The private channel that the three major GDSs are now offering agencies that have reached an agreement with the European airline group IAG won't lead to a bifurcated agency community of haves and have-nots, a key Amadeus executive said.
Instead, said Amadeus senior vice president of travel channels Decius Valmorbida, the private channel is just one of many options that Amadeus will make available as airline distribution models evolve and become more varied on the road to widespread industry adoption of the IATA New Distribution Capability (NDC) standard.
"We feel that by opening up a number of technological alternatives and opening up many models in which agencies have access to content, that will provide a lot of flexibility for what is important for agencies, which is to give travelers choice," Valmorbida said.
Amadeus developed the private channel option in concert with IAG ahead of IAG's Nov. 1 implementation of a $10 per one-way surcharge on GDS channel bookings for its subsidiaries British Airways and Iberia. Subsequently, Sabre and Travelport also entered into private-channel deals with IAG.
Agencies that enter into private-channel agreements with IAG have access both to airfares that don't include the GDS surcharge and to a wider suite of British Airways and Iberia content than is available in the general GDSs, said Wade Jones, executive vice president of Sabre and president of Travel Network.
In turn for those carrots, agencies using the private channel lose out on the incentive payments they typically get for making an airline booking through a GDS.
Thus far, IAG has been focusing its private-channel agreements on large travel management companies, among them Carlson Wagonlit, Hogg Robinson Group, BCD Travel and Amex GBT. That emphasis has fueled concerns that only the most elite agencies will benefit from the private channel, while smaller agencies will be forced to operate at a disadvantage.
But Valmorbida said that, while airlines are currently experimenting with a variety of distribution strategies to apply in the more dynamic NDC world, Amadeus ultimately expects that full-content displays, rather than solutions such as the private channel, will win out.
"We feel that airlines will move into an environment where they are making all of their products available everywhere because that is the smartest thing to do," he said, asserting that tickets purchased through travel agencies produce 40% more yield on average than tickets purchased through other channels.
Thus far, IAG, Lufthansa and Air France-KLM are the three airline groups that have implemented GDS surcharges in an effort to reduce distribution costs by driving more customers to their own direct sales channels. But other airlines have taken different tacks in the early days of the NDC era. In October, for example, Air Canada entered into a distribution agreement with Amadeus under which Amadeus will eventually display Air Canada's full range of branded fares and ancillary products as well as corporate rewards and other specialized offerings.
Meanwhile, American Airlines is paying incentives to travel agencies that make a booking through an NDC-supported connection, whether that connection is a direct connect or facilitated by a GDS.
In response to increasing airline adoption of NDC, all three GDSs have announced that they plan to obtain Level 3 NDC certification, the highest certification bestowed by IATA, by next year.
Valmorbida said that Amadeus is updating its agency platform to support the wide variety of distribution strategies airlines are now employing, including traditional ATPCO GDS content, NDC-supported content, direct connects and screen scraping.
The private channel, he said, "is another tool in our toolbox."