GDS fees looming, possibly within the year, BTM hears

Agents will have to pay to access airline fares via global distribution systems (GDSs) in the near future – possibly within a year. That is a view shared by a growing number of carriers.

Air Berlin became the latest airline to make clear it wants a change in the GDS payment model yesterday, when the German carrier’s UK and Ireland country manager Titus Johnson told the Business Travel Market in London: “I believe we’ll see change in the structure of payments in the next 12 months.”

British Airways has already made clear it believes the current distribution model must change.

Referring to American Airlines’ legal battle with GDSs Travelport and Sabre over the US carrier’s effort to drive sales via its own Direct Connect system, Johnson said: “The outcome will be integral to the future. If American pursues Direct Connect, other airlines will follow and costs will fall.”

He predicted a victory for American would lead airlines to pay GDSs according to the volume of sales, rather than per sector booking as now.

Johnson said: “Even if American does not win its lawsuits, it is likely the [legal] pressure will lead GDSs to lower their costs to airlines. There will be a shift in how GDSs are rewarded where the end user pays some – but not all – of the costs of distribution.”

Amadeus UK managing director Tim Russell agreed the level of incentives GDSs currently pay agents would be reduced. He said: “They will diminish. But they will not disappear because of the competition for [access to] the point of sale.”

However, Russell disagreed that the pending court cases between American and Sabre and American and Travelport would aid a settlement. He said: “The lawsuits could be seen as posturing. All sides should be sitting down to talk to one another.”

Johnson agreed with Russell that: “GDSs offer unrivalled value [in distribution] particularly outside airlines’ home markets.” He said: “GDSs have been key to Air Berlin’s growth. They are essential for multi-sector itineraries and of particular value in far-flung markets, and most IATA airlines see the value of GDSs.”

But he said: “The cost of sale is too high – that is the fundamental issue. It is legacy pricing and it must change.”

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