09 October 2008

Latest Amadeus says... Technology more important than GDS rebates

In the early 1990s there was a great TV show intended for kids but with great satirical overtones called "Dinosaurs". It aired for 3 seasons on the US ABC network. It was very American humour but the satire was global.

It played to contemporary themes of overbearing corporations who would not tell the truth to their customers or their workers as seen through the eyes of a drone worker Earl Sinclair. Earl worked for the WeSaySo Corporation.

Sometimes Amadeus reminds me of the this company.

Their latest pronouncement comes from Australia. Speaking to Oz Travel Trade rag "Travel Today", Amadeus Australia managing director Tim Russell said GDS rebates - incentives given to agency chains to offset transactional charges - were slowly becoming less of a deciding factor than the functionality of the systems.

OK - so I have to call him on this one. Hogwash.

Actually on 2 counts.

Firstly cash is always more important that technology and functionality. However this notion hides a multitude of assumed sins which I wont bore you with now.

Secondly the hidden message is that Incentives are going away slowly but surely and Tim is actually preparing the market for this eventuality. The airlines HATE the fact that the GDS's are paying these fees basically from their pocket. Full Content GDS contracts were supposed to get past this problem but so far they have failed to achieve that. GDS revenues keep rising even amidst falling transaction counts and incentive fees also keep rising. But there is a point where the balance is lost. I think we are there and some airlines are already achieving savings through aggressive GDS bypass.

Ironically it is technology that is becoming the differentiator in all this. Why? Because distribution technology based on GDS bypass technology now exists that can be delivered at a lower price point than GDS's can compete at. So Tim Russell's statement is technically true even though it is not what he meant. Be careful what you wish for - Tim - it may actually happen that Agencies decide that Technology is important but that GDS based technology does not fit the bill any more.


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