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For Business, Corporate Travel & Meeting Buyers & Arrangers

Whither the GDSs now?

In the second of two articles on GDSs, Stanley Slaughter considers why TMCs still value GDSs and whether this is enough to ensure their survival.

GDSs are under threat. Many consider their model to be broken, others think they can be bypassed in a manner that cuts out the intermediary and makes booking less expensive. New technology is also a constant challenge to a system that has existed for forty years or more.

But that said, the GDSs are valued by one essential part of the business travel booking process, the travel management companies (TMCs). These see them as the ideal one stop shop where much business can be conducted – from booking to management information. It is a strong card but will it be enough to ensure their survival?

Pat O’Neill, managing director of Ian Allan, a major independent TMC in the UK, is in no doubt that travel management needs the GDSs. He recalls the nightmare of doing everything manually, before their advent, mainly on the telephone and with “piles of paper.”

The arrival of the GDS transformed the process of providing one point of sale for airlines, cars and hotels. This was supplemented by secure storage of data, including individual traveller and company profiles, and their travel policies.

This, O’Neill said, led to both management, finance and administration efficiencies for the TMCs and their clients. “We feel that currently the GDS serves the purpose of linking our front to mid-office systems. It provides secure and compliant data storage for us and this is a prerequisite in today’s market,” he said.

A more recent development is passenger tracking, where O’Neill feels GDSs provide a “real time” and complete source of data, instead of having to check with several sources and then consolidate data. There are also fewer errors or omissions this way.

There is also the point that GDSs tend to sign only 100% content deals with airlines so no fares are omitted from schedules, an old trick once regularly used by carriers to entice bookers onto their sites. With more and more airlines signing up to the GDS, for example Easyjet which is increasingly looking to attract the business traveller, O’Neill believes this makes them an even better way of getting full and speedy access to the carriers customers want. 

Perhaps most crucially, there is the argument over technology. This is changing at a bewildering pace but few TMCs can afford fully fledged IT departments to keep pace. A GDS which invests heavily in technology can fulfil this role, said O’Neill.

“Most small to medium TMCs have limited IT departments due to the sheer cost and return on investment. The GDS functionality is there and it can deliver the processes for you, as a technology partner. Amadeus is our technology partner. You have to look for partnerships,” he said.

“For us, GDSs are definitely a good business tool. You need to have an aggregating centre, which can process and store data, and the GDS can do this.”

Christoph Klenner, secretary general of the European Technology and Travel Services Association (ETTSA), an organisation which champions GDSs, concedes that there is growing competition to GDSs from meta-searchers, like FareFinder and Google.

But he sees these as mainly attempting to attract the leisure traveller and maintains that these will often only find the fare but not complete the transaction. This still has to be done by the traveller or his or her agent and through a reservation system, either a GDS or an airline’s.

“These meta-searchers are just one layer of a multi-layer distribution landscape. A channel for bringing the consumer to a distribution channel,” he said.

The GDS is much more than just an information broker, Klenner said. It provides information, but it could also be used for booking and as a repository of the fulfilment data. “The GDS will forward the booking data, liaise with the airline’s system and give you your electronic ticket. It is a fantastic tool,” he said.

Like O’Neill he points out that the GDSs will also store travel data, including company data and company policy as well as saving a booker's time by giving access to other services.

“It is difficult to imagine that an airline’s direct connect service will offer the breadth and depth of service that a GDS will. Breadth and depth – that is the unique selling point of the GDSs,” Klenner said.

The argument is unlikely to stop there. It would be fair to conclude that GDSs with their multiple services are designed much more for the business travel market than for leisure. Leisure bookers do not need the panoply of MI, traveller profiles, company travel policies and passenger tracking.

They seek as often as not the least expensive air fare or hotel rate. There is no need for them to pay extra for things they do not require.

But for the business traveller, at least travel policies are enforced and duty of care demands traveller tracking. These services that the GDS, and with them the TMCs, offer are not available currently in any other form.

There will be change and technology will almost certainly drive it, but for the moment GDSs seem secure.    

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