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Airline Group Urges Dialogue On Distribution IssuesJanuary 4, 2011 By: George Dooley
On behalf of its airline members, the Open AXIS Group jumped into the fray over distribution issues, offering an insight into American Airlines Direct Connect program and industrywide concerns with the GDS systems and online travel agencies (OTAs). The group called for an open industry dialogue and urged a debate over the real issues and facts facing the industry and noted that the issue has now boiled over into the view of consumers.
“It is unfortunate that our industry has reduced itself to the levels it has in recent weeks but until the Distribution Gap between how airline products and services are sold in direct channels and indirect channels is eliminated, there will be a continual erosion of customer and agency/intermediary satisfaction with the Indirect Channel. Fortunately, what the airlines are looking for is no different than what Open AXIS Group has implemented,” said Jim Young, executive director of Open AXIS Group. “We need immediate action on this issue and I call upon the industry to resume a reasonable discourse on a matter as important as this one. We have reduced ourselves to nasty sound bites in the media and ugly disputes in the courts. It is time for everyone to get back in a room and honestly debate the topic in order to reach a reasonable conclusion that benefits all parties concerned in the best interests of our customers. Open AXIS Group remains committed and willing to work with the entire industry in this area.
Key points offered by OPEN Access included:
Fact – Technology and/or commercial limitations imposed on the airlines by the Global Distribution Systems (GDS) have prevented competitive products from being sold through the indirect distribution channel. Since multiple choices exist for consumers for airline service, an airline must be pro-consumer and pro-choice for it to remain competitive and viable. Over the last five years, a large number of airlines have been working hard to take more control over how their products are sold, and, in addition to developing optional products and services for consumers to choose from, in order to customize their travel experience. The Open AXIS Group was formed to address these concerns with a single uniform industry airline integration XML standard by which an airline distributes its products to third party agencies.
Fact – Airlines desire, and have pushed for, product and price transparency. The suggestion by pundits that airlines have an underlying desire to make their products less transparent leads one to believe that the pundits themselves may not really understand the marketplace and how buyers purchase. Airline direct websites are very transparent as to what is included in a travel purchase. The method each airline undertakes to sell its products through their direct online channels is based on their own product and marketing strategy. As each selling strategy is unique and differentiated, what the consumer gets when they make a travel purchase has to be clearly communicated and transparent. It is this same level of transparency and selling strategy that the airlines desire to provide to their indirect channel (online and offline travel agencies). In this indirect channel, it is the responsibility of the GDS network to ensure that an airline, from which they derive a majority of their revenue, has the ability to market and sell its own product the way the airline wants to, without being forced into a display that ultimately commoditizes the airline’s optional products and services. Although this method of display is easiest on the GDS, this current GDS-centric model inhibits airline product choice, lessens the airline brand, and ultimately limits the consumer’s ability to make his or her own choice.
Fact – A single industry standard addresses cost concerns on both sides. Just as it is costly for an airline to maintain multiple agency connections via different GDS imposed XML standards, it is costly for an agency or GDS to maintain multiple airline connections via proprietary airline XML standards. The Open AXIS Group standard was created by the airlines to address this issue. The air travel industry has been invited to participate in the development and enhancement of these standards. For a dominant OTA to suggest that the Open AXIS Group Distribution 2.0 model is of questionable, if any, benefit to travelers is either an intentionally inaccurate statement or a gross misunderstanding of the basis of the standard. Airlines and distributors participating under the Open AXIS Group Distribution 2.0 model will enjoy expanded choices for their customers, more competitive products and services based on a better understanding of the buyer, and a better purchasing and traveling experience.
Fact – Direct Connect is not GDS bypass or one-off links. All member airlines have communicated to the GDS providers that they would consider selling optional products and services through indirect distribution channels under the right commercial terms. This includes the ability to differentiate their products and services in a way appropriate for each individual carrier. This gives the airlines access to customers who choose to purchase air travel from accredited third party travel agencies who represent a large incremental revenue opportunity to the airlines. What needs to change is the distribution method, which requires a technology and commercial capability that the GDS have been unwilling to provide as it also creates a system that allows an airline to differentiate not only what is sold, but how it is displayed and sold. The Open AXIS Group distribution standard is inclusive to all distribution channels, either direct to an agency or via the GDS network.
Fact – The Open AXIS Group Distribution 2.0 model is the model for the future in the industry. All member airlines have adopted the Open AXIS Group Distribution 2.0 model and the Open AXIS Group standard for XML connectivity and access to their optional products and services. This standard is in use today by 6 of the 7 member airlines. Further, attributing to the “open” nature of standards development, an additional 6 non member airlines also use the Open AXIS standard for XML connectivity.
In support of this purpose, the Open AXIS (Airline XML Integration Standard) Group has developed and maintains a standardized XML schema tailored to the airline industry that is capable of delivering comprehensive functionality to both the supply and demand sides of the travel supply chain on a worldwide basis.