Strategic Meetings Summit London, 26 September,
September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
Bryan Conway, Managing Director, EMEA and Brazil, Travelport GDS looks at the potential for low-cost carrier business, following the inking of its easyJet deal
In October 2007, we signed a breakthrough agreement with easyJet, providing Galileo-connected agents with access to the low-cost carrier's fares. The announcement came at the end of a year when the industry was dominated by discussions regarding the changing nature of the relationship between low-cost carriers (LCCs) and global distribution systems (GDSs) and if, or how, they can work together.
The trend towards using low-cost airlines in the UK has been one of the great travel success stories, market share has increased to 40% of all seats sold in Europe, with the sector growing three times the airline industry global rate (source: OAG September 2007). Traditionally the LCC business model focused on the leisure traveller, flying out of regional airports with new, efficient, single aircraft-types in order to keep overheads down.
But that model does not have infinite growth potential and increasingly these airlines are recognising the need to start tapping into the lucrative corporate market to expand. This would also be of benefit to corporations who increasingly want to have access to the fares offered by low-cost carriers who are now operating from major city airports. That is where the GDSs play a crucial role as the preferred booking mechanism for the travel management companies that service this corporate market.
The importance of travel management companies to the corporate marketplace cannot be over-emphasised. In 2006, the 30 members of the Guild of Travel Management Companies (GTMC) accounted for more than 75% of all business travel bookings in the UK (source: Guild of Travel Management Companies). Similarly the GTMC is on record backing GDSs as its preferred method of completing transactions.
These travel agencies and their customers want LCC content on the systems they use for the rest of their business - the GDSs. By having this content available through a GDS and integrated in the same availability display as other carriers' flights, the agents benefit from increased efficiency. They no longer need to spend valuable time searching the low-cost carriers' websites individually or via screen scraping applications.
And the LCC booking can also be integrated in any itinerary that is produced for the customer and included in any hand-off to the agents' accounting systems. So, by making their full inventories available online via a GDS, LCCs provide the travel management companies immediate access to their inventory and so facilitate more corporate bookings on the LCCs. And not only does the LCC get a higher volume of bookings - they are also generally higher yield bookings.
Galileo has been leading the way in this field; of the 120 recognised LCCs in the world, Travelport now distributes 75 of them. In the past few weeks we have not only announced a new agreement with easyJet, but also with Southwest Airlines in the US, the largest LCC region in the world. This growth seems set to continue in 2008 as the benefits of broader and potentially more lucrative distribution options with the GDS and their agency customers augment the traditional direct distribution model of the LCCs.