Key Issues for GDS Users
GDS access to Internet fares
Financial incentives from GDSs
Elimination of shortfall penalties
Restrict carrier access to agency marketing data
One-year or two-year contract limits
2006
2005
2004
0
20
40
60
80
100
GDS access to Internet fares
*Financial incentives from GDS
2006
54.1%
18.0
16. 8
6. 3
2005
48.2%
NA
30. 9
11. 5
Elimination of shortfall penalties
Restrict carrier access to
agency marketing data
One-year or two-year contract limits4.7 9. 4
* 2006 represents first time asked for this report.
2004
52.0%
NA
27.0
12.0
8.0
fices (1995-2006)
1999
28.0
25. 2
24. 8
21. 5
2000
26. 6
25. 8
23.0
23.0
2001
33. 2
23. 4
24. 3
18. 6
2002
29. 9
26. 9
23. 9
19. 2
2003
31. 5
23. 1
22.0
23. 4
2004
33.0
21. 1
25. 1
22. 7
2005
30. 7
23. 3
22. 7
23. 3
2006
33. 1
24. 7
25. 3
20. 9
GDS Usage (1995-2006)
100% 98 98
97 97
95%
91 91
90 89.8 90
90%
86
85%
80%
1995 1998 1999 2000 2001 2002 2003 2004 2005 2006
GNEs snap at opportunity
By Michele McDonald
In many industries, new technology is welcomed and embraced. Airline
distribution is not one of those industries.
In most industries, it is understood that the end user pays the cost of
distribution along with all the other costs of producing and selling a
product. The airline distribution industry is not one of those, either.
The so-called GDS new entrants were the focus of much atten-
tion beginning in the fall of 2004, when the major airlines, notably
United, began touting them as alternatives to high-priced tradition-
al distribution systems.
The traditional airlines focused on the
cost issue. The GNEs pointed out that tradi-
tional GDSs were based on 1970s technolo-
gy, while the new breed was based on newer,
cheaper and nimbler technol-
ogy. But over the next two
years, the GNEs gained little,
if any, traction in the agency
marketplace.
Some observers wondered
aloud whether their true pur-
pose already had been served
in providing the threat, rather
than the reality, of an alterna-
tive to Amadeus, Galileo, Sa-
bre or Worldspan. Ellen Lee, vice president of business
Not so, according to Ellen development, G2 Switch Works.
Lee, vice president of business development for G2 SwitchWorks,
one of the new entrants. G2 cites the fact
that it has signed Air Tran, Alaska, American, Continental, Delta, Northwest,
United, US Airways and America West
(although US Airways and America West
have merged, their reservations systems
won’t be merged until next year). JetBlue and Midwest will be added this fall
and winter.
The latest round of negotiations between
the GDSs and the airlines has produced a
raft of new GDS programs and “products”
and counterploys by the airlines. Both
sides are trying to move distribution costs
around their battlefield, largely at the expense of the travel agencies that are caught
in the crossfire.
Lee said the GDS-airline brouhaha has
at last produced a set of conditions that
is beneficial to the new entrants. “There’s
been a spurt of interest,” she said.
More than 200 agencies got in touch
with G2 Switch Works in the weeks follow-
ing the announcement by the traditional
network airlines — American, Continental, Delta, Northwest, United and US Airways — that they would demand a $3.50
payment from agencies for each segment
booked in “nonpreferred
channels.”
Five of the six airlines
tapped G2 Switch Works as
a “preferred” channel, whose
bookings would be exempt
from fees. United was the
sole dissenter, something of
an irony given its role as an
early prophet of the benefits
of GNEs.
At the same time, the op-
tional programs concocted
by the GDSs, which trade
access to “full content” from participating
airlines for reduced incentive payments,
have placed G2 closer to a level playing
field, Lee said. “Before, we had a hard time
getting past the incentive discussion,”
she said.
There are currently three levels of access
to G2 SwitchWorks. Home-based agents
can use the system via Trisept’s VAX Vacation Access. “You just click on the air-only
tab for full access,” Lee said.
Small travel agencies can use the Web-based G2 Agent interface. “We make sure
that they are in good ARC standing, and
they get free access into the system,” Lee
said. In addition, she said, “we pay a modest incentive” to agents who use the system, something of a departure from the
original plan, which envisioned G2 merely
as the technology provider; the key “
relationship” would exist between the airline
and the agency.
But, Lee said, setting up financial rela-
tionships between every participating air-
