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Mar 23 - 29, 2007 / No.1512
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Next-generation GDS to roll out |
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Airlines turning to GDSs and agents as their online sales begin to plateau, says Galileo
By Raini Hamdi
SINGAPORE – Galileo says it is developing the prototype for the next-generation GDS, which will allow airlines to merchandise their product and manage their yield, something airline websites are able to do and current GDSs are not.
Although GDSs have become less cryptic over the years, the next-generation desktop will be far sexier and will enable
| | Wilson: a new phase for GDS. |
airlines to sell in the way they want to sell and achieve maximum revenue through the unbundling of the product, according to Galileo’s new CEO and president, Mr Gordon Wilson.
He is working with a couple of airlines on the prototype and hopes to have “something to show by the end of this year”.
“Airlines are changing how they sell, but the distribution market has not kept pace with the airlines. The challenge for GDSs therefore is how to enable airlines to sell in the way they wish to sell to agents,” he said.
Industry “observers” should quit asking what role intermediaries had, Mr Wilson said. The fact: GDSs were entering an exciting new phase and their activity had become dynamic in the last six months, he claimed. It was also untrue airlines were only interested in lowering GDS fees, he said. “These are exciting times and airlines, agents and GDSs are moving on with large and concurrent dialogues.
“There are several reasons for this. The airline dotcom sites are beginning to plateau, their sales growth flatten. Airlines that have embraced online sales realise that third-party distribution – GDSs, agents – is not going to go away, still has a value and that it is better to work with it as people want choice. Not everyone wants to go to the airline direct; people want multiple providers and content – cars, hotels, etc.
“Look at the LCCs (low-cost carriers) which are now embracing the GDS. When they started out, they said sales via their websites only, but now AirAsia, Oasis, Valuair, Jetstar, Virgin Blue have all embraced the GDS. There are 53 LCCs bookable in Galileo. They need the distribution reach.
“LCCs have also woken the legacies, causing a big change in airlines’ mentality on selling. The more far-sighted full-service airlines have unbundled the product and are pushing yield by upselling all the time – upgrade from one fare to the other, one class to the other, pre-order your meal, pay extra for more baggage space. If they can prompt that at the point-of-sales – and agents still account for majority of airline sales – that’s where airlines want to go.
“For GDSs, the challenge is how to get all of the content required for agents to sell. If the GDS cannot provide the way airlines want to sell, it will be bad for agents. Currently the airlines see any GDS as a commodity, all the same format. We want to show that within that parameter, they will be able to merchandise and market their products.
“That is the next-generation system and we would do better than meta-search engines as there will be only one application, one record of everything. I believe that is a huge value add for agents.”
Meta-search engines transmit searches simultaneously to several individual search engines and get back results within a few seconds. They do not own a database of web pages, but send the search terms to the databases maintained by search engine companies.
“Of course I worry about meta-search, but I always believe that you have to change your business before somebody changes it for you. And GDSs are changing for the better,” Mr Wilson said.
He said new technology kept GDSs relevant. In Australia, for instance, Galileo will be launching in the next few weeks technology that will automate the process for debit memos. There had been revenue seepage from uncollected fees charged by airlines when passengers made changes to flights. The new technology would save agents and airlines the agony and “millions of dollars”.
“How this came about was because of our good relationship with Qantas Airways, which brought up the issue to us. We are forever building new things. That is why we are of huge value,” he said.
Meanwhile, Mr Wilson forecasts 15 per cent growth for Asia-Pacific this year, a rate it enjoyed last year following gains in Hong Kong, Indonesia, Malaysia, Singapore and Thailand.
Westminster Hong Kong was an agent that moved to Galileo end-2005. Sources said a new client that had crossed over was Hogg Robinson in Singapore, but this could not be confirmed at press time.
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