"Traditional "brick and mortar" agencies still provide the highest yield to suppliers"
Published: 19 Sep 2008
Travel Distribution Summit Special
A global distribution system like Amadeus continues to diversify its offerings. From being a traditional GDS, Amadeus has evolved steadily to become a technology services and solutions provider.
As airlines tie-up with IT service providers for improvement in turnaround-times, reduction of carbon footprint and exploiting the next wave of mobile-based technologies, GDSs, too, are now contributing in many other areas in addition to distribution.
Assessing the situation, Owen Wild, director of marketing, Amadeus North America, says, "We have been working closely with our customers and the travel industry to develop new technologies that help them tackle their business challenges. When it comes to the airlines, we are not only working with them to enable their distribution, but we are now also involved in serving their business and operational IT needs from booking to baggage."
Wild, who is scheduled to speak during EyeforTravel's Travel Distribution Executive Conference 2008, to be held in Las Vegas on 1-2 October 2008, referred to the Amadeus Altéa solutions suite as an example. The suite helps airlines to maximise revenue, increase operational efficiencies and excellence, provide faster reaction to the changing marketplace needs and improve customer loyalty.
Wild shared that more innovation is on the way with the phased rollout next year of the new Amadeus Airline Retailing Platform. This new platform will bring airlines greater efficiency and enable them to leverage functionality to clearly differentiate their brand, including the ability to merchandise and promote inventory in real-time to increase sales, optimise yield, improve time to market and reduce costs.
"Moving forward, we believe a critical component of being able to serve the changing needs of the travel industry will be our open, collaborative approach to technology. Amadeus technology is open and can work with any type of system, like a customer's own technology, mobile and third party technologies, and other distribution systems. By enabling collaboration between data, content, channels, systems processes, people and communities, we can address our customers' needs not only across the supply chain, but also across their distribution channels," said Wild.
According to the industry experts, in terms of how the IT budget is being managed, it is estimated that 62 percent is for ongoing operations and maintenance, and the rest for new initiatives.
On the current spending pattern of airlines towards IT, Wild said, "Faced with today's challenges and competitive marketplace, you might question whether airlines can and should continue to invest in their IT, but the answer is that they can't afford not to."
He pointed out that many airlines are bogged down by the decades-old legacy systems on which they currently operate.
"And with these rigid legacy systems also comes the added expense and resources needed to maintain them. While operations and maintenance costs are obviously critical elements to keep business afloat, I think airlines realise the importance of "future-proof" technology, and are thinking long-term about their IT investments," he said.
"Airlines have seen the growing challenge of effectively managing their IT budgets as a significant expense – and it's an expense they no longer want to take on with in-house development. Several suppliers working with Amadeus including United Airlines, British Airways and the Star Alliance are already headed in that direction. By utilising our open, state-of-the-art technologies and common platform model, they are able to cost effectively expand their reach to customers, thus providing new revenue opportunities based on technologies that meet their current needs, but which are flexible enough to address the ever-changing needs of consumers," said Wild.
It is said that not every airline can operate in a direct to market model. But still it is felt that legacy carriers have shackled themselves to the more traditional distribution channels and even as hard as they try to extradite themselves to bring their distribution costs down they cannot do without the 'brick and mortar' travel agencies.
Commenting on the same, Wild said, "While the low-cost carriers may have paved the way for airline direct distribution, the legacy carriers have also realised the value of adding the direct-to-consumer channel to the distribution mix. By now, most of the legacy carriers have shifted nearly half of their volumes to other, non-GDS channels. But the key word here is "mix." To maximise the ability to best serve their customers, it is important that they don't rely too heavily on a single distribution method – be that direct or indirect."
He added that it is important to remember the significant value that the travel agent provides as a travel consultant.
"Our research has shown that the traditional "brick and mortar" agencies still provide the highest yield to suppliers. Our role here is to provide the best technology to give suppliers the power to sell in multiple channels," said Wild.
Wild is scheduled to speak during the "How is evolution and innovation in the GDS space impacting the distribution landscape" session along with Pegasus, Sabre and Datalex during the forthcoming Travel Distribution Executive Conference 2008.
EyeforTravel's Travel Distribution Executive Conference 2008 is scheduled to take place in Las Vegas on 1-2 October 2008. The conference is part of Travel Distribution Summit, North America.
For more information visit: www.eyefortravel.com/tdsusa/conference
Contact:
Helen Raff
VP North America
EyeforTravel
helen@eyefortravel.com
+44 (0) 207 375 7582
Comments
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angelinjones said on 23 Sep 08:
International Tourism is changing rapidly globally. A number of key challenges and opportunities are emerging for both tourism destinations and suppliers around the world. This level of development requires a rethinking of both strategic and tactical Tourism Management.
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Angelinjones
Intenet Marketing
Pitkin said on 22 Sep 08:
That is a very interesting comment. Airlines cannot afford not to further invest in technology, and yet the highest yield is from traditional brick and mortar agencies.
More than a dozen years ago, when online sales of airline tickets was coming over the horizon, I was a part-owner in a traditional travel agency in California. I launched one of the first web sites for my agency in our geographical area. I tried to collect email addresses for everybody who walked through the front door.
The agents in my shop fought the technology in every way. They refused to learn even the basics of email. The local chapter of ASTA (American Society of Travel Agents) invited me to give a talk on how to use email at the monthly luncheon. The talk was cancelled for lack of interest.
I am not really blaming the traditional traditional travel agents because nobody can see the future. On the other hand, I believe we would have a different business model today if the traditional shops had embraced the internet before the birth of Travelocity, Expedia and all the others.