A day before British Airways and Iberia instituted a surcharge for GDS-based bookings, Sabre Corp’s. CEO acknowledged that the industry’s move to New Distribution Capability (NDC) connections between travel agents and airlines needs to be mindful of the investment that will be placed on travel agents.
Sabre CEO Sean Menke also acknowledged that the industry needs to protect the end-to-end reservations process as its full deployment could impact agent back-office systems. “The thing that continues to come back from the agency [community], I think you're hearing them be a lot more vocal probably than they have before with what is playing in the marketplace,” he said.
“The question that agencies always ask, be it if it's going through a direct channel, is what forms of investment are they going to have to make to make sure that the new booking sort of flow aligns with what they have in the mid- and back-office,” Menke said.
“And what you often hear is that the dollars that they will be getting aren't enough to pay for the changes that they're going to have to make in development.”
Agents expressed concerns
Agency owners and others at the American Society of Travel Agents global conference this past August, raised their concerns during a luncheon discussion at the event. Attendees told Travel Market Report that agents in the closed session expressed their displeasure with the various parallel paths different airlines are taking in migrating some of their distribution through NDC, which impacts travel agents and the way they operate.
Menke asked the industry “to listen to the entire story… what additive investment is going to be required on the agencies, be it a brick-and-mortar or an OTA, if the distribution model changes.”
He affirmed travel agents’ opinions on the call this week. “I think there has been, actually, a void in the travel ecosystem on how we drive this forward, and that's something that I'm very adamant that we [Sabre] are going to do,” he said.
Starting Nov. 1, British Airways and Iberia began charging travel agents approximately $10 “per fare component” for traditional GDS bookings. Meanwhile, Lufthansa has had a surcharge in place for years, and American Airlines currently is offering to pay travel agents about $2 per component when using NDC.
In its simplest form, NDC is a “protocol” for airlines, GDS and GDS-customers allowing them to communicate with each other. NDC allows for the dynamic web experiences consumers find at a host of user-friendly websites, including the airlines' direct channels. Traditional GDS technology is more labor-intensive and does not allow for the kind of agile marketing and merchandising a consumer might find, say, at Amazon.com.
Over the last 15 years, the airline industry has invested heavily in offering direct booking channels for consumers, and in some ways their technology has leap-frogged ahead of the GDS, making airline bookings for travel agents more cumbersome and confusing, and decreasing agent interest in serving their clients’ airline reservations needs.
Half of agents say they no longer use traditional GDS
On a recent travel agent Facebook thread, an equal number of agents said they no longer use traditional GDS, though many said it is still their preferred air bookings method.
Menke noted how travel agencies of all kinds have spent “millions and millions of dollars aligning their systems to the GDS and the GDS capabilities,” so they are entrenched with traditional, “native” GDS technologies.
Since the GDS “touch every piece” of the end-to-end booking process, Menke said “we sit in a really good position to help this transition and help those carriers do what they need to do, and make sure that we're supporting the agencies at the same time.”
In other comments, Menke noted how the airlines’ move to NDC is designed to drive more revenue. “The one thing that I don't think is coming across really clearly is that each of these carriers are looking at it a little bit differently. And in doing that, their primary focus is on how are they driving more revenue. And as they look at distribution, they are focused on what are the forms of distribution that are going to drive the higher revenue components, and that's an important sort of distinction as you break this down.”