These days, direct connections and the GDSs’ ability to display airlines’ ancillary services are an important issue for the travel industry and each side’s opinions are diametrically opposed. Travelport has published a statement concerning AA’s direct connect. Travelport disagrees with AA and claims most of AA’s statements to be “myths”.
Although Travelport’s argumentation seems valid at first glance, when thinking about it you realize that things are not as easy as Travelport would like them to be. We believe there is a need for clarification. So, to understand our point-of-view, please read the following statement:
“I would like to add my 5 Cents to the topic – again just to justify movement in the industry with no personal interest as we provide connectivity to the GDSs and gain nothing by direct connect – but I’m personally surprised by how certain individual try to save the status-quo and do not realize that the world has already changed.”
Travelport: “Travelport understands that AA wants to drastically reduce agency distribution payments even though those payments already represent a very small percentage of the value of the tickets sold. AA is aggressively trying to persuade agencies to bypass the GDSs by offering agencies short-term incentives to shift AA bookings to a direct connection. But a successful direct connection will result in the 100 percent long-term loss of an agency’s financial assistance (FA) through the GDS for all of its AA bookings. Also, even if AA offers an agency an increased incentive to offset the lost FA for some period, the agency is still left with the inefficiencies of booking most airlines through the GDS, and having to book AA through a direct channel….”
Strauss: Travelport seems to forget that it is not the airline that pays the bill in the end, it is actually the traveler. Our understanding is that AA tries to make the travel distribution chain leaner which usually brings the price down. If an agency brings value to the table we believe no airline (respectively the traveler) would hesitate to pay an incentive for such value. If an agency just takes the first call and executes the booking why would a traveler need to pay for this? Agencies need to have their own infrastructure in place. The supermarkets also build their shelves themselves and don’t let their forwarding companies build them.
Travelport: “Direct Connect would require agencies to connect directly to AA’s systems to book a flight. Direct Connect would therefore require an agency to spend time and money to change its computer systems to allow the booking to be made on AA’s internal system. Direct Connect would also generate multiple travel records that agents would be required to coordinate, thereby creating still more inefficiencies. Additionally, typical GDS processing (i.e. availability, pricing, shopping, PNR creation, and ticketing) would be moved within AA’s platform, causing the agency to create duplicate steps in day-to-day processes. The Direct Connect process will not allow shopping and booking to be completed in the GDS which eliminates the tremendous one-stop efficiencies that led to the creation of the GDSs by the airlines in the first place. Again, if additional carriers follow AA’s lead, these inefficiencies will be compounded.”
Strauss: If Travelport would open their system and i.e. offer their universal PNR to everybody (not just the party who books a flight through the Travelport GDSs) they could actually make profit on this – if their universal PNR is better than the one from the competition. Otherwise there are tons of companies (incl. TripIt, etc.) who would happily step in and fill the gap.
Travelport: “…. But AA’s proposed Direct Connect solution is really confusing because you will be forced to use multiple systems thereby causing great difficulties in providing your customers informed choices. The comparisons you make every day to serve customers’ best interests – to match their preferred flight times and find the best routings and fares – will be dramatically more difficult.”
Strauss: Technology is here to fix things. I believe technology is capable of handling huge amount of comparison. If not and Travelport’s assumption is correct than nobody will be able to handle that complexity and everybody will return to Travelport and alike as the one and only(s) who have figured out travel distribution. So the question becomes is Travelport up for the challenge and do they provide the best possible service for the traveler?
Travelport: “Travelport is ready, willing and able to work with AA to deliver the customization AA is talking about. The Travelport Universal Desktop and Travelport Universal API products demonstrate commitment to invest in new technology that solves for individual customization and aggregation of new content not historically available within the GDS, while creating an efficient desktop for travel agents that also allows suppliers to customize and differentiate their content……”
Strauss: And here it sounds like Travelport is up for the challenge and well prepared! So what is there to worry about unless they fear that others might do it better?
Image by Gonzalo Aragon