LCCs after experimenting are returning to GDS

EFT Special: Insight from Worldspan on Latin American market The emergence and growth of low cost carriers in Latin America has made air travel more affordable in the region, allowing an increasing number of consumers to add air to their travel pl

Published: 11 Jun 2007

EFT Special: Insight from Worldspan on Latin American market

The emergence and growth of low cost carriers in Latin America has made air travel more affordable in the region, allowing an increasing number of consumers to add air to their travel pl

The likes of Click Mexicana, InterJet and Volaris have been in the news in Mexico. In Brazil, low-cost airlines such as GOL Linhas Aéreas Inteligentes, BRA and WebJet now account for more than 40 percent of the domestic market, according to a recent media report.

From travel distribution perspective, Michael Parks, Senior Vice President-Global Operations, Customer Marketing, and Latin America Sales and Service, Worldspan says, “LCCs in the region are starting to realise the value of the broad distribution achieved through participation in the GDS.”

On how LCCs are expanding and their operations are impacting travel, Parks cited an example and said, “In Brazil, no more than eight million people (Brazil population is 188 million people), or around 4.5 percent of the population, have ever flown. In Brazil, some airlines are introducing new credit and payment facilities, and other new initiatives to reach out to first time flyers.”

Parks shared more information on how GDS’ are shaping up in Latin America, Worldspan’s operations and much more in an interview with EyeforTravel.com’s Ritesh Gupta. Excerpts:

How does Worldspan ensure that it offers targeted technology and business solutions to clients in Latin America? How have you integrated content into the points of sale and provided front-, mid- and back office solutions to clients?

Worldspan’s industry leading Go! platform is the industry’s first fully IP enabled desktop product for travel agencies. This technology has enabled Worldspan to deliver and maintain higher quality reservations tools to our customers at a dramatically reduced cost. This cost advantage has allowed Worldspan the flexibility and the marketing edge to attract and maintain the content solutions that travel retailers in the region require. Worldspan’s XML Pro messaging product and expertise in e-commerce, are helping travel wholesalers minimise the impact of content fragmentation by allowing them to develop online applications that can seamlessly integrate content. Especially in Brazil, the main travel consolidators such as Rextur, Esferatur, Sua Viagem, Interline and others are taking advantage of our solutions to succeed in this business environment.

Considering the fact that the GDS model is under pressure, especially for low-yield, cost-efficient and domestic distribution, how do you assess the situation in this part of the world?

GDS remains the most effective and efficient distribution channel in the industry, even for LCCs. Most of the low cost carriers who have experimented with distributing without GDSs have since returned to GDS.

Brazil remains an anomaly, but we believe that with time, TAM and Gol will reach the conclusion that other carriers around the world have reached – that there is great value is in taking advantage of the power of GDS for the domestic market.

Traditional airlines have solid relationships with the GDS distribution channels in Latin America. With the increased competition from LCCs, they are looking at ways to reduce distribution costs to better compete. How is your relationship with airlines evolving?

Wolrdspan has a long history of being the most innovative and flexible GDS in the business. We tailor our offerings to meet the individual needs of each supplier. As a result, we have long-term agreements in place with the majority of the airlines in the region.

We believe that airlines will partner with companies that complement their needs. To that end, we continue to develop innovative solutions that will help airlines better serve their customers. For example, Worldspan developed Rapid Re-price technology which is being widely chosen by airlines and increasingly by agencies as a highly cost effective and accurate tool for re-pricing air tickets. We have even made this available across GDS platforms.

How do you expect GDS model to shape up? What impact will this have on travel providers, agencies and the end user?

At Worldspan we have close relationships with our suppliers, and are open to working with them in ways which benefit all parties involved. We understand the issues surrounding the cost of distribution but we also know travel agents are, and will continue to be, a critical part of the travel booking process. With this in mind, we are proud of our track record to continue to work and innovate with airlines to enable us to carry the most comprehensive airline content possible. This is why Worldspan managed to successfully negotiate multi-year-full content agreements with six major US airlines in 2006 - and continue to have the content of all major airlines across the globe.

With the expiration of carrier GDS contracts, most North American carriers took the opportunity to introduce wholesale changes in the way they manage their distribution. How do you see these developments especially from this region’s perspective?

There is no doubt that distribution costs are shifting, and that the freedom the Internet brings to the travel booking process has been instrumental in this. Airlines have been seeking ways to manage their distribution cost, and the US certainly led the way in this. Worldspan is delighted to have successfully renewed deals with all these airlines and takes this as a huge vote of confidence in our value to them.
What has happened in the US is probably just the start and is definitely for the long term good of the industry with all players benefiting.

What targets have you set this year or what’s on your agenda?

At Worldspan we continually look at both sides of the equation - ensuring that our suppliers and agents benefit from the technologies we provide. From our end we are continually developing technologies which keep our suppliers and customers ahead of the game, looking to help them save time and therefore money, and offer the best range of options possible. Adding value is critical to us and our customers, providing extensive content with the most travel options and rapid response time to their requests (content, speed, reliability and innovation) - where possible ensuring these are unmatched in the industry.

GDSs who keep the main picture in mind - that is the suppliers who provide them content and customers who book travel – and develop products will be the GDS which endures.

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