The earthquake that rocks the world of distribution was quietly delivered in a session at CASMA last week.
Cory Garner the newly appointed director of merchandising strategy for AMR subsidiary American Airlines made an unequivocal statement about the future direction of AA’s distribution.
Further clarification came for the team with Don Bender, manager of distribution strategy highlighting the components of the strategy.
And GDS isn’t it!
Essentially AA will deploy two forms of direct distribution. An XML toolkit and a web based solution.
AA has been working with Farelogix on this solution for quite some time and has deployed the capability in more than one geography.
What is somewhat interesting here is that the team took a very holistic approach and addressed more than the usual connection services.
AA has already engaged with the financial fulfillment process via ARC and presumably BSPs to arrange for direct distribution on a very broad scale.
My team at T2 has contacted large scale intermediaries in several markets and can confirm that contracts are now out to players for use of the tools associated. AA waited until the whole process was in place before going public with the announcement.
At this point we can only speculate on what role the GDS will play in the future of AA’s distribution.
Last month SITA’s IT trends 2010 was released and it showed a clear move by the world’s airlines away from GDS based distribution. In the space of 10 years from 2000 to 2010 – the GDS based distribution share has fallen by 50%.
But AA is creating in effect a brand new category of distribution that is not unlike a dealer model.
Moving the control of display of product from the GDS to the agency is a fundamental shift that will forever change the paradigm how product is served and managed.
For the future – this will mean a major change for the world’s intermediaries.
Commercially it puts perhaps the final a nail in the coffin of the GDS segment fee model.
Technology wise it creates a challenge for the intermediaries to develop independent supply chain systems.
Companies like Farelogix will become increasingly valuable to both sides of the value chain.
Large scale players like the OTAs who have strong technology platforms and resources will find the adoption of multiple supply chains easier.
Many TMCs will struggle with the challenge and will probably regret having put all their eggs in the GDS basket.
Ultimately the AA announcement last week in Las Vegas is just another step along the way from holistic to heterogeneous (read fragmented) supply.
Anyone who wants to play in this game now needs to assess their future positions carefully.
In my humble opinion GDSs can still play in this field but no longer in the exclusive central role where they have held sway for so long.
I find it ironic that but a few months back Sabre was chastising Farelogix for creating a fragmented world.
The core reason the airlines like AA are moving away from the old ways is that the GDS companies failed to come to terms with their airline partners in addressing the cost model. Now they are paying the price.
Welcome to the new world order.The earthquake that rocks the world of distribution was quietly delivered in a session at CASMA last week.
Cory Garner the newly appointed director of merchandising strategy for AMR subsidiary American Airlines made an unequivocal statement about the future direction of AA’s distribution.
Further clarification came for the team with Don Bender, manager of distribution strategy highlighting the components of the strategy.
And GDS isn’t it!
Essentially AA will deploy two forms of direct distribution. An XML toolkit and a web based solution.
AA has been working with Farelogix on this solution for quite some time and has deployed the capability in more than one geography.
What is somewhat interesting here is that the team took a very holistic approach and addressed more than the usual connection services.
AA has already engaged with the financial fulfillment process via ARC and presumably BSPs to arrange for direct distribution on a very broad scale.
My team at T2 has contacted large scale intermediaries in several markets and can confirm that contracts are now out to players for use of the tools associated. AA waited until the whole process was in place before going public with the announcement.
At this point we can only speculate on what role the GDS will play in the future of AA’s distribution.
Last month SITA’s IT trends 2010 was released and it showed a clear move by the world’s airlines away from GDS based distribution. In the space of 10 years from 2000 to 2010 – the GDS based distribution share has fallen by 50%.
But AA is creating in effect a brand new category of distribution that is not unlike a dealer model.
Moving the control of display of product from the GDS to the agency is a fundamental shift that will forever change the paradigm how product is served and managed.
For the future – this will mean a major change for the world’s intermediaries.
Commercially it puts perhaps the final a nail in the coffin of the GDS segment fee model.
Technology wise it creates a challenge for the intermediaries to develop independent supply chain systems.
Companies like Farelogix will become increasingly valuable to both sides of the value chain.
Large scale players like the OTAs who have strong technology platforms and resources will find the adoption of multiple supply chains easier.
Many TMCs will struggle with the challenge and will probably regret having put all their eggs in the GDS basket.
Ultimately the AA announcement last week in Las Vegas is just another step along the way from holistic to heterogeneous (read fragmented) supply.
Anyone who wants to play in this game now needs to assess their future positions carefully.
In my humble opinion GDSs can still play in this field but no longer in the exclusive central role where they have held sway for so long.
I find it ironic that but a few months back Sabre was chastising Farelogix for creating a fragmented world.
The core reason the airlines like AA are moving away from the old ways is that the GDS companies failed to come to terms with their airline partners in addressing the cost model. Now they are paying the price.
Welcome to the new world order.
The earthquake that rocks the world of distribution was quietly delivered in a session at CASMA last week.
Cory Garner, the newly appointed director of merchandising strategy for AMR subsidiary American Airlines, made an unequivocal statement about the future direction of AA’s distribution.
Further clarification came for the team with Don Bender, manager of distribution strategy, highlighting the components of the strategy.
Essentially AA will deploy two forms of direct distribution: an XML toolkit and a web-based solution.
AA has been working with Farelogix on this solution for quite some time and has deployed the capability in more than one geography.
What is somewhat interesting here is that the team took a very holistic approach and addressed more than the usual connection services.
AA has already engaged with the financial fulfillment process via ARC and presumably BSPs to arrange for direct distribution on a very broad scale.
My team at T2 has contacted large scale intermediaries in several markets and can confirm that contracts are now out to players for use of the tools associated. AA waited until the whole process was in place before going public with the announcement.
At this point we can only speculate on what role the GDS will play in the future of AA’s distribution.
Last month SITA’s IT trends 2010 was released and it showed a clear move by the world’s airlines away from GDS based distribution. In the space of ten years from 2000 to 2010, the GDS based distribution share has fallen by 50%.
But AA is creating in effect a brand new category of distribution that is not unlike a dealer model.
Moving the control of display of product from the GDS to the agency is a fundamental shift that will forever change the paradigm how product is served and managed.
For the future – this will mean a major change for the world’s intermediaries.
Commercially it puts perhaps the final a nail in the coffin of the GDS segment fee model.
Technology wise it creates a challenge for the intermediaries to develop independent supply chain systems.
Companies like Farelogix will become increasingly valuable to both sides of the value chain.
Large scale players like the OTAs who have strong technology platforms and resources will find the adoption of multiple supply chains easier.
Many TMCs will struggle with the challenge and will probably regret having put all their eggs in the GDS basket.
Ultimately the AA announcement last week in Las Vegas is just another step along the way from holistic to heterogeneous (read fragmented) supply.
Anyone who wants to play in this game now needs to assess their future positions carefully.
In my humble opinion GDSs can still play in this field but no longer in the exclusive central role where they have held sway for so long.
I find it ironic that but a few months back Sabre was chastising Farelogix for creating a fragmented world.
The core reason the airlines like AA are moving away from the old ways is that the GDS companies failed to come to terms with their airline partners in addressing the cost model. Now they are paying the price.
Welcome to the new world order.