Archive for the 'Sabre' 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 
Advertisements

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

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)

Amadeus – Sabre joint venture

Again an interesting news from ATW Online just a day after my article on the subject:

Amadeus and Sabre plan to create a joint venture that would provide secure, automated payment processing, clearing and reconciliation solutions for non-air travel sales. The two companies filed with the European Commission for antitrust approval to create the new entity. European Union law requires such a filing. Regulatory approval in the U.S. is not required.

In a statement, the companies said that “the intent of the joint venture is to establish an industry standard solution to improve and better meet the requirements of the travel industry with payment efficiencies, increased automation, and improved interoperability.”

“There’s no industry standard now for payments not covered by the Airlines Reporting Corp. or BSPs,” a Sabre spokeswoman said.

A BSP, or billing and settlement plan, operates under the auspices of IATA to provide a central point through which travel agents submit sales reports and payments for airline ticket transactions in countries outside the U.S. ARC performs that function in the U.S. But no such system exists for the processing of hotel, car rental, tour operator or other non-air transactions. “This will result in improved efficiency” for all parties involved, the spokeswoman said, including hotels, tour operators, wholesalers and travel agencies.

An Amadeus spokesman said a decision by the EC was expected in the third quarter of this year.

See full article here.

This joint venture is about non-air segments. I guess air segments will be the next step. In this case it is the strategy I recommended yesterday. I guess they did not need my help, but anyway, it is good to see that others have come to the same theory. Anyway, well done Amadeus and Sabre!

By Szafi

Blog calendar

July 2019
M T W T F S S
« Apr    
1234567
891011121314
15161718192021
22232425262728
293031  

Archives

Advertisements