Indian travel agents and associations have taken offence to the recent decision of national carrier Air India to make Travelport its exclusive GDS provider for domestic flight content.
Starting December 4, 2018, Air India has disconnected its domestic inventory from Amadeus and will go on to pull its domestic inventory from other GDSs in 2019 – effectively continuing its inventory distribution with only Travelport.
A large section of Indian travel consultants polled by TTG Asia opined that the move will alienate the airline from the trade, as Amadeus is the GDS provider with the largest agency market share in the country at 40 per cent.
“Till recently it was easy for a medium-sized agency to offer a gamut of airline options, including Air India, to a client who could then make an informed decision. With this move, agencies like ours with no access to Air India’s choice of GDS will not be able to offer this airline as an option,” said Farah Raina, founder & CEO, Pink Elephant Sport & Pink Elephant Journeys.
“In the short run, due to this move and the resulting confusion, Air India will surely lose a lot of business to its competitors, which are more supportive of small- and medium-sized travel agents,” she added.
In a joint communication to Air India, two major Indian travel agents associations, Travel Agents Federation of India (TAFI) and Travel Agents Association of India (TAAI), expressed strong reservations about the airline’s decision.
“We were informed that Air India had to take this initiative to save on GDS costs, which are high. We explained that GDS cost is not as important as a seat sale. To lose out on the sale of a seat implies huge losses compared to the savings on GDS distribution,” read the communication.
Industry sources further speculate the move could have repercussions on Amadeus’ decision to continue its contract covering international bookings with Air India.
“If Amadeus decides to cancel its contract for international bookings, it will be a major jolt to Air India which is already under financial stress,” said a Chennai-based leading travel agent who wish not to be named.
However, it appears that Air India content is neither available domestically nor internationally.
An Amadeus spokesperson told TTG Asia: “Air India has decided to cancel its distribution agreement with Amadeus. The airline’s content is no longer available on the Amadeus system, in India or internationally. We have presented many options to Air India over recent months in an effort to give it access to the best technology with the broadest network of travel agencies globally and remain open to discussions.”
At press time, Air India was unavailable for comments.
Update: Amadeus has gotten in touch with TTG Asia to clarify that Air India content is not available domestically or internationally.
With lower fuel prices and strong economic growth, the global airline industry net profit is expected to hit US$35.5 billion in 2019, slightly ahead of the US$32.3 billion expected net profit in 2018 which saw profitability squeezed by rising costs, according to IATA forecasts.
It is expected that 2019 will be the 10th year of profit and the fifth consecutive year for airlines to deliver a return on capital to investors.
“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile,” said Alexandre de Juniac, IATA’s director general and CEO.
The 2019 industry outlook is based on an anticipated average oil price of US$65 per barrel, lower than the US$73 recorded in 2018, following the increase in US oil output and rising oil inventories.
Fuel is expected to account for 24.2% of the average airline’s operating costs, an increase from 23.5% forecast for 2018.
Meanwhile, passenger traffic (RPKs) is expected to grow 6% in 2019, outpacing the forecast capacity (ASKs) increase of 5.8%, and remains above the 20-year trend growth rate. This in turn will increase load factors and support a 1.4% increase in yields. Passenger revenues, excluding ancillaries, are expected to reach US$606 billion (up from US$564 billion in 2018).
Asia-Pacific carriers are expected to report a US$10.4 billion net profit in 2019, up from US$9.6 billion in 2018, with net profit per passenger projected to be US$6.15 (3.8% net margin). Lower fuel costs, low levels of fuel hedging and strong regional economic growth are supporting profitability in 2019 in this region, according to IATA.