or quite a few years, most agents have
gotten their GDS services for little or nothing. In fact, the GDS
is a net revenue producer for high-volume agencies that earn bonus
segment credits. Life with the GDS vendors has not always been a
day at the beach, but as the systems compete for agency
subscribers, agents clearly have benefited.
But the systems do not compete for airline participants. They
don't have to. Ever since the adoption of the anti-bias rules in
the mid-1980s, the airlines have believed there is nothing they can
do to bring any downward pressure on those fees. Nothing, that is,
until they discovered the Web and invented Orbitz.
Now, that pressure is building.
Galileo, to take one example, is trying to develop what it calls
"a new economic model" that could enhance the value of the GDS and
alleviate the airlines' disenchantment with its costs.
It is, of course, in Galileo's interest to do so. The company was
acquired last year by Cendant, and the last thing Cendant wants to
see is an accelerating airline stampede away from GDS distribution.
You could safely say it's a collective goal of the GDS industry
to stop the stampede and make it worthwhile for the airlines to put
all their fares in the GDS. And, in fact, most of the GDSs seem to
be pursuing various avenues to accomplish this goal. Any GDS could
attempt this by fiddling with the booking fees, making them more
competitive with Web distribution.
But Galileo is part of Cendant, a past master in the arts of
cross-marketing, leverage and synergy. Thus it should come as no
surprise that Cendant is exploring ways to add value to airline
participation in Galileo by leveraging its other service
These propositions bear close scrutiny because they offer the
promise of a market-based way to stop the stampede, bring the
missing supplier inventory back into the GDS and enhance the value
of agency distribution.
The downside, and there's always a downside, is that agents may
be asked to contribute to this additional value, either in the form
of a fee, reduced segment credits, or other contractual
We hope it's a price agents can afford, for as long as the GDS
remains the travel agent's primary business tool, G must stand for
Global, even if it's not free.
Good news from abroad
he Commerce Department reports
that international arrivals to the U.S. will increase 2% this year.
It was previously forecast that visitor arrivals would be down this
year, but the turnaround has come sooner than expected.
Our international friends are telling us that it's OK to travel,
and it's OK to travel to the U.S.
That's good to hear.