In the last round of GDS negotiations in 2007, airlines such as American Airlines and Delta Airlines stridently warned that they would pull out of major GDSs if the carriers didn't get their way.
In 2010, American is pledging to go outside of the GDSs again, this time through Farelogix, and JetBlue, in more thoughtful tones absent the rhetoric, is pushing the message that the airline-GDS business model is broken and must change, leading up to negotiations next year.
Noreen Courtney-Wilds, JetBlue's vice president, sales, says the industry took "baby steps" in the last round of negotiations.
After those talks, the airlines reduced the booking fees they had to pay GDSs, and the GDSs made themselves whole to a large extent by greatly reducing the incentives they pay to travel agencies.
"We all kind of know the financial model needs to change," Courtney-Wilds said in a panel discussion, "Future of Distribution Forum," at the TravelCom conference in Dallas yesterday afternoon.
She adds: "If it doesn't change, folks will look for other ways to solve it."
Courtney-Wilds notes that JetBlue recently transitioned to the SabreSonic reservations' system and ratcheted up to full participation in the four major GDSs.
The upside is that JetBlue picked up incremental business from the GDS channel, but the downside of "opening up the floodgates" is that there was an increase in travel agencies "snatching up seats that you didn't need help filling in the first place" at a higher distribution cost, Courtney-Wilds says.
She says JetBlue doesn't need help selling $49 tickets and, referring to increased GDS distribution costs for sometimes low-yielding tickets, Courtney-Wilds adds, "we definitely have to address [that] going forward."
Asked what was on her wish list as far as a new financial model, Courtney-Wilds says she doesn't have all the answers, but that the solution should lead to a variable structure where the airline can pay for distribution in areas where the carrier wants to play -- and presumably not pay in less-cost-effective areas.
One reason JetBlue opted to go full-throttle in the GDSs is that it gives the airline the opportunity to tap into the high-yielding corporate-travel business in certain markets.
Referring to a lot of noise these days about airline direct-connects bypassing GDSs, Courtney-Wilds says technical issues aren't the basis of the conversation and all of this talk will be silenced once the airline-GDS financial model is fixed.
Fellow panel member Dan Westbrook, vice president, supplier development in the Americas for Travelport GDS, told the audience that the business model may need to be "fine-tuned," adding that most airlines are willing to pay for high-yielding business.
He adds that Travelport GDS is talking to suppliers, looking for opportunities and trying to find the right balance.
Westbrook says the ultimate solution may vary, sector to sector.
Courtney-Wilds also had some stern, if polite, words for metasearch engines, too.
In the past, she says, JetBlue's fares would appear in metasearch engines and consumers would link into the booking path on JetBlue.com, the airline's cheapest distribution channel.
However, today JetBlue's inventory is displayed in metasearch along with several other booking choices in the same results box and there are greater distribution costs for the carrier if consumers book through online travel agencies instead of going to JetBlue.com.
"The economics of the channel have changed and we are looking at that," Courtney-Wilds says.