A new white paper published by Open AXIS Group, the organization that promotes the use of XML as the standard for airlines connecting to distributors, seeks to “separate fact from fiction, rhetoric from reality” in the debate over direct connections.
The paper addresses several issues of concern that have been raised by travel agencies, the group that has been caught in the middle of the contretemps between airlines and GDS companies.
Among those concerns are:
• Limited functionality. “Direct Connect functionality includes all of the capabilities of a legacy airline connection through the GDS, including shop and purchase as well as support functions (refund, exchange, split, change, void), etc. ARC/BSP reporting is supported as is Interline and Codeshare.”
• Unproven technology. Open AXIS noted that Priceline is using American Airlines’ AA Direct Connect. The online agency recently issued a statement saying it is processing 1,000 American bookings daily through the link.
• Expensive implementation. Open AXIS said that depending on which implementation method an agency chooses, “the level of agency investment can range from zero cost to thousands of dollars in costs.” (See sidebar for implementation methods.)
• Pricing transparency. Rather than “hiding fees,” the white paper said, direct connects will make them more transparent and accessible to travel agencies.
One of the major benefits of the new connections, according to the white paper, will be the ability to tailor offerings to passengers based on their status and experience with the airline. It also will be possible to “bundle” services that are commonly requested or required by corporate travelers, the paper said.
But it is not clear that airlines themselves currently have this capability.
While much of the paper was dedicated to exploding what it called myths generated by the anti-direct connect camp – GDSs and their allies – it also acknowledged that the other side has put forth its own myth: that adopting direct connections would be painless.
“Even if your agency does not have to outlay any dollars to use Direct Connect (which is entirely possible depending on your chosen implementation method), there are some adjustments to be made; learning curves to be overcome; operational reporting procedures that must be reviewed to ensure this new content source is being accounted for; etc.,” it said.
What the paper did not address are the commercial realities that may be the biggest nut to crack in any attempt to change the status quo.
The big nut: GDS agency incentives
Some travel agencies derive significant revenue from productivity incentives paid by their GDS. While both airlines and GDS companies would like to reduce those incentives, the market is still competitive enough that GDS companies feel they are necessary to maintain their agency market share.
Direct connections almost certainly would reduce that revenue, and airlines have only hinted that they might compensate agencies in some manner.
Even more critical at this juncture in mid-July is the state of commercial relationships between airlines and GDS companies.
American is suing Travelport and Sabre. US Airways is suing Sabre. The GDS companies are suing them back. American’s contract with Sabre expires at the end of August, and other agreements will be up for renewal around the same time.
Distribution 2.0, Direct Connect and Travel Selling: A Reference for Travel Agencies. Open AXIS white paper, can be downloaded on the site.