Can GDS survive?

Global Distribution Systems are in a position a bit like the music industry – they sit awkwardly between providers of the service, ‘Airlines’, and consumers of the service, ‘Customers’.

And while the woes of the music industry haven’t quite caught up to the GDS industry, they will. Here’s why, and what GDS systems will need to do to stay relevant.

Back in the good old days, there was a real problem for customers to book a flight on an airline. How would they access the airline’s systems? Short of going to the airport, this was an issue. But then GDS stepped in, and provided a centralised computer network that airlines could plug into, and more importantly, travel agents could plug into. Now customers could walk to their local travel agent, and book a flight. Fantastic.

But then the Internet came. And first it wasn’t a big deal, but these days it’s a game changer. I can’t imagine any credible airline these days that doesn’t offer online purchasing of tickets. It wouldn’t make sense. It would be one of the lowest cost channels for a customer to directly purchase the lowest possible fare.

And so what should a GDS do? Well let’s examine who needs a GDS.

Airlines somewhat need a GDS. Sometimes a passenger wants to fly to a destination that isn’t offered by an airline. A GDS could make the first leg of the journey with a particular airline, and then use another non-competing airline as the second leg of the journey. That’s a value add for the airline, as they’re getting a booking they normally couldn’t fulfil by themselves. If you check out Air New Zealand’s website @ http://www.airnewzealand.co.nz, you cannot book a flight from Auckland to Manila. That’s not to say there are no possible routes, just no possible all Air New Zealand routes. A GDS can deliver this.

In addition to this, a GDS provides a marketing service to airlines. An airline may only have the web infrastructure to suit a particular country or market segment, i.e. being translated into the appropriate language, and meet the appropriate cultural norms. A GDS can do this, and deliver a consistent experience for the customer regardless of the airline being offered. This means Air New Zealand doesn’t need to code a website in Korean, and doesn’t have to understand what would be appropriate and inappropriate ways to present information.

Having said this, airlines can change. What’s to stop Air New Zealand creating a web service to their booking system that Air Philippines couldn’t take advantage of, and start offering Air New Zealand routes to complement their existing Air Philippines routes? This ensures the customer stays on the Air Philippines webpage, and is offered a service that meets their requirements. Everyone wins.

And airlines are starting to offer sites in other languages and cultures as demand increases. Check out http://www.airnewzealand.com for the Air New Zealand American home page. The cost of them offering multiple languages may be cheaper than going through a GDS.

Do customers currently need a GDS? I don’t think they care to be honest. Sure, they can use Expedia to book a flight from multiple airlines, and it would meet their criteria, but often you find it cheaper to book directly through the airline. And if an airline is holding its best fares for their own website, this puts GDS sites at a distinct disadvantage.

So what’s a GDS to do? Here are my two ideas.

Focus on providing brokering services for companies that cannot afford their own booking site. Small hotels, small airlines, small tourist businesses may not be able to justify creating their own booking site. Why can’t they leverage your infrastructure and experience in providing services directly to the customer?

And secondly, provide an experience to the customer. Think about the experience as the journey, not the destination. The destination is the customer has purchased a reservation. The journey is that they went through a personalised experience that treated them like a friend, and recommended tours, packages, and hotels that would meet the requirements of the customer. GDS companies must really go beyond the basic reservation experience a single airline can offer, and really think about offering a seamless end to end experience for the customer.

It’s a bit like the difference between using a Windows mobile phone and an Apple iPhone. The Windows mobile phone can run any applications you like, and multiple applications, but the experience of finding those applications, paying for them, installing them, and using them is variable, and sometimes horrible. An iPhone offers a consistent world-class experience for all applications regardless. Be the Apple of the GDS industry, and you will succeed where your competitors will fail.

One Reply to “Can GDS survive?”

  1. Windows mobile and Iphone it’s not a good example… GDS works like old computer with extra RAM, but unfortunately… the old computer is still not working like new SONY VAIO or Mac Pro…

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