Gordon Wilson, ceo of Travelport GDS and a leading figure in travel management, talks to ABTN about the recession, changes in the industry and how GDSs are increasingly diversifying
There are fears in the industry that the recession could help to bring permanent changes to business travel. Some, like Willie Walsh, ceo of BA, believe there could be a "structural shift" which will not only see fewer people travelling but also fewer people travelling in premium class.
It is not a view shared by Gordon Wilson, ceo of Travelport GDS and a leading trend spotter in the industry. Mr Wilson said the only structural shift he could see in premium travel was in European short haul.
Here, he said, the price and value from flights of under three hours was not enough to persuade corporates to go on booking business class. But he rejected the idea the same would apply to long haul flights.
"I think that as Europe turns the corner and the IPO (Initial Public Offering) cycle begins again, the bankers, lawyers and equity people will start flying again. I can't see that they will trade down but maybe that is wishful thinking.
"I can't see those people at the back of planes. It will also be a source of competition as companies offer premium travel to recruit people. These people plough back and forth across the Atlantic and as the IPO becomes more commonplace again, I think premium travel will come back."
But that may not be just yet as Mr Wilson said he felt Europe still had "some way to go" before the recession was over. Travelport which owns two of the largest GDSs, Galileo and Worldspan, is doing "reasonably well."
Travelport's first quarter booking volumes were down 15% and ebit (earning before tax) down 6% year-on-year, but the company has since made up some of its lost volume. Nevertheless it was, like most firms, cutting costs and aiming to improve its operating margin.
The third and fourth quarters look better with volumes set to rise as airlines cut fares to encourage more people to fly. Mr Wilson said he was seeing some increases in volume in North America but added: "I am not seeing any growth in Europe even though France and Germany are posting growth in their GDP. Europe has some way to go before it turns the corner."
Globally he could see some growth in the Middle East but Africa, more specifically South Africa was in recession. "I think we are plateau-ing in some areas but it is too soon to call it a recovery," he said.
But he said what he was also seeing, at the National Business Travel Association Annual Convention and Exposition, was a "lot more focus and energy in corporates about adopting an online booking tool."
He said: "They know they need that to get compliance and they know they also need it to know where their people are and that they are safe. There is a growth in both using and adopting them."
One of the problems that Mr Wilson sees coming for corporates is their need to get all information on costs and charges for services provided by suppliers. This is the unbundling of products and subsequent levying of charges for different services, mainly done by airlines but also by hotels. It is more widespread in the States - and also an issue of some contention - than in Europe where it is largely confined to low cost carriers.
"This is going to make policy management more complicated. What is the policy on it going to be? All of it needs to be managed and it is going to become more not less complicated," Mr Wilson said.
A full session at the NBTA convention in San Diego last week was devoted to the problems caused by unbundling and to the Electronic Miscellaneous Document (EMD) which the Americans hope to set up next year as the industry standard for collecting these ancillary payments.
While acknowledging that EMDs are just a means of making payments for the unbundled services, Mr Wilson said that all GDSs were waiting for that standard to be brought in. "But what the EMD does not solve is how airlines get their content into the booking tool and therefore the GDS - and that is where our products, like our Universal Desktop and Traversa, come in.
(The technology is already there and has been tested by Travelport in Canada, he said.)
These new products are a further example of how GDSs are diversifying, moving on from just providing content to agents by offering a wider and more complete range of software to clients. Travelport's Universal Desktop, launched last year, aims to provide agents access to a range of GDSs, including rivals Amadeus and Sabre, through a single, fully integrated graphical user interface (GUI).
Another new product is Traversa, a corporate booking tool. A new deal announced last week between Travelport and IBM will enable the two companies to offer clients an integrated expense management and booking facility by combining Traversa with IBM's Global Expense Reporting Solutions (GERS).
A third is e-Net, an Australian company Travelport bought earlier this summer which takes a significant amount of the cost out of agency payments to hotels and airlines. This includes bill backs from hotels which Mr Wilson said are a "complete nightmare from an administrative point of view."
It is partly aimed at low cost carriers (LCCs) which want to distribute content through the trade but do not want to join the BSP. Virgin Australia is an early user of the scheme which Travelport is rolling out among LCCS in Asia before bringing it to the US and Europe.
There is huge investment involved in this. But with airlines fighting to reduce their fees to GDSs, the need to offer more products than just a CRS has become essential. Rail is another area where Travelport is offering services where a few years back it would not have done so.
Agents also want products with which they can serve their corporate clients in something as near a one-stop shop as possible.
Travelport's diversification, along with that of other GDSs, is set to continue.