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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This Post Has 42 Comments
Dear Norman,
Thank you for your questions.
1. 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 (https://www.travel-industry-blog.com/travel-technology/travel-technology-for-dummies-what-are-incentives-commission-overrides/). 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 (refer to full content: https://www.travel-industry-blog.com/travel-technology/travel-technology-for-dummies-what-is-full-content/).
2. 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 (https://xx1.pass-consulting.com/documentation/xx1-travel-sdk/v1-7-3/messages/). Obviously, there is also a commercial aspect: agreements which each GDS are required (even if you use an aggregator such as us).
Let me know if this answered your question.
Thanks,
Michael
Hi Michael,
I have some queries on usage of GDS.
1) Will an Airline be able to list their offerings on different GDS?
2) What are the complexity for a retail travel agent to use different GDS?
Dear Ashwin,
Thank you for the kind words and your detailed questions. Let me try to answer them one by one:
Regarding Question 1a: Is my understanding correct that multiple websites (say skyscanner/trip.com etc.) use the same GDS backend to serve the same information to the users? If so how is the pricing different on different platforms? If no, how do they do it?
a. 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 – pls. also refer to http://www.travel-industry-blog.com/travel-technology/travel-technology-for-dummies-what-is-full-content/.
b. There is a fairly good picture about how sales entities (agencies) relate to distribution and supplier here: http://www.travel-industry-blog.com/travel-technology/pss/, which is a copy of the same picture of my book Value Creation in Travel Distribution.
c. Now, with skyscanner.com this may be a different topic. I’m not 100% sure, but I believe they can rather be seen as a metasearch engine than an OTA – at least for the western hemisphere. Since 2016 skyscanner is owned by the largest travel company in China (which would suggest agency) but the product itself can be rather put into metasearch engines like such as Kayak and the likes. Metaseach engines in travel I have not touched on this blog but I did in my book though (I will probably touch this topic in an extra blog in my series for dummies, as it may be good to have it covered here, too). However, it is debatable if there are a travel related distributor – all the do is scan or parse websites for deals. In other words, if you search on Kayak, they will scan websites of (real) OTAs such as vayama.com, Expedia, Booking.com, etc. for that same city pair and compare what comes back and provide it to you. If you make a booking decision, metasearch engines ‘refer’ you to that website and get a commission.
d. So, now, we have still just talked about published fares (air) and rates (hotel). Obviously, in travel there can be numerous negotiated fares – if an OTA or corporation is a good customer with huge business, they can negotiate a better fare or rate, which can lower your business expenses in business travel or is something an OTA can markup in leisure travel. Air, car and hotel can also be packaged together and end up cheaper than the individual bookings of published fares, since sales entities have negotiated deals.
Regarding Question 1b: Now you look up a ticket from NYC to Tokyo. Being indecisive you spent quite a lot of time pondering on whether to get the ticket now or wait till later (meanwhile the website identifies your interest in the ticket and 5 other people’s interest and jacks up the price). This new price, how and where is it decided?
a. With regards to what the website does while you are looking up prices, and how many entities are watching and capture your interests behind the scenes is just super scary. I watched one demonstration one time what happens behind the scenes of a few ‘retired’ hackers at one of our internal conferences: They got shoes using an old WinXP laptop at a 75% discount on the same website compared to using a brand-new Thinkpad: the poor guy who still uses an WinXP laptop cannot have much money, but they still want to sell him something. So, this applies to any internet sale, not just travel. But this is not something that happens on a GDS level – this is the website playing with you. Maybe opening an incognito window may help. This is a generic problem of today.
b. If indeed more people are looking at the same trip, there is a specialty in travel which may change the price on a GDS level: certain booking classes may ‘sell out’ when they are booked. Now, booking doesn’t necessarily mean ticketed, unless it is instant ticketing – which is usually the case on leisure websites. Not at all common though, in an agency or corporate environment, where numerous PNRs may be booked just to find the best one – or several best ones. So, an agency books a flight (= creates a PNR), hence this inventory is given away. They won’t pay for it now and probably never ticket it, but the inventory is gone while you searched for that same connection. At this time you may end up at a higher price, but maybe in a few hours or at a later time that agency frees such PNRs and the old (cheaper) booking class is available again. A lot of this especially applies to ‘last seat inventory’. This is something you may have already witnessed, when after you filled in your information and hit book, the website comes back with “the price has changed”. Read more here: http://www.travel-industry-blog.com/travel-technology/ticketing/.
Regarding Question 2: Is it by the website (skyscanner.com)? If so do the tickets remain at the same (initial reduced cost) for all other frontends using the same GDS?
I think I explained it above, but skyscanner as a metasearch engine has nothing to do with it, as they only scan other sites and the (I think you mean) fares are a combination of published fares and negotiated fares filed as booking classes with ATPCo and potentially marked-up by the seller. What the GDSs can provide to their agencies depends on their (full-) content deals with the supplier. In the past there was a code of conduct in the EU (also explained to in my book), but today competition is enforced.
Regarding Question 3: Is the price controlled by the fare rules? What are the fare rules?
No, fare rules are only the rules (also filed by ATPCo) that are attached to the fare. Like whether or not this fare (of a certain booking class) can be refunded, rebooked or exchanged to e.g. a different date/time, different city pair, different traveler (usually never), what baggage you can bring or check, etc.
Regarding Question 4. Also, could you point to where I could find out more about ATPCo?
Pls. take a look at the comment section (exactly my answer on 12/6/2017 to the comment from 11/30/2017) on http://www.travel-industry-blog.com/travel-technology/pss/.
I hope I answered all your questions. Feel free to follow up.
Thank you,
Michael
Hello Michael,
Thank you for the post. This is very helpful in understanding how the backend technology works for travel companies.
I did have a few questions. The prices of tickets are most often dynamic (I mean to say that it goes up and down based on the demand/your repeat sessions etc.). As you have said already, the price is not regulated by the GDS systems but fetched from airline ATPCo, I wanted to clarify my understanding with a specific example:
Suppose you are trying to book on an aggregator website (say skyscanner.com)
1. Is my understanding correct that multiple websites (say skyscanner/trip.com etc.) use the same GDN backend to serve the same information to the users? If so how is the pricing different on different platforms? If no, how do they do it?
Now you look up a ticket from NYC to Tokyo. Being indecisive you spent quite a lot of time pondering on whether to get the ticket now or wait till later (meanwhile the website identifies your interest in the ticket and 5 other people’s interest and jacks up the price). This new price, how and where is it decided?
2. Is it by the website (skyscanner.com)? if so do the tickets remain at the same(initial reduced cost) for all other frontends using the same GDN?
3. Is the price controlled by the fare rules? What are the fare rules?
4. Also, could you point to where I could find out more about ATPCo?
Dear Yogesh,
I appreciate your interest in the travel industry and especially distribution such as GDS. The book “Value Creation of Travel Distribution was written exactly with the goal to support individuals like yourself to get knowledgeable about travel technology and travel distribution and get to know all the players who shape the travel industry (and what their goals are). I used to explain all this to interns and new hires and at some point, I just decided to write a book instead of repeating myself over and over again. This travel industry blog goes a little more in detail and should also interest individuals who already work in the travel industry – hence, I would consider the blog as a source to turn to, once the book is consumed.
With regards to a career in travel distribution, I can only say that I strongly believe, travel will always play a major role in our life. The numbers indicate that travel has grown significantly over the past almost decade (since the last recession that hit every industry). No video conferencing, FaceTime or Skype will take away the personal contact in business as well as in leisure. Today, I believe one in 10 people work in hospitality and tourism. So, should you become an expert in regards to cryptic GDS screens which is still dominant in some agent environments? I doubt that they will be around forever as tools with more automation are catching up. However, as long as you are able to adapt, the travel industry should always have a spot for you.
Good luck,
Michael
Hi, my name is Yogesh and I do not have any information about GDS and I want to learn using this application. May I know from where should I start learning about GDS from the starting of GDS? And is there any career future after learning GDS?
Dear Kieran,
Thank you so much. I appreciate it. Amadeus indeed also controls to some extend the sales channel. Between 2003-2011 Amadeus even the majority ownership of the Online Travel Agency (OTA) Opodo. In Business Travel Amadeus always had an Online Booking Tool (OBT) called E-Travel (it is actually powered by our backend system XX1) which they are about to sunset since they acquired i:FAO and their Self Booking Tool Cytric in 2014. Interestingly enough, Amadeus is not shy to cannibalize one of their own business lines, when it benefits another one: https://www.linkedin.com/pulse/siemens-uses-amadeus-cytric-hook-altea-bypassing-gds-save-strauss/ – this was one way to keep Concur, us and others away from the largest Business Travel Account worldwide – at least back then for the moment (Siemens will still implement Concur in 2018).
Hi Michael,
Clear and concise post. Thanks very much.
Does Amadeus also control the sales-end or just GDS and CRS (through Altea and Navitaire)?
Kieran
Dear Palak,
Thank you very much for your question. If you scroll up a bit to my reply on Nov. 26, 2016, you will find some further information. Also, pls. take a look at http://www.travel-industry-blog.com/travel-technology/pss/ where all three ‘systems’ are explained.
In short (and layman’s terms):
– A CRS is part of the PSS (so essentially they are the same when in comes to bookings): it is the inventory management of the airline. Like the warehouse of ‘seats’ of an airline. The supplier (airline) is responsible.
– A GDS is the distribution system how those seats (= inventory) are made available to passengers via sales entities. A comparison (but probably not 100% correct) could be: a GDS is the whole-seller responsible for combining inventory from different suppliers (read: CRSs from different airlines) and deliver it (read: make it available) to the various shops (read: Agencies for leisure travel and Travel Management Companies for business travel).
Pls. let me know if this helps or if I should try a different approach or go more into detail.
Thanks,
Michael
I am still not clear with the difference in PSS, GDS and CRS. Could you please expain it in layman terms with an example?
Dear Arun,
This comment relates more to the NDC article http://www.travel-industry-blog.com/travel-industry/ndc/, as with NDC, fares and fare rules are no longer filed with ATPCo. With NDC, the fare along with its rules is rather provided by the airline depending on who is asking (e.g. good clients get better fares or more flexible conditions – and these may change by the day and not be fixed for a year). Hence, the airline has ownership of the whole offer management, and consequently also needs to ticket depending on those conditions.
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). A fairly good picture, how settlement of a typical fare in the traditional GDS distribution world has been carried out can be found on http://www.travel-industry-blog.com/travel-technology/travel-technology-for-dummies-what-are-incentives-commission-overrides/ – the box “Airline” and “Credit Card” should then be seen as one box as a combination of a credit card company with ARC or IATA. These are the entities who in fact distributes the money – but details for the settlement process are probably worth another blog – stay tuned.
I hope this helps. Keep the questions coming!
Thanks,
Michael
Dear Imane,
I’m not sure I completely understand your question. However, maybe a picture will help you understand the difference. Pls. take a look at my first picture called “Travel distribution landscape” of the Passenger Service System article http://www.travel-industry-blog.com/travel-technology/pss/ (the CRS is part of the PSS). 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) combines the inventory management systems of numerous (up to 500 – also compare http://www.travel-industry-blog.com/travel-industry/ndc/) CRSs from all major airlines. Depending agreements between GDSs and airlines, GDSs have several or all fares the airlines offer (this is the discussion about full content deals further described on http://www.travel-industry-blog.com/travel-technology/travel-technology-for-dummies-what-is-full-content/). 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 and the GDSs retrieve fare and fare rules from ATPCo to provide a full picture (fare, fare rule, availability of inventory at such fare – and all this for each and every airline the GDS has an agreement with).
I hope this helps. Feel free to reach out with further concerns and I will try to answer.
Thank you,
Michael