Amon Cohen talks to Greg Webb, president of Sabre Travel Network, about the relationship between GDSs, TMCs and airlines, and whether self-booking tools have had their day
Q What is the big picture behind the state of conflict Sabre has found itself in with American Airlines recently?
A: The big picture is that there are 450 airlines we are getting along with just great. For the most part, we're working well with the supplier side. The noise and conflict are unfortunate, but they are based around the fact our contract with American Airlines is up on August 31.
Q Do you think we are going to see more of these direct connects, such as AA is proposing?
A: AA is the only carrier that has discussed direct connect. Airlines have been under pressure for several years. They are trying to create differential products and that is why the discussion around the distribution model is such an interesting one, because some of the push for direct connect is contrary to what consumers want. We want consumers to understand what they are getting. There is nothing about a direct connect that is beneficial unless you are a customer who only flies one airline. What is the additional value of it? I'm not sure what it delivers. There is no reason that absolutely everything AA wants can't be delivered today.
Q Some say that global distribution systems (GDSs) are efficient but not cost-effective
A: For the most part, the real expense around the cost of distribution is not the GDS. We are less than 1 per cent of the cost of a ticket. We believe we are on a par with an airline's internal cost of distribution.
Q Should airlines be wary of the additional cost of distributing ancillary fees through GDSs?
A: A We've put in a structure [for ancillary fee distribution] at zero cost to our airline customers. This is a chance for them to add significant revenues at zero cost.
Q But isn't the big problem with GDSs not the technology but the way they are structured economically? Airlines intensely dislike that a large proportion of the fees they pay GDSs are used to pay incentives to travel management companies (TMCs).
A: I am not sure that if incentives were eliminated tomorrow it would change our structure. There is an assumption that the services GDSs provide today aren't good value. That's wrong. Once an employer pays you your salary, it's up to you how you spend it. It's the same here. The way we choose to use our funds is at our discretion. Let's say there was a reduction in incentive funds. We would find other ways to spend that money. As an industry we are better at collaborating on a roadmap for all stakeholders to be successful. You can't talk about one part of it in isolation. The question of where we should go with the economics of the industry assumes the model is wrong, but the economics today deliver a large amount of value.
Q Have self-booking tools reached saturation point in the corporate marketplace?
A: In the US, the 200 largest corporations have done a good job. Most have self-booking tools and because they are highly managed, adoption rates are very significant. In the mid-market, adoption rates are lower but they are improving. In Europe, the number of companies using online booking tools is also lower and the adoption rates are lower. The average is 55 per cent. I think it can get higher. The tools have become more sophisticated at handling more complex itineraries. In Asia, penetration is extraordinarily low.
Q How do you think booking tools will evolve?
A: The recession of 2009 was interesting because businesses started looking at their travel departments as being about more than facilitating travel. They asked questions like: "How do you help us travel smarter?" or: "How does travel stand up against video-conferencing or tele-conferencing?" This summer, we will introduce the first phase of Sabre Collaboration Marketplace, which looks not only at travel but also how to utilise, shop and schedule videoconferencing and tele-conferencing. It allows people to make better travel decisions, and sometimes that better decision is not to travel. The way people think about travel is going to change based on all these alternative forms of collaboration.
Q What impact do you expect mobile technology to have on corporate travel?
A: Travellers are beginning to expect more of their mobile devices. Today, it is still largely about one-way information: things like accessing your itinerary or gate information. I think the next set of apps will be more interactive, especially on the iPad and other tablets. It will become more of a two-way communication, and corporate TMCs will have to deal with that. Travellers want to be connected to their TMC but don't want to talk to them. If a flight is cancelled, for example, TMCs can come back with options via mobile.
Q So you think tablets rather than phones hold the key to the evolution of mobile in the marketplace?
A: It will be a mixture of both. Smartphones have higher penetration but there is no question you can have a much richer experience on a tablet-sized device. We've launched a booking facility on GetThere. Hotel booking is already out there and air is coming in the very near future.
Q What would your final message be to corporate travel managers?
A: Pay attention to the changing landscape of how airlines sell, and ensure you get full access to all content sold by airlines so that you can make good buying decisions.
- Greg Webb is president of Sabre Travel Network, the division of Sabre Holdings, which runs the Sabre global distribution system and the self-booking tool GetThere. Webb has been in his present position since the beginning of 2010, but has been with the company for 14 years, including serving as chief marketing officer for both Sabre Travel Network and sister division Sabre Airline Solutions. Before joining Sabre, he worked as a management consultant and in telecommunications.