|Changes ahead for GDS business model.|
Thursday, 25th October 2012
Source : Martin Kelly
Abacus' Robert Bailey admits that the rise and rise of low cost carriers will inevitably lead to changes in the 40-year-old business model of Global Distribution Systems.
'Low cost carriers will be a catalyst for change.' President and CEO Mr Bailey said. (right)
"What the change will be I don't know." Mr Bailey said low cost carriers now comprise 25% to 26% of the available air seat capacity in Asia Pacific "and this can only grow" with the opening up of new regional markets and city pairs.
But many low cost carriers don't want to do business with the GDS such as Abacus, Amadeus, Sabre which derive most of their revenue from charging traditional or legacy carriers around US$6 to US$8 per sector to distribute their airfares to travel agents.
This is a major issue for the GDS because 1. their main customers, legacy carriers, are in apparent decline and 2. The fastest growing sector of the aviation market, low cost carriers, in many cases does not want to pay their rates.
Some compromises have been reached with low cost carriers moving up the aviation food chain but fundamental differences remain.
And it's not just all about cost.