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BTC Defends Value of GDS Distribution SystemMay 19, 2011 By: George Dooley
Kevin Mitchell, chairman of the Business Travel Coalition (BTC) took aim at reports that Richard Tams, head of UK & Ireland sales for British Airways (BA) told the Guild of Travel Management Companies that the current travel distribution system model as “broken.” Of course, Mitchell said, “this has become almost fashionable to say, and in some circles, a litmus test of one’s presumed travel technology sophistication.” However, Mitchell says, “saying the distribution model is broken actually accentuates a certain benightedness with respect to the value of the GDS-centric distribution model.”
“An overwhelming majority of managed travel community participants keenly understand the huge value that the current distribution model generates. As the graphic immediately below depicts, thousands of suppliers with billions of prices and schedule options provide their offerings, in disparate data formats, through the “front doors” of the GDSs. Normalized, comparative display feeds flow out the “back doors” to TMCs and travel agencies around the world that service billions of consumers. This is all accomplished day in and day out with barely a hiccup,” Mitchel notes in a posting on his blog, ”If It Ain’t Broken, Continue To Improve It!”
“For TMCs, the model enables tremendous efficiencies, a complete product offering, front, mid and back office capabilities and the ability to properly serve individual travelers and corporate clients,” Mitchell says.
“For corporate travel departments, the model provides price transparency and comparison-shopping across all suppliers necessary to support a business trip. GDSs enable employee booking tool productivity, customer service, travel policy compliance, duty-of-care initiatives and effective supplier negotiations. The blended cost (domestic and international tickets) of GDS services represents about 1 percent of the price of an average airline ticket for business travelers," Mitchel says.
“For airlines that participate in the GDS-centric model, their products and services are enabled in real-time for sale in millions of global markets on a multi-cabin basis with seat assignments and complex frequent flyer status support; changes and cancellations are executed effortlessly. Airlines can efficiently interline, code share, handle various currencies and support integration of their antitrust-immunized global alliances. What's more, participating airlines avoid all manner of IT investments, IT staff and IT operational budgets while benefiting financially from standardization-driven efficiencies.”
In particular, Mitchel argues, BA offers a global product to a market with complex needs. “Its business travel customers demand a vast array of pre- and post-trip services that neither BA’s website nor any other 3rd party solution can accommodate. With the airline’s complex connecting network and global footprint, BA arguably derives more value from GDSs and TMC distribution than any other airline in the world. BA’s easy availability and strong participation in the GDSs gives it a decided advantage in securing a premium share of corporations’ high-yield business. Broken? I don’t think so.”
“According to Webster, broken is defined as “violently separated into parts: shattered.” Carlson Wagonlit Travel’s communication this week aptly characterized this definition when it bluntly told corporate clients that if the TMC has to go outside the GDSs this summer to book American Airlines directly, clients can expect a $25.00 increase in transaction fees,” Mitchell said.
“According to Word Hippo, the opposite of broken is “intact,” “working” and “triumphant.” I think that pretty much summarizes modern travel management as powered by GDSs and supported by TMCs.”