields are marked *

  1. Peter K

    BTW, I know that TMCs do not use meta-search. It is their customers that do.

    And they are becoming aware that TMCs are not meeting their needs because the system they use (GDS) has inadequate content. It hardly has any LCC content. And suddenly a company’s staff are being booked on far from the optimum itinerary and costing more and taking more travelling time.

    But you Mr Cowley do not care that you are not meeting your customers needs and paying more and spending more time travelling. You want your customers to jump through YOUR hoops because the system you use does not meet either your needs or your customers needs.

    Step outside your local market with a small number of local dimestic travel airline options and virtually all in the GDS. And of course most international airlines are in GDS. Australia is a nice place but a small market.

    But try operating this way in UK or EU or Eastern Europe and Russia/CIS or in USA, Canada, south or Central America or in a large part of Asia.

    You can’t unless you are short changing your clients.

     
    • Peter K

      And if your TMC (if you are in one) has any profit, it is most likely nearly all coming from GDS segment fee incentives. And fancy doing a booking outside your normal workflow and only charging $2. So you are too scared to recover your real costs. Another broken business model.

      Travel agents in very competitive markets with lots and lots of options are getting less and less productive because of the inadequacies of the GDSs

      And so in reaction to this, GDSs and agents like you would prefer to have the market regulated and competition impinged because you and the ststems you use cannot keep up with the pace of the market and customer requirements. Customer ‘demands’ I should say as they are becoming more and more informed and have greater expectation and are far more in control than ever before.

      The days of the travel agent traditional misleading and deceptive conduct and their own opaque pricing are becoming more and more numbered.

      Things are becoming more and more transparent and full disclosure mandated by regulatory authorities to protect consumers.

      As the tide goes out, we shall soon see who is wearing no clothes.

       
  2. Peter K

    Thank you Timothy.

    I rest my case.

    This all stated with my comments about the current inadequacies of the GDS to meet current customer travel requirements and to hinder it by not adopting modern connectivity technology

    You verify that in spades with your knowledgeable comment re how TMCs have to operate because of the GDS shortcomings. It is making them less and less efficient.

    It also illustrates the sham and spurious arguments put to the EC by the current lobbying by vested interest groups of agents and GDSs (GMTC, GBTA, ECTAA and Euro Passenger Federation) to endeavour to regulate and in effect reduce competition under the ruse of anti-competive activity.

    A nice ending note. Thank you.

     
  3. Timothy O'Neil-Dunne

    @Martin Yes – large tracts of corporates now use MetaSearch. I suggest you start looking at the funnels for whence the traffic arrives. As more corporates move away from mandatory policies to budget based ones – this is but one source. However I would wager that there is a significant population of corporates are searching via OTA and metasearch as a way to budget. I even know (directly) that one mid size corp requires that you attach a copy of the meta search results to the back of the expense reports to prove you obtained the best fares. I dont think its a case of either or – but both “and”. Cheers
    Timothy

     
    • Martin Cowley

      That is utter hogwash. 100pct credibility fail. Put out a list with names on it. TMCs simply don’t work like that. They live and die by efficiency. The sarcasm of my previous remark re TMCs using meta was clearly lost in translation. Anytime a TMC has to work outside the most efficient environmentment it costs them money. Aggregators etc cost them money. They charge for it. $2 per direct connect doesn’t come close to covering the bill. Add a ‘0’ and you’re in the range. What century does your ‘corporate’ live in that they attach meta results to the back of expense claims? Send Concur or Serko around to see them. And Peter K. If you want to throw rocks around then don’t hide behind anonymity. As we say down here ‘Who the bloody hell are you?’ Or do you not want to come out?

       
  4. Peter K

    Mr Cowley

    Please refrain from making any more comments as you only make your self look foolish. Your comment about meta-search and making booking changes or inerlining was a doozy.

    And your reference to Glen punchings holes in my argument also exhibited your lack of knowledge. He punched holes in nothing, but at least he has some understanding of matters.

    I put forward in my last post on the subject matter what was crazy about the aspirations of some on NDC and the almost technical impossibity of achieving personalised pricing in multi-airline shopping displays versus what was achievable in a mono-airline response and of benefit for all (customer, airline, agent and GDS) It was practical and knowledgable comment.But this went way over your head. It would not have gone over Glen’s head I can assure you.

    BYW, do you know what he was referring to in his list when he mentioned use of OC codes. I bet you didn’t.

    Do us all a favour and go educate yourself on this topic rather than an unquestioning Ill-informed thinking and moreover, trying to curry favour on the back of comments from others like Glen. Glen has a Sabre employee perspective, but at least somewhat informed, even if a bit short on vision and some of the real issues facing his company. I am advised that you are ex Sabre yourself, but involved with travel agency subscribers, rather than any technical knowledge of the business. You are probably a Trump supporter, as you exhibit the same sort of mindless ‘get on the bandwagon’ profile? Do you read Briebart News?

    Anyway, enough is enough. I am wasting far to much time here. No more comment. No more entertainment. No more information.

     
    • Glenn Wallace

      FYI I do not work for Sabre, have no affiliation with Sabre or any GDS. I’ve worked for small to massive agencies, both leisure and corporate, so that’s where my perspective is informed from.

       
      • Peter K

        Apologies Glen.
        You have good tech knowledge about finer points of GDS mechanics like OC codes and connectivity that it looked like you were a techo for a GDS and I could tell it was not Amadeus and very unlikely Travelport. But now makes sense how you support GDS but not in a position support where they should be going with for example NDC. You are working with the existing GDS functionality. I agree with you that many airlines not thinking things through. Your example of 8,000 price points for preferred seating is a classic. Why would they need that many price points even in theory, but in reality are they going to apply them and who is going to manage this even when automated.
        Personalised pricing within multi- carrier shopping displays is another pipe dream that cannot be realised without massive transaction volume hits on core systems, and for what? Just not feasible. But if looked at in a mono carrier environment (after particular carrier selected) then NDC can provide value.
        And what are the Agency and GDS associations using as leverage with the EU in a spruious claim about competition? Personalised pricing in multi-carrier availability and pricing displays.
        Tilting at windmills and using a spurious argument to bring in regulation that will in fact lessen competition. Same obsfucation applies their getting on board the Google whipping band wagon re comparative shopping sites and in case of travel trying to have OTAs classified in same category as meta-search Google Fly, Skyscanner, Kayak etc which are not travel agents.
        I said I would make no more posts but in your case I make exception to apologise to you for aspersin you were a Sabre employee
        Good luck. Complex area.

         
    • Martin Cowley

      Hallelujah!

       
  5. Timothy O'Neil-Dunne

    @Glenn given the position you have taken – I strongly suggest you pen an op ed piece on this topic. The point you raise is an important one – the question of availability and the quality of same is not (per se) the problem of NDC. You have pointed your finger on a very sore point of airline distribution. One has to ask the basic questions in light of the points you raise as to the “fit for purpose” concepts of how airline inventory state is managed. So – put your money where your mouth (pen/computer) is, and write a piece on the state and value. It appears you want to make the point that NDC has little/no value in this topic. So ‘cmon – lets see you! Cheers. Timothy. PS address please to linda@tnooz.com

     
    • Martin Cowley

      @TOD you wonder why people think you are just an old fashioned, gds hating, bigot. Glenn has done his work already in his very thoughtful, balanced comments below. He’s punched huge, fact based holes in the myth that is NDC. Why on earth would he now play your game to your tune. What more do you need? Enough already, unless you can answer his points. Give us all a break and perhaps your alter ego, Mr Peter K (anon) could do the same. Meta search as the future of distribution? Try making changes and interlining on meta. Really!

       
      • Peter K

        Ha ha ha

        I was not going to make any more comment.

        But your last point about meta-search exhibits to every one reading this post that you have absolutely no idea what you are talking about .

        Ha ha ha

        Way over your depth, that is clear .

        You do not even know what meta-search is and yet you deign to make comment.

        I rest my case

        And so much also for your agreement with Linda to be civil in your dialogue. You ask for protection and then go on the attack Oh dear.

        But task completed. You have outed yourself

         
      • Linda Fox

        All here – again, keep this polite and professional. We don’t want to stop comments on stories like this, all discussion is good and neither do we want to have to ban individuals.

         
      • Peter K

        Simply to educate you Mr Cowley.

        Could not leave you so uninformed. Re your concluding remarks above about meta-search. The one I laughed so loudly about because what it revealed about your knowledge and your right to comment on others.

        Of course meta-search can cope with interlining options. Take a look at Skyscanner.

        Booking changes? You do not do them on the meta-search site. You do this with the organisation you have chosen to fulfil your booking. Might be an OTA, might be a supplier. Who ever the customer has chosen to book and ticket their chosen itinerary.

        Meta-search have a greater array of content than OTAs . Most OTAs only have GDS content when it comes to airlines. That is, those suppliers of goods and services that choose to distribute via GDSs. Only a few of the better OTAs add/merge non-GDS content with their GDS sourced content to present the customer with a greater array of product options.

        TMCs rarely present their clients with all of the airline and pricing options available as most almost entirely rely on GDS content. More informed companies and their travellers these days are getting very annoyed with their TMCs as they are frequently booked on more expensive and much longer duration flights with stopovers when they could have taken a cheaper non-stop flight of an LCC. Corporations these days are generally quite prepared to travel on an LCC. For example a large percentage of passengers on easyJet are business travellers. This is going to expand and expand.

        So something has to be done here rather than hiding head in sand if TMCs are going to meet customer expectations. Only a few are addressing it and many are having to introduce very inefficient practices outside their workflow and automated data captute for back office accounting and customer reporting. Meta-search is not the answer here. It is the TMCs own systems or GDS assisted facilitation. And why are so many carriers not in GDSs? Because they are so expensive. Particularly for short haul low fare airlines. And why are GDSs so expensive? Hmmm. Nothing to do with agent incentives of course?

        Meta-search aggregate their content from a greater array of content sources including airlines’ own websites that are both GDS and non-GDS dustibuted.

        The better airlines have special cacheing technology for the meta-search engines to hit to cut down the transaction intensity on their core systems. Screen scraping is frowned upon (and so it should be) but some meta-search have been known to screen scrape to get extra content. But most suppliers now cooperate with meta-search to give them access to better connectivity and content that not denigrate their system performance because of transaction intensity.

        And most meta-search are getting much better in their programming on how they gather content for a shopping query and do not go out and hit every single airline with a query for information. For example not going and querying AA for a request for travel Barcelona to Amsterdam. OTAs are getting better at this also. They were likewise major offenders. Particularly the less sophisticated sites. They often had no idea of the issues they were causing.

        Meta-search are facilitators to help customers quickly sort through a massive array of options possible and endeavour to present all options. They provide a range of filters to help customers refine their searches. And then they provide customers with options on where to fulfil their selected travel. And the options include OTAs and direct to the supplier.

        So hopefully you now know a little bit more about the subject.

         
        • Peter K

          Take a look at Google Flight for a US itinerary.

          You might be suitably impressed.

           
        • Martin Cowley

          Which obviously accounts for why so many corporate travel programmes rely on meta search to serve their customers. I have no idea who you are. I suggest we all move on Mr Peter K (anon). Pls enlighten us. And ps try spell check. It might change your life.

           
        • Glenn Wallace

          You’re way out of touch with agency technology. Many OTAs and TMCs offer non-GDS LCC options and are able to mix content between GDS and non-GDS. There are several technology intermediaries, one of the more well known is TravelFusion (CTrip now has a majority stake). However, there are operating inefficiencies with non-GDS content (managing booking failures, schedule changes, customer driver changes). The non-GDS content may not meet the needs of every corporate client. If I were running an OTA or TMC I would charge an “LCC fee” to the customer to cover those operational costs which are more seamlessly managed by the GDSs and airline systems. Note the end result is not too different, legacy airline with higher price point and paying GDS/agency fees/commissions, or LCC at a higher price point (with a customer facing fee from the agency). Don’t underestimate the operational efficiencies the GDSs deliver at massive scale. Switching a “major” carrier from a GDS to some kind of direct-API driven solution is bound to have costs for the agency/customer. There’s no such thing as a free lunch. Hence AA’s approach to pay the agency for connectivity costs for using NDC solutions — the only problem with their offer is the 2020 end date….

           
    • Glenn Wallace

      Hi Tim,

      I’ll certainly consider doing that in my copious spare time — but the question is really quite broad, because you also have to (in fairness) look at both airline and agency requirements. I also know that there are integrators and system vendors have done a lot of good work on NDC related products and there is quite good functionality there if viewed on a 1:1 agency to airline basis. My point is less that NDC is maybe not the best solution but that the problem is really complex (and becoming increasingly complex) and the evolution of the existing industry standards (warts and all) has produced scalable solutions.

      Here’s a tiny example: paid seats. The original OC spec (if I recall) allowed a seat to be in a price bucket, allowing an airline to set a price and yield the inventory, perhaps not with absolute granularity. One airline (now long since merged) said that it wasn’t flexible enough, that they had loaded 88,000 prices in the system which was too much data to manage. I made the point of did they need 88,000 different pricing segments (eg by equipment, date, flight, by seat type….), or 88,000 price points? Their approach was trying to implement the latter, when in fact they only needed the former, and not that many. It is a really subtle point – but one that has a huge impact on the implementation and how the data are distributed.

      Maybe it is still quite possible that an airline decides they need 88,000 price points… (e.g. seat 5K on April 5 is $4.37, seat 5J on April 5 is $4.36 and so on vs seat 5K and 5J are in a group of premium exit row seats, and premium exit seats on Tuesdays are $4.50) …. who am I to judge how an airline defines its product and inventory?

      Glenn

       
      • Timothy O'Neil-Dunne

        Glenn
        Thanks for the comment. I think this improving general understanding from the perspective you hold is why you should write the piece. Moving to dynamic pricing for product should consider both the supply AND demand curves. I will argue constructively that there should be no pricing controls. My view is that the internet has changed how product pricing is determined and that the current rigid (legacy) structures serve neither side. Airline and Travel products should not be considered special cases. Ultimately it must be about the consumer being able to purchase the product – when, where, how etc they want. It’s beholden on all of us to deliver that. So take some of that copious time and use it constructively!
        Cheers
        Timothy

         
  6. Peter K

    Hello Glen

    Interesting comment, but still not quite there.

    Let’s face it, it is a pipe dream of some idiots within airlines if they think that initial request for flights availability and pricing from a shopping entry can bring back personalised pricing.

    You cannot apply some principles of closed system retailers to airlines that distribute via multiple channels and systems. They have been reading too many textbooks.

    Airlines must participate in shopping responses whether they are via GDS, OTAs or meta-search and there must be consistency across all points of access, including their own website. Otherwise there will be a shambles and a lot of customer dissatisfaction.

    Airline host systems cannot even cope with transaction intensity of shopping queries as they are now, let alone the massive increase if also having to look at a passenger profile before responding.

    Even if you are hosted by big systems like Amadeus or Sabre you will suddenly hit penalties for excess transactions as all this processing intensity does not come for free.

    So the opportunity comes in the next level, that is; “once a particular airline is selected”. The ability to reach through and recognise the customer and strengthen the relationship. To perhaps surprise and delight.

    Airlines should abandon the bulls..t idea of personalised pricing, particularly charging a passenger more. And why discount further if they have alrady chosen you. You could have closed user groups on your own website, but this is generally dilutionary so why do it. Not only is it not cost effective the whole process of personalised pricing across the board is likely to be massively dilutionary and the airline P&I systems could not cope and it would be a shambles in 5 minutes. And imagine the customer wrath if they found out that that their so-called personalised pricing was higher than if they were not recognised and available to any Joe in the street.

    But it does not mean that NDC should be abandoned. It should be pursued in a more realistic mono-airline environment to enable recognition via third party systems and to provide rich content.

    Right now I think the drunks are in charge of the brewery at some airlines at the urging of some of the big consulting firms who are applying inapplicable theory. Some are away on another planet. They just do not understand the complexity and risks, but are getting the airtime of the very senior exec group who are not across the detail, but it all sounds so wonderfully plausible.

    But I do not want to see a lessening of competition with various interest groups leveraging so-called competition concerns to use regulation to in fact lessen competition. Why should an airline be prevented from sutcharging a GDS booking if it wants to take this commercial risk? Why should an airline be prevented from dealing with travel agents or only wish to deal with a selection of them. Why should airlines be prevented from stopping screen scrapers and misrepresenting their pricin and adding undisclosed fees.

    And OTAs are not to be compared to meta-search when examining Google practices of comparative shopping displays. It should be compared like with like. Meta-search with meta-search. Meta-search are not travel agents. They are aggregators of information for consumers and are referral sites.

    An OTA is a completely different beast.

    This is my last posting on the subject.

    It is a complex subject and most commentators on all of this subject matter are not Competent enough to make valid and useful comment .

    Most have legacy thinking and/or vested interests which make it a sham.

    And on these circumstances almost any stupid thing can happen

     
  7. Timothy O'Neil-Dunne

    Hopefully now that everyone has had their lesson in civility – the debate can continue. It would seem that this is a topic that could stand a further test of deeper evaluation. Sifting through the comments – there are many issues which can rise the passions. But we should try and be dispassionate about them. The mix of commercial issues (including processes) and technical (legacy vs new stuff) does show that the level of complexity in Airline Distribution does bear this type of scrutiny. Long may that occur.
    Cheers

    Timothy

     
  8. Kevin May

    Kevin May

    Missing you guys already 😉

     
    • David Bishop

      Kevin, clearly NDC gets the mercury rising with people on all sides of this fence!

       
    • Glenn Wallace

      Here’s another angle people are either ignoring or not aware of. With the existing industry solutions, with the exception of some availability requests, and booking confirmations, the messages to the airlines aren’t interactive. The data are pushed out to various partners: fares, ancillary descriptions, rules, schedules, some availability. Each end point (GDS, OTA, TMC) is free to come up with creative solutions to both scale and also do a better job of searching, and not just for a single component, the whole trip.

      NDC turns that on its head, and requires almost every piece of supplier data be “pulled” not “pushed.

      The analogy would be that Samsung says to Amazon: no, I will not tell you anything about my televisions. Each time a customer shows up and searches, you need to tell me about your customer, and then send me a request, and I’ll decide what they can see…. even though Amazon has the relationship with the customer, their buying history across other brands and other types of products and understands the entire context of their (trip) purchase. How ridiculous does that sound?

      Now, I get that an airline seat, a flight experience, is more complex, and perishable than a TV on Amazon.

      But NDC renders concepts like instant search (hello Jeremy, Google Flights?) almost impossible without some caching or push-data/predictive scheme. It also centralizes (rather than distributes) massive messaging volume to the carriers. For a larger carrier, maybe they can build systems that scale and bear the cost. For a flight from Seattle to London, you have to hit at least every carrier flying routes that might possible connect to these points. And for a larger carrier, that load is worth it because they have 10 flights a day. But maybe a smaller carrier, they’re still seeing the same massive query volume, and they have one flight a day that never quite lines up as a feeder, and so their conversion is terrible, but they still are hit with massive query volume. Potentially hundreds of millions of expensive pricing queries per day (not lightweight avail requests). To each airline! Maybe you optimize that query, but NDC still makes the business of searching for a complete trip (potentially) incredibly inefficient.

      That is why all of the hotel “direct connects” push availability, rates and information so that the massive shopping load is not spread across the large spectrum of large and small chains. And so that smarter search algorithms can be implemented at end points closer to the customer.

      The “direct connect”, “GDS bypass”, “legacy vs modern” are not as relevant to the evaluation of NDC as a solution than the fact that it is structurally weaker than an admittedly complex system that has evolved over decades but continues to be very efficient, both operationally for agents, but also efficient in terms of CPU and network bandwidth and latency for the customer.

      The NDC proponents will point out that suppliers want to be able to personalize pricing. And while the existing systems don’t allow them to select or filter inventory response, they do allow for example, to look at what loyalty tier a customer is in, and fit product attributes and pricing to that tier. This was an important part of the design of ATPCO “OC” that all of the airlines participated in. (these structures are still fundamental in all of the ancillary product definitions, whether they flow through ATPCO or interactive messaging implementations)

       
  9. Peter K

    BTW, it is the GDS companies that need to adopt the new connectivity standards proposed in NDC.

    The suppliers of NDC compliant systems to airlines and others are peripheral. Almost irrelevant in total scheme of things.

    It is the GDS companies that need to lift their game. They are doing a disservice to all who use their systems, both suppliers and users.

    GDS pricing is another matter.

    One has to assume the GDS business model is broken. Why? When providers of high tech systems have to pay their users to use their systems.

    The hedge funds and PE funds are amazed when they fund this out and why the share price of Sabre and Travelport are in the toilet. Very few realise the advantage that Amadeus has in moving to open systems and the huge inroads they are making in airline core system technology. Even huge US carrier Southwest in USA has recently migrated to their PSS platform from Sabre.

    Even though the GDSs are based on old legacy technology and aged connectivity standards of EDIFACT and type B messaging, they are still sophisticated systems and should not be providing it to agents for free, or worse, paying agents to use it.

    This is the core of their problem. It has made GDS fees so high for airlines that they no longer see the value for money and hence taking alternative steps.

    But the bottom line is that the GDS systems are being held to ransom on a treadmill. They would love to get off it, but do not know how to.

    So the agents might in fact lead to their undoing.

    More and more OTAs are direct connecting to airlines.

    And the meta-search are also starting to expose the hidden fees in the OTA pricing. All part of the evolving scene.

    The TMCs will be the last hold outs with the GDS model as it is, but even they must finally succumb to the relentless pressure of technology advancement and ‘the Internet of things’.

    To hold back and impede the growth of modern technology will be to the detriment of all parties. To try and use legislation under a ruse is disgraceful.

    As with all change there will be both victims and beneficiaries.

    The support of GDSs and their business models as they currently stand could lead to many travel intermediaries ultimately being left on the wrong side of the fence

     
    • Glenn Wallace

      I literally don’t know where to start with the errors in your post. Firstly, all GDSs are using open systems to different degrees, two of them have made major investments in open systems architecture. (I do agree that Travelport is still trying to maintain 3 systems.) Bringing up the “EDIFACT” boogieman is misleading. Many systems and interfaces between the GDSs and their partners use XML or some variant thereof. Meta search doesn’t typically deal with bookings and post booking support (why? because it is difficult!)

      Who are the OTA’s direct connecting? Love to know more…

       
    • Linda Fox

      Thanks for the great comments and opinions expressed, keep them coming. That said – let’s remain polite and professional.

       
      • David Bishop

        Think we passed the ‘polite and professional’ a while ago!

         
      • Martin Cowley

        Absolutely Linda. It’s all good honest fun. However I do think it’s time Mr Peter K came out from behind his cloak of anonymity. If he is not T O’D’s alter ego then I’d love to know who he is and why he thinks so highly of me?! #justsayin’

         
  10. Peter K

    Dear Murray Harold

    You.have repeated a word over and over and have obviously no understanding of the meaning of the word.

    The word is AGENT.

    You are an agent of the airline. Nothing more .

    You do not own the customer in the entire travel process. You may be considered to own them for the booking process only. The supplier of the service owns the customer for the elements they provide.

    And this is enshrined in the legalities of your arrangement with an airline and the airline’s legal responsibilities to the passenger (its customer). Legally you are peripheral so why do you make these claims. You are not a re-seller even.

    And you do not own the money that you accept from the customer for their journey. That is not your money and the airline is extending you a line of credit. It is the airline’s money. And they carry a risk on you accepting it on their behalf.

    And if you are a corporate agent, the corporation is paying you for fulfilment of their travel contracts and managing the travel of the company. Hence the term TMC.

    But at the end of the day no-one truly “owns” and customer. They are not slaves. They own themselves.

    You cloud the matter with spurious history that is revisionist.

    I am not totally anti-agent. They have a definite role to play. I also happen to know a lot about agency technology and agency economics and work practices, whether they be retail, corporate or wholesale.

    The fact that you have tied your internal systems and work flows to GDS search engine technogy does not give you licence to hinder other more modern technogy developments and airlines also have the right to not deal with you if they wish.

    And similar to credit card fees, they have the right to recover from the customer the additional cost of dealing through a particular channel that uses a very expensive system when there are other options available. It is their commercial risk to surcharge.

    But your arguments are flawed in many ways regarding content and best fares.

    The primary one is that GDS’s do not cover all airlines and all fares, Only those that choose to distribute via GDSs. So the systems you use are not revealing to the customer all of the options and prices they have access to.

    The only search engine aggregators that access all content are currently the mete-search engines.

    But I realise that because of your current dependencies on GDS that this does not fit into your workflow. But that is your fault and you should not exhibit Luddite tendencies to try and use legislation and spurious arguments to force airlines to maintain your anachronous practices.

    And it annoys me to see NDC misrepresented as if it is a Trojan horse. Agencies have indulged in scare mongering in the extreme.

    It is simply an attempt at a more modern connectivity standard (above the current antiquated old CRS and GDS standard of EDIFACT and type B messaging that are very limited.

    NDC is not meant to be a bypass mechanism. It is meant to be a mechanism whereby airlines can deal via third parties (agents) and provide richer content and be able to reach through to their customer and provide a level of service and recognition at a level equivalent to if the customer was dealing direct. Especially its high value customers who expect this recognition.

    And all you want to do is hinder it. Why?

    And you fail to see that this connectivity can only come in when the airline has already been chosen/selected.

    It would be a technical impossibility for any aggregator system to provide variable pricing by individual customer in a neutral aggregated display. So an airline must continue to publish its competitive best fares for pricing comparison or else it and others are deluding themselves.

    And furthermore would create an impossible unmanageable situation in airline pricing and inventory management areas. The variables are likely to be in the areas of ancillary sevice offers and benefits. Not base pricing. Other wise it becomes massively dilutionary for no real benefit. And it also has to manage its dealt/contracted fares.

    I am not railing against agents per se, but instead against the arachonistic and crooked thinking that is being used to bar progress, and the misleading and deceptive conduct and conspired alarmism that is being deployed to stymie progress and protect self interest

     
  11. Martin Cowley

    Tnooz listen up. These pages have become the garbage dump for the mindless ranting and vitriol of a small number of tired ‘yesterdays heroes’ who take advantage to your publication to air their bitter, twisted, “one eyed” and often fallacious and hypocritical views. Describing the commercial terms negotiated between travel agents and gds as ‘bribes’ is beneath contempt. Calling agents ‘luddite’ is just as pathetic as when IATA referred to the gds as leeches and the EK CEO referred to intermediaries as parasites. Schoolyard stuff at best. These people are either vendors who have a solution to push or ‘has beens’ with an axe to grind- or both. Your choice, Tnooz but I sense that you can and should do better.

     
    • Peter K

      Martin Cowley, you are a confused and it seems revengeful person. I read your recent biased and unnecessary attack on BA.
      I have been advised that you are known to be a disaffected yesterday’s man with an axe to grind and little real knowledge. This seems to be verified in everything you write.

       
  12. Murray Harrold

    Remarkable response by Peter K which may only be described as, at best, rather naive. A response which shows a meagre understanding of how agents work and, indeed, of how travel works.
    Travel and Travel agents, it could be said, embraced tech long before “travel tech” as we know it today (that is, tech paying money to discover things about travel which, if they had asked any agent, they could have found out for free, wrongly diagnosing the issues and applying totally inappropriate solutions) – but I digress. Travel tech first started, perhaps, with a chance encounter between an IBM salesman and the then president of American Airlines, on a plane, in 1953. In 1958 Sabre was born and by 1964 Sabre was in use. Agents embraced Viewdata when it came out, lived through expensive leased lines and today, make more use of the internet than perhaps, one imagines. Calling us “Luddites” demonstrates a rather challenged mind when it comes to appreciating the actuality of travel.

    Actually, we agents do “own” the customers – and there is a very good reason for that. No one else in the supply chain bothers to do so. True, a lot of information may be collected and processed, mainly so any given supplier can flog the client something else, deluge them with unwanted emails and irritate the hell out of them with unwanted texts. That is not “owning ” the customer. Agents own the customer because agents are the only people that actually talk to them, really try and understand what they are after and all with a view to finding the customer the best value for what they want, rather than what supplier wants to sell them.
    Agents are quite happy to go along with NDC – that is, when it has finally proved itself; rather, when it actually produces something. There are companies around that offer NDC solutions – trouble is, they do not say what the solutions are (unless you are able to translate travel-tech-bellocks-speak) and all do not offer anything an agent can test. Agents will not use anything until such time as they are 100% sure whatever it is they are using, works. The GDS systems do work. If I book a flight from anywhere on the planet to anywhere else on the planet, with hotels and cars thrown in on my Sabre (or Amadeus or Gal) then I know that whatever it is I have booked will happen. If it does not happen, then it is more likely to be me (or more often, a supplier) than the GDS. Agents are hyper-cautious. We have to be. If a travel tech type gets it wrong, they can fiddle with a bit of code and try again. If an agent gets it wrong, we have an irate person in Singapore who should be in Los Angeles. Agents do not have the luxury of failure (the supposed virtue of which, it would seem, tech seems, for some unfathomable reason, to be quite content) and this promotion of the “Okay to fail” maxim in tech quarters does little to re-assure us. Neither does it go any way to mitigate the ire of the thousands of people tech left standing at London Heathrow Airport during the last public holiday.

    So. if you want to integrate “better” tech into travel, prove it works, prove it works all of the time, every time and we agents will embrace it. Otherwise, tech may be wise to take its head out of its nether regions and start trying to understand travel, rather than pontificate on the attitude of those at the sharp end of the business who are getting just a little tired of these, frankly, banal attitudes.

     
    • Glenn Wallace

      The agents market to and find the customers, manage their profiles, support their bookings (this is a non-trivial cost) etc. and also decide how and where they will make the booking, and also help the customer find accommodation, transportation etc. There are many choices to get from point A to C and it is a competitive marketplace. I don’t see how NDC helps a competitive marketplace by fostering more 1:1 implementations instead of creating a new and better marketplace.

       
  13. Timothy O'Neil-Dunne

    While this debate will continues to rage – we need to just sit down and examine the situation clearly. The facts are straight forward.
    From a regulatory perspective there are no price mandates in the European Community – I would argue that EU airline behaviour is governed by TFEU Articles 101 and 102. Airlines and Agents are free to charge what service fees they like. The question of Transparency in this context is clearly false, it is also pretty out of date. Several airlines have been charging a differentiated fee or differentiated contracts for more than a decade.
    As this debate is now out in the open, should we also not only look at these charges but at the GDS fees and the incentive fees (aka “bribes”) that the GDSs are paying to agencies as well? Not only that – let’s go the whole hog and look at the restrictive contract provisions (Full Content Agreement) that effectively set higher prices through a “tax” guaranteed and placed on to the consumer.
    Any argument about transparency with regard to fees from ETTSA (funded largely by the 3 US/EU based GDSs) has to be spurious. The GDSs have had their fingers in the cookie jar for a very long time and now they have been found out. They are hoping by obfuscating the argument – no one will notice that in fact they are guilty of the very thing they are accusing the airlines of!
    Whether by stick (DCC type such as LH and BA/IB) or carrot (as AA is doing) the solution for consumers to have the ability to get to the highest value channel for their particular needs is – now a lot easier. If only the GDSs had invested in new technologies just percentage of the money they had given away in “bribes” we could have had a better distribution system years ago. GDSs put several companies who tried to bring in new technologies at lower price points out of business through their restrictive practices and questionable tactics.
    Let’s stop the BS.
    GDSs cannot provide the depth and breadth of a differentiated airline product lines to the consumer with their current legacy technology platforms. It is clearly cheaper and easier for them to make this noise rather than actually go and solve the problem of their ancient technology platforms. Further the notion of Travel Agents as the source of neutrality is a myth – up there with the Loch Ness Monster. Yes there are a lot of hardworking agents but neutral? It is very straight forward. The significant majority of distribution via intermediaries is not fully neutral and has not been for a very long time. Nor does it need to be. We really need to retire the 1970s thinking and get on and fix the more pressing problem of how we give the consumers what they want when they want, in a form they want – and deserve.
    Cheers

     
  14. Peter K

    They critics seem to be completely overlooking meta-search engines that are much better at aggregating and comparing.

    The meta-search pick up Airlines that do not distribute via GDS as well as those that do.

    A very convenient oversight.

    The pro-GDS argument is fraudulent misrepresentation.

    The pro-GDS group simply trying to protect their GDS incentive commissions which are the core of the problem. It is this cost to the GDSs that makes their fees to airlines unacceptably high.

     
  15. Peter K

    What a load of rubbish. The CRS code of conduct related to airlines owning GDSs not to favour them selves at expense of other airlines they were distributing.

    It is simply market forces prevailing what airlines are doing and there is tranparancy

    This is simply some travel agencies wanting to hold on to to old legacy systems lacking functionality because they are paid large incentive fees by GDSs.

    If airlines did not have to carry the cost of these large incentives to agencies in their GDS fees, then airlines would be far more predisposed towards using the GDS channel. And GDSs and agencies should be supporting NDC which at the end of the day is a modern connectivity standard to replace the very old EDIFACT type B messaging standard that cannot support rich content. The NDC standard at the end of the day is to enable airlines via the GDS channel to provide richer content and reach through to the customer via this channel to provide similar levels of service and customisation as what it can provide to customers who deal direct.

    The Luddites are the travel agents pretending they are looking after their customers. What a load of cods wallop. Most travel agencies do not even provide a contact in the passengers booking to enable the better airlines disruption management systems provide a far better service and advice to travellers should there be a major disruption.

    About time most travel management companies and travel agents came out of their closet and became more transparent. They have deceived their customers for about fifty years now and do not like it when these days they are being caught out. And not willing to disclose their hidden fees and charges. The latter particularly applies particularly to OTAs.

    Remember, you are an agent of the airline. They are not forced to deal with you. So good on you Ryanair for telling many agencies and tour wholesalers: “We do not want to deal with you agent X, and we do not need need you and we choose not to deal with you.” It is their prerogative as to who they deal with. As it is the prerogative of any airline. Just as it is in business generally with an agent/supplier relationship.

     
    • David Bishop

      I agree with most of what you say Peter K…albeit I wouldn’t have used words like luddites! But, the underlying narrative makes perfect sense here

       
    • Glenn Wallace

      “And GDSs and agencies should be supporting NDC which at the end of the day is a modern connectivity standard to replace the very old EDIFACT type B messaging standard that cannot support rich content”

      GDSs use all kinds of messaging. The argument that they are stuck in EDIFACT is not true. Take a look at the rich ancillary products from Amadeus and Sabre. There is XML messaging for payments and seats.

      “If airlines did not have to carry the cost of these large incentives to agencies in their GDS fees, then airlines would be far more predisposed towards using the GDS channel.”

      You say they are large, but who knows what they are really? I would agree that the traditional flow of funds may cause the airline to fear how large the incentive payments are, but remember this, the agencies find the customers, and the GDSs fulfill and provide the tech to service the transaction. Isn’t that why the airlines participate in the GDS?

       
      • Martin Cowley

        Exactly, Glenn, but the anti gds brigade would never let the facts get in the way of a good story. Would they?

         
        • Peter K

          Martin.

          You continue to miss the point.

          The GDS technology was magnificent technology in its day. It was advanced in its day. Real time processing of vast numbers of transactions. It had to be written in almost machine language to achieve this. TPF. And banks used similar technology for yonks until they came to the realisation that they had outgrown it and then spent billions and millions of man years to move away from it. And many have not been able to afford to do it and suffer a major disadvantage as a result. But these are their own systems..

          But the GDS stuck with the old tech. All but one (Amadeus) that is now about 95% on open systems. But even they still continue to use legacy applications. But they are well poised to be able to move if and when they want to. And they do not have copy PNRs. Only one booking record. But the others are not. Travelport in fact is stuck with 3 separate CRS systems.

          It was great technology, but it is old technology. It is late 1960’s early 1970s technology in its core systems in all but one GDS as mentioned above. And that GDS is beginning to dominate and will continue to do so because the differences will soon become more apparent.

          The core system connectivity is still EDIFACT type B messaging. It is only peripheral functions that move away from this standard. But they are all capable of moving away from this old connectivity standard and try to leave the core untouched as much as possible. But it is a massive investment in front end systems and connectivity tech to do this and also not a simple matter.

          The GDS’s started out as being real value for money to distribute airline services.

          But over time with their internal competition with each other, they lost their way to gain short term advantage and in the the process they destroyed their business model. And they milked the system for all it was worth. And went to the airlines to pay the bill.

          Now they realise that it is a real problem, but do not know how to get out of the clutches of the agents who no longer care about the differential functionality between the GDSs and just chase the money offered.

          Take a look at Travelport’s financials last year. They won over a large agency group and paid them the financial incentives up-front. Tens of millions of dollars. And the agency group soon after became insolvent. So Travelport received no segments and suffered a massive loss. Certainly sounds like a broken business model to me. And the hedge funds and PE funds all agree with me. The equities market also agrees.

          So maybe it is the agents that will finally kill off the providers of their systems. And when you have one provider only, I am sure that one of the first things to go will be elimination of agent segment incentives and probably a reduction in airline segment fees to try and arrest the airline moves and to regain the faith of the airlines who used to be far from anti-GDS. But times and technology have moved on and airline margins have reduced. And so have agents margins.

          Do you know how much the going GDS price to an airline is in GDS fee per passenger per segment? Over US$8.

          Some airlines with power have restrictive full full content agreements that reduce this fee in their home markets. Most airlines have nil and if they do have such an agreement they receive very minor reductions. So their GDS distribution cost is huge. And for short haul airlines it is a very large percentage of the ticket price, let alone the impact of various taxes fees and charges added to the headline price that have to be collected by the airlines on behalf of third parties and governments.

          And airlines even have to pay for cancelled segments and passive segments and no-show segments. And guess who causes most of these?

          And what are the agency incentives being offered? Around 3 and 4 dollars per passenger per segment. And agencies are dependent on this income. The profits of most TMCs are simply about equal to their GDS segment fee commissions. So many of them have a broken business model as well.

          So they (the agent industry) are desperately trying to hold on to this revenue, even if it means impeding technology advances. Even if means less customer service. But you can hardly blame them for their self-interest.

          And soon the major airlines are going to get mightily pissed-off with the GDSs doing deals with the LCCs at much lower rates to get their content, and excluding those LCC segments as being subject to inventive commissions. And the big OTAs are looking after themselves with direct connectivity to the airlines and merging it with other GDS content.

          So none of this is a good story at the moment, no matter which way you look at it.

          And legislation to protect agent’s interests is not the way to go. A dishonest and fraudulently misleading argument is being put forward at the moment to the EC based on misinformation and focussing on a so-called competitive transparent pricing argument. It is a flawed argument because GDS’s only have access to a cross-section of airlines (a lot , but not all) and do not have access to all fares available.

          But there is one rapidly emerging aggregator than can provide access to all. The Meta-search companies. But the agency groups are of course silent on this as it shoots a massive hole in their argument.

          But of course using meta-search does not suit their work-flow. It is true.

          But it does not mean that current airline practices disintegrate true price comparison shopping. Their practices are not anti-competitive. It is simply evolution and the result of a good thing (GDSs) over exploited by some parties, while the airlines foot the bill. Surely you can see this?

          But of course you are an expert on all of this. Not.

           
  16. David Bishop

    There is neutrality and independence for those TMC’s that invest in high value add technology to aggregate content from multiple sources. I’ve looked back and I can’t see any similar letters aimed at the Hotel chains viz their relationships with the OTA market? Why is this different?

     
    • Roy

      I’m not aware of any hotel chains that are **charging OTAs a fee** to book via the GDS and telling OTAs that to avoid the fee their only option is to ‘direct connect’ the OTA’s platform to the hotel’s own proprietary API. That is what the airlines are doing. Hotels are simply promoting their own websites and giving end-customers special offers to book there. That is the difference as I understand it.

       
    • Martin Cowley

      Oh dear (2). Move aside @professorsabena. Your place at the sharp end of the anti-gds crusade has been usurped by Mr Peter K (??). Or is it still you but in new clothes????

       
    • Glenn Wallace

      1: the hotel supplier marketplace is highlight fragmented
      2: the hotels pay the agencies quite large commissions because it is difficult for them to efficient acquire customers directly.
      3. the hotels have been open and willing partners in implementing new connectivity, working with the agencies rather than trying to shove them down the throat of the agent (to be fair to AA, they’re taking a much more productive route now)
      4. air tickets and products are far more complex than hotels (created by the airline industry!) – more complexity==harder to evolve. There’s big inertia for an agent to stick with the GDS because they do what they do very very efficiently and operating cost effectively (put aside incentives for a minute)

      Maybe we could talk about the IATA vote to adopt NDC? Some interesting stories there…..

       
 
 

Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel