The airline is poised to regain primacy in the emerging new distribution environment.
And, once again, the airline will be at the center of innovation and have control over their data.
NB: This is an analysis by Eric Dumas, CEO at Vayant Travel Technologies.
Airlines were long the single biggest drivers of change in travel.
They have played a pivotal role in the creation of a flourishing global industry, driving the development and adoption of technologies that made travel faster, safer and more affordable.
The distribution and marketing of airfares was revolutionized by this same innovative spirit.
In the 1960s airlines designed and operated the first Central Reservation Systems (CRS) to maintain inventory data.
CRS automation meant airlines could sell faster and cheaper: at a stroke, an unwieldy system based on phone calls, printed reservation cards and handwritten tickets was replaced by swift efficient processes.
As aviation took off to become a mass-market phenomenon, the airlines needed more robust and flexible global systems that could handle rapidly expanding passenger volumes.
And so at the airlines’ behest the Global Distribution Systems were born around 1980.
Focused on distribution technology, the new GDSs had access to a depth of IT expertise that airlines struggled to match in-house.
Over time, the GDSs became independent of the airlines.
Airlines pass on the baton of innovation
Yet just as the airlines handed the baton of innovation to the GDS, the world of airfare search, marketing and distribution was about to be transformed.
With the advent of the Internet age in the 1990s,the new web-based players became the pioneers of innovation.
Pretty much every area of commerce – from the sale of clothes, groceries and household appliances through to financial services and entertainment – became ecommerce.
Within a decade, rudimentary online shops became sophisticated e-retailing sites with personalization and targeted marketing.
The steady stream of e-retailer innovation fuelled consumer expectations: they wanted more choice, more personal offers.
The arrival of the travel metasearch engines answered this need and they were a real step change in the customer experience.
This was great news for consumers – and airlines liked the way metasearch engines could send them direct bookings.
But the big picture was one of increasing complexity as the number of channels to the customer multiplied and airlines lost control over their data.
Regaining the initiative: new direct connects
For the first time in two decades there is now an opportunity for airlines to regain the initiative, win back control over their data.
Advances in technology have made it much cheaper to operate large IT systems and airlines have started looking for new efficient ways - beyond the GDS - to handle their reservations and distribution.
In a sense they are going back to basics, trying to dis-intermediate their relationships with travel agents and direct consumers.
A few direct connect strategies have already been implemented by airlines and this is going to get more widespread with the IATA NDC initiative.
The airline as the orchestrator
Direct bookings have a clear appeal to airlines, particularly as bookings in the GDS have become more costly.
But rather than seeking to build a uniform direct model, airlines should think in terms of partnerships and working with IT specialists who can help them with their complex global requirements.
The important thing today is for airlines to regain control over their data and drive the next stage of distribution with their own strong vision.
Airlines are in the best position to do this, determining both the shape of the future and which partners can help them get there.
These partners will provide the airlines with solutions that they can truly own and shape; that are versatile (with a range of potential applications and users) and that can support new revenue generation models.
At the same time, airlines will have an opportunity to simplify the distribution landscape.
In this picture, the airline acts as an orchestrator, determining the future shape of the industry and mixing-and-matching IT partners to bring it to life.
Once again, the airline is driving the evolution of air distribution.
NB: This is an analysis by Eric Dumas, CEO at Vayant Travel Technologies. It appears here as part of Tnooz’s sponsored content initiative.
NB2: Orchestra conductor image via Shutterstock.