Twenty years ago I used to run the largest air consolidator business in Scandinavia. We had a single aim: to have the best and the most fares you could find.
And we did.
In those days, most processes were manual. We got confidential price lists from the airlines. We learnt the ins and outs of the particular contracts and then added our mark-up and distributed our pricelists via fax to all the agents in the countries with routes and booking classes.
Most of the agents made their own bookings and queued them to us for ticketing. Some called in and let us do the work for them. It was intricate work much of the time. The reconciliation process was equally tricky.
We had fare analysts and ticketing specialists. We needed all the help we could get because rules were often quite messy.
Offline Asian carriers, such as Malaysian and Singapore Airlines, which used feeders from Scandinavia to a hub in Europe, had thorny rules to say the least.
Some allowed stop overs in Asia, en-route. Some allowed stopovers for a surcharge. Some airlines like PIA, JAT, Aeroflot and others had their own set of rules and could only be ticketed by themselves.
Some airlines allowed a stopover where the airline paid for the hotel, such as Lan Chile, Iberia, TAP and others. Some you could change, some not.
On top of all of this, there were also seamen’s rebates, youth discounts, student discounts, religious fares, government and parliamentary fares. You had minority fares for people in Spain who live on the islands.
There were special published fares for certain ethnic groups. If you flew business class you could construct routes with Hip’s and there were lots of intricate ways to lower fares. There were even fares you could combine with train and ferries.
In those days there was no chance in the world the CRSs (now GDSs) could help you out with all these fares. You had to do it all manually. The CRSs could handle published fares, point-to-point and, in some cases, simple route constructions with the highest fares in economy class.
I would argue little has changed. Not the GDSs, and certainly not the level of complexity around fares. In fact, the complexity has worsened.
And we as an industry have dealt with it by not dealing with it at all, leaving out a huge business potential, meaning that there are fares and combinations out there most people in this industry have no idea about.
In 2010, most global fares are point-to-point, much like domestic fares in the US. We have all the low cost carriers which do not publish fares through ATPCO.
The common flight currency like FCU or NUC is not being used as extensive as it was 20 years ago to construct fares. Instead we use multiple local currencies with hourly fluctuations, making a multi-stop itinerary easier to calculate, but harder to get right simply because you have multiple sources of information.
Again we have dealt with multiple sources by not doing anything, or too little. Twenty years ago it was simple - you had the CRSs, the APT and all the consolidators. That’s it.
Airline fares online have come to a place with almost supposedly “perfect information”. Perfect information for the one who supplies it that is - GDSs.
Compare any two websites or more and you will basically get the same routings and fares because all use the same sources.
To differentiate your offering as an OTA you have to use content from multiple GDSs and LCCs, be able to tweak your results, or both.
What mattered 20 years ago, still matters today. People want a combination of the lowest fare and the perfect routing. For instance, South Africans do not care about having to fly via Dubai, because Emirates planes are new, have better seat pitch and better in-flight entertainment. Plus people can do great shopping in Dubai.
I know that thousands of people from Stockholm fly via Budapest to London because, essentially, it’s cheaper and they get a whole day in Budapest for sightseeing, shopping and Palinka.
So I am not one who subscribe to the idea that sorting by “agony” is the best way forward - it's only one.
That two companies, Everbread and Vayant, specializing in airfare search got lots of attention during the PhoCusWright's Travel Innovation Summit says something. Both companies have been in the making for the past four years and are not a sudden response to the Google–ITA Software deal.
Assen Vassilev, founder of both companies, simply knew he could do it better and that time is ripe for fares differentiation - besides it a huge market.
Online travel as we know it, is a simplified version of what travel agents did in the past but without all the wisdom and experience a good fares and ticketing expert had.
While hotel rates distribution has come a very long way the last ten year, airfare search has stood still, up until now.
There is a tremendous resistance to change in airfare search. Reasons are that few understand the underlying complexity, therefore arguing - why change.
Second is that there has been no alternatives up until now. Resistance is rooted in the belief that the GDSs have it all, and they want us to continue to believe that, to protect their business that is now being challenged in a world with fewer and bigger players in the history of our industry.
With metasearch engines and now Google entering the travel space, OTAs are looking for alternative ways to differentiate their offering and finally crack the code to start make money on air.
One size does not fit all, and that’s what the industry slowly is starting to realize.
NB: Author is an investor and board member of Everbread.