The following is a Farelogix response to “Distribution Execs Opine on Transparency, Economics” as published by The Beat on Nov. 18, 2010.
I attended the recent PhoCusWright Conference, where the underlying theme was Chaos. Certainly we don’t need more chaos in our industry, but as always, PhoCusWright put on a very good show. I did the usual networking and listening to the many pundits and sponsored speakers, but one in particular hit home with me: Jeff Clarke, CEO of Travelport, made a number of industry observations and statements during his interview presentation. Two statements in particular were strikingly significant in terms of how Travelport and other incumbent players view the world of distribution.
Mr. Clarke’s first intriguing statement was a response to the question: “What is the role of the GDS?” Keeping in mind that GDS stands for global distribution system, Mr. Clarke stated, “Our role is to negotiate on behalf of our 65,000 travel agents with 400-and-some-odd airlines.” Stunned, and attempting to quell the loud ringing in my ears, I wondered, “Did he really use the word ‘negotiate’ in defining the role of the GDS?” As it turned out, I had heard correctly, as the full quote was subsequently published in The Beat.
So … if the role of the GDS is to negotiate with airlines on behalf of travel agencies, then whose role is it to provide an efficient and value-based innovative global distribution network for airlines and other travel suppliers to distribute their product to their indirect channel? Whose job is that now? The meta search companies? Google and ITA? Farelogix? One thing I can confidently predict is that someone will take on that role now that the GDS (or at least one GDS) is no longer in that business.
I remember a mere three years ago, when speaking at The Beat Live in Cleveland, I described a growing trend that I feared would soon take over travel industry distribution–referring to the fact that Innovation was being replaced by Negotiation. Well I hate to say I told you so, but I Told You So! It is pretty clear now from Mr. Clarke’s statements that at least within the realm of GDS distribution, innovation has been and will continue to be replaced by negotiation. This is not good for the travel providers or the travel agencies.
I certainly can’t speak to how the heads of the other GDSs view their current role in the industry, but knowing that all the GDSs are vehemently opposed to any form of direct connect (well okay, unless it is Southwest or a number of other low-cost airlines), I can only imagine they would agree with Mr. Clarke’s comments. We can’t be sure about that … but I am sure someone will ask them!
Mr. Clarke’s second significant statement was his suggestion that travel agencies seeking to use airline direct connects must connect to literally hundreds of airlines individually through a number of unique technology integrations. This is absolutely untrue, yet it is proving to be a commonly used fear tactic by more than one GDS. The reality is that thanks to new organizations such as Open Axis Group, multiple airline XML connections can be achieved by one single technical integration.
As you can no doubt surmise, I see the world a bit differently from Mr. Clarke. In fact, thanks to the establishment of a standard for XML airline connectivity (Open Axis Group), I am confident we are evolving to a world where there are fewer–not more–airline connections required for effective distribution. I could even see a new Connectivity World of One: one technology industry standard connection bringing all the rich, robust, unique and differentiated content directly to the TMC, OTA, or corporate booking tool.
Sounds far fetched? Not at all. It is entirely up to whether we as an industry choose to be dominated by Innovation or Negotiation. For my part, I hope we can finally say goodbye to closed and proprietary airline connectivity with restrictive developer agreements. Let’s open things up with a single, free, non-restrictive, XML-based industry standard for all airline distribution connectivity. In the spirit of innovation, transparency and productivity … I ask you: why not?