|Slowly Slowly Does it as China Opens Partially to Foreign GDSs.|
By Yeoh Siew Hoon
Thursday, 13th September 2012
It’s the day before I am set to fly to Shanghai to moderate a panel at the China Travel Distribution Summit and the news of the week is China opening its market to global distribution systems for the first time.
Really? This has been a development years in the talking and planning, and a subject of much contention.
Two years ago at the same conference, Ram Badrinathan, then with PhoCusWright, called for a freeing of the market, quoting Gandhi, “I do not want my house to be walled on all sides and my windows to be stuffed, I want the cultures of all the lands to be blown about my house as freely as possible but to refuse to be blown off my feet by any.”
His remarks about the limitations of China’s GDS environment, effectively monopolized by Travelsky, sparked a response from Larry Liang, general manager of airline solutions of TravelSky.
First, Liang explained to the audience that there were two types of GDSs – one was run by investors and shareholders who set profitability targets and the other was run by airline shareholders whose aim was to provide services to shareholders and customers. “Both are different business models and have different performance criteria and cannot be compared in the same breath.”
He then compared GDSs to nuclear weapons, saying there were some countries that chose to have GDS or nuclear weapons and those that did not. “China is a big country; we have to choose what we want to do.”
So it seems that with the recent announcement by the Civil Aviation Administration of China (CAAC), which released a deregulation provision on August 30, China has chosen what it wants to do – a partial opening up.
For the first time, from October 1, 2012, foreign airlines will have the option of using global distribution systems to distribute their air fares to travel agents in China.
GDSs are of course excited by the development. Amadeus immediately issued a press release, applauding the “publication of the new CAAC Computerised Reservation System (CRS) regulations which will bring enhanced global distribution technologies to the Chinese market that will significantly benefit the travel industry and consumers in China”.
It added, “The People’s Republic of China airlines will not have this choice, however Amadeus hopes for a further liberalisation of the market in the future.”
Brett Henry, vice president marketing of Abacus International, called the news “awesome”.
“I am excited,” he said, adding that clearly this signaled the beginning of the opening of the market to foreign GDSs. “Deregulation will follow the slowly, slowly approach China has applied in other sectors - this is the first step toward a full market opening.”
Noted Amadeus’ Brett, “The new regulations are an important step in bringing positive change to the current travel landscape in China. The regulations will enable a new technology infrastructure that will allow for a more dynamic travel booking market with more travel products on offer that will greatly benefit the Chinese travel industry and Chinese travellers.”
An industry source in China has this observation. “There are still some barriers for the foreign GDSs to expand in China market. Deregulation will only apply to flights on international carriers.BSP ticketing might not be open to foreign GDSs even after the deregulation.