A senior British Airways executive has made clear the carrier’s support for American Airlines’ attempt to break the existing airline distribution system.
BA head of UK and Ireland sales Richard Tams described the global distribution systems (GDSs) as “gatekeepers” and the current model as “broken” in an address to the Guild of Travel Management Companies (GTMC) on Sunday.
Tams acknowledged a victory for American Airlines would have major implications for agents, saying: “It may mean having multiple GDS access as well as an ability to aggregate content from other sources.”
American has filed a lawsuit against Travelport, owner of the Worldspan and Galileo systems, following months of acrimony between the pair as it seeks to drive bookings via its own Direct Connect system rather than the GDSs.
Tams told the GTMC annual conference in Abu Dhabi: “GDSs are incredibly capable platforms . . . [but] there are two major concerns for BA – the economics of the model and the ability of GDSs to meet changing needs.”
He argued: “GDSs make margins of up to 30% . . . They have priced themselves as distribution gatekeepers, using other people’s money to fund unsustainable market share battles. Many in the industry would privately admit the model is broken, but they are struggling to make the transition.”
Tams said: “Airlines need to be able to freely manage the content they own.” Addressing fears that BA will follow its partner American down the Direct Connect road, he said: “We have full content [GDS] deals in place up to March 2013 . . . [But] we’re open to new ideas on a new model.”
The break-up of the current distribution model that sees airlines pay to appear on GDSs – and agents given the technology to access the systems for free – would see agents have to pick up the costs.
Advantage corporate director Ken McLeod said: “This is the first time we’ve heard BA admit it supports American Airlines with Direct Connect.”
Tim Russell, UK managing director of GDS Amadeus, rejected Tams’ argument. He said: “What would happen if the GDSs just disappeared? Our profits enable us to keep investing in research and development. Some carriers expect the service for nothing.”
Earlier, in a pre-recorded statement, Travelport chief commercial officer Kurt Ekert described American’s lawsuit as “frivolous”. He accused American of seeking “to limit consumer choice” and said the dispute was “never about technology – it is solely about finances”.
Tony Berry, industry and fare distribution director at HRG, reflected the feeling among GTMC members when he said: “Direct Connect will happen – but not yet. A lot of investment is needed. We need access to 400 airlines. Do we need to contract [separately] with each one?”
Tams confirmed BA would begin negotiations on new GDS deals next year.
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- BA spells out support for American in GDS dispute
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