Distribution EVOLUTION
With American Airlines threatening to pioneer a path away from the global distribution systems, where does this leave the stalwart distributors of travel content? Mike Swindell reports
FOR most people, the concept of a walled garden conjures up images of a pleasant sunny space full of fruit, ripe for the picking. In Sabre's lexicon, applied to American Airlines' vision of direct connect distribution to buyers in the travel industry, it is nothing short of a honey trap. The ‘walled garden’ tag was applied during the escalating row in the US between American Airlines and the Travelport and Sabre GDS over the issue of distribution. Cynics would say that the bare-knuckle battle
is part of AA's bid to win more favourable terms as its GDS contract comes up for renewal. Certainly, airlines have long been vocal about
the perceived high cost they have to pay to use the GDS distribution channel that has been the default option for decades, but the reasons for this challenge to the status quo run far deeper than just the fees charged by the GDS. Previously full-service airlines are now hungrily eyeing the low-cost carrier model
where ancillary services are bought as extras in addition to the base fare. The process of unbundling is much more advanced in the US than it is in the UK and Europe, and the American Airlines battle with Sabre and Travelport in the US courts might also be seen as a war of ancillaries indepen- dence, with direct connect representing the airline's bid to retain control over what is generally agreed will be – and already is for some – a hugely profitable revenue stream. American Airlines argues that an XML link
into its core systems is the only way that TMCs and corporate buyers can get the best from ancillaries and special offers. On its website dedicated to explaining direct connect, AA says GDS’s decades old technology is now challenged by the internet and related functions: “These new technologies are not only less expensive, but they are also more functionally rich. Direct connect technologies
will allow travel agencies to interact with our internal customer management systems in ways that current models simply do not support,“ the airline explains. This may well be the case. But the question remains, how does American Airlines, and the other 400 or so bookable airlines, plan to implement direct connections with travel management companies and, ultimately, the corporate traveller? Shelly Terry, senior director, airline merchandising for Sabre Travel Network, accuses American Airlines of some fancy footwork on this score. She says, “A year ago, American Airlines
was suggesting that agencies or corporate customers would jump at the opportunity to connect directly to them and would be willing to bear the expense of incorporating that connection into their business operations. Overwhelmingly, the agencies and
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