Travel Distribution Fragmentation Robert Langsfeld The Corporate Solutions Group® Incline Village, Nevada 775 -832 -5151 rlangsfeld@thecsg. com www. thecsg. com MTBA/OVBTA October 13, 2006
Reality Strikes !! • • • The bills are starting to arrive 80 C /transaction costs ? ? Participation $2. 00/ticket cost by agency HRG is negotiating individually, but the fee continues to be $1. 98, $1. 99, etc. • CTD’s hit hard – Getting more in to the details – “Been living off of the benefits” • Sharing the impact MTBA/OVBTA October 13, 2006
What Are The Issues? • • • New GDS Contracts Pricing Participation Variations Opting In/Out Distribution (aka Content) Fragmentation MTBA/OVBTA October 13, 2006
Distribution Revisited Low Cost Carriers GDS Deregulation TMC Consolidation “Super” PNR Central Collection Location Travel Procurement Department Direct Connects MTBA/OVBTA October 13, 2006 Southwest Alternate GDS Online Agencies
New TM Process Options (Air) Shopping (New Pricing Engines) Selling Direct pipeline to airlines ________________ United Airlines ________ US Majors (Direc. Net) Traditional GDS Direc. Net Sky. Connect (LCC’s) Non Participants (stand-alone websites or limited res. system participation) “Super” PNR Central Collection Location Agent Desktop Traveler Self Booking Tool MTBA/OVBTA October 13, 2006 Financial Management Reporting
The Move to Lower Cost Distribution MTBA/OVBTA October 13, 2006
Economic Comparison GDS charge Inducement GDS margin MTBA/OVBTA October 13, 2006 GDS costs
New GDS Contracts • Most of the GDS’s have come to agreement with the Airlines – Participating Airlines – American, Continental, Delta, Northwest, United and US Airways • $3. 50 per segment • “opt-in” agreements • Access to content MTBA/OVBTA October 13, 2006
Pricing “Access through participation in the Super Access program incurs an 80 cents per-segment reduction in incentive income for users. The program and costs are comparable to the "full content" programs introduced by Galileo and Sabre. ” • • $3. 50, then what do you get in return? Are there any other fees? Are there any offsetting revenues? What about “simple” tickets? What about complex tickets? What about international trips? If you don’t pay, what do you get? What do you pay if the airline is not participating? MTBA/OVBTA October 13, 2006
Participation Variations • The major, primary airlines are participating – What do you get? • Is the information the same for each of the Airlines, GDS’s? • What is promotional, private content? • What about the non-participating airlines? • “TMC proprietary technologies as a means to shield clients from GDS program fees” MTBA/OVBTA October 13, 2006
Opting In/Out • If you opt -in you get full access – But do you? – Promotional, Private, Special Fares? – What else? • If you opt-out, what do you know you are getting vs. not? • Again, non-participating • Plus, these are in reference to the agreements between some of the airlines and the TMC’s – How about you? MTBA/OVBTA October 13, 2006
Distribution (aka Content) • To get Legacy Airlines schedules, you new to”play” – But is your TMC playing? • “Warner said such CWT-provided technologies as a self-booking tool are "component parts of a holistic, integrated solution. ” • If the airline is non-participating, then what do you do? • Even of more concern, who is watching? – Auditing MTBA/OVBTA October 13, 2006
Fragmentation • Now we get in to a real issue • If information comes from varied sources, then we are subject to “interpretations” • We are just staring out on our journey • The TMC’s are offering to “not charge” if you use “this or that” – Now, if you are a current client-no – If you are a new client-yes • Ex. - Merchant Model MTBA/OVBTA October 13, 2006
The Future • “Things are a-changing” • Essentially a cost increase from the airlines to the TMC’s – Make well formulas • • • What is the next step? Steps? ? Increased fragmentation Bias Hotels Who is watching who, and why? Ask to see the whole, not just the part they are showing you MTBA/OVBTA October 13, 2006
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