And so it comes to pass.
The first Full Service Network Carrier to come to the market and advocate a complete break from the traditional GDS based model. AA's Cory Garner announced this week that AMR's airline subsidiaries will move to 100% direct distribution.
Max Hopper must be spinning in his retirement home with this one. AMR and its former child Sabre have finally come to break apart. In less than 60 days AMR has broken the chains that bind that seemed so formidable back in the 80s and 90s.
On August 29th they announced they were bailing out of Sabre's hosting. And earlier this week at CASMA they announced they were bailing out of the GDS model that Sabre used to dominate.
There can be no simple words to describe this fundamental shift in AA's position. We should note that this has not been a sudden decision but a long term progression as the former child moved slowly but inevitably towards conflict with its parent.
So now you have it. Two of the World's premier carriers have now clearly laid out their opposition to the GDS holistic one size fits all model. AA and LH - via different methods have defined the new world order.
Of course this could not have come at a worse time with the GDSs primping themselves for IPO. Now two of the largest content providers have created opposition to the very business model that they are hoping to take to the IPO market.
The WOW team and Sabres joint investors (TPG and Silverlake) must not be happy bunnies this weekend. Needless to say Blackstone must also be a tad PO'd.
You gotta love this business. It is NEVER dull.
Cheers
1 comment:
Hmm...I wonder if this is AMR's attempt to scare GDSs, given the announcement took place prior to Halloween.
I don't doubt AMR's desire for 100% direct distribution, but I do doubt their ability to achieve this objective -- at least any time soon.
The key isn't the leisure traveler, it is the corporate traveler. The challenge will be a supplier's ability to develop the required interfaces necessary to integrate with corporate accounts and TMC's mid- and back-office systems. Certainly this is easier and less expensive to do now than it once was, and it will no doubt become even easier and less expensive to do in the future. But it is still a complex challenge.
I certainly suspect that AA is working with Hewlett-Packard/EDS to ensure that its new Jetstream PSS will be able to support this initiative. But it will take 4-5 years for Jetstream to be fully developed and rolled out.
I am sure AMR is serious about this. Sure, there may be some positioning in what they say now, for their next round of GDS contract negotiations. I don't doubt for a minute that they want, someday, to have that 100% direct distribution objective achieved. And if any US airline company will achieve that, it will be AMR.
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