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Negotiating power

Is British Airways and Iberia’s agreement with GDSs to allow TMCs to avoid booking fees really about a move toward NDC, or is there more to it?

Following British Airways and Iberia’s agreement with Amadeus, a similar arrangement has been reached with Sabre that will give agencies a way in on so-called ‘private channel’ content. BBT interviewed Sabre and a TMC to find out more about this complex relationship.

Wade Jones, president of Sabre Travel Network, attributed the emergence of GDS fees in Europe to the competitive nature of the market, with legacy airlines forced to invent new ways of competing with low-cost carriers.

“It makes business difficult in the EMEA region, so airlines have to work hard to maintain revenue. They’re experimenting with new ways of protecting their content, and one of those ways is adding fees.”

He explained that British Airways and Iberia’s agreement with Amadeus and now Sabre is meant to encourage TMCs to negotiate directly with the airlines to have access to different content. “It’s a move away from the one-size-fits-all approach we’re used to. IAG has created the opportunity for TMCs to negotiate access to more complete content – so it saves the airlines on cost, which is then passed on to the TMCs in the form of waiving the fee.”

Leading the way
With NDC continuing to make headlines in the travel world, we wondered what Sabre’s take on the situation was and what it meant for the GDS. “Sabre is committed to NDC,” Jones commented. “By the end of 2018, we’ll be Level 3 compliant. NDC is another way to distribute content, another way to bring that content into our system, and we welcome it wholeheartedly. We understand that our platform has to be flexible enough to accommodate future changes in distribution, and that’s our goal.

“The GDS will continue to play a role in transparency when it comes to content distribution, and NDC is essentially another way to ensure that transparency.”

What it means for TMCs
To complete the picture, we spoke to Michael Qualantone, executive VP of global supplier relations at American Express GBT, to get a TMC’s perspective on Sabre’s points. Qualantone agreed that GDSs have a big part to play in the implementation of NDC, saying: “The GDSs are currently Level 1 NDC compliant, and have plans to get to Level 2 and 3 next year. Sabre has been leading efforts and is actually ahead of most airlines in terms of preparation for and development of NDC.”

However, he pointed out that it’s important to look at IAG’s private channel agreements as separate to a move toward NDC. “NDC is simply a new standard that could enable airlines to share content. Today, there is neither risk to content access nor anything wrong with how the GDSs integrate and display content. And despite attempts to link NDC to private channel, the airlines announcing these GDS surcharges are not even NDC-ready themselves. So, why the IAG private channel direction? This is more about who gets what airline content, and who pays for access.”

Qualantone said Amex GBT relies heavily on the GDSs to provide them with better content. “Our preference is to have the GDSs fully own this responsibility, and for us to work with them rather than having to work separately with some airlines. However, some airlines will continue to challenge the GDSs on cost and the requirement to provide full content. This cost issue has been around for a very long time, and the GDSs have done a very good job in resolving such matters in the past and we will continue to rely on them for this role well into the future.

“It’s important to remember that NDC is neither about new technology nor booking direct with airlines; it is about a new data structure environment, and how airlines will share content. GDSs have evolved over time, and will continue to do so as they integrate NDC and new airline content. We fully believe the GDSs have a role to play as the major travel distribution solution for the foreseeable future.”

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