| Journal: TWUK | Section: |
| Title: | Issue Date: 29/05/00 |
| Author: | Page Number: 8 |
| Copyright: Other |
Analysis
Is there a future for GDSs?
The Internet has provided new competition for the established global distribution systems. Tanya Jefferies asks industry players if the GDSs can survive
THE UNSTOPPABLE rise of the Internet has prompted a major change of direction for global distribution system suppliers in recent years.The four main GDSs – Galileo, Sabre, Amadeus and Worldspan – have traditionally concentrated purely on providing an electronic link between travel agents and their suppliers in the airline, hotel, car hire and ferry industries.
But the growth of the Internet as a relatively easy and cheap method of electronic distribution has forced them to diversify in order to remain relevant to their old clients.
Over the past few years, they have scrambled to develop and market new Web-based products to both existing customers and the plethora of new Internet start-ups in need of product to sell.
The question is whether GDSs have done, and are doing, enough to retain their importance in the new on-line world.
Ryanair, which has just announced its intention to stop selling tickets through Galileo from July 31 (Travel Weekly, May 22), does not think so.
Sales and marketing director Tim Jeans claims that by charging fees of up to $4 a sector, Galileo for one has priced itself out of the market.
“Part of the reason why even the full-service carriers are developing their Web sites so quickly is because it’s the best way of saving money and circumventing the GDSs,” he said. “For the airlines, the Internet is being seized on like a drowning man would seize a life belt.”
He said selling an airline ticket direct to the public through a Web site costs a fraction of what it costs to sell a ticket through a GDS.
However, Galileo International’s vice-president of subscriber sales and services Gordon Wilson claimed that Ryanair had chosen the wrong moment to drop its services.
He said Galileo was about to launch a new, significantly cheaper product aimed at no-frills airlines, details of which are expected in a few weeks.
“This is us being responsive to the needs of the new low-cost airlines,” he said.
However, Wilson admitted Galileo was concerned about the news that separate US and European groups of airlines were teaming up together to create joint Web sites to sell tickets directly to consumers.
“The airlines’ objective is to get travel agents out of the loop and GDSs to some degree,” he said. “Our challenge is to make sure we add sufficient value so the airlines prefer to use us rather than anything else.”
He added that the US airline group had already signed up Worldspan as a partner, proving that airlines did still need GDSs. The European group has not yet announced its plans.
Wilson also pointed out that Galileo is involved in a huge range of Internet-related initiatives.
For instance, the company provides inventory to new Internet sites including lastminute.com and travelstore.com and to major airline sites belonging to United Airlines and Sabena.
It has a range of Web site bookings services for travel agents, from basic, off-the-peg services to sophisticated, customised booking engines.
Other ventures include Galileo.com, a travel portal offering US agents a chance to sell their product on-line. Wilson is hoping to introduce a UK version by the end of the year.
Meanwhile, Amadeus managing director Graham Nichols believes GDSs have a strong future. “There is a lot of talk about GDSs being cut out but the evidence doesn’t support that. Thirty airlines have come to us to design their Web sites for them.”
He pointed out that GDSs were best placed to provide booking engines for Internet sites because they already had vast amounts of product to sell.
“I don’t think anyone will try to reproduce this depth of infrastructure. It would cost an absolute fortune to do it,” said Nichols.
He added Amadeus was aiming to be represented on every new distribution channel that emerges, including mobile phones with Internet access and interactive TV.
Mike Cogan, partner at travel technology consultancy Equinus, agrees with Nichols.
“A few years ago, they were entrenched as the fixed link between travel suppliers and agents but now they are becoming service providers.”
He said while Ryanair and other low-cost carriers might find it easy to sell tickets through their own sites, the mainstream scheduled carriers still needed the GDSs.
“If you are British Airways, a Web site alone won’t meet your needs,” he said “For a major international carrier, a Web site will not fill an aircraft.
“GDSs are not dead at all. They are strong, alive and will be around for some time to come.”
Changing times:
the Web is forcing GDSs to diversify
their businesses
quotes
“For the airlines, the Internet is being seized on like a drowning man would seize a life belt.”
Tim Jeans, sales and marketing director, Ryanair
“Our challenge is to make sure we add sufficient value so the airlines prefer to use us rather than anything else.”
Gordon Wilson, vice president of subscriber sales and services, Galileo International
“The GDSs are not finished, far from it. They have started to innovate and are repositioning themselves.”
Mike Cogan, travel technology consultant, Equinus