Published on Thursday, February 5, 2004

GDSs to review agent incentives

Travel Technology Show Special: The incentives received by agents from GDSs will come under review this year, GDS bosses have admitted. The message from the GDS seminar taking place at the Travel Technology Show in London, is that GDSs will be forced to evaluate their costs, particularly agents’ incentives, under pressure from changing nature of the distribution chain and the impact of GDS deregulation. Worldspan vice-president and general manager EMEA Graham Nicholls said he thought it was only a matter of time before deregulation came to the UK. “That deregulated environment, driven by market forces, will allow GDSs to respond by directing different offerings to different customers.” Amadeus executive vice president commercial David Jones thought deregulation in Europe was likely in the next six months. Sabre senior vice president Richard Adams said the company welcomed GDS de-regulation. “It will give us the opportunity to work towards value pricing. “There are many possible models that GDSs may adopt as we enter into a deregulated market that will bring value to our customers. And when we bring value there is an opportunity to seek recompense for that” he said. When asked by the debate moderator Paul Richer whether GDS deregulation would lead to screen-biasing, Sabre’s Mr Adams would not confirm or deny whether the GDS would start putting certain airlines ahead of others. On the subject, the Amadeus and Galileo executives (Cendant Travel Distribution Service (Galileo) regional director UK and Ireland, Alison Bell) said they would not introduce screen biasing because it was up to agents to do that. Mr Richer then asked the question of whether GDSs would start charging agents. Mr Jones began by saying that GDSs would start charging fees to agents. “It will be this year, to some extent, in some places” he said, but later retracted the statement and mirrored the carefully selected words of Sabre’s Mr Adams: “We will look to reshape the incentive curve.” Mr Adams and Ms Bell both said that their respective GDSs, Sabre and Galileo, had “decided to take the hit” in a recent deal with British Airways that gave them full access to fares. In response, Amadeus’ Mr Jones said: “Taking the hit is very noble. “But look at Sabre’s results for the fourth quarter and if you read the transcript for the analysts call, see what the managers are saying on the subject of agents incentives.” Mr Jones said that cutting revenue means costs need to be reduced elsewhere, and one area would be agent incentives. “I am not saying they are going to slash them but they will take a look at incentives” said Mr Jones. Sabre’s Mr Adam’s responded with his words about ‘reshaping the incentive curve’. All the GDSs agreed that despite doing different deals with airlines over fares and content, they would not start taking content exclusively from airlines, which would mean that in the future agents would have to use more than one GDS to get access to fares from all airlines. Mr Jones said: “Seeking exclusivity of airline content is extremely foolish, and screws up your agent customers because they want content.” Report by Ginny McGrath

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  • Sabre on incentives

    Can Mr Adams guarantee his Sabre connected agencies with contract renewals this year that the net payments recieved by them from Sabre per sector will not be reduced? I think not - or am i mistaken Mr Adams?

    By Steve Weinstock, Friday, February 6, 2004

  • The GDSs are starting to differentiate

    I find it fascinating to watch such obvious GDS differentiation start to happen after years of finding it difficult to distinguish one from the other. Also of note is the fact that it's the two GDSs that have been independent of airline ownership for the longest (Sabre and Galileo) that are currently the most proactive when it comes to developing realistic new economic models in response to demand from their airline customers. Amadeus' new value-pricing initiative has resulted in a net increase in GDS fees for most airlines (not, interestingly, its owner carriers) and Worldspan seems not to know what it wants to be when it grows up. Some two years ago Worldspan launched (with great fanfare) a search for a new economic model - still nothing has materialised. This year, guys?

    By David Nesbitt, Thursday, February 5, 2004

  • Full content on the GDS - a priority.

    We reiterate our view that full content on the GDS is a priority for us and for our travel agency customers, but industry economics make it clear that this cannot be achieved without changes to the structure of booking fees and incentives. Our commitment remains to attain travel agent access to the most comprehensive array of fares in order to best serve their customers. Consequently, Amadeus is continuing discussion with British Airways, precisely to ensure access to full content for travel agencies. The comments made by Sabre in this regard are misleading.

    By David Jones, Amadeus GTD, Thursday, February 5, 2004

  • Sabre Travel Network's view on agency incentives

    Let's be clear. Sabre Travel Network is on record as saying that it has no plans to start charging agents for GDS content. It is also on record as saying that it will not start slashing travel agency incentives left, right and centre. This contrasts starkly with David Jones' comments to the media in November last year, in which he stated clearly that Amadeus does have plans to charge travel agents for GDS content. It also contrasts with Amadeus' apparent willingness to let its British travel agency customers shoulder the entire burden of the recently-announced British Airways distribution supplement. On the subject of Sabre Travel Network's agency incentive payments, TravelMole correctly reports that we want to stop the inexorable rise of incentive payments; in other words "reshape the incentive curve". David Jones himself admitted that this does not mean that we will necessarily slash agency incentive payments. With this assurance, and the peace of mind that comes with our DCA Three-Year Option agreement with British Airways and more than 20 other carriers, Sabre Connected travel agents in the UK are able to continue with business as usual, and make concrete plans for the future.

    By Richard Adams, Sabre Travel Netw, Thursday, February 5, 2004

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