At least 2 legacy airlines (SAS and AF/KLM) have informed the regional markets that next year they will pass on the cost using GDS to the TMC and Travel agencies if booked traditionally and not using New Distribution Capability (NDC) or API.
Starting in April 2023, American will begin to discontinue their support for legacy technology (GDS). A significant amount of American’s existing products will become exclusively accessible to travel retailers and Online Booking Tools (OBTs) in modern retailing channels powered by NDC technology.
It may sound trivial, but we are talking about serious cost to the airlines and now the buyers. Agencies in France have identified the cost at 13€ per trip. To SAS (with 25 million passengers) it means an annual cost saving of 250-325 million€ that are now being passed on to the traveler and buyers. Most of this cost will hurt businesses with frequent travelers.
Both airlines use the same way to administrate the new structure, and this means serious added administration by the TMC. The usage of the same structure as BSP Agency Debit/Credit Memo and thus no cost to the airlines but the data will arrive up to 3 months after the trip and then the TMC will probably pass on to the buyers. It may end as an administrative nightmare.
The airlines are also planning to demand that their cheapest fares will not be available on the traditional GDS structure, which can hurt both the business travel and leisure sector.
The core issue is simply that what 50 years ago was a major breakthrough for airlines (the first American Airlines) to ensure inventory control, pricing, and data flow, is now in place simply because it works, and no one wants to be the first mover to invest and learn from other industries.
In a world with focus on the individual, tailormade offerings, and constant price changing, the mainframe structure cannot live up to market expectations and even gateways like NDC has very little personalization happening in it.
Right now, the 2 airlines hit the regional and local markets where most of their income is generated with most passengers. Other airlines are obviously waiting and planning to act the same.
Frequent business traveler represents serious income and need much more personalization from recognition to bundle offerings i.e., upgrade, preferred service, food, and drinks and much more.
Is this the end of the traditional TMC or travel agency? No of course not! The value and services being offered is needed by corporations. However, new thinking, change of operation, introducing new technology like Artificial intelligence (AI) and Application Programming Interface (API) will enable better and more personalized offerings and most TMC are aware of this.
The buyer faces short term increase in cost but can expect new and better offerings as the infrastructure of arranging a trip will improve substantially in the coming years.
Global distribution systems are the platforms on which most corporate travel bookings are made.
A. Global distribution systems provide real-time data about flight schedules, airfares and seat availability, and they process airline reservations. They provide availability and booking support for hotels, rental cars, trains, limousines and ancillary travel services.
B. GDSs store information on travelers’ booked itineraries in the form of passenger name records, and they pass booking information to agency accounting systems.
C. They store passenger and corporate profile information that can be transferred automatically into reservation records.
D. Most GDS implementations are led by travel management companies, which may be considering alternatives in light of any supplier initiatives to disintermediate the GDSs.
E. Online booking tool systems connect with GDSs to obtain inventory and allow for pricing and reservations.
