In this article:
- What is distribution?
- Who uses GDS distributed flights?
- Is GDS distribution right for your airline?
- How Blue Sky Booking Can Help
What is distribution?
Distribution is a complex matrix of sales channels used by airlines, hotels, cruise lines, car rental companies, travel agents and other travel vendors. Until recently, distribution relied almost exclusively on huge corporations who's beginnings date back to the 1960s called Global Distribution Systems, or GDSs. The three main GDSs today are Sabre, Amadeus, and Travelport. Sabre is the most widely used GDS in North America.
GDSs facilitate important operational and business functions alike, from interlining and code sharing to providing travel agencies with a central place to access schedules and fares for booking purposes. Fares and schedules are sent by the airline to the GDS via third parties (ATPCo for fares and Innovata or OAG for schedules,) which the GDS publishes for travel companies to use for travel planning and booking. The GDS holds no inventory on file, and must connect directly to an airline's computer reservation system to confirm availability and confirm bookings.
"Fares and schedules are sent by the airline to the GDS, which the GDS publishes for travel companies to use for travel planning and booking."
Who uses GDS distributed flights?
The largest of these travel agencies is Expedia. Expedia is an Online Travel Agent (OTA.) Other examples of OTAs include Orbitz, Travelocity, and Priceline. OTAs and traditional travel agents give travelers the ability to book multiple flights, reserve accommodation, and rent cars in a one-stop-shop fashion, and even offer pre-packaged travel deals.
When an OTA or traditional travel agent books a flight, the GDS communicates directly with the airline’s Computer Reservation System (CRS) to confirm availability and make a reservation. The reservation information is recorded in the airline’s CRS to hold the booking, as well as in the GDS, where it is made available to other airlines and travel vendors who may be involved in connecting flights, tours, or activities. Travel Agents have been known to sell flights for less than the fares posted by the airline as a lost leader to entice the traveler to buy a package from them.
GDSs are also used by aggregators. The most well known aggregator is KAYAK, but other examples include TripAdvisor, Skyscanner, and Google Flights. Aggregators search the GDS, dozens of OTAs, and other fare websites then presents the traveler with all the options. Instead of completing the booking, the aggregator directs the traveler to the source and collects a referral from the OTA or airline.
Is GDS distribution right for your airline?
Selling flight inventory through GDSs can offer your airline many benefits. Distribution through a GDS means your airline’s flights are visible to a global audience, which could boost sales and help your airline grow. Corporate travel, an important revenue stream for many airlines, is booked heavily through the GDS. Aggregators are more likely to find your airline and offer your flights to travelers if you are listed on a GDS. If you have flight inventory that is about to expire, dropping the price on the GDS could help fill the flight.
"GDS distribution has some downsides, and chief among them is cost."
Of course, GDS distribution has some downsides, and chief among them is cost. Bookings made through the GDS have fees that can eat into your profits. Airlines also lose some control of bookings made by agencies, as the agency is in charge of the reservation. If the traveler wants to make changes to their itinerary, they are often faced with poor customer service and restrictive policies set fourth by the online or traditional travel agent, which can create a negative overall experience the traveler may associate with the airline. Airlines also miss out on the chance to upsell other products or tailor their services to the individual traveler.
How Blue Sky Booking Can Help
The good news is that direct bookings are increasing as travelers become more internet savvy, and Blue Sky Booking can help transition your newly-obtained global traveler to direct bookings permanently thanks to a simplified, one page booking page and incentives like frequent flyer programs. For many smaller airlines, striking a balance between the global presence GDS sales offer and the higher margins of direct sales is the key to sustainable growth.
If selling through GDSs sounds right for your airline, contact us to find out how Blue Sky Booking can help you get started.