IATA plans to unveil a new distribution technology standard that combines the “best of both” GDS and direct channels, enabling airlines and travel agents to sell on product, not just on price, IATA director general Tony Tyler said in a speech at the SITA Airline IT Summit in Brussels.
The new distribution technology standards, to be presented at IATA’s World Passenger Symposium in October, said Tyler, are “about creating alternatives to both GDS and direct distribution” that will move travel distribution beyond the 1970s GDS model, which he called “clunky.”
Travel agents, said Tyler, “have to recognize that technology is changing the business. They can’t expect their role to stay the same, and they can’t expect airlines to do things the same way.”
He also said that he expects the 60,000-plus agents around the world who participate in IATA’s billing and settlement plan to continue to “play a major role in distribution.”
‘Best of both channels’
IATA’s goal is to “bring the best of both channels” to new alternatives, Tyler said at a press conference following his speech. But he did not define what those alternatives might be.
“We might see some dilution of commoditization” of the airline product, he said. “Currently, airline websites are the only alternative to the standardized format of the GDS screen.”
Differentiating the product
Asked whether the standards are aimed at enabling wider distribution of ancillary products or basic air fares, Tyler said, “it’s not just the ancillaries. It’s about an attempt to enable airlines to differentiate their products.”
A business class ticket might buy an economy seat next to an empty seat on one airline – a common scenario on short-haul intra-European flights – or a seat that converts to a flat bed on another carrier, Tyler noted.
“But the only way to compete now is on price,” he said, because of the limits of distribution technology.
GDSs join in collaborative effort
Tyler said he is confident that GDSs will join the move to modernize distribution and described the standards development process as a “collaborative effort” with GDSs, airlines and other providers.
“The GDSs and system providers have an important role to play in working with us to optimize this NDC [new distribution capability],” he said.
“Progress can’t wait,” he said. “We can’t shape tomorrow with the models and technology of yesterday.”
‘Holding us back’
In his speech, Tyler acknowledged that GDSs “made the airlines move decades ahead” of other industries when they were introduced.
But the industry of today “is very different from the industry of the 1970s, when the fares displayed on green screens was really all that was needed.”
Today, Tyler said, “the GDS is holding us back. The decades-old GDS model is too clunky to adapt to fare unbundling.”