26 May 2011

"GDS Also Vigorously Compete" but do they do this fairly?

The team at Travelport have hit back at the American Airlines lawsuit and as expected have asked for a summary dismissal of the action.

A good summary can be read in a wide variety of media. They tend to be biased based on the viewpoint of the media organ involved. So I am not going to do a link to any of them.

In the US Travel Weekly article there is a good quote that ends their piece:

"GDSs also vigorously compete with other distribution channels that now account for a majority of air ticket distribution in the United States. Contrived market definitions cannot mask these contemporary business realities."

Let me translate that for the non-lawyers and non-spinmeisters in the audience.

Fact: GDSs have restrictive contracts for agents and airlines. Having read and advised both agents and airlines on the topic - I believe I am well qualified to make that statement.

Fact: The legacy GDSs now account for less than 50% US market share and that share continues to fall. (Based on ARC transaction numbers).

Fact: GDSs will do anything possible to protect their $9 Billion annual revenue business.

But what the last sentence means is anyone's guess.

Sadly in my view - Travelport still thinks its just about the money. The argument doesn't make much sense however when you see the extent to which they have gone to obfuscate the underlying issue which is about more than mere cash and negotiation.

Yes... there is a clear issue that the GDS charges too much and passes on that money in an unnatural way to the agents to buy business.

However the lack of technology innovation (and I am talking about REAL innovation not just more lipstick on the old pigs) and the lack of enabling a richer consumer experience is what needs to change.

The controlling mechanisms that the legacy GDSs have placed on the market has only one beneficiary over the long term. Google.

Consumers need and want choice. They need innovation to enable that choice. The GDSs with their cost model and antiquated technology have for too long held the market hostage. Now they are being punished for it in the marketplace and it would seem - also now in the courts.

In particular the venture companies that own the US GDSs need to take a hard look at everything. The GDS cash cow operation model with mediocre and antiquated clunky systems are not sustainable.

Time for change. Real change


1 comment:

Glenn Gruber said...


After reading Ashley's post on Tnooz, it seems that the high cost of the information from ATPCo, OAG and the like seem to be much more of a barrier to new entrants and innovation than the GDS. Your thoughts?