We were still talking about the effects of Lufthansa Group and IAG carriers imposing a fee for bookings made using the GDS when Air France KLM last week announced it was joining the club.
As the largest carriers in each of the world's global air alliances are now all incentivising customers to book either direct or through IATA's New Distribution Capability it's probably not the time to look at this through the perspective of the individual carrier but instead through the prism of what this is all saying about our changing attitude to distribution.
The first message is that carriers want to work with distributors but that not all methods of distribution carry the same costs and benefits.
Stephen Humphreys, BA's head of global sales, is quoted as saying at the UK business travel agents' organisation — GTMC — autumn conference that "We're moving away from a content strategy defined by our GDS relationships to one not restricted by the GDSs."
In other words the GDS is only one distribution option. Just as at one time the only option for a flight was an IATA carrier booked by a travel agent via the GDS other choices are now available.
Other elephants in the room also need considering.
People may not like talking about it but money is at the root of this whole discussion. The GDSs thrive because their extensive content has made them the go-to one-stop shop for shopping, comparing and booking. This has given TMCs not only access to content which they can book on behalf of their clients but a revenue stream as GDSs make incentive payments to agents in recognition of the volume of bookings put through the GDS.
The traditional model was tweaked a decade ago with the introduction of opt-in programmes which charged TMCs fees for access to full airline content, effectively reducing their incentives. This was in most cases passed through to the corporate client. This will now change.
For suppliers the converse is true. Placing their content on the GDS increases the volume of bookings. However, the supplier does not receive an incentive payment; instead it pays the GDS a fee to distribute its content. Agents and GDSs have long argued that the fee is good value for suppliers when compared with other sales and marketing options. Many suppliers however tend to consider the fees extortionate and non-economic.
The focus these days is on making unit cost savings so it would be naïve to expect GDS fees to be exempt from scrutiny. If the airlines can come up with a lower cost alternative — special deals for large TMC providers in the case of BA and Iberia, direct channels for Lufthansa — they will.
There is also the tiny issue of expectations. The GDS was created in the days when air tickets were commodities to get an individual from X to Y and the fare was the total cost. Carriers now charge for ancillaries from baggage to seat selection and they want the ability to sell whole inclusive packages at the time of booking.
When airlines used fares to price inclusive tickets, route deals were used as personalised offerings for corporates. The ability of slick revenue management teams to fine tune and disaggregate fares has resulted in annual route deals slipping in popularity but big data and algorithms also allow revenue managers to create truly personalised corporatesdealson a company-by-company basis.
Our expectations of data, price and the GDS are all indeed changing.