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Global Distribution Systems (GDSs) risk alienating airlines and corporate buyers if they don’t listen and engage with their needs, say leading industry figures.
Speaking on behalf of the aviation industry at the ACTE Executive Forum yesterday (December 2), Richard Tams said airline suppliers have felt for a while that they’re not necessarily being treated as the customer.
The head of UK sales and marketing for British Airways said: “If I were a GDS, I’d like to think I would remember the old saying: ‘He who pays the piper calls the tune’.”
Airlines pay the bill, continued Tams, but “they don’t very often feel they are an empowered customer”.
He said: “There are a lot of reasons for this, but the main reason is that in some markets the GDSs operate as sort of quasi-monopolies.”
While not commenting directly on the current spat between Travelport and American Airlines, he said: “Airlines will do what they can to try and create competition where they perceive there is none.
“That means looking at all sorts of alternatives to GDSs, even if they may seem surprising to some people.”
The GDS network is “by far” the most efficient way of distributing complex airline products, said Tams, but “there is a point at which the cost of these does need to come under scrutiny.”
For cheaper fares the cost of selling fares through a GDS means airlines’ margins are “slim, if existent at all,” he said.
“You are going to see airlines doing things to try and get round them [the GDSs] and create a real environment for customer-supplier negotiation, which very often it doesn’t feel like.”
GDSs, however, are trying to improve their own direct relationships with, and sales to, the corporate buyers, said Anya Newton, executive director at Goldman Sachs.
To make themselves more relevant to buyers, GDSs need to get closer, she said, as they are failing to grasp the corporates’ needs.
“I think there is some great software developments going on with some of the GDSs and I think there is much more opportunity to develop that together,” she said.
“I think the GDSs need to differentiate themselves. They’re not going to be able to completely rely on content and distribution fees. They’re going to have to manage different solutions,”
Newton’s thoughts were echoed by Chris Crowley, ACTE president and SVP of BCD Travel.
“The future of the GDSs as a content ownership middle man is very short,” he said. “If I was a GDS I would think my future is probably not in owning content, nor even owning content distribution networks.
“My future is somewhere in the acquisition of content and the placing of it in front of the end consumer. I would do that through the travel market, I would do it by working more closely with suppliers.”