GDSs Start Modifying Terms and Pricing - Welcome to the New Model that you will pay - Unbundled and of course More Expensive.

"So how would you like your GDS PCA today sir - you can have it anyway you want it as long as its black." (And profitable to me).
"This is a really old bike good for only one thing, it is not modern and can do very little ... I will give you only a few measly pennies.." "What it was your beloved ancestor's prize possession - then take less not more for this old heap of iron scrap...."

For some time now those airlines (that are astute and are tightly managing their costs) have probably noticed that their total flow of money to the GDSs are - well let's not put too fine a point on it - expanding.

In preparation for the ancillary revenue model that are emerging the GDSs are taking different tacks with regard to the cost model. Some are unbundling and others are now "adjusting" their fee structures.

One thing is for sure. The GDSs are determined not to be left out of this gravy train. They are going to be charging a lot of money for ancillary revenue services if they can get away with it. I predict a showdown is coming between the GDSs and the airlines over this. The GDSs are already putting out stories on how much new infrastructure they are putting in place to make themselves ready for AR. Travelport is taking a different tack from its competitors and is sticking well and truly with the IBM model by buying a whole load of new zTPF boxes.

As one IT wag told me several years ago after evaluating the zTPF system - he made an interesting point. For the first time in his memory (he had started with TPF version 2.X) - zTPF was going to run effectively the same Operating System but with no new functionality added. Seems like the old boys in Hursley (near Winchester) are finally being pensioned off.

But I digress..

The issue is going to be how the GDSs price the ancillary services. Will they do it fairly and equitably? And here they stand at a reasonable risk. If they price it at zero or essentially little charges then they will have a hard time in cost recovery. If they price it too expensively - the airlines wont distribute the AR products via the GDS and will resort to new channels and more flexible yet cheaper alternatives like Direct Connect tools.

The Airline accountants (now somewhat dusted in ash) are going to be looking for more places to save money. The GDS better play nice. For the coming IPOs this year - this represents a bit of a threat. The world is not quite as homogeneous as it once was.

Better pay attention to this one chaps... it wont be a nice and easy model. As the old adage goes - "Fool me once shame on you, fool me twice shame on me." Think of that when you stand across and start negotiating over that big old iron.

Cheers

No Secret Any More - AC Cans Polaris PSS

The slow painful lack of progress with the Air Canada Reservations Project known as Polaris has come to a dead stop with AC writing off C$67 million. More importantly the depth of the work left to do was an astonishing C$40 million. This clearly indicates that the project was no where near done. Even if you discount a large amount of money for implementation, there is a clear indication that this project had some significant hills to climb to reach an "implementable" solution. Sadly ITA software is left without its anchor customer for what is a significant amount of their future revenue expectation.

And the big winner in all this?

Amadeus?

Once again carrying all before it - Amadeus is fast becoming the only game in town for large scale reservations systems PSS. ....Well maybe not.... Amadeus has many problems of its own with the UAL implementation not making any visible progress. There are now some pretty good alternatives for large scale legacy airlines.

Mature solutions are from: Mercator (the core system of Emirates and several other airlines), itself an adaptation of the old Swissair Atrraxis system.
SabreSonic (as deployed at AA and many other carriers) the latest iteration of the venerable system from Sabre.
Horizon (although I am sure that I will get flamed by SITA who think its a brand new system)
EDS-Shares - Continental, Virgin Atlantic and US Airways are the biggest users.

There are some good solutions at the lower level of LCC and simple carrier level - such as Navitaire New Skies and Results or TikSystems (Amadeus's newest best friend).

Still trying to make headway are Unisys's Air Core, and IBS's solution.

The market for PSSs remains in churn with some big contracts still up for grabs. Lufthansa's exit from the market has left a hole. The cooperation between UA and CO should be interesting and we will be keeping an eye on this. They might yet decide to go to something different away from Altea. For sure there are a lot of people making trips to Chicago and Houston!

Actually there is one certified winner in this. IBM who managed to stay behind the scenes and retain the value of their relationship with AC. Couple this with the recent outsourcing of many of QF's IT functions to the Software and Services Giant and the boys in Armonk must be smiling.

For the rest - stay tuned.