Archive for the 'GDS' Category

Easyjet Opens Old-new Sales Channels

When I saw it in the news that easyJet will sell its seats via GDSs, my first reaction was “oops”. What is a GDS and why is it surprising for the airline industry?

What is a GDS?

The abbreviation stands for Global Distribution System and there are a few of them available in the world. You might have read about Amadeus, Gabriel, Galileo, Worldspan, Apollo or Sabre in our blog.  Airlines use these systems to distribute their products: seat availability and prices. This is the traditional sales channel for airlines. Travel agents also have access to GDSs and they use them to reserve places through them. The reason why low cost carriers do not use this channel is that there are costs attached to each end every transaction and it might happen, that a booking is cancelled, but the airline had costs with it.

Why is it suprising that easyJet starts using GDSs?

Now easyJet opens towards this sales channel, which will definately increase its sales costs. It says it will add a point-of-sale fee to fares booked through the GDSs, ensuring that its Web site “remains our primary distribution channel and fares will always be cheapest when booking direct online. €7.50 will be paid for a one-way ticket, €12 for a return ticket and €5 per segment for a ticket that includes more than 2 segments. Taking the fact GDSs normally charge USD 2-3 per segment for a transaction, they must have thought about cancelled bookings by creating the new fees.

 Why is it still very logical?

The intention behind easyJet’s step was to open towards business travellers. The characteristics of business travellers are that

- they usually travel in and out within a day or maximum 2-3 days – by this characteristic low costs are better for a traveller as traditional airlines usually charge much more for these short returns than low costs

- they like loyalty programs, especially if the company allows them to collect miles during business trip that they can use for leisure purposes – this is something low costs do not have yet, although I believe there are some low costs seriously considering it.

- they do not arrange their trips for themselves, they have travel agents to arrange it for them – now this is the weakness of low costs, because the real big agencies like Amex will do their best to make their reservations via GDSs, so they loose business by not being present in them. And this is the point where Easyjet decided on taking action.

Easyjet

Low cost trends

easyJet is a follower with this strategy. They just copied the model of 2 US low cost carriers: Jet Blue Airways and Southwest Airlines. So what is happening in the airline industry?

The classic low cost model is that they save money on sales channel costs and spend it on direct advertising, thus generating direct traffic for themselves. It is a clear trend that the gap between low costs and traditional network carriers is narrowing.  Network carriers are forced to keep up in the tough competition with low costs, so their reaction against the low cost attack was reducing sales cost by directing more passengers towards their direct online sales channel (their website), stopping costly services like hot meal on board, basically giving less service for a lower cost. Besides that they give even higher services and better for their business and first class passengers to gain more revenue from that segment.

On the other hand low costs have to compete with each other, too. So we can see they start giving sandwiches and refresheners on board (for example Sky Europe) and start selling tickets via GDSs. Next steps can be loyalty programs, code share flights or at least strategic cooperations and different cabin classes, but the latter one is less realistic. The tendency is clear: at the end there will be very similar airlines, some of them offering long haul and very high niveau first class services, but for us, “the rest” it will be irrelevant whether we will fly a low cost or a traditional airline.

Related articles:

- Easyjet acquires GB Airways
- Self designed uniforms at easyJet

By Szafi 

Amadeus Turns 20

amadeus logo  Amadues 20 Anniversary Logo

The largest European based GDS (Global Distribution System), Amadeus has just turned 20 years old a week ago, as it was officially established 21OCT1987 by four European Airlines: Iberia, Air France, Lufthansa and SAS. The four airlines wished to create a European GDS by merging their own computer reservation systems. The basis of the new GDS was System One, an existing US reservation system.

Within a year they have opened their headquarters in Madrid, Spain, their development center in Nice, France, and have started construction on the new Data Center, in Erding, Germany. In 1989 they have launched AmadeusPro to allow travel agents to book flights through neutral screens, while already 11 airlines were Amadeus users. One year later the Erding Data Center opened, which costed $200 million altogether, and was capable of handling 150 million transactions in the first year. 1991 saw 45.000 terminals being connected to Amadeus, while in 1992 the new Amadeus GDS was launched with the first PNR being booked for Mr. Wolfgang Amadeus. In the first year 70 million bookings were created. 1993 saw more than 10 million bookings each month, as well as 60% of European Travel Agencies were connected to 1A (1A is the two letter IATA code of Amadeus GDS). In 1994 Austrian Airlines joined the distribution system as the 100th airline selling through Amadeus. One year later Amadeus fully acquired System One from Continental Airlines, thus becoming the largest GDS in terms of travel agency locations. In 1996 www.amadeus.net was launched, while bookings topped 309 million. Only about 50% of old System One users accepted the forced migration to Amadeus. In 1997 Amadeus celebrated its 10 year anniversary, while serving 32% of the travel agency market worldwide, and the first Amadeus powered travel website was also launched by Icelandair.

In 1998, the first year of their second decade, they launched the SAP Travel Management tool, which is fully integrated with SAP’s finance and HR modules, and their data center handled one million transactions in a single day for the first time. By 1999, around 80 airlines and 3000 travel agencies rely on 1A e-commerce solutions, and this is the year, when 1A launches the world’s first neutral Electronic Ticketing solution: the Amadeus E-Ticket Server (ETS). In 2000 and 2001 Amadeus lays down the plans for the coming years, by starting development on Vista (a browser based version of their reservation system), on new Inventory and Departure Control Systems (for British Airways and Qantas as the first customers), as well as announcing the new Altéa Customer Management Solution. In 2003 the annual number of bookings passes the 400 million mark, while new airlines launch their websites based on 1A, among them bmi and Qantas. In 2005 Amadeus shifts its “identity” to become “Your Technology Partner”, and repositions itself as a leading Airline IT service provider. To support this change, they win a major contract to support the Star Alliance with a new Common IT Platform for all member airlines. Last year Amadeus handled 499 million bookings, and by 2007 they provide 192 airlines with their e-Ticketing. This year they have launched MoneyDirect as a Joint Venture with Sabre.

As the leading Airline IT provider, they provide the capacity for common shared access to flight reservations and frequent flyer information to nearly 150 airlines as Amadeus Altéa Reservation airlines (formerly known as System User). Current Amadeus Altéa Reservation customers include:

  • 6 of the 11 oneworld airlines (55%)
  • 13 of the 21 Star Alliance airlines (61%)
  • 3 of the 10 SkyTeam airlines (30%)

And with the Common IT Platform for Star, this number will raise in the future. As we can see, in the first 18 years Amadeus focused on the travel agencies (and seems like they have won on that front being the leader on the market), and now they start to focus on Airlines. If they are as successful on this market as with the travel agencies, they may be the largest player in this field as well, within the next few years. It looks like they have started down the right path to do that.

http://www.amadeus.com/2020/

On the dedicated anniversary website you can find some more items besides the history of Amadeus, such as future plans, and thank you notes. They also added a fun “Personal Note for you” feature, with a personalized message, don’t miss that one, either!

We would also wish Amadeus a Happy 20th Birthday on behalf of AirlineWorld Blog!

by balint01

SITA Plans To Develop New CRS

SITA announced the development of a new Reservation System. You can read the full story on ATW Online. I must admit I am not a SITA fan myself. After an almost failed project in 2003 and a completely failed project in 2006 with them and after seeing their “Horizon” project slowly sinking into the ocean. By the way in the airline industry it is fancy to give applications names related to aviation. But Horizon is not a smart name as the closer you try to get to it, the further it moves from you.
I was honestly surprised by this announcement. After failing the Horizon project together with Unisys, Lufthansa Systems bought that half ready, unusable product (I worked with it; there were completely insane features in it and very important functions missing). Not long ago LH Systems announced they stopped developing it – which I think was a very wise decision. This is the relationship between SITA and Lufthansa Systems that appear in the article.

When I take a look at this announcement, I have a guess about what is going on at SITA. Ian Ryder’s name appears in the article. I first met him during our first e-commerce project together with SITA. At that time he was the head of SITA’s newly bought, Godalming based e-commerce department. SITA bought that company in late 2002 or early 2003. They had a product called I-Travel Direct. It was first implemented for Air New Zealand on a different GDS and Malev was the next client on SITA Gabriel. Later Malev migrated to Amadeus and we developed our own e-commerce solution based on Amadeus. But it was clear that SITA’s solution was at least competitive, although for us it was not flexible enough. At that time they also developed a new pricing system there also mentioned in the article.

So my guess is that this e-commerce and e-pricing solution will be the basis for this new development. And if this is the case, I have to say it is a good idea and this way they are right; even low costs will be able to take advantage of it. Such a development is a mega project though with many departments involved and if I just take a look at that department responsible for SITA’s DCS, they will stumble into lack of knowledge and lack of professionals. They can only succeed with it if they will hire some good project managers (better than the ones I met before – except Kevin Bull) who can split up this huge project into well definable pieces and monitor developments closely. These project managers will also need support and attention from the highest level management.

I will write an email to SITA and ask for their comments.

By Szafi 

Amadeus And Sabre Launch Moneydirect

As Airlineworld has reported earlier, Amadeus and Sabre plan a joint venture to provide secure payment clearing and reconciliation service for non-air travel sales. Yesterday the two GDS (Global Distribution System) providers revealed some details about this new entity. In our previous article we have mentioned that the new joint venture required an antitrust approval from the European Commission, which they have received on 12SEP2007. The new solution called Moneydirect is based on an Amadeus product launched in Australia and New Zealand in 1998 already. It will focus on hotels, cruise lines, tour operators, car rental companies, ferries, railways, and travel intermediaries such as travel agencies and wholesalers.

James Filsinger, chief executive officer and general manager of Moneydirect, said operations, which are currently hosted in Australia, will move to Ireland, with subsidiary offices in Australia and the U.S. He said travel agencies can use Moneydirect to pass payments onto suppliers minus their commissions. They also can use it to schedule several payments to cruise and tour companies in installments.

Moneydirect logo

 

Moneydirect also will address currency issues, he said. For example, a U.S. travel agent who books a hotel in Australia might get a $10 check issued in Australian dollars 90 days later. Moneydirect will enable the hotel to transfer the amount immediately directly into the agency’s bank account. “Payment can go in either direction,” Filsinger said. “If a hotel company manages hotel commissions directly, it can use Moneydirect to pay agencies.”

He said the platform is flexible enough to handle transactions in which the agent has a net rate and can retain the markup when the customer’s credit card is charged the full price for a travel component. Any size agency, hotel or other travel company can use the product, he said. “Even a small company that provides scuba tours can use it, so it may open the door to some new content that wasn’t already available before,” he said.

Filsinger said the fee structure has not yet been finalized but will be transaction-based. “We have a fee model that ranges from 10 to 20 cents, depending on the type of transaction,” he said. Moneydirect will be GDS-independent, he said. The joint venture is looking at ways in which it can communicate with agencies’ back-office systems in an efficient manner.

In granted approval to the joint venture, the EC said it concluded that “the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it. . .. There would be no horizontal or vertical overlaps between the activities of Moneydirect and its parent companies.”

The EC added that “this business is not closely related to the parties’ GDS business” and Amadeus and Sabre “have put in place structures to limit the information flows between Moneydirect and its parent companies.”

So Amadeus and Sabre has started on the road to provide an IATA BSP type of solution for travel agencies using their systems. The IATA BSP provides the same service of a general clearing house, but only in relation to air travel – between IATA member airlines and IATA member travel agencies selling those airlines’ tickets. Now the agencies (using Amadeus and Sabre reservation systems) will be able to take usage of similar services in relation with the other travel related content which they offer to their customers – their life will indeed be made much easier. Looking forward what will be the next cooperation between Amadeus and Sabre!

by balint01 (based on ATW News)

100% E-Ticketing: IATA Places Last Order For Paper Tickets

On 27AUG2007, IATA has placed its last order for paper ticket stocks to be used by its associated travel agencies before the 31MAY2008 deadline for 100% Electronic Ticketing. This means that IATA will only support Electronic Tickets starting 01JUN2008, paper tickets will become collectors’ items!

TAT Type Paper Ticket

The final order was for approximately 16.5 million paper tickets to be supplied by seven specialised printers which are to be distributed among and used by some 60.000 accredited travel agencies in 162 markets worldwide. IATA’s settlement systems issue over 400 million ticket annually. The elimination of paper tickets would not only cut airlines’ costs by USD$9 for every traveller (a total of USD$ 3 billion for the whole industry) but would also mean that air travel – criticized by environmentalists for its part in global warming – would save 50,000 mature trees a year, according to Giovanni Bisignani, director general of the International Air Transport Association (IATA). Non-IATA airlines, mainly low-cost carriers such as Ireland’s Ryanair and Britain’s easyJet, already have a paper-free ticket system where travelers are registered in computers and present only an identity document at check-in. Now with the pressure from IATA, the traditional carriers are moving in this direction as well.

An interesting statement from the airline body says that China, one of the fastest-growing markets for air travel and host to next year’s Olympic Games, is heading to be the first country in the world to operate an entirely paper-free ticketing system by the end of this year. Just like in many other fields, China has done a very impressive progress in this matter as well, because 3 years ago, when the 100% ET program of IATA was launched, there were no E-tickets issued in the most populated country in the world and now they are headed to be the first country to eliminate paper tickets, before the original deadline!

by balint01

100% E-Ticketing = 96.5% E-Ticketing!

As AirlineWorld had reported earlier, IATA has extended the deadline for 100% Electronic Ticketing. Not so long ago IATA has also admitted (which they probably knew all along the road) that pure 100% Electronic Ticketing (ET) will never be reachable for the whole market. Here is a quote from IATA (Bryan Wilson, ET Project Director in an ATW Webinar):

“We now understand the real target is 96.5%” *

* for IATA BSP’s (central clearing house solution for travel agents and airlines in most of the major IATA markets around the globe)

96.5% non-paper ticketing

Now the question is this: Where is that remaining 3.5% and how come it will remain Paper Ticketing?

First of all, about 20% of interline journeys (itineraries that involve more than one airline) will remain paper ticket based due to the interline ET agreement not being in place between the two involved airlines (this accounts for 2.4% of the total), about 1% of tickets will be paper tickets as per the choice of the travel agents, and about 0.1% will be accounted for airlines who choose not to introduce electronic ticketing at all. IATA says, this “remaining 3.5% will be satisfied by other means.” This “other means” would actually mean other, non-ET solutions, such as an agent issuing a paper MPD (Multi-Purpose Document), which then later is turned into a ticket by the airline, or some of the airlines deploying their own paper ticket stocks at agencies, who then issue paper tickets for that particular airline. (At the moment IATA centrally deploys the airline independant paper ticket stocks to their registered travel agencies worldwide, so this responsibility would be moved from IATA to the airline that chose not to move to 100% ET, at their own expenses.)

96.5% of airlines involved 

IATA has classified each member airline to a group (that is differentiated by a color) based on their plans/state of ET readiness. Out of 348 IATA member airlines that used the IATA BSP in May 2007:

  • Platinum (100% ET): 9 airlines
  • Green (own ET and interline ET enabled): 156 airlines
  • Yellow (own ET in BSP only – at the moment): 62 airlines
  • Orange (having a plan for ET, including 1st date of ET in BSP): 85 airlines
  • Red (no plan for ET yet): 0 airlines (so all members have expressed their plans by MAY07)
  • Purple (does not plan to implement ET at all): 33 airlines
  • Brown (will use another airline code to issue tickets): 3 airlines

This means 3 airlines will be “hidden” behind another carrier using the same airline code, so they will practically introduce ET, and will have some backoffice accounting work to do in-house. 33 airlines however (almost 10% of all member airlines!!) plan not to roll-out Electronic Ticketing at all! This is quite a surprising number at first glance, but in reality, these are mostly very small, charter airlines who do not sell their tickets via travel agencies and reservation systems, so they can have their own alternative ways to replace electronic tickets and they actually only account for about 0.1% of the total sales. But 321 airlines (89% of the member airlines) will fulfill the BSP (travel agency) enabled Electronic Ticketing requirement by the prolonged deadline of 31MAY2008!! This is a great achievement!

96.5% of all tickets sold at travel agencies

On the other hand, if we look at ticket volumes the situation slightly changes. As you would guess, if a large airline becomes ET enabled, and especially interline ET enabled (is able to sell ET’s that include another airline) with more and more partner airlines, the ticket volume percentage would jump much more! So by MAY2007 the global penetration of ET’s within the IATA BSP’s (travel agency sales) was already at 80.7%! IATA projects this number to grow to 92% by the end of the year. The difference from there to reach the above mentioned 96.5% means 18 million tickets!! Quite a lot if you try to imagine this many paper tickets physically – it would make a really huge pile of paper, even though these 18 million paper tickets only account for 4.5% of worldwide airline ticket sales! By thinking about this, it’s much easier to imagine that by stopping paper ticket issuance totally and moving to 100% ET really can save the worldwide airline industry about 3 billion USD annually. (Not to mention all the environmental impacts…)

96.5% in Interline Volumes

Based on the above numbers, IATA has decided to extend the deadline for the issuance of the last paper tickets at an IATA registered travel agency, due to the fact that it is believed some airlines would not be able to make it by the end of 2007 (the original deadline). Also the service providers are overloaded with interline ET connection requests, which they seem not to be able to handle before the year end. IATA foresees that by the end of 2007, some 2100 interline Agreements will be introduced, which would cover about 75% of all interline connections. In terms of ticket volumes, this means a higher percentage. To get to the desired level of 80% (which would mean 2300 agreements), many service providers and airlines would have to be involved at an increased pace, and the difference would actually be 2.3 million tickets!

by balint01

Worldspan Joins Galileo and Apollo at Travelport

Worldspan by Travelport Logo

According to the news today, Travelport, the parent company of Galileo and Apollo GDS platforms has completed its $1.4 billion (!) acquisition of Worldspan yesterday after the deal was given regulatory clearance by the European Commission, which concluded that the reduction of GDSs operating in the European Economic Area from four to three would be “unlikely to result in coordinated behavior” between the remaining GDSs. “The Commission has therefore concluded that the proposed transaction would not significantly impede effective competition within the EEA or a significant part of it,” it said. Galileo and Worldspan are the second- and fourth-largest GDSs respectively operating in the EU.

This move makes Travelport a dominant player in the field, by controlling three major GDS platforms. While Travelport has talked of potential synergies between Galileo and Worldspan, it also has indicated that it won’t merge the platforms. Galileo said that even if it thought forced migration was a good idea, “attempts to do this in the past by some of our competitor GDSs have shown that such a strategy would be likely to fail.” According to ATW News, that is likely a reference to Amadeus, which experienced some rocky moments 10 years ago when it acquired System One and forced to migrate its users to the Amadeus system. We will have to sit back and wait for a few months/years to see if this will really be the case. It would be also a possible solution for bigger cost-cutting that the three Travelport controlled GDSs do actually merge in the background, but will keep three UI’s and brand-names to keep the travel agencies and suppliers happy and not to force a migration. Galileo and Apollo are strong with travel agencies, while Worldspan has the extra value of having airline customers and products, and very good online tools. Worldspan also cooperates with SITA on electronic ticketing and ET hub solution for airlines for example. In the world of always improving airline websites and booking engines, a GDS needs to keep up a good online presence (which allows travel agencies to become online travel agencies), which Worldspan has been very good in. In Hungary there has been a major travel agency that only made the move from Galileo to Worldspan to enable itself to enter the online travel market.

Galileo will be enhanced by Worldspan’s online distribution technology platform, while Worldspan will benefit from Galileo’s expanded supplier base and expansive content,” Travelport GDS President and CEO Gordon Wilson said. “The complementary strengths of both companies will bring improved offerings for our agency and supplier customers, and we are particularly excited about the technology innovations and breadth of services we will be able to bring our suppliers and subscribers in the future.

Galileo and Worldspan produced more than 379 million combined air bookings in 2006 while operating in 145 countries and processing as many as 15,000 transactions per sec., according to Travelport. The combined company will serve 750 travel suppliers and 63,000 travel agencies.

by balint01

Cathay Pacific Signs for Amadeus Altea – Who Will Win?

A quote from the news:

Cathay Pacific signed a 10-year contract with the airline IT provider Amadeus. Cathay Pacific and its subsisdiary Dragonair will adopt the complete customer management solution Altea for reservations, managing inventory and departure control.

Cathay Pacific Airways, which already uses Amadeus’ internet booking engine to power its commercial website, has identified IT as a core component of its strategy as it seeks to expand operations and continue to grow in some of the world’s fastest growing aviation markets like China, as well as the US and Europe.

According to Hans Jorgensen, Vice President, Strategic Airline & Partner Programmes at Amadeus: “As one of the world’s most successful airlines, in terms of both profitability and growth, we are delighted that they have selected Altéa CMS as their customer management system.”He continued: “We believe that Cathay Pacific’s decision as the first Asian carrier to choose the whole Altéa suite of solutions, will be viewed positively by other airlines and catalyse growth for Amadeus in the Asia-Pacific region, as a leading IT provider in the travel industry.”Cathay Pacific Airways and Dragonair, who together carried 22 million passengers in 2006, join 42 airlines across the globe that have selected Altéa CMS.

Who is lucky?

Again a oneworld member that was given the right to implement the full Amadeus Altea solution, probably within a reasonable timeframe (however, the news do not state when the planned cutover will take place, Amedeus first has to deal with LH, AF and KL among others…). Believe it or not it is not the supplier who is lucky here. Amadeus – chosen by the 3 major airline alliances – is on the right track to become the number one IT provider in the industry and thus rule the world of airline IT providers. The airlines need a common platform for passenger handling more than ever. Major IT providers (Galileo, Sabre, Worldspan, SITA and others) gained some market in the past 20 years, but the future will not see them as players in the market if they will not change their strategy. The problem is that free data transfer is more important for airlines than prices. But there is no free data transfer between different GDSes, DCSes and inventories, so the only solution left for them is to pick one and use only that. At the moment, Amadeus is the only one that offers the full suite of airline solutions, in an integrated package, which has been rolled out almost completely already and is working at some airline customers, as we speak.

Amadeus was chosen very rationally by oneworld, then Sky Team and Star Alliance followed them, too. They have already ruled the European market and now they are on the way to Asia.

So how can other providers win some clients for themselves?

There is still a field to play. Amadeus has 2 very tough weaknesses, which can be an opportunity for others. One of these weaknesses is that they do not have the capacity to start more new projects, therefore airlines cannot sign up with them, they would simply not receive a “slot”. This is why I wrote Cathay was the lucky winner here, because there is a huge queue of airlines wanting to adopt the Altea technology. The other weakness is the huge and a little bit chaotic organization. There are too many managers and not enough real working hands, therefore production is less effective. We have been to meetings, where there were at least 20 people sitting and nobody knew what his or her task will be in the project. Of course later about 5-6 people had real tasks. There is one more good thing that other system providers can use: the Amadeus API. You can basically do whatever you want with it – there are a few system providers that already did that actually. You just have to know the system. Summing up if I were one of these providers, I’d put all my cards on offering solutions to airlines that serve their data exchange needs by interfacing Amadeus (as well as my own solution – if I have one) and give them a very similar, integrated solution for GDS, inventory and DCS and I would give them deadlines that are acceptable. I would also provide personal consultancy and good customer relations, in which Amadeus is also not the best due to being overloaded with new customers. If I were another provider on the market, I would also offer some tailor made enhancements/modifications, which Amadeus usually refuses to do – due to the high overload again. But I would also need a working solution to compete with Amadeus, “slideware” presentations would not do the trick… Whoever has that at hand, will win.

By Szafi

New Sabre solution – useful or not?

Today I read the following news on ATW Online:

Sabre Travel Network is on the verge of rolling out a new product that will enable it to house a “mirror image” of a carrier’s inventory within its system to provide a more accurate picture of the airline’s availability. Kyle Moore, vice president of product marketing, said the growth of air fare shopping options has led many airlines to introduce caching of their air fares to minimize the volume of messages that hit their inventory systems.

“Caching is great for driving down message costs,” he said, “but the down side is that it is a picture of availability at a point in time, and at some point it is no longer accurate.” In the “proxy scenario,” Sabre duplicates the response that a carrier’s inventory system would give to a query, “almost duplicating the logic of their inventory management,” he said.

The carrier must “help us understand the logic and foundational rules about what is opened and what is closed and how to interpret it correctly so that we don’t have to rely on a cache,” Moore said. “A proxy is not perfect, but very nearly,” he added. “It allows the airline to have a better answer at the point of sale.”

Moore said Sabre’s launch customer is currently testing the system.

In the next few weeks, Sabre also will introduce a new XML connectivity option for airlines whose internal reservations systems don’t support Edifact, the traditional communication protocol used for GDS connectivity. Its launch customer is AirTran Airways.

It will enable travel agency subscribers to view the carrier’s seat maps for advance seat selection and enter frequent flyer information. “Even if it’s just 1% of an agency’s sales, we want to make it available to them,” Brian Houser, vice president of sales strategy, said.

I have had a long and endless fight with GDSs’ product developers, this time I take the chance and write an open question to Sabre’s managers. I hope they will help us understand their strategies. We would be grateful if they left a comment to this article in the blog.

Dear Sirs,

first of all I could not find this press release anywhere on your website. The last update was in June. As I could not get a clear picture of this product, just some hints from this press release, these are just first reactions. In the following let me comment this new feature form the view of an airline.

- GDS providers are interested in transaction costs. So whenever a GDS provider comes out with a tool that helps decreasing transaction costs, it is always suspicious. So is the situation in this case. I will explain it later, why.

- for an airline the biggest number of request transactions is coming from its website, not from the agents. Therefore we can say those clients coming from the website are not travel professionals. There is no way an airline can explain any customer that although the system shows available seats, it comes from cache, so the seats for that very nice, cheap price are not there anymore. Besides that you as a merchant have a price obligation that once you gave an offer to a customer for a certain price, you have to provide that product on that exact price. So whenever we at Malev considered caching, we immediately disclosed it from our development strategy. We had to decide so also because other airlines who used it had very bad experiences with it.

- Airlines will not reduce their costs dramatically, because (and I don’t know the price of your product) what they can loose on not hitting the inventory directly, they will pay for this product and customer claims.

- What does it mean that airlines have to teach you their logic and foundational rules of what is open and what is not and how they apply their revenue management? First of all: what is closed and what is not, it is absolutely clear in every airline’s inventory. I am sure you have seen such thing already. For caching or mirroring a complete partition of an inventory there is no need for you to know the airline’s revenue management strategy. Besides that this is one of the biggest secrets at airlines. They will give you information on their security or fleet strategy earlier than on their revenue management strategy. You just cannot expect such thing from an airline.

- The only useful thing for an airline I could read in your press release was the XML connection. This can really help reducing communication costs as EDIFACT is the most expensive communication technology, so by replacing it with XML, the airlines can really save on communication costs. This feature could have been introduced much earlier. It would have brought you some income.

- I would even not like to comment on the last paragraph in the article, because I think it is just a mistake.

- If you would really like to help airlines reduce their communication costs (and it is kind of a requirement from IATA), I recommend you to take a deeper look at their e-commerce strategies and develop more efficient pricing solutions, because that is their biggest suffer and that is the point where they have to pay the biggest amount of communication fees.

The above comments are not just for Sabre Airline solutions. This time it was them who came up with a new solution that airlines would dislike, but what I could see as an airline manager and later as a consultant was that none of the GDS providers take the effort to better understand the daily problems of airlines and develop their products in co-operation with them, although it is the clearest interest of both parties. IATA also has a role that this gap between airlines and their IT providers is deepening. I hope this gap will be soon closed by heavy discussions between the parties.

By Szafi


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