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Wednesday, August 24, 2011

Clarification in terminology - Direct Connect or Supplier Direct

Thanks to Jim Davidson for his comments on The Beat on my post on Channel Shift (see below for his comments in italics). 

Jim is right.  There are two things at issue here. 

DIRECT CONNECT - Farelogix provides a technology solution to suppliers which they refer to as the "Direct Connect Distribution Model" that allows them to become the technology hub for that supplier and for anyone that wants a direct connection to that supplier's inventory/fares.  The actual connection may be through a GDS or an OTA (such as Expedia or Priceline who are Farelogix' customers today) or someone like Concur or Agentware on the corporate travel front.   The use of Direct Connect may sound a bit like a misnomer if there are several hops from the corporate traveler to the TMC to the GDS to Farelogix to the airlines, which is why we probably need a new term.  How about Connection Hub Jim?? 

DIRECT CHANNEL - As we then look separately at Supplier Direct (or as Jim says, the Direct Channel), we are looking at a supplier's own web site (or their call center).   It is that sale that tends to look just like the OTA when we look at the average fare or the average daily room rate for hotels.  That is what I was referring to in my original blog.

Again Jim, thanks for shedding light on this one.  I think we have allowed several issues, such as merchandising and transparency, to be mixed in the Direct Connect debate, which is unfortunate.  It is NOT one bucket of things.  The GDSs are offering to show some of their merchandising solutions to help shed light on the merchandising argument, so stay tuned for that one!


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Thanks Chicke for this good information. But I did want to point out that in this context, Direct Connect and the Direct Channel are not the same thing. 

In my view, Direct Channel refers to the airline website/call center as opposed to the Indirect Channel which refers to the travel agency channel.


Direct Connect -- as in AA's Direct Connect -- is by design for the travel agency channel – and can be implemented as either a GDS by-pass directly to an agency such as Priceline...or as a GDS pass-thru like what AC is doing with Travelport. Regardless of implementation, the focus is on the travel agency channel.

With so much misinformation out there, I wanted to clarify since there are a number of folks out there that think Direct Connect is all about shifting airline business from agencies to their website and that is not the case…


See you in Denver.

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