China Opens Up (a Bit) to Foreign GDS Competition

The Civil Aviation Administration of China will allow foreign GDSs to operate in China for the first time beginning Oct. 1.

New rules relaxing restrictions on outside GDS operators come 11 years after China joined the World Trade Organization, which had made the loosening of China’s rules a condition of entry into the WTO.

Impact on foreign carriers
The move means that foreign airlines will have the option of using GDSs based in other countries to distribute their air fares to travel agents in China.

Airlines based in the People’s Republic of China will not have that option, however. They will continue to distribute to Chinese agencies only through the TravelSky system. Chinese carriers distribute to agencies in other countries via foreign GDSs.

TravelSky Technology Ltd. not only functions as the only GDS operator in the market but also as the near-monopoly provider of airline passenger services systems.

Amadeus in China
Amadeus said it will introduce “an innovative suite of easy-to-use solutions that will help travel agencies improve operational efficiency, offer greater customer convenience and help to reduce overall IT spending for travel agencies in China.”

Initial details regarding the new access were sketchy, but the loosened restrictions are unlikely to result in a rush of activity, given the Chinese government’s penchant for bureaucracy and confusing rules.

Bank settlement plan issues
In a complaint to the European Union filed last year, Amadeus noted that “IATA, and more specifically its office in China, does not certify foreign CRS suppliers to join the local BSP, since, according to IATA, the pre-condition is that they hold a license from CAAC. Hence TravelSky is the only CRS permitted to use the BSP.”

It is not yet clear how the new regulations will affect the IATA relationship.

TravelSky’s GDS pacts
TravelSky has formed a number of relationships with western GDS companies over the years.

In 2002, Amadeus agreed to provide TravelSky with access to non-air content, including hotels, car rental companies rail and cruise operators.

This year, TravelSky signed reciprocal hotel content agreements with Sabre and its Asian subsidiary, Abacus International.

By far, its deepest relationship is with Travelport. The companies signed a joint product development agreement focused on advanced passenger service systems technology for airlines worldwide. They also have a hotel content agreement.