Last week in Beijing I made the case for de-commoditizing the airlines. Even though it was a friendly audience at the CASMA Fall Global Conference, there was some sharp discussion during Q&A. Fair enough, as I skewered American’s handling of its Direct Connect value prop to the business travel community. Here are the key points:
Does Distribution Really Matter? Can it Differentiate Airline Products?
Absolutely. Think about how the endpoint of the distribution chain looks today. You still see flight times, carrier logos and prices. Pretty commodity-like stuff, that. From green screen GDS terminals to mobile booking displays, all you see is a long list of racked-and-stacked flight options.
It’s the equivalent of shopping in the paper towel aisle at WalMart. Price dominates.
It’s a simple formula. Google Flight Search + Airlines’ Hunger for Direct Connect = Trouble for GDSs.
You may think Google Flight Search is just another meta search tool. I think it is a major step in a campaign to build direct connections between airlines and travelers. Google Flight Search is GDS Bypass personified.
Google sees the GDSs as fortresses, producing hundreds of millions of captive airline searches beyond the reach of any search engine. Searches that need to be freed. Searches that should have the right to be completed directly with the supplier. Searches that in their basic form can be served up quite nicely with Google Flight Search.
I recently claimed in this webinar that the travel industry’s innovative golden years were in the 1990s, and that our industry hasn’t seen much innovation (with a capital I) since.
Why the lack of innovation, you ask? I listed three factors, and am adding a fourth here.
Barrier 1: The legacy “Rows and columns” GDS mentality. The GDSs are arguably the most influential – and constraining – link in the travel value chain. Their products and attitudes about travel technology have driven much, maybe most, of the way suppliers, TMCs and many corporate buyers think about the travel technology landscape, for better or worse. Continue reading →
Dot 1: Google is in a quandary. It needs to enter big markets with high growth opportunities. Dot 2: Google likes the travel industry. I’ve heard estimates that about 10% of its revenues are attributable to travel. Dot 3: There’s a big travel-related search market that Google hasn’t cracked. It sits behind the walls of the GDSs. Dot 4: ITA Software has deep expertise in airline pricing, shopping and availability searches. ITA powers Continue reading →
**Update: The four finalists are noted below in bold purple text.**
The Phocuswright Travel Innovation Summit showcased 34 firms yesterday. Each has an interesting new angle on some aspect of the travel business. For me, the firms in the social scanning and fuzzy shopping categories were the most intriguing. See this post for my take on the implications for travel procurement. Continue reading →
I’m surprised that two of these posts don’t relate directly to travel procurement (“Trippy…” and “Future Innovations…”). You’re saying it’s OK to cast a wider net in terms of topics. Cool. I’ll continue to bring in this type of content from time to time. What else would you like to see here?
Here are the highlights from my recent presentation at CASMA titled “Future Innovations in Airline Distribution”. The original deck has about 50 slides, but because it was designed for a live 60-minute speech, it’s hard to get the meaning of many of the slides (nearly all pictures) by themselves. So here’s the 3-minute version:
Channels have limits.
Distribution channels are essential to commerce, but they have limits. The Panama Canal has to build wider locks to accommodate the newest and largest cargo ships. This is a metaphor for the GDS distribution channel, as it cannot handle the “wider” content that airlines want to distribute today.