Google (not the GDS) is the new enemy in airline distribution

An airline distribution conference doesn’t seem complete without a bit of a poke at the global distribution systems.

Segment fees paid by airlines, age of the technology and how long it takes to get anything new done are all popular reasons for GDS bashing.

However, at an airline event last week, the bashing was reserved for Google Flight Search, which is ringing alarm bells for some in the travel industry for the strength it is gathering.

It’s a subject close to the heart of CarTrawler’s technology chief Bobby Healy who first laid out his concerns here about a year ago.

In short, Healy feels GFS is “very bad” for the airline industry (and travel in general), and future distribution.

He sees the roll out of the service enables Google to extend its reach to the top of the trip planning funnel – i.e where consumers go first to start planning a trip.

And, Healy thinks airlines need to evaluate GFS in a different way to other potential threats because of Google’s power and the data it has on consumers and their purchase intent.

He says that “in good times” a GDS makes about $3 per booking, an airline makes about $21 but currently, according to Healy, Google is making $16 per online airline booking.

“It’s growing every year, widening and deepening as they take more of the travel funnel.”

It’s not about cost

Healy was speaking at the CAPA conference in Dublin last week but said it’s actually not about cost but about “the loss of control.”

He likens Google to a “blender” because it attracts more and more users with its products and ecosystem and gathers more information, data and insight on them.

“They have more access to you customers then you’ll ever have, more insight into your customers, more data. It knows your customers location, it knows absolutely everything about your customer.

“It has an engineering capability like nothing we’ve ever seen and produce products quicker than anyone else.

“Airlines willingly give Google their pricing data and inventory in real time sub 10 response times. That key item is the problem here as you have created the perfect storm for intermediation of your own customer base.”

What to do?

Airlines can push back GFS on this by only giving up their data on their own terms. This is something Healy believes both American Airlines and Ryanair are doing.

And, provide the sort of value Google is providing, via better mobile products, for example.

Or, wait for the regulators to catch up.

Those solutions seem weak as pointed out by CNN journalist Richard Quest who was moderating the CAPA session and says it’s like “trying to hold back the tide.”

He questions whether it’s possible for the airline to be in control and own the customer with the number of distribution channels out there and ongoing disruption.

But, ultimately control lies with the customer as Travelport global head of product and marketing Ian Heywood stresses.

“That’s where it should reside but it’s about what is put in front of the customer. Is the airline going to be able to do that or is someone else going to do it for them?”

Heywood says a more collaborative approach is the way forward so that airlines can improve how products and services are shown to consumers and it is no longer all about price.

He adds that airlines need to take steps along an API path to move forward generally.

“Everyone talks about disruption, that’s the reason no one has moved anywhere. Airlines have been waiting for a big disruption rather than working with the industry to plan evolution.”

Steps to IATA NDC

Heywood says airlines need to start using a combination of existing ATPCo technology and API to ensure their content is being distributed via various channels.

“Once you have those steps in progress then arilines can see how they can get more content into the API path.”

He stresses that it’s going to take a lot of time and will require investment in both API technology and a merchandising platform.

“ATPCO works well and is really efficient so we’ve got to make sure new technology and processes are as effective and as efficient.”

Heywood adds that carriers will also need to “reengineer the human process” to get buy in from everyone.

The last word

So, taking into consideration slim margins, 40 years of technology and the complex fare structure – can it be done?

Healy says airlines really need to focus on what the problem is.

SAP general manager and global head of travel & transportation Paul Pessutti adds that the airline industry needs to invest in areas such as data science.

For Heywood, although the industry is only a “minute way along the path” – the technology is there and the standard is there so it’s just about bringing it all together.

NB: Reporter’s flights and accommodation costs at the conference were supported by Travelport.

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About the Writer :: Linda Fox

Linda worked at tnooz from September 2011 to June 2018 in roles including senior reporter, deputy editor and managing editor.



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  1. Nathan Bobbin

    Google makes $12-15B top line advertising revenue from the travel space. Why would they want to create a channel conflict with their biggest customers while concurrently entering a business with far lower margins than advertising?

    Seems to me Google’s strategy must be, as always, to organize this data (content as we call it in the industry) and provide sensible options to the consumer based on everything Google knows about the consumer and the terms of their search. The options provided will be OTA and Both OTAs and Suppliers need to start thinking about 1) how best to market through a mix of organic & paid search and 2) how to convert users that come to them through search. Almost like real-live eCommece retailers…. The Meta-Search brands seem to be ahead of the curve from my view as a consumer.

  2. Ted

    There’s only one reason why I start with Google Flights anytime I search for a flight — it doesn’t suck. (1) it doesn’t take forever to give me results; (2) it doesn’t bias the result based on whatever airline is giving them more money (3) the results isn’t cluttered with pop-ups reading “978 other people are buying this ticket” or “add insurance to this trip” (4) they give me the information I want (type of aircraft, meal or no meal, seat pitch or, if in business, lie flat or slanted seats, entertainment or no entertainment, Wi-Fi or no Wi-Fi, etc.), (5) they compare buying separate tickets on roundtrips, (6) their recommendations are usually very good and (7) they allow me to compare flights from different airlines.

    As a consumer, it’s very clear that the enemy in airline distribution are the airline themselves, whose sites totally suck. For example, on the site from the world’s largest airline, American Airlines, I can’t even tell what meals are included in my $2,000 business class ticket, what type of seat I will be sitting in, or if there will be any seatback entertainment. Why would I ever want to start my purchase there?

    You should ask consumers before writing articles!

  3. N

    Funny that Mr. Healy balks at the $16 GFS makes per booking, then he goes on to talk about how Google has more access to customers and engineering capability no one else has. Perhaps the $16 is commensurate for the value added by the capabilities/data/funnel of Google that airlines don’t have (and will probably never have). However, I do agree that airlines may be working themselves into a corner by embracing Google.

    I would also like to know where the $16 number comes from. I suspect he is confusing revenue and profit.

    • Bobby Healy

      Hi N, not confusing rev from profit…the number on GOOG is indeed rev, because it’s impossible to get to EBITDA based on the numbers they publicly disclose. That number is actually provided by a recent SKIFT article. I think it’s fair to compare GOOGs rev alongside other numbers as an indicator of how rich the segment is for them and how much they are ultimately taking out of the total wallet. Ultimately, ALL of these costs will be paid by the consumer – so the more GOOG take, either the airlines have to subsidise that in some way, or the Hotel and other ancillary aggregators do. Or…(and this is what the EU believes), the Consumer will end up paying. The more expensive advertising becomes, the more the prices will have to rise, or margins decline. And there will only be ONE winner in that equation. The monopoly that controls ALL the traffic.

      • Josh Gunn

        So Lufthansa estimates that selling a fare through the GDS amounts to €16 and Google is apparently earning $16 (€14.35 as of May ’17) for a flight booked through GFS.

        Which is the better user experience for the person actually paying for the ticket? Undeniably GFS.

        Admittedly not a complete apples to apples comparison as both sets of figures are assumptive, but when cost is more or less equal, user experience wins.

        I agree that a travel industry dominated by Google and Amazon isn’t a future many people, including myself, want but it’s basic human nature to want 1. Choice 2. Value and 3. Simplicity.

        These things will not change. If the industry ignores that and keeps treating people like they shouldn’t be trying to compare costs and offerings in a quick and simple way then they’ll have nobody to blame but themselves.

        They should redouble their efforts to build loyal brand followers (looking at you United, BA) while accepting that for many, we just want the cheapest flight with the least amount of hassle involved in booking it.

        Ps. An airline’s brand investment should inform the user’s decision ahead of time, not dictate it at the point of sale.

  4. Ian R Clayton

    Well GDS is pretty outdated and it time for modern technology and up to date systems to replace it. I am not happy that is Google. It is being very disruptive to travel companies now, from hotels to activities and all the steps from planning to purchase. Its power is unrelenting and it looks poised to close down all the small companies who provide services to travels and hotels. We do not want a single company dominating the entire landscape!

  5. Henry Harteveldt

    ATPCO may “work” well but it is as relevant as a DC-6 in today’s airline world. Airlines are, as the should be, intent on pursuing dynamic pricing, which means less reliance on pre-filed fares and, in turn, ATPCO.

    • Ian Tunnacliffe

      Henry, you are right but with very few exceptions airlines are literally years away from being able to do dynamic pricing.

      And this whole mantra about GDSs being outdated is something I have been hearing for more than 20 years. Remember the GDSs rôle is providing data to intermediaries who then interpret it for consumers. These intermediaries may be human travel agents or additional technology layers. The end consumer should never see a raw GDS display. With that in mind, where are the deficiencies in GDS technology? I can think of some but they are as much to do with airlines’ inability to provide their offers in a modern form as they are about the GDSs inability to consume them.

      Lest anyone be unclear, I do think that the GDSs have been under responsive to airlines’ wishes to update their proposition and I certainly think that there was a period from roughly 1995 to 2005 when they were guilty of some horrific price gouging. All that said, any airline that wants to switch to an API connection to the GDSs is able to do it today, so why have so few outside the LCC space chosen to do so?

    • Paul Byrne

      Agree that the desire for airline to retake control, make the offer and know their customer in order to better serve them is the way forward. All of this in real time, in addition.
      Cost saving/reduced filing/fewer ADMs are all desirable outcomes also.

    • Bobby Healy

      Agree, BUT…problem with that is that it means the airline is responsible for scaling their systems to internet speeds…which they ain’t very good at.


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