The last time Ryanair’s Michael O’leary was offered a chance to wax lyrical about the distribution system in travel he chose the GDSs as the main target for his ire.
While this may have given his favourite target of travel agents some respite, it was basically a reprise of a common theme about the inefficiency in the traditional system.
In his tirade O’Leary made reference to how things were when Ryanair last used GDSs two decades ago – the timescale being an important distinction for the man now tasked with heading up Amadeus in western Europe.
David Doctor’s appointment was confirmed this week, the long-standing Amadeus executive replacing Angel Gallego who has been taken up the role of head of the Asia Pacific region.
Speaking to Travolution last week after a Corporate Business Breakfast organised by sister publication Travel Weekly, Doctor said GDSs have changed to reflect the value they offer.
In his previous roles in airline distribution he struck the first airline content deal and brought in value-based pricing, reflecting the ability of airlines to drive business direct in core markets.
“This was a big change in the relationship between airlines and GDSs simply because a change in legislation meant we could negotiate. Before that we had standard pricing.
“What we did essentially was change the price of our fees according to the territories that we were generating bookings from for the airlines.
“For instance a booking for BA coming from the UK was cheaper than one coming from Japan because we were bringing more value in terms of reach.
“We had to be able to find a way of being more cost-effective where there was a more cost-effective alternative, like online booking, and reflect the value of the network.”
Doctor concedes Ryanair’s dominance and short-haul focus in core European markets means the carrier can shun the GDSs.
Despite this, low-cost rival easyJet has come round to embrace the GDSs which can help it reach the corporate market.
Doctor rejects the charge that GDSs do not offer value, or that they have not sought to change and to provide airlines with the kind of retailing environment they say they want.
“We understand very clearly we bring different value to different parts of the business. Value pricing is a good example of that.
“If [as an airline] your major sales are done in a territory where your brand is strong we do probably bring less value – the whole indiscreet channel brings less value.
“The GDS world has come a long way. Twenty years ago it was issuing tickets, today it’s about a lot more than that.
“It’s about search technology, caching, search, self-booking tools, being in all different channels.
“Presenting your offers to the consumer in the indirect channel involves a lot of technology, there is a lot of aggregation involved in that.
“If you do not want to compete in the aggregated market because you have a very powerful brand there is less value.”
With new forms of search technology being developed which are reliant on caching and huge computer power, Doctor believes Amadeus can solve business’ IT challenges.
Amadeus owns the largest data centre in Europe at its German base in Erding, a prize asset it believes gives it a lead over rivals.
“We have the capacity to help with that business challenge because we have the processing power. We resolve it for a lot of airlines today because we are the hosting party.
“The Amadeus system means interfacing and processing is the same, it’s not a different system, really you are talking to yourself.
“That allows us to do things which are really very special. When it becomes complex for you to do you want someone else to do it for you.”
As the debate of Iata’s New Distribution Capability (NDC) rages, Doctor recalls Amadeus developing Features which allowed airlines to graphically display their different products.
“We did this as part of the Airline Retailing Platform in 2008/09. The truth is the take-up of that has been very low.
“It’s a case of be aware of what you ask for because you may just get it. To show product differentiation in the product code you need product differentiation. Very few airlines do.
“If you want to differentiate yourself, do it from the core product. A lot of differentiation we see is unbundling and product pricing rather than actual product differentiation.
“There are some airlines that are very good at it. The Middle Eastern airlines have been ingenious about reinventing what air travel is.”
Doctor believes that technology and the GDSs are evolving too quickly for NDC to make a serious difference.
And in the ambitions of the airlines to take back more control of their retailing activity, he sees huge potential for Amadeus to remain at the heart of the system.
“Look at Iata’s roadmap for NDC. They are talking about getting something out by 2018. That’s not fast.
“A lot of the things they are trying to do will be history by then. Merchandising at the point of sale is a valid requirement for any business, airlines, tour operators or hoteliers.
“Also the shopping needs of the customer are a valid requirement. NDC is about mass distribution and aggregation.
“You need processing power and stability to give the right answers to the right queries as fast as possible.”
Although being a huge global organisation in an innately global business Amadeus increasingly understands the need to customise its products for local market needs.
Doctor said: “Everyone likes to be different. The more global we become the more people look at themselves.
“We are never that rigid, we are flexible in our decision making. If it’s successful we will try to repeat it, if not we won’t.
“We won’t buy market share. Our position has always been to look at three main things: improve access to content, technology adapted to customers’ needs and service.”
It is this last area that Amadeus has looked to improve on following feedback from customers, said Doctor.
“They said they felt like they were buying a Ferrari but no one has taught us how to drive it. We want our customers to be successful and we want to make money by being a leader.”