An Open Approach to Travel Distribution?

Travel managers, watch this 2-minute video about the benefits of open API systems, and then ask yourself how it could – should – be applied to the travel industry:

To me, this video makes the point beautifully that open systems create unlimited opportunities. Closed systems, bounded by definition, can and do create value – but which type do you really want to bet on?

Let’s consider the case of direct connections (DC). As I told an audience last week, American Airlines has done an incredibly crappy job of framing the value proposition of DC to corporate buyers. So right away, it’s really hard to argue that there are any tangible benefits to you folks from seeing DC succeed.

But, given the compelling case made by this video, shouldn’t we be in favor of loosening the rigid pipes of the current GDS-based distribution model? Shouldn’t we be in favor of opening the lid of the inventory box, and letting creativity and innovation flourish?

I’ll rest my case with this slide:

(Hat tip to Tnooz for posting the video in this article)

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This entry was posted in Airlines, Distribution, Travel Industry, Travel Technology and tagged , , , . Bookmark the permalink.

4 Responses to An Open Approach to Travel Distribution?

  1. Yes, absolutely! The shift to open systems is inevitable, as it benefits consumers and those who add “real” value (e.g. the people who fly the planes). The only question is how long it will take to get there. We have some players using the court system to hold up their walls, which is a sure sign we’re near the tipping point.

    Unfortunately, while this video does a great job of illustrating benefits of being open, it doesn’t help quell the business model concerns of some of the industry players. Board games may only last for a few years, but still cost $30, while a deck of cards lasts for a lifetime and costs $5. In a nutshell, that’s the issue at hand.

    But along with disruption of the current model, new business models are created. Anytime commerce passes through an open system, there are monetization opportunities. There is real money to be made here, in the long run even more than GDS are making now through their closed systems. They just need help to figure out how and move fast — something large companies are generally pretty poor at. But the longer they wait, the more opportunities they create for new entrants, leaving them in the dust when the shift does happen.

    • Scott Gillespie says:

      Evan, as usual, you’ve cut to the heart of the economic issue here. I couldn’t agree more, or explain it any better – thank you!

  2. For quite some time I have been an advocate of Open Systems. I actively support the open standards in the Travel Industry. While I cannot speak for the airlines, I concur that the airlines have not been able to present their case for Open Systems. Sadly this is not necessarily due to their skill in communication but rather the unnecessary restrictions placed on the leading proponents through the law suits and contractual restraints.

    We can clearly observe that (without being specific) the GDSs have done a remarkable job in gagging the opposition to their model through a wide variety of contractual restrictions. Thus the ability to be specific to the values of Open Systems in Travel Distribution is at the least muted.

    For those who operate outside of our industry, they marvel at the the fact that the technology is as closed as it is. They openly laugh at the antiquated systems in place in airlines and other travel verticals. Unfortunately the ability to adopt open systems and therefore benefit from the technologies that abound and the learning from other industries is restrained by – well I think by now you all know the answer. This restraint of distribution capability from a technology perspective results in a series hidden taxes that ultimately the customer is paying.

    A hidden tax because those who use the GDS based technology have to spend increasing amounts of money to provide even the basic levels of service other products offer. his in turn creates demands from the agencies to get even more money from the GDSs to cover this increased cost.

    A hidden tax because the GDS fee per ticket has risen to such a level – around $15 for an average ticket.

    A hidden tax because the user community – travel intermediaries – either have to make their own technology or buy expensive technologies that operate with the Legacy GDS based systems. There is only a small percentage of reservations today made by travel agents that are not touched, processed or manipulated by non-GDS third party systems. And don’t get me started on the completely insane GDS policies of “certification” ostensibly to protect their precious mainframes from abuse. Politely that is BS. It is just another way the GDS have created and further more maintain an absolutely closed system.

    And what do we have to show for it? Generally a poor experience for the consumer. A pretty awful search experience and inconsistent pricing (because so many players can have the “right” price. And a huge wastage of computing power and technology just to maintain the status quo.

    Some times I feel that we are standing at the Brandenburg Gate and its June 12th 1987. So if I may paraphrase Ronald Reagan. “…. if you seek liberalization, come here to this gate. Mr. GDS, open this gate. Mr. GDS, Mr. GDS, tear down this wall!”

    Cheers

  3. Valyn Perini says:

    We need to clarify the difference between an open API and an open system (and even though you don’t mention it, open source). “Open” has become so ubiquitous and broad a term that it has become almost meaningless.

    Generally, open APIs (like TripIt’s for example) allow developers to write apps for the benefit of a specific application (in this case, TripIt). There is no greater industry benefit, unless you believe that the app with the open API somehow benefits the industry as a whole. While TripIt has value (if you count user base as an indicator of value, and the fact that I personally can no longer live without it), no one will say it has changed the way consumers search, source or book travel.

    Open source means an application that is freely available, fairly easy to use, has a broad implementation base and a development community that supports the application. In the travel industry, there is no such animal. We at OpenTravel come close but we don’t provide an application, but the means for two applications to communicate via our standard XML schema.

    The definition of an open system is not a defined concept in the technology community, so I’m not sure how you’re defining it here, Scott.

    Now let’s talk about direct connect. Conflating direct connect with open systems is just plain confusing. There are plenty of non-open direct connects out there already (see GDS and any other distributor who uses a proprietary connector), and some non-proprietary direct connects using OpenTravel schema or the Open Axis schema via Farelogix. But a direct connect is not by definition open; that depends on the method of connection.

    The issue here is not connection but access; until the controllers of information and inventory, supplier or distributor, allow free or cheap access, we’re all kind of stuck.

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