Today I would like to just focus on the distribution and the inventory management and therefore on the differences between CRS (central reservation systems) and GDS (global distribution systems).
In the travel distribution we can find lots of many to many relationships instead of 1:1 relationships. So how do these relationships look like? Well, one supplier provides its fare to many distributors. A traveler on the other side has the opportunity to book inventory from multiple suppliers. How this works? Well, that’s easy to explain: You might want to take a flight from the United States to Europe with your favorite airline and from there you might want to go on vacation and visit Asia. But regarding the second flight, you might prefer a lower price, so you might want to choose another airline.
In this example, you might book your first flight directly via the website of the provider and the second flight direct via an inventory system. That’s why an agency can use e.g. Sabre as a distribution system for booking a Lufthansa flight, which Passenger Name Record (PNR) is then sitting in the Amadeus reservation system (inventory system). As the inventory is managed by the central reservation system (also known as computer reservation system), I would like to shortly give you some information on this. CRS were originally operated by airlines and later extended for the use of travel agencies. So what is a CRS? It is a computerized system used to e.g. store and retrieve passenger information related to air travel, hotels, rail, car rentals and anything like that.
Blog Series: Travel Technology for Dummies
- What Is Full Content?
- What Is a Booking Reference or PNR?
- What Is Overbooking?
- What Is a Passenger Service System (PSS)?
- What Are Booking, Waitlists, Tickets, Codeshare & Interlining?
- What Are Active and Passive Segments?
- What Are Incentives, Commissions & Overrides?
- What Is a ‘Married Segment’?
- Blockchain in Travel: All You Need to Know – for Now
- What Is the Difference Between Fares, Rates and Tariffs?
- What Is NDC?
- What Is Continuous Pricing?
- What Is Direct vs. Indirect Distribution?
CRS and GDS as two distinct steps
For a long time the GDS had a dominant position in the travel industry, but in order to bypass them and consequently avoid their fees, airlines have started to distribute flights directly from their websites. Another option to bypass them would be to use direct connections to sales entities such as travel agencies. Today approximately every five years GDS are in heavy negotiations about (full) content and distributions fees with airlines.
From time to time airlines and CRSs are also discussing a switch to a new hosting system (inventory system), but this is far less often since it involves a huge technical migration with many risks. American Airlines recently abandoned their envisioned migration from Sabre to HP. Mergers sometimes also require a transition to a combined CRS. So what is important: The GDS usually operate the CRS and that is why most people consider the terms GDS and CRS synonymous. However I don’t! I consider those as two different steps of value creation: inventory management (CRS) and distribution (GDS).
A GDS is the Global Distribution System and the major ones are Amadeus, Sabre (incl. Abacus), and Travelport (incl. Apollo, Galileo and Worldspan). The term CRS is not used so much any longer as it became part of a bigger system: the Passenger Service System (PSS) which usually comprises of the CRS, an airline inventory system and the departure control system (DCS). Typical examples of a CRS are Shares from Hewlett-Packard (formerly EDS), but more importantly SabreSonic (Sabre) or Altéa for traditional carriers. For low cost carriers there is also Navitaire (like Altéa owned by Amadeus).
A CRS is solely responsible for inventory management (which is more detailed described in that article). A GDS (if it is involved and there is not direct distribution e.g. through the airlines own website or NDC) combines the inventory management systems of numerous (up to 500) CRSs from major airlines. It depends on the agreements (subject to negotiation) between GDSs and airlines, whether GDSs have several or all fares which are offered by the respective airlines (this is the discussion about full content deals). To make it more complicated, a CRS itself does not have fares (prices) only classes. The fares itself (along with the Fare Rules) are filed by the airlines with ATPCO (Airline Tariff Publishing Company) and the GDSs retrieve fare and fare rules from ATPCO to provide a full picture.
Finally, a new trend is direct distribution enabled by NDC (New Distribution Capabilities). This is a new communication protocol that replaces a protocol which has been around since the 1980s (EDIFACT – Electronic Data Interchange for Administration, Commerce and Transport) with a new standard (XML – Extended Markup Language). Airlines including Lufthansa, British Airways, Iberia and American have announced direct connect initiatives via NDC. They either introduced charges to book through a GDS or will be offering additional capabilities if booked directly through their NDC interface. The other aspect of NDC is that airlines want to take control of the distribution, such as provide offers based on ‘who is asking’, price ancillaries etc. – in order to differentiate from each other.
Messaging between a GDS (or any other system) and a CRS (= a portion of a PSS) was usually done in EDIFACT – however there are also structured interfaces available. With a few exceptions our implementation to the GDS also works with hooking directly into the Altea or Sabresonic system. NDC is a new standard in essence a new pipe in parallel to EDIFACT. So the best idea would be if the GDSs unplug their EDIFACT pipe and plug in their NDC pipe. However this will never happen as it would mean that all airlines (around 500) would need to sunset their EDIFACT pipe and move to the NDC pipe. Then there is still an open question about ticketing. Bookings via ATPCO are ticketed and paid for in the GDS. Bookings via NDC using the Airline API are done by the airline system.
In the traditional GDS distribution world, airlines filed their fares and fare rules in accordance with a limited amount of single digit classes with ATPCO. The GDSs retrieved fares and fare rules for a specific class of a specific airline from ATPCO and checked the inventory for such class – either in their own inventory cache or directly with the airline CRS. So, indeed, ATPCO is not part of the booking or ticketing value chain other than providing information to the GDSs. Booking and ticketing is carried out by the GDSs. Finally, the billing and settlement is usually done via a clearing house – predominantly ARC (Airline Reporting Corp.) and IATA BSP (International Air Transport Association Billing Settlement Plan).
OTA (Online Travel Agencies) may use the same GDS or multiple GDSs. It’s a choice each agency can make. Fares may or may not vary between GDSs – this depends on the content deals the GDSs make with each supplier (airline, etc.) whether or not the fares are the same or different. There may also be tax differences. If we are talking about a supplier (airline) that has full content deals with the GDSs you want to compare, the pricing should be about the same. Hidden from consumers are also markups. Although not so common with air fares (as agencies get commissions from airlines), agencies can markup their fares or rates any way they seem fit. Agencies may also get negotiated fares (if you bring a lot of business to a certain provider, that provider could provide you with better fares/rates), which they markup to the closest published fare.
Airlines use the CRS as part of their PSS as their inventory management system. It is just as confusing because all of the major GDSs also ‘own’ a PSS and thus the distinction is not done correctly in many cases.
Whether or not an airline lists all or some of their inventory in the GDS is a negotiation between the airline and the GDS. The airline may want to be in the GDS as GDSs offer a huge sales channel. However, the airline also has to pay commission and overrides for distribution via the GDS. The GDSs want to be a one-stop shop and hence prefer to have the full spectrum of all airlines with all fares. Some airlines only want to provide their higher priced fare in the GDS, which is not a preference of the GDSs.
The complexity of using different GDS for agents as well as agencies and TMCs is that each GDS has their own interface (API, Agent Desktop, cryptic screen). Hence, one needs to learn different ‘languages’ (if the cryptic screen is used), work with different graphical user interfaces (such as Sabre Red or Amadeus Selling Platform), or have separate integrations into separate APIs (such as Sabre webservices, Amadeus webservices, Travelport universal API, Galileo webservices, Worldspan DIR, etc.). Exactly this has been a profitable niche market for us since the year 2000: to provide one API (or even Agent Desktop) to all major GDSs, where among others two of the top three TMCs use our services. Obviously, there is also a commercial aspect: agreements with each GDS are required (even if you use an aggregator such as us).
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