An Abacus backed 100 per cent by Sabre is set to fire up the competition among GDSs in the region, but how sabre-rattling it will be remains to be seen

Travel agencies see Sabre Corporation’s acquisition of Abacus International as a shot-in-the-arm for the GDS, which they say has been losing marketshare overall in the region to Amadeus and Travelport. The general consensus among travel industry CEOs interviewed across Asia is there could be three strong players eventually and, that, can only benefit agencies.

Agencies choose their GDS based on four criteria: first, back-end incentives which the GDS gives them, such as a sign-on bonus and year-end cash for having met targets; second, ease of use; third, content and availability of airline seats; and fourth, technical support.

Under the current ownership structure in which Sabre has a 35 per cent stake in Abacus and a consortium of 11 Asian airlines holds the rest, Amadeus and Travelport evidently have been able to muscle up on these criteria even though Abacus is the ‘Asian’ GDS and the first in many markets. It is no secret that Abacus loses out in particular with incentives, as it has to give its airline owners preferential rates, whereas Amadeus and Travelport charge airlines higher fees and are thus able to give higher incentives to agencies.

As well, airline owners are said to be unwilling to re-invest earnings to strengthen Abacus.

How much marketshare Abacus has varies from market to market. In the Philippines, agencies interviewed perceived Amadeus as the most user-friendly, and Galileo as the most generous and aggressive in giving incentives. Abacus is often used only for domestic ticketing because Philippine Airlines (PAL), one of its owners, gives it a complete inventory of seats in Abacus but only regular fares in Amadeus and Galileo, according to the trade. This means PAL tickets are cheaper when book via Abacus. Which is why Adkins Travel, which switched to Amadeus this year – “for a change”, said owner and general manager Francisco Lim – still uses Abacus for domestic airline bookings. Some agencies, like Wow Philippines Travel Agency, which has been approached by Abacus and Amadeus, simply choose to book direct with local airlines like PAL and Cebu Pacific since as inbound operators, they mostly do domestic ticketing.

In Hong Kong, Jason Shum, executive director of Nan Hwa (Express) Travel Service, believed Abacus share had dropped from 80 per cent to 60 per cent and cited lower incentives than rivals  as the reason. Shum added: “Abacus’ practice to have its GM seconded from Cathay Pacific means a change of personnel every few years so it’s not as stable as other GDS. My concern regarding the acquisition is, who’s going to be the successor (GM). Moreover, it really depends on Sabre if they are willing to invest and fight back to offer similar perks like its rivals.”

Abacus is widely believed to hold a marketshare of 50 to 60 per cent of the Asian market today, which means it remains the dominant player with scores of agencies that are loyal to it and that believe Sabre’s acquisition, expected to close in 3Q15, will strengthen the GDS.

One such fan is Dynasty Travel Singapore, which uses Abacus for all transactions on air tickets. “We believe that Abacus/Sabre will continue with the longterm business relationships it has with its former partners and try to gain new marketshare with travel agencies throughout the region,” said Alicia Seah, director of marketing & communications.

“At the start, we believe the current vision of Sabre is to accelerate global growth by acquiring Abacus which is the leading GDS in Asia Pacific and will not ‘rock the boat’ with too many changes, instead build confidence and trust among the current Abacus travel agencies.”

Sabre has said it is entering into new “longterm” agreements with the 11 airlines although it would not comment on how these agreements might be different from before, or whether there were opportunities to increase fees charged to airlines and incentives to agencies, etc, either during an investor call conference or to questions from TTG Asia. Airlines including Singapore Airlines and Cathay responded to TTG Asia’s queries with a standard statement: “We strongly believe that Sabre, with its deep industry expertise, leading technology and customer focus, is ideally placed to invest the necessary resources and innovation to ensure Abacus’ future success. As a global airline based in Asia, we recognise the continued importance of Abacus as a distribution partner and we remain highly supportive of the organisation and the travel agencies they serve.  To that end we have entered into a long term distribution agreement, which we believe will substantially benefit Abacus subscribers as well as ourselves and Sabre.”

Abacus competitors are understood to be ready to pounce on any opportunity the acquisition can bring, for instance, the chance Abacus may lose the special status accorded to it by its airline owners, or the chance that the takeover by Sabre may cause staff layovers, disruptions to operations and market uncertainty. Travelport and Amadeus declined to comment what the opportunities and threats might be. Mark Meehan, Travelport managing director, APAC, said: “We don’t comment or speculate on announcements made by our competitors; we remain fully focused on the delivery of our Travel Commerce Platform and the distribution of unrivalled air and hotel content to our global travel agency subscribers.  We already have global distribution agreements with all of the 11 Asian carriers involved, many of which also rely on us for our industry-leading merchandising solutions which are unique in the marketplace.

“We are also continuing to redefine corporate travel and travel payments through our unmatched adjacency businesses.”

Sabre president and CEO Tom Klein underscored the “deep local market expertise” of Abacus and the “global capabilities of Sabre” as “a powerful combination”.

“Together with Abacus, Sabre will provide customers and suppliers with improved and faster access to Sabre’s industry-leading innovations, including low-cost carrier content, ancillary capabilities, data analytics, and the latest in mobile solutions and personalisation services. Additionally, airlines and travel agencies will have more options for new and differentiated products and services created specifically for customers in the Asia-Pacific market,” he said.

That’s sweet music to the ears of Abacus fans. When asked what outcome they hope to see from the acquisition, agencies across the region virtually voiced what Klein had promised.

“With Sabre’s extensive network and interactive platforms, we look forward to data-rich solutions that give us unique insights into operations as well as customer shopping and booking trends,” said Seah.

Misa Travel Singapore’s CEO Wee Hee Ling hopes for a faster transfer of the latest technology and solutions, “so that we can be more efficient and productive in serving our clients”. Equally important for her is for there to be continuity, the same level of helpdesk support and no drastic change in processes.

Over in Malaysia, Syed Mohd Razif Al Yahya, group managing director/group CEO, Sutra Group of Companies based in Kuala Lumpur, said: “In the past, I have used Abacus, Galileo and Amadeus, and last year I signed a five-year contact to use Abacus. Octraves Technology, a subsidiary of Sutra Travel Group of Companies, is developing a web service system which is B2B, B2C and B2Enterprise which will partly use Abacus technology.

“Personally, there is not much difference between the different global distribution systems. The main differentiator is the after-sales service. I am happy with Abacus because the team provides quick response when there are technical issues.

“Sabre, I believe, has the latest technology and this acquisition will further result in improvements in technology and new developments which, we as subscribers, will benefit from.”

Abdul Rahman Mohamed, deputy general manager, channel management, Mayflower Acme Tours, agreed: “The acquisition simply means that Sabre is very serious about strengthening their presence in Asia-Pacific through Abacus. Abacus has a good system, in terms of Internet booking protocol, front office and back office technologies, which I personally think is more superior compared with its major competitors. With this new acquisition, Sabre is likely to inject more capital which will strengthen Abacus further and increase its marketshare in the  region.

Adam Kamal, CEO, Rakyat Travel, said: “We are migrating to Abacus from a different GDS because Abacus provides more airline options and the system complies  with the requirements of local corporate companies. For example, the back-end office complies with the reporting format of corporate companies, which makes our work to generate reports for our clients less tedious.

“The Abacus system is already a good one and with the new acquisition I believe there will be more good things in store in the future as Sabre will have full control in decision-making.”

Other agencies are now finding Abacus interesting again. Tommy Tam, managing director,  Arrow Travel, Hong Kong, which switched to Galileo a few years ago, said: “We renew our GDS contract every three to five years, so we may reconsider (Sabre) by then.

“With this new acquisition, the industry may end up with three strong players – Sabre, Galileo and Amadeus.”

This article was first published in TTG Asia, June 19, 2015 issue, on page 4. To read more, please view our digital edition or click here to subscribe.

Additional reporting by S Puvaneswary, Rosa Ocampo, Prudence Lui, Sim Kok Chwee