“GDSs provide suppliers the reach that direct-connectivity platforms are unable to match”

TDS Asia 2009 Special

Travelport is gearing up to launch a new Universal Desktop solution this year.

The solution will be the industry’s first, fully integrated agency desktop designed to offer more customer choice, expanded GDS content and the opportunity to sell an enhanced combination of products and brands across all market channels, creating an opportunity for advance purchasing capabilities, according to George Harb, Commercial Director, Asia, Travelport GDS. 

Harb, a speaker for EyeforTravel’s Travel Distribution Summit Asia 2009 in Singapore, spoke to EyeforTravel.com’s Ritesh Gupta about why GDS still plays a crucial role, fulfillment and customer servicing and much more. Excerpts: 

Eyefortravel.com: It’s easy to compare GDS segment fees with small fees of direct-connectivity platforms. However this does not take into account the resources needed to implement and manage direct-connect relationships. What’s your viewpoint regarding the same? 

George Harb: The management of multiple direct connect relationships is a time consuming and resource intensive exercise for both agents and suppliers. When you consider the dynamic nature of the industry, the resources needed to keep each connection updated (with changing fares, taxes, inventory classes and specials) would put a strain on any organisation trying to manage these changes across hundreds of suppliers and online distributors.  

However, GDSs provide suppliers with the reach that direct-connectivity platforms are unable to match. The GDS/agency channel puts the onus on travel agents to be responsible for all fulfillments. This frees up the supplier to focus on what it does best – whether this is selling seats, rooms or cruise cabins.  

In today’s challenging economic environment, companies are changing their focus to their core businesses. By using a GDS, they can complement their own core competencies with an efficient and comprehensive global network of Sales Points of Presence, reaching markets where some suppliers do not have their own presence. 

It goes without saying that the optimal distribution strategy is determined by the relative costs and benefits of each alternative. I would say the benefits of a GDS far outweigh that of its costs.  

Eyefortravel.com: Recently, a legacy airline pointed out that online-direct can turn out to be more expensive than traditional GDS distribution if not properly controlled. He referred to various costs related to marketing/advertising, customer servicing, credit card fees, fraud, transaction cost, booking engine and payment gateway. What's your opinion about the same?  

George Harb: As Internet penetration across Asian cities is somewhat disparate, credit card and payment issues in some markets still pose a problem today. Credit card fraud is another area which still needs to be addressed, particularly in emerging markets.  As such, even Low Cost Carriers (LCCs) have to offer a mix of payment options, other than online, to their customers. For example, JetStar Asia allows its passengers to make payment for air tickets booked online at 7 Eleven stores throughout Singapore.  

Unlike LCCs, which offer point-to-point flights, legacy airlines have to grapple with complex itineraries involving multiple sectors and interline services. This makes fulfillment and customer servicing not only difficult but costly. There are other costs associated with online-direct which can also be considerable. 

Other than the initial investment outlay, Search Engine Optimisation in particular can cost significant time and money.  

Furthermore, online bookings tend to be of lower yield as online customers shop on price. 

GDS on the other hand, is largely a bundled variable cost (per segment) and returns higher yield bookings for airlines. JetBlue in the USA, for instance, has said that the GDS system provides a good contribution – and that is coming from a low cost airline with a high proportion of online bookings. This example should prove too that a mixed strategy is essential, even for low-cost models. 

Eyefortravel.com: There is no one channel that suits all needs. There are different customer needs, and factors such as technology, reach and price/cost, all leading to requirements for a different mix. Each channel has specific appeal, dedicated audience and loyalty. Where do you foresee the role of a partner like GDS fitting in today's environment? 

George Harb: Airlines will have to rely on a mixture of sales channels to effectively reach both leisure and business travellers and over the last couple of years, we have witnessed a trend whereby airlines are using multiple channels to attract profitable customers. The industry has come to recognise that yield is becoming even more important now than it been in the past few years.  

GDSs have been known to deliver higher value business traveller transactions by selling higher margin tickets and providing a wider distribution for suppliers. Based on 2007 figures, an average ticket price generated through Travelport GDS is about US$600. And in Asia, this figure is even higher; for instance in Hong Kong, ticket price averages around US$1,200. As a high yield channel, we believe the GDS will continue to be an integral part of a travel supplier’s distribution mix.  

In addition, the GDS/agency channel can provide a service to customers who have a predominantly complex or risky requirement for travel (such as a multi-stop itinerary that might change, or a high-value cost that requires management). In Asia, this face-to-face interaction is still highly valued amongst travellers and they are willing to pay for professional advice in managing their travel needs.  

What’s more, we are continuingly evolving our business to provide solutions which help our agency customers and suppliers increase efficiencies and grow revenue in an environment of increasing competition and reduced commissions.  

Through products like Travelport Agencia, Travelport is able to facilitate the ‘unbundling’ of airfare components to help airlines grow revenue, differentiate and take advantage of opportunities in merchandising.   

Travelport will also be launching a new Universal Desktop solution this year. The solution will be the industry’s first, fully integrated agency desktop designed to offer more customer choice, greatly expanded GDS content and the opportunity to sell an enhanced combination of products and brands across all market channels, creating an opportunity for advance purchasing capabilities. The Desktop will also help better serve the needs of travel agents and their customers through the ability to create a universal record that captures all the different bookings from different sources into a single PNR.  

Related links: GDS, Direct Connectivity, Unbundling 

End