G2 SwitchWorks has
a lot to prove.
The new alternative
GDS has to prove to the airlines that it can pipe them into travel
agency offices at a lower cost, with more flexible technology, than
the traditional GDSs.
It has to prove a
bit more to agents, most of whom seem to be more comfortable
(financially and otherwise) with their GDS arrangements than most
airlines. Agents have to be sold on the idea that a new GDS can
deliver a reliable tool with a short learning curve that easily
integrates into existing systems and procedures. And it has to do
so while generating productivity gains that will offset any cost or
Thats a tall order.
There is some chance that G2 will succeed, but there is also some
chance that it will fail.
Our resident cynic
predicts that, judging by the fate of most dot-coms and technology
start-ups, it will achieve some success but fall short of its
initial goals, revise its business plan, and end up as somebodys
merger partner or subsidiary. Hes been wrong before,
In short, its a little
early to predict how this experiment is going to play out, and
thats why we believe ASTA and the Business Travel Coalition have
jumped the gun by running off to complain to the Justice and
Transportation departments that G2 is offering its first airline
participants what is vaguely described as the opportunity to
acquire a minority stake in G2.
As we see it,
theres nothing to complain about, yet.
No airline has yet
invested in G2 SwitchWorks. G2 has not disclosed how its
opportunity is going to be structured, when it will be offered or
how large a stake will be available to airline investors. G2 has
confirmed, however, that its talking about minority shares, with no
representation on the board and no control.
On the basis of
this flimsy bit of fact, the BTC wrote a letter to the attorney
general claiming that G2 appears to be funded and controlled by
major U.S. airlines.
punch darkly warned that G2s offer of minority shares to the
airlines is an indication that the airlines are once again poised
to involve themselves in the ownership and, possibly, control or
significant influence of a firm with GDS-like
The key words here
are appears, indication, poised and possibly. Theres a lot of
huffing and puffing and hedging here but no evidence that anything
untoward has actually occurred.
ASTA and the BTC
both claim that the DOT must make good on the pledge it made in
2003, when it got out of the business of regulating GDSs: We retain
the authority to bring enforcement cases against firms that violate
the statutory prohibition against unfair methods of competition,
and we will take appropriate action if we have evidence of unlawful
Were going to take
the DOT at its word and express the hope that it wont stick its
nose back into this business unless it actually sees some unfair
competition or some evidence of unlawful conduct.
So far, there is