Mark Pestronk
Q: Travel Weekly's sister publication, The Beat, recently published an article about the major U.S. airlines' increasing trend of listing their lowest fares only through nontraditional GDS channels. The article quoted an in-depth survey by Amtrav, a leading TMC (No. 36 on Travel Weekly's 2023 Power List). According to the survey, comparison searches show that the NDC and direct-connection fares were lower on American, United and Southwest than on the traditional GDSs much of the time, and not only for the lowest fare classes. Of the major U.S. carriers, only Delta still has all of its fares in the GDSs. Our agency is going to be negotiating a new GDS contract soon. What does this trend mean for our negotiation goals?
A: If the lowest fares in most classes of services on most carriers are no longer bookable in the traditional GDSs, it means that the typical GDS contracts in effect for almost 40 years are now full of potential dangers. So, you have to be on guard when your GDS vendor presents you with such a contract.
By using the term "traditional GDS," I am excluding NDC bookings that are available through the GDS. All three GDS vendors have NDC fares on many or most carriers, but the fares are not booked or processed in the traditional way. Let's call these NDC offerings "NDC-through-GDS."
So, what's the danger here? After all, if NDC-through-GDS segments are generally available in your GDS, don't the vendors count those segments toward your contract quotas and segment incentives?
Contrary to the beliefs of many agency owners and even GDS reps, the answer is generally "no." For example, Travelport's standard contract, which calls its own NDC-through-GDS segments NDC Limited Reservations, states that such reservations "shall not be eligible for any per-segment incentive. ... Notwithstanding the foregoing, where the per-segment incentive table ... sets out a per-segment incentive in respect of NDC Limited Reservations for certain specified vendors, the per-segment incentive table shall prevail."
In other words, NDC-through-GDS bookings earn no GDS incentives unless the contract states otherwise, which yours probably doesn't, at least at the initial offer stage.
If, like many large travel agencies, you have an annual segment quota, or if, like many midsize and small travel agencies, you have a "share quota" that requires you to place 80%, 90% or 100% of your segments through the GDS or pay a large penalty for segments below the quota, you are being offered the worst of both worlds: no carrot, and a stick if you don't meet the quota. If you cannot obtain incentives, then your challenge is to reduce the quota or the penalty, or both, so that you will be able to find better deals through other channels.
More broadly, if the best fares on most carriers are no longer in the GDSs, the rationale for having long-term GDS contracts in the first place becomes much less compelling. Sometime soon, you may want to be released from your contract, but under the typical GDS contract, early terminations are nearly impossible.