Ahhh … March. This winter in Southern California has been akin
to living in Seattle; we’ve had the 2nd wettest winter since 1884 –
almost 36 inches rain. It’s been wet and cool since early January.
But today it is a delightful sunny 76F (24C) degrees. There is a
light wind coming off the desert blowing the haze and smog out to
sea. It is a wonderful spring day to be sitting on my deck
conjuring up March’s “Off-the-Wall Comment(s).”
Eastman's "Off-the-Wall Comment(s)"© ...
The ResExpo conference in early March generated a great deal of
publicity … largely because it was the first significant trade
event to follow the announcement of G2 Switchworks and ITA of their
new GDS by-pass solutions. United Airlines had announced in early
February that it would offer a per-ticket incentive of up to $5.00
for early-adopting travel agencies that shifted from legacy GDS
tool to the newer systems.
All of the quotes noted above were quips picked up and reported
by one travel trade magazine or another during the ResExpo
conference.
These quotes were part of the introduction I used this month to
discuss the topic of GDS By-Pass in presentations to the Silicon
Valley Business Travel Association and two TQ3 Navigant’s Corporate
Advisory Board meetings – to draw attention to the diverse views
that GDS by-pass represents. Each quote has its own spin … and I’d
like to take a moment to put some “un-spin” on the thoughts
proffered.
“I’ve never seen Sabre, Galileo, Amadeus and Worldspan “lock
arms” this much.” Jim Davidson, CEO Farelogix, Former President/CEO
Amadeus North America
There is little doubt that the traditional GDSs are “locking
arms” against this new external threat to their dominance and
control of the traditional travel distribution model. An
alternative digital gateway solution for booking seats on airlines
is a major threat to the traditional GDS industry unlike anything
that has come along before.
Not even the evolution of Internet travel agencies posed much of
a threat to the control over distribution for the GDSs. Yes,
Internet travel agencies have significantly transformed the
relationship between buyers and access to-and-from the distribution
system – and with the relationship between buyers and travel
agents; but the GDSs remained the digital-links through which the
major trunk carriers continued to offer product.
The fact that United Airlines would offer corporate travel
agencies an incentive to abandon the traditional GDS system in
favor of an alternative, lower-cost, gateway into the United host
is a very real “wake-up” call. The GDSs can chip-and-bitz about
market-share among themselves – because the literal market-share
shift was minimal and always within their own industry oligopoly.
True, there was some erosion of bookings via airline-direct
Internet web sites; but for the most part, the actual booking tools
were actually provided by the GDSs or their subsidiaries.
As new-business start-ups, neither G2 Switchworks nor ITA would
represent much of a threat to the traditional GDS structure (I know
… I’ve tried a couple of times “;-]] ). But both ITA and G2 evolved
out of the successful airline owned online travel agency Orbitz.
Both have leaders well recognized from the Orbitz evolution and
ITA’s fare-rules engine has become the backbone of a number of
other airline and Internet product offerings. Concurrently, G2 was
apparently intimately involved with the development of the Orbitz
alternative-GDS model prior to Cendant’s acquisition (if the law
suits between the two are to be believed). And G2 recently obtained
$10 million dollars in equity funding.
All that is to say, between them, these two new-entrants have
the foundation upon which prudent investors can foresee the
possibility of achieving critical-mass in an alternative
new-technology distribution channel. Add FareLogix and a few other
smaller players, and what the airlines are siphoning off for
themselves via direct-bookings, the traditional GDS distribution
structure is significantly threatened! Is it no wonder that Sabre,
Galileo, Worldspan and Amadeus have “locked arms” to forestall
these new entrants?
“There will be a lot of pain. The question is, who will bear
that pain?”
Mitch Gross, General Manager, The America’s, Galileo’s Client
Services.
And that is a very good question!
Historically, the airlines have borne the pain! In the past, the
airline “pain” of paying segment fees to GDSs was fairly easily
off-set by the price control that the oligopoly of GDS distribution
provided for the airlines. Product pricing could be controlled via
the channel distribution … and there was insufficient “spill”
between channel retail outlets for spill to be meaningful. But
along came Internet … and all of a sudden, the channels could put
their pricing out to “the world;” which led to ubiquity of fare
information.
The Internet has virtually eliminated the ability of the
airlines to control their pricing via different distribution
channels (other then on their own web sites). In so doing, the
Internet has concurrently created a commodity market for airline
seats. Some of you may have noticed that JetBlue announced plans to
roll out a dynamic packaging option on their web site this summer –
that will integrate “packaged air and hotel” pricing; effectively
beginning the process of combining two commodity product offerings
as one to create a “value add” for buyers (lower total price) with
higher opaque margins for the suppliers. This is not an easily
implemented solution within the traditional GDS architectures; but
almost a “no-brainer” on new technology platforms. Therein lays one
of the less painful alternatives by which traditional GDS segment
fees will be off-set or replaced.
There is another aspect of this question that needs to be
explored. In each of the sessions I worked in this month, I asked
the participants the following two questions … “How many of you
access Internet from home?” Virtually every hand was raised. “So,
who pays for that Internet access?”
Therein lays another answer to who is going to bear the pain.
Instead of the airlines having to fund all of the software
technology, all of the telecommunication costs and all of the
hardware costs – the users are going to have to start picking up a
portion of those costs. But today, the bulk of the $4.00 segment
fees go to supporting a technology base that mandates the use of
proprietary hardware and software – by suppliers, vendors,
intermediaries, and virtual users. With the exception of the
“JetBlue’s” of the industry (and there are a few others in addition
to JetBlue), virtually all of the “user-friendly” web-based
front-end tools exposed to customers and agents alike – all go
through “technology interpreters” for conversion to the
“proprietary technology” solutions that serve the GDSs and
airlines.
But in today’s contemporary technology world, virtually
everybody uses interactive communicating technology tools – from
PCs to Blackberry’s to cell-phones; all owned by the users and all
moving data across common technology platforms using common
software conversion protocols. What costs $4.00 per segment to
process on proprietary technology and software platforms costs 25%
of that on alternative platforms – in large part, due to the
commonality and universal acceptance of the alternative technology
platforms!
Still, implicit in Mitch Gross’ comment is a hidden cost that
the airlines must, ultimately, bear. It will be a very real pain.
Fortunately, it will be largely a one-time pain; in lieu of the
ongoing $4.00 per segment pain that the airlines are confronted
with if they continue to support the traditional GDS distribution
structure. That airline pain will be the cost of converting their
legacy proprietary software and hardware technology platforms into
contemporary technology solutions! And the hard reality of that
pain WILL NOT be the literal costs of technology conversion – but
the hidden costs of retraining, restructuring, and redefining the
tasks and roles of the people within the airlines.
Frontier Airlines recently “scratched” the surface of this pain
when they moved from being hosted on EDS Shares to being hosted on
Sabre. I’m told that the migration process went pretty much “as
planned;” with the minor technology and data mapping hiccups that
are typically spawned by such migrations. But in spite of purported
training on the new Sabre systems – the actual switch from
many-years of using command-line instructions to the new Sabre
web-enabled user-friendly screens virtually brought Frontier to its
knees. The agents had been trained – but they had NOT been
confronted with “real time” issues in “live-stress” situation; and
when they were, they reverted to “first-learned” skills – trying to
figure out how to use command-line entries and applying Shares
structures to a Sabre data environment.
On the day of migration, virtually all flights were delayed;
many were canceled. Customers at the airports found themselves
waiting in lines for up to two hours. Many spilled themselves to
other carriers. Delays were system wide. Telephone wait times were
up to 4 hours (for those with the patience to hold). The problems
were not resolved in one day as the Frontier PR people initially
claimed – but lasted for more than a week. Four weeks after the
migration, callers to the Ascent Frequent Flier telecenter were
still getting a pre-announcement suggesting wait time of one to two
hours; and recommending that Ascent Members might be served in a
timelier manner via the Frontier web host.
What is the “pain” of such an experience? What is its cost in
lost employee moral … in lost customers … in lost revenue? And in
this case, the bulk of the problems were apparently created by
experienced users moving from a traditional “command-line” response
structure to a purported “user-friendly” set of web screens already
proven to be more efficient and effective for a number of other
carriers!
There is real truth to Mitch’s question – a truth that can be
mitigated with careful planning. But it is a truth of any new
technology transition that rings true not just for airlines (as the
example I use implies) – but for virtually any travel business that
is today, a part of the traditional distribution channel.
Technologists tend to dominate these kinds of business structure
transformations. It is easy to become mesmerized by the technology
focus; and miss or downplay the human elements of change. Yet, just
as consumers have learned to efficiently use Travelocity, Expedia,
eTravel, and Orbitz user-friendly type front-ends., the operational
and other aspects of technology transformation in the way travel
product is created, distributed, and delivered can be overcome with
thoughtful foresight and a focus on humanness of the transition. By
focusing on the human elements of implementing new business
processes, the technology facets will virtually take care of them
selves.
“The number one trend in the travel business is for companies to
attempt to be more agile.” Mike Hulley, Vice President,
Transportation Global Industry, EDS
Regular readers of OTWC have been seen this message frequently.
The key word here is agile.
However, agility is NOT reflected in dependency on a single
technology platform or gateway. Agility is NOT represented by
dependency on a single distribution channel. Agility is NOT based
on having an outside third-party channel vendor or supplier
promising to be responsive to the ever-changing industry on YOUR
behalf.
Agility … whether one is discussing product packaging, internal
operations -- or the technology tools to enable either or both … is
dependent on the primary business entity owning and controlling its
own information management technology switch.
In the traditional distribution structure, various
intermediaries provide different elements of the digital packaging
of travel products. Technology traditionally came from the GDSs.
Travel packaging was typically the role of tour operators. Travel
agents performed the retail outlet functions of product
distribution. Roles were fairly clearly delineated and pricing
structures served to fund the appropriate channel.
In a digitally-driven information world, as noted above, these
channels have come apart. The problem is that they have NOT yet
restructured themselves. It makes no difference whether one is an
airline, a GDS, travel agent, corporate travel buyer, tour or
cruise operator, trade group, hotel or bed-and-breakfast property,
leisure travel buyer, Internet travel marketing company, car rental
or limousine services company, financial settlement center, ground
services provider, or any other of the myriad of other travel
industry participants – it is no longer possible to intelligently
predict the future of your business marketing alliances and/or
distribution channel structures. All that you CAN predict is that
whatever they are today – there is only a 15% probability that they
will still be the same in three years!
Thus, if you are to remain agile in today’s evolving business
environment, it is incumbent on one to take control of and maintain
or manage from within your own business entity, the key technology
that enables your business to integrate its products with widely
divergent suppliers and/or buyers (i.e. distribution channels). The
greater a company’s dependency on a single channel or provider of
services – the more likely that company is to become a sole
provider or outlet of products controlled by that intermediary
channel.
If survival depends on agility, then it is incumbent on every
business entity to control the technology switch through which it
obtains its product and/or sells its product. It is quite possible
to outsource virtually all other elements of your digital
information/management/processing environment if you control the
flow of information to and from the entities and business processes
that go into fulfilling your product commitments. Outsourcing your
control platform virtually relegates your product offerings to
those of your outsource platform! In today’s travel business
environment, the traditional roles structure alluded to above is no
longer valid; and one moves along that path with great risk.
“Airlines are increasingly moving to the Internet to sell
tickets not only because of lower costs but also because Internet
success in driving customers, unlike more traditional advertising
such as print or the electronic media, can be exactly measured.”
John Slater, Managing Director, Distribution Planning, Continental
Airlines
I’m sure that John Slater might have said this more directly,
had he know that he was being quoted. But the message is quite
clear. Airlines are moving to Internet because response can be
exactly measured. Airlines do not have those same kinds of
measurement tools when they use mass media tools such as
advertising in print, television, or radio.
The very critical concept to which John seems to refer is
measurement … measurement AND, implicitly, the control that comes
from being able to track and measure immediate response.
One of the facets which John did not outwardly focus on is the
“interactive” aspect of both measurement and control. The ability
to track the interaction of prospective buyers with the product
offerings is even more valuable. After all, people don’t visit a
web site without a reason … whether it’s an airline hosted web site
or an Internet travel agency. Even if they don’t buy on this visit,
their interaction with the offerings can provide significant
customer information.
John’s thoughts suggest two additional aspects. The first is
that traditional media platforms will become increasingly suspect –
and will, over time, necessarily develop some form of
linked-response tie-ins that will enable them to compete to some
extent with the digital interactive tools. Without such auditing or
accountability, investments in those traditional media must
necessarily wane.
The second aspect of John’s remark is that what goes for
airlines … necessarily goes for virtually everybody else in the
airline distribution channel. If travel agents, agency buying
groups, corporate travel buyers, etc., cannot measure, manage, and
virtually control the sales of seats for a given airline (or hotel,
car rental firm, etc.) – they will be unable to prove in measurable
terms that they are “eligible” for whatever business relationship
they seek to make. Said in today’s terms – incentives, overrides,
commissions, contract fare pricings, etc; will all become
measurable and accountable … O&D market by O&D market, room
by room, etc.
The ability to measure goes both ways in a digital world. The
numbers must match … and discrepancies justified. This is
particularly true as traditional market share and comparative
billing data made possible by the oligopoly of the existing
distribution channels – become virtually useless as buyers and
sellers create direct links for both purchasing and settlement. The
power of negotiation will belong to the negotiator with the
greatest knowledge; and if knowledge base is equal, then it will
default to the buyer – because airline seats, hotel beds, rental
cars, and the core traditional travel products have become
commodities of basically equal value available from alternative
sources as a result of the digital information evolution!
“The emergency of ITA and G2 is really about business models,
noting that GDSs deserve the competition for treating airlines as
suppliers and not customers.” Peter von Moltke, Senior Vice
President, North America, Amadeus
Peter is truly correct in his observation. This is, of course,
an extension of the airline culture. The airlines owned the GDSs.
When the airlines spun the GDSs out of their economic and
psychological protection – they provided levels of “insurance” that
the new business entities would survive in the form of multi-year
contracts for services. The airlines set themselves up for failure
… by not really negotiating closure on future pricing (i.e., by not
hedging their future distribution costs).
And the legacy structures embedded in the airline and GDS
systems were also perceived (by airlines and GDSs alike) to be the
most cost effective structures – because nobody had bothered to try
to understand the growing cost imbalance being created around the
standardization of Internet and PC-based technologies.
In point of fact, had the dot-net era not evolved as the
airlines were encountering financial problems – it is quite
possible that the airlines would still be owners of the GDSs. Given
this basically cultural history of co-dependence … there was no
perceived need on the part of the GDSs to treat airlines customers.
One could not survive without the other.
And that co-dependency allowed the GDSs to keep increasing
segment fees as they created front-end solutions to interpret the
evolving Internet world to their industry’s legacy platforms –
without really understanding how those increased costs that were
being passed along to the airlines or recognizing that the
traditional channel structures through which airlines priced their
product were coming apart as a function of Internet. The
tradition-bound thinking has ended up “blind-siding” both the
airlines and the GDSs.
It is quite probable that the GDSs do not yet understand that
the airlines are less and less, “co-dependents” – and more and
more, “customers.”
The unanswered question is – with the GDSs figure that out in
time to restructure their relationships to ensure survival? That is
a far more subtle and controversial question – with the answer
hidden beneath 40-plus years of culture, tradition, and incestuous
business processes.
“GDS Companies are missing the point. It is about
technology.”
Jeremy Wertheimer, President/CEO ITA
Jeremy‘s quote can have an infinite number of meanings … and may
very well have. Further, the quote is not reflected in the context
of his whole thought.
The general nuances of the material reporting on these exchanges
seemed to suggest that the GDS representatives were trying to argue
that their $4.00 average segment fee was cost justifiable given the
value add that the GDS brings to the distribution process. The GDSs
were and are claiming that the costs (Mitch Gross’ “pain” comment)
of developing alternative business processes to incorporate the use
of the alternative GDS business model were so costly that nobody
could afford to make the transition.
For travel agencies, corporate travel buyers, tour operators and
consortiums traditionally dependent on the GDSs providing all of
the technology solutions necessary for participation in the
distribution channel – this kind of thinking is very valid. As
noted above, the GDSs thought/think of the airlines as
“co-dependents”; just as they think of their “agency outlets” as
“co-dependents.” It is very clearly a mental picture issue.
Implicit in the quote above is that Jeremy believes that the
GDSs have their thinking twisted – that it is not about the
economics or value-add issues; rather, that the issue is technology
cost.
After all, the airlines have taken to hosting their own web
sites because the new technology is less expensive than the
traditional structures. Consumers have become educated in using the
Internet and the Internet is amuck with software vendors able to
offer low-cost solutions structured to serve buyer-specific
needs.
The traditional distribution structure is fraught with
proprietary high technology costs that cannot support or serve the
new technology models (for reason’s discussed above); while
virtually the entire buyer base is functionally integrated and
familiar with the new technology platforms.
Given the availability of low cost programmers and readily
available hardware technology resources to provide easy access to
the new GDS alternative gateways – his legitimate question
challenges the perceived GDS nonsense about “value-add” via the GDS
channel? .Further, his company has a proven development history in
responding to the challenges presented by the industry (as also
noted above)
So, is the question really about the economics and value-add
that the GDSs allude to – or is it about the economics of the
technology platform that Jeremy and the other new entrant’s
suggest?
And the answer is … in my opinion – neither!
At least, not either in the direct sense of what is likely to
happen over the next six months to a year!
The problem is not in the distribution side of the equation! The
problem resides on the airline or product supplier side.
As OTWC readers know well by now, the core airline technology
platforms are basically 1960’s era technology. Until recently, the
cost-benefit of transforming these systems from the holistic
self-contained digital platform into contemporary modern
information environments was unjustified. While Internet has
created increasingly significant stress on these legacy platforms –
the self-contained nature and wholly-owned sole-settlement process
(i.e., the only way to buy a ticket on a legacy carriers is via an
outlet that can “settle” with ARC or a BSP) made it unnecessary to
integrate new business processes or technologies.
The success of the JetBlue and AirTran new business model
carriers … carriers that gain significant cost advantages through
the use of new technology solutions throughout their business
processes … is forcing the legacy carriers to reconsider. A few
have already embarked on changing their base core hosting
platforms.
But for the majority, the legacy structure remains intact. And,
unfortunately, the legacy structure is more than just an inventory
hosting environment. The embedded structure includes virtually all
inter-airline and intra-airline messaging. It includes operations
and crew scheduling, catering, maintenance, airport operations,
ground-to-air communication, airport reporting, government
reporting, air traffic control interaction, revenue management,
revenue accounting, financial settlement, etc., etc., etc. The
legacy airline information structure is a virtual onion of
overlapping and interdependent systems and processes.
It is simply not possible for the airlines to incorporate,
respond to, or adequately serve the needs of these new technology
solutions being proffered by the likes of ITA and G2. Should there
be a flood of demand for G2 or ITA services, the airlines would be
forced to throttle or limit their use.
Yes, the airlines want qualified users willing to fund their own
transition costs to begin to adapt these tools. But the purpose of
enabling these tools to have access is, in my view,
experimentation! They are experiments by the airline suppliers
around which the airlines can begin to learn how to manage the new
technology environment without the front-end filters provided by
the GDSs. The airlines are the ones moving, under controlled and
measurable structures, away from the traditional technology
structures that have served them these past 40-plus years.
And as the airlines come to understand and manage these
direct-link alternative technology gateways – they will acquire
supplemental knowledge that will transform not only the
distribution structure, but the core communication links, services,
processes, and communication structures of the airline’s operations
and business model. There will be no turning back. The organic
network of interactive bilateral communication will become
strategic and tactical tools as the legacy carriers come to
understand how badly they have been victimized by the technology
platforms of the new-entrant low cost carriers.
Yes, Jeremy is right that the issue is about technology; but NOT
about technology as applied in the external distribution structure.
It is about the legacy carriers re-discovering themselves in a
quest for survival – and the ensuing structural transformation will
engulf virtually everybody in the travel transport, packaging,
distribution, and purchasing environment.
How it will end up is just about anybody’s guess. With the
increasing success of point-to-point one-class airline products and
new private-jet products coming under the umbrella of traditional
airlines beginning to evolve, it is reasonable to expect
increasingly divergent distribution structures – each serving
unique niche packaged product offerings in order to capture the
value-add of concurrent commodity product offerings.
And such a model will necessarily be interactive … packaging in
response to buyer’s virtually immediate needs. Such a technology
structure brings us back to the issue discussed above concerning
the risk in over-committing to a single technology or supplier
resource and the need to maintain immediate control over a business
entity’s own digital communication switch structure to ensure
agility in the marketplace.
Eastman's "Off-the-Wall Comment(s)"© ...
OK … so did you pick up on that discrepancy?
There are multiple concepts to pull out of these three quotes
lifted from “The Beat” this month – but did you see the conflict in
claims?
Cendant said “incentives paid to agency subscribers” drove
distribution costs up. Bruce Finch on AutoDesk jumped all over the
implication that those incentives were/are the result of corporate
travel managers and other mega agencies negotiating overrides and
other productivity agreements – all of which are funded by the
airlines through segment fees.
In fact, that has been the traditional distribution channel
mantra – segment fee costs are going up and up because of
incentives paid by the GDSs to high production mega travel agencies
– primarily the agencies that serve the corporate customers! It is,
like some much of our traditional distribution thinking, an
embedded mental concept. Like Bruce says, “… seems transparent to
me.”
Have you caught the discrepancy yet?
Did you note in the Worldspan report that they don’t call the
costs “incentives” – but inducements! But that is not the
discrepancy. The discrepancy that needs to be noted is Worldspan’s
statement that “…Inducements grew due to the … continuing shift
toward online travel agency transactions, which tend to have higher
inducement costs than traditional travel agency”
The discrepancy is that “online agencies tend to have higher
inducement costs than traditional travel agencies [that serve
corporate travel departments]” (the boxed after-though being this
author’s add-on thought).
There are some other tidbits in The Beat’s report on Worldspan’s
annual report that offer some interesting insights. Captured above
is the fact that Expedia represents 28% of Worldspan’s
transactions. Not reflected here is that although Sabre evolved an
agreement with Expedia about a year ago to handle additional
transactions, Worldspan claims that Expedia has not shifted any
purchasing from Worldspan. If true – this suggests one of two
things. Either Sabre has not learned to treat Expedia as a
“customer” (see above); or that IAC/Expedia is still considering
acquisition of Worldspan as a gateway to serve traditional
airline’s not willing, ready, or able to begin moving toward the
new technology platforms.
Given that Worldspan has been marketing their hosting
environment … and like Sabre, already operates a functional
new-technology environment virtually capable of modeling the G2 or
ITA alternative technology solution at any time that the airlines
said “let’s do it” … it makes an acquisition of Worldspan by
IAC/Expedia seem even more likely to me. I suspect that the major
hindrance in such a buy-out is tied more to a disparity in the
perception of value between IAC and the investors that stepped in
to buy Worldspan from its airline owners some years back.
Two other little tidbits in The Beat’s story were also of
interest. The first is that Worldspan accounted for more than 67%
of the online bookings processed in the U.S in 2004 and that such
booking generated about 48% of Worldspan’s total year-end bookings.
The second little tidbit was that Worldspan’s top ten agency
subscribers generated only about 9% of Worldspan’s total bookings
in 2004.
It is very clear that Worldspan has, as noted in OTWC’s for many
years, strategically positioned itself as the Internet gateway to
the airlines. As some of the direct-booking business models
discussed above gain critical mass, Worldspan will necessarily need
to restructure its revenue model very quickly; necessarily faster
than either Sabre or Amadeus with their significant airline hosting
platforms serving as an alternative revenue base. Galileo is, for
all practical purposes, already “morphing” into Cendant … and as
such, appears headed for a role as a niche-gateway for agencies
seeking franchise-like support linked to Cendant-owned
properties.
That said, the significant dynamic in play between these two
annual reports is the dichotomy between the implied responsibility
for incentive/inducement payments – and those responsible for the
ever-increasing segment fee costs to airlines.
Important in this premise is the culture of competitive
tradition which Bruce Finch describes as “graft.” The fact that he
openly uses such a harsh term suggests that he and many of his
travel manager compatriots are coming to the realization that they
have met a corporate travel cost enemy … and in the words of Pogo,
”… he is us!” Such recognition suggests a new openness to
alternative distribution channels – not just G2 or ITA, but other
direct-link and/or agency reverse-consolidation buying.
And equally important is the dichotomy as to whether the online
agencies or the traditional agencies are driving those
incentives/inducements! Whether it is the corporate travel
community or the online booking agencies that cause the greatest
distribution angst for carriers will drive much of the first-focus
new technology decisions as the airlines expand their experiments.
Increasingly, the ability to measure and manage transactions will
influence the supplier’s decision. Intermediaries in travel
distribution and travel buyers will need to be sensitive to how
this dichotomy plays out – as it will influence both technology and
supplier relationships over the next two to three years.
++++++++++
It appears that I have “babbled enough” for today. And as usual,
I’ve left a bunch of stuff on the table. And in “classic”
Off-the-Wall Comment(s) tradition – this is going out as a first
draft. Please use your common sense to “interpret” my grammar,
spelling, and logic errors.
Respectfully,
\\ Richard
Copyright © 2005, The Eastman Group, Inc.
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From: “The Beat ~ a business travel newswire” (March 3, 2004)
…
“Incentives paid to agency subscribers of the Galileo global
distribution system rose by $18 million in 2004, according to
Cendant Corp's Annual Report, published Tuesday [March 1,
2004].
From: “The Beat ~ a business travel newswire” (March 4, 2004)
…
In Response: “The Beat ... An op-ed by from Bruce Finch,
AutoDesk, San Rafael
“Graft (my term…I believe the industry calls it "incentive
money") continues to fuel ridiculous payouts ultimately paid for by
the corporations using these tools. If the airlines, GDSs and
travel management companies stopped trying to "bribe" everyone,
maybe we’d see what the real costs are, and the high fees which
airlines pay to the GDSs would drop due to internal
competition...NOT because some cash-hungry procurement or travel
manager saw a chance to make a buck. Seems pretty transparent to
me. ….
From: “The Beat ~ a business travel newswire” (March 4,
2004)
Describing in its Annual Report Worldspan's position as the
largest processor of online travel transactions in the United
States, the company also revealed the degree to which it depends on
its largest agency subscriber, Expedia…. Expedia booked 28 percent
of transactions processed by Worldspan in 2004. …. Inducements paid
by Worldspan to travel agencies rose in 23 percent in 2004; Cendant
and Sabre previously also reported multimillion-dollar increases.
"Inducements grew due to the growth in transaction volumes and the
continuing shift toward online travel agency transactions, which
tend to have higher inducement costs than traditional travel agency
transactions," according to Worldspan.
From Various Trade Stories, March 2005�Comments emanating out of
ResExpo
“I’ve never seen Sabre, Galileo, Amadeus and Worldspan “lock
arms” this much.” Jim Davidson, CEO Farelogix, Former President/CEO
Amadeus North America, “ResExpo: GDSs unite in defense against new
entrants”; Travel Weekly, March 7, 2005
“There will be a lot of pain. The question is, who will bear
that pain?” Mitch Gross, General Manager, The America’s, Galileo’s
Client Services, “ResExpo: GDSs unite in defense against new
entrants”; Travel Weekly, March 7, 2005
“The number one trend in the travel business is for companies to
attempt to be more agile.” Mike Hulley, Vice President,
Transportation Global Industry, EDS, “Big Ideas in Travel
Distribution – ResExpo 2005”; TravelMole Weekly Insider USA, March
7, 2005
“Airlines are increasingly moving to the Internet to sell
tickets not only because of lower costs but also because Internet
success in driving customers, unlike more traditional advertising
such as print or the electronic media, can be exactly measured.”
John Slater, Managing Director, Distribution Planning, Continental
Airlines, “Big Ideas in Travel Distribution – ResExpo 2005”;
TravelMole Weekly Insider USA, March 7, 2005
“The emergency of ITA and G2 is really about business models,
noting that GDSs deserve the competition for treating airlines as
suppliers and not customers.” Peter von Moltke, Senior Vice
President, North America, Amadeus, “ResExpo: GDSs unite in defense
against new entrants”; Travel Weekly, March 7, 2005
“GDS Companies are missing the point. It is about technology.”
Jeremy Wertheimer, President/CEO ITA, “ResExpo: GDSs unite in
defense against new entrants”; Travel Weekly, March 7, 2005
Eastman’s Off the Wall Comments©
March 2005
� “TMCs Ponder UAL's Carrot”; BTNOnline.Com, February 7,
2005
� “JetBlue plans dynamic packaging”; Travel Weekly, Travel
Technology Section, March 21, 2005
�
http://www.avweb.com/newswire/11_12b/leadnews/189409-1.html
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