03 March 2009

New GDS Usage Patterns Emerge

From the Professor's position, I see decidedly interesting trends emerging in 2009 of how the GDS model is morphing.

As we saw from the last few weeks - GDS usage is down - WAY down. Now comes some new data that points to a real change in the profile of the GDS contracts in the USA and Europe.

To the other side of the pond first, I was looking at some numbers from Europe today - the traffic from European airports is plummeting at the same level or greater than the USA. Europe has been on a great growth spurt until 2008. Europe's emplanements now comprise over 500 million passengers which is getting closer to the USA's numbers but the days of rapid LCC fueled growth are over. That should point to an end of the significant total GDS based traffic share erosion for Europe... I said should. But it wont. Last week, KLM joined Lufthansa in pushing for a battle with its dominant home market GDS, Travelport's Galileo and Worldspan brands. The Dutch part of the AF/KL group has a slightly different program that will result in a surcharge of Euro 4.50 per segment. (LH's PFP program costs Euro 4.90).

Coming back across the Atlantic we see some new trends which should cause even more misery - particularly in Atlanta and Dallas.
ASTA's annual GDS survey points to some significant trends. Here is some of the recap from the ASTA Website synposis: http://www.asta.org/News/PRDetail.cfm?ItemNumber=5122

GDS penetration among ASTA members has dropped 15% in the last 10 years. In truth the number of Agents has of course halved in that time. 40.4 percent of respondents said they have a "No-minimum" pricing plan. yes most of these are still getting paid a segment override. While these numbers are showing a negative trend, the GDSs are still paying more (percentage wise) in incentive compensation.

It seems clear that the holistic (aka non-fragmented) model is fully on the way out. But this makes travel like any other business. Other markets have seen this fragmented supply for many years - pre-and post the Internet boom. Sadly Travel may lose its "special-ness".

Welcome to the new world order.


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