The Next Generation Airline Distribution System

October 12, 2008

Travel distribution is for many an obscure segment of the travel industry. When audiences hear the word distribution they usually think of shipping or transport. It is quite inaccurate however to compare the role of travel distribution companies to the role of shipping companies. Unlike product distribution, information distribution is as much about packaging and labeling as it is about transportation.

When it comes to airline products, the information that the distribution systems (GDS) are packaging today, for either direct consumers or industry professionals, is reducible to three categories: schedules, availability, and pricing. None of the GDS show information at the point of sale about all of the other qualitative differentiators. The definition of onboard service is entirely left to one’s imagination or experience.

In all fairness, today’s GDS were originally designed to automate the selling of airline tickets by reservation agents and then later travel agents. All they needed was information about seat inventory and pricing, and the ability to issue tickets and passenger receipts. When it came to answering questions about the value proposition, the airline representative provided information by referring to product sheets, in-house training or fam trips, none of which was or is available through the GDS.

When this schedule and pricing information was exported to consumer sites, the impact of this lack of supporting detail is magnified ten fold. To get a clear picture of this, imagine that all the milk containers lined up on a supermarket’s shelf have the same color and that the only printed information on the face of each carton is the industry code name of the producer, the expiration date, and the price. As a consumer, one would have to buy a carton and open it to find out whether it is organic, or homogenized, or condensed, or sweetened.

As a contrast to airline distribution, consider hotel booking sites. They are content rich offering extensive descriptions of amenities and services. The hotel industry, entering the automated distribution environment a bit later than the airlines, has perhaps learned from their experience in addition to using newer technology to communicate (distribute) their product to the consumer.

The next generation GDS should in our view offer serious tools for airline product differentiation as well as customer segmentation. Both supplier and consumer are much more sophisticated and should be enabled to deliver and find appropriate products and information with the least amount of clicks and intermediaries.

Passengers should have access to information they need to customize their trips. Consider a transatlantic flight. One carrier might offer free drinks, full meals, free headsets, free newspapers and refreshment kits in all cabins, while another carrier for $50 less offers none of these. In today’s GDS environment you do not have access to any of this information. Wouldn’t the passengers like to know what they are getting for $50 less?

The FAA maintains databases with air traffic control actual take off and landing information. By comparing these to airline schedules we could inform in advance that there is a high probability of delays on a given route. Wouldn’t passengers like to have this information before they commit to buying a non refundable ticket? Would it not be a great service to travelers to be able to measure their trip time from door to door, not just airport to airport.

We are no longer in an era where “one size fits all”. Whether occasional travelers or road warriors, passengers much be empowered to choose the right aircraft, the right airport, and use the sales channel process most suited to their schedules and their expectations. That is where the GDS will prove themselves most useful to passengers and suppliers alike.


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