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Thursday, July 21, 2011

Answer Series: GDS PERSPECTIVE - What do I have to do if my agency customers have multiple GDS/booking sources?

Our question today is "What do I have to do if I have multiple GDS/booking sources?" 

While this question is asked from the agency perspective, today we are looking at this issue from its impact on the GDS.

As we covered earlier in the week, agencies have had multiple booking sources for a very long time, including having multiple GDS systems.  According to an ASTA Survey on GDS use in 2010, 13% of agencies have more than one GDS.

From the earliest days of automation, agencies would book on their GDS system and also book by phone.  And with the advent of the Internet in the mid 90s, agencies would occasionally find a low fare on an airline or OTA website and book it there.

This created the need for something in the GDS to allow the agency to consolidate itineraries and invoicing.  This is called the Passive Segment.  That segment is simply a "memo" entry in the record, so it doesn't communicate with the airline to actually secure a seat, but it does carry with it a fee from the GDS to the airline (and in some cases, agencies pay a fee for excess passives).

Some third party tools even integrated the ability to auto-generate a passive segment for bookings made on their platforms.

Now with the threat of one or more major airlines pulling out of one or more GDSs, we need to look at the GDS perspective on how they will handle the situation:

GDS PERSPECTIVE
If the airlines elect to pull out of your system (either by non-renewal of their Participation Agreement or by restricting the content that they provide to you under that Agreement), and your agency customers need to add additional booking sources, you will need:

  • Clear passive segment policies and procedures for both the airlines involved and for the agencies that need/elect to document a booked segment on that carrier for creating itineraries and invoices/billing for their clients.
  • New revenue sources to replace the lost revenues from bookings on that carrier, particularly if they are a major portion of your bookings.
  • Recognition of the financial hardship that existing productivity pricing agreements may put on some agencies
  • Clear customer service policies for the challenges that may emerge from interline situations noted under AIRLINE PERSPECTIVE
On an ongoing basis, you will need continued and diligent communication with your other airline customers about the value provide by the GDS and the agency community, in the form of higher average yields and variable cost distribution.

Tomorrow, we will look at the AGENT and CONSUMER perspectives.

Stay tuned.
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