25 March 2009

The Death Of The GDS

So my topic for 1000th Professor Sabena Blog is the Death of the GDS.

So is this trash talk or is it real?

Actually I think its very real. At CASMA's Spring Conference this week in Dallas (where I am still stuck due to weather) Henry Harteveldt called on the current GDS companies the proverbial big 3 to become GMS - Global Merchandising Systems. He could also mean Global Marketing Solutions. I agree. The age of passive distribution is over.

I hereby declare therefore that from now on the GDSs are officially dead.

Lest you think this is just me spouting off - lets examine the case for the GDS.

I put it to you that they are increasingly less Global. Their products can and generally are used Globally - but the share of the total market for Travel products has fallen to a point where there can be no thread of universality about their global ambitions. Indeed we have evidence that even the executive suites are seriously thinking of retrenching their marketing footprints - perhaps the re-emergence of the National Marketing Company model. Their solutions are no longer globally and more importantly exclusively relevant. There is this major need to add on value added products. As noted in early posts - the sheer percentage of total PNRs touched by a third party system is now staggering.

We see the dealership model emerging. We see a divergence in commercial agreements. We also see that Carriers will establish regional contracts not master global contracts. By necessity the ability of the marketing needs will result in fragmented commercial relationships. (personally I hate this idea but I see no real alternative).

Now if it pleases the court - let me present my case against Distribution. Passive distribution is as dead as Newspapers. Active Marketing and Merchandising is where its at. The GDSs are still not able to assist the airlines in this regard. The airlines will therefore deploy their own solutions in conjunction with - or frequently ignoring the GDSs. Fragmented solutions and requirements by airlines which are no longer part of the holistic model is going to drive everyone nuts.

And for my final argument - I present the GDSs own desire to change the way the customer file management systems work. This is actually very good. All 3 GDS company's have remote profile systems off the mainframe. Amadeus is turning off TPF in 2010. Sabre cannot be too far behind. Indeed Sabre's announcement that it is "flattening the PNR" is but another nail in the coffin of the GDS model.

I will grant you that they are Systems, but they are no longer ubiquitous.

So in summation:

The GDS model is indeed no longer sustainable as a one size fits everything. It has fragmented content, fragmented markets, and different applications. The sector no longer has a homogeneous business model.

So this is it. Farewell to the GDSs. They have served us well. Welcome to the new world of the GMS. Welcome to the new dawn where the servers can be here there and everywhere. Where the competitors will range from Sabre to Farelogix, Multicom to Zujui, Kayak to Expedia, Adventure Central to Pegasus, Travelzoo to Farecompare etc etc. All in some way shape or form a GMS platform. The legacy GDSs will stay around (I hope). But just like the rest of the global economy, everyone has a role in the future market. So too does the user and supplier communities. The GDSs will continue to evolve into GMSs. Losing their unique status is a blow to their ego and pride, but they actually gave that up a long time ago.

This will be fun. This will be hard. But tomorrow Scarlett is another day. And that day has finally dawned.

Cheers! And thanks to all of you. Here's to the next thousand posts. I wonder what the world will be like then!

1 comment:

Elisabeth said...

I was just reading your Blog and found it really interesting, especially the 1000st. Perhaps you are interested in some articles related to this issue!
Have a look at an article from Pass Consulting to this topic!

Regards, Elisabeth