Travelport on IATA project, hotels and ad sales for growth, influence of developer network

IATA might be proposing a way to overhaul the way airlines distribute fares and inventory to intermediaries, but those currently in the game are concerned about the process.

Travelport argues that it and others are already working with airlines through APIs (such as its own partnership with Air Canada) to give agents access to the ancillary products and services, so questions the motivation behind IATA’s recent move to introduce NDC, the so-called New Distribution Capability.

The desire to introduce NDC, Travelport president and CEO Gordon Wilson argues, is based not only on arguments over technology but also a “power-play” by IATA and some airlines with “their own agendas”.

Travelport is already working hard to and succeeding in bringing ancillary shopping for travellers through agents, Wilson argues, adding: “We are not going to sit by and wait for this [NDC] to happen.”

The GDSs, including Travelport, are concerned that those at the heart of the NDC project (a key and influential group of airlines, primarily) have so far paid only modest lip-service to many of the stakeholders involved in the airline distribution ecosystem during talks over the project.

“There should be [distribution] standards,” Wilson argues, but created using a collaborative approach and not via the “lowest common denominator”.

Meanwhile, Travelport will be hoping continued growth of the business in Eastern Europe, especially Russia, can help offset the impact of economic woes elsewhere in the continent.

The company, which released its third quarter 2012 results last week, says it is seeing a softening of air volumes across Western Europe and also North America, with Spain and Portugal in particular singled out as apparent “problem areas”.

But with year-on-year growth of 39% in customer segments in the third quarter of 2012 in Russia, 23% in China and 9% in South Africa, against the backdrop of a global decline from 89 million to 85 million y/y, president and CEO Gordon Wilson remains upbeat.

Net revenue y/y for the third quarter may be down to $489 million from $509 million (adjusted EBITDA down from $118 million to $106 million over the same period), so Wilson points to the sixth consecutive quarterly increase in revenue per passenger (RevPas), up 3% y/y, as an indicator that new products and agreements are helping with its “strategic execution”.

The latest financial results are the first in which a year-on-year comparison can be made for its Rooms & More accommodation search and shopping platform since its launch in the summer of 2011.

Financials for the platform are not broken out in the earnings report, but Wilson says the system is currently hosting around 900,000 offers from over 350,000 properties worldwide, of which roughly 90,000 are from the GDS.

A “relatively large component” of the continued growth in RevPas comes from the hospitality wing of the business, Wilson says, as well as an increase in ad sales via agent desktops. Rooms & More is expected to be added to the Universal API shortly.

The agent tool, Smartpoint, is now in deployment across the company’s network of Galileo-connected agencies, Wilson says, with two further releases expected in 2013 and a browser-based version for Worldspan users due for launch in December this year.

Meanwhile, the 12-month-old Developer Network is also apparently making its mark, with the mobile agent tool developed by a Portuguese company earlier this year seen as a key indicator that opening up some of the company’s technology and APIs to third parties in over 70 countries can “benefit the wider community”.

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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.

 

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  1. Timothy O'Neil-Dunne

    If I may beg to differ with Mr Wilson. His quotation implies that the GDSs have no agenda and are not culpable on this subject:

    “the desire to introduce NDC, Travelport president and CEO Gordon Wilson argues, is based not only on arguments over technology but also a “power-play” by IATA and some airlines with “their own agendas”.

    One of the issues that the GDS must accept is that they have had their own agenda for many years not to develop any new distribution capabilities that challenge their dominance of the distribution market. Naturally much of this is based on the cost and complexity of the changes required. Calling a spade a spade here – the 4 major issues are:

    Cost
    Poor GDS based functionality (let’s be kind and call it obsolescence)
    Lack of merchandising capability (clearly at a time when the Full Service Airlines need it).
    Control (through highly restrictive practices by the GDS both to the airlines and the agencies).

    For the past 16+ years – the airlines have invested in New Distribution functionality primarily through their own websites while the GDSs sat on their hands. Now they are having to pay the piper.

    In my view this unpleasantness was avoidable. The Travel Agents are the victims though as we have seen in the AA vs Sabre/TP lawsuits not exactly blameless.

    The GDSs have to wake up and smell the coffee. The level of capability in personalization must be put in place. The cost to be born by the GDS now is higher than it needed to be. That is probably why they are protesting so much. Of course having to cede control is tough for any gatekeeper.

    Cheers.

     
 
 

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