Aerial view of Germany's airline distribution landscape - tech, ancillaries and other challengesNews / DistributionBy Viewpoints | December 19, 2013Share This article was originally published on With a total 2012 travel spend of Euro 133.6 billion, Germany is one of the largest travel markets in the world – and clearly the single largest in Europe.From 2010 to 2013 the market has grown an average of four per cent in bookings and of eight per cent in revenues each year.All of this presents its own specific set of challenges for airline distribution - technology, airline merchandising and price control to name a few.NB: This is an analysis from Andreas Schurrle, managing partner of business consultancy Donnelly Spire.In 2012 the German tour operators alone generated total annual revenue of Euro 24.2 billion, which includes all charter airlines’ revenues.According to the German Billing and Settlement Plan, IATA-airlines generated a revenue of Euro 11.4 billion in Germany (up from Euro 10.6 billion the previous year).In total 200.2 million passengers departed from and arrived at German airports in 2012. The German Airport Association expects this number to grow by about three per cent in 2013.As the 2012 travel agencies revenue in Germany totalled Euro 22.5 billion, a comparison of this number with the figures above reveals that not only the traditional charter airlines but all airlines serving the German market depend heavily on the agency channel.Travel technology companies entering the German airline market therefore need to be aware of the challenges illustrated below.The Tourism Airfares ChallengeTourism Airline Distribution Model GermanyThe Tourism Airlines Price Control ChallengeBefore a certain date, usually some 150 days prior to departure, the airlines’ published fares are lower than the tour operators’ contracted fares. Travel Agents are likely to book the lower advertised fares as opposed to the contracted fares.Consequence for the airlines = revenue loss.After the 150 days mark people booking via travel agents are more likely to being sold the cheaper tour operator fares.The airline, however, would rather sell its own, revenue management optimized, published fares. However, airlines’ are still expected to offer steady prices to tour operators and must find modern responses – and a technology that can handle it.Ancillary RevenuesThe next major challenge for all airlines in the German, Austrian and Swiss markets is how to distribute all possible ancillaries from unbundling to cross- and up-selling across all the different channels.Player-Hub technology could be one answer to this question as it, for the first time, enables airlines to control prices for products and attributes and combinations of those at the point of sale via their own Player.A task group consisting of Lufthansa, Thomas Cook’s Condor Airlines, Air Berlin and TUIfly have identified and published the global types for leisure air travel. They are free to use for every other airline as well. (please refer to the Definitions section at the end of this document).The Information Technology ChallengeDefinitions:X-PackagingAir, accommodation, etc. are dynamically packaged based on current, daily rates and availability from various sources and sold as one package at one price in local currency to the traveller. In Germany, Austria and Switzerland, a market consisting of 95 million people and the highest annual travel expenditures in Europe, this X-packaging usually takes place in the TravelTainment, Traffics or Travelport’s Travel-IT systems.The suppliers, mainly tour operators, transfer daily rates and availability into the cache of the above three systems – once every 24 hours, usually at night. Quotes are made at the point of sale based on this cached data. Verification only takes place upon booking. Advantage for tour operators using this X-technology is the limited amount of traffic their own systems have to handle. Traffic is only generated during booking process. Also the distribution systems’ cache is updated with the booking requests’ responses.Y-PackagingThis is based on Peakwork’s Player-Hub technology. The suppliers, mainly tour operators, install their own Player, which hosts all pricing and availability data. The Player permanently synchronizes with the suppliers own inventory system. Travellers’ queries on websites or in travel agencies are made against a Hub system, which looks like a booking engine. This Hub then searches those Player systems that are approved for this very Hub (commercial/contractual agreements) and dynamically calculates a package price for the traveller in local currency.Tour operators on the supplier side can have several Players; one that handles their own inventory and others that handle external accommodation, air, etc.A major advantage of Y-Packaging to the suppliers is to regain control over data and the ways in which inventory is packaged, priced and sold. Also products can be much more differentiated than in X-Packaging technology. For example, hotel rooms can have an unlimited amount of attributes. A set of attributes is called a Global Type. Dertour, e.g., has defined a certain sets of attributes for a hotel which is called “on the beach”.OTDSOpen Tourism Data Standard - initiated by TravelTainment, Traffics and Travel-IT as a response to the Player-Hub technology, is a standard which enables distribution systems to support Global Types in travellers’ queries.Both X- and Y-Packaging were invented by the German Ralf Usbeck. He founded TravelTainment in 1992, sold the company to Amadeus in 2006 and three years later, in 2009, established Peakwork.NB: This is an analysis from Andreas Schurrle, managing partner of business consultancy Donnelly SpireNB2:Child image via Shutterstock.