Who pays for distribution costs?
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What should they do to navigate the turbulent times? A White Paper by travel management company BCD Travel says even the full-content agreements signed in 2006 between airlines and GDSs are “at best a stop-gap measure for corporations seeking efficient access to airfare inventory”.
The white paper explores the tensions and complexities in the current distribution environment and addresses issues such as GDS fees, credit card merchant fees alternative content aggregators (ACAs) and the rise of unbundled pricing.
“From the corporate client’s point of view, however, airline cost controls are no longer a spectator sport,” the White Paper said.
“The carriers’ drive to reduce costs and revolutionise pricing affects everyone downstream in the chain. This gives rise to the question of who is ultimately responsible for the distribution costs associated with airline seats, hotel rooms, etc.”
Dee Runyan, executive vice president of technology, products and supplier relations for BCD Travel, said corporations need to understand clearly the views of key industry players as to the short-, medium-, and long-term viability of current distribution channels.
The paper said after reducing labour costs, airlines have moved forward quickly on other cost control fronts, such as capacity, using more efficient aircraft, eliminating unprofitable and investing in more profitable long-haul routes with less low-cost carrier competition.
However “ownership” of their highest-yield customers - managed and lightly-managed business travellers - remains a point of concern for major airlines, who see the GDSs and travel management companies (TMCs) as competitors, the paper said.
BCD Travel interviewed a range of subject matter experts from the major airline, low-cost airline, GDS, hotel, and travel management company sectors.
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