Amadeus is building out a platform for its intermediary customers offering traditional air content, NDC-enabled content and all the other elements of a trip including transfers and in-destination activities.
Live Travel Space, as the platform is called, is the approach the company has decided is needed in the evolving consumer landscape.
“We started to look at market trends, and all that happens beyond travel has an impact on our industry. Travelers want to have everything in less than a second, they want complete solutions such as door-to-door that look into the overall trip and they want user-friendly interfaces," says Decius Valmorbida, president of travel channels at Amadeus.
"They have so many new demands that it changes what we as travel players want to offer to customers. We see travel sellers changing to address all of those needs, and as travel technology providers, we need to change as well.”
Those with a good memory will recall when Amadeus started using the "your technology partner" strapline to get the industry thinking about it as more than just a global distribution system with a front office selling system. But, the platform, according to Valmorbida, is more than just a front office system.
He says it takes in its agency selling system and its cytric system for corporates, but the difference is in the back end and how the company aggregates content.
“We have done an upgrade to be able to consume New Distribution Capability content. An upgrade on extended air choice which is the ability to integrate low-cost carrier content, and we have done an upgrade on traditional GDS to sell ancillaries. There are similar examples in hotels and in-destination content.”
Driving change
The traditional agency channel has been accused of being reluctant to change in the past, but Valmorbida says customers are willing adapt and change.
“It’s difficult to see a future of consuming NDC through cryptic codes, you have to use a graphic user interface and the dilemma is that for us to bring all this, some disruption will be necessary.”
He says there are an increasing number of ways to sell travel, from metasearch to online travel agency with a mobile app to corporate self-booking tool.
“They are all different segments, different business models and different technologies which require thinking as a platform and not any more as a product, which is the GDS, a single business model, with a single front office and front-end technology and a single way of sourcing content.”
Whilst the foundations for the platform is in place, it's evolving as technologies such as NDC develop. Amadeus plans to have its web services version of NDC available in September, while offline agencies will have to wait for the first quarter of next year.
One interesting element of this: While Amadeus is working on technical pilots of NDC with airlines and agencies, the all-important commercial negotiations have not been completed.
Intermediation is increasing not only with existing agencies but new players because travelers want to compare. The level of loyalty is low, customers are buying destinations, buying trips and no single global provider can offer trip services into all destinations with the same level of service.
Decius Valmorbida, Amadeus
“We have two business models that provide a lot of flexibility already. The fact that we’re doing an upgrade in technology does not mean it has to change radically. There is the GDS model, which is where an airline does not have a strong relationship with a particular agency and it provides flexibility and the possibility of an arrangement with any agency without the hassle of a specific commercial model around it.
“What we’re allowing now as well is if there are strong ties between any given airline and agency - because you have agencies that consolidate a large amount of sales so they have the bargaining power - there is the possibility of private deals that can be more interesting from a commercial point of view to do. A combination of public and private will continue so the discussion is more around fee levels, than radically different models.”
In addition to having to consider airline and intermediary relationships, the Live Travel Space also has to take into account how different areas of the world are developing such as mobile penetration in Asia.
“That’s the whole claim of the open and dynamic system. In Asia the main front office is mobile, so content we are aggregating needs to be well displayed on a mobile. In different niches and segments with travel sellers, what is required is very different, meta needs speed so that is different to the conversation with OTAs who are interested in speed but also fulfilling the trip while travel management companies are looking to productivity with physical agents.
"With the travel platform, we’re trying to make sure each segment has its own technology. We’re seeing fragmentation of the point of sale and it’s harder and harder to reach new travel seller with a single product because the only way to differentiate is to provide a different traveler experience.”
Diminishing market?
The cynics out there might question why all the investment in a potentially diminishing intermediary channel, but Amadeus says data shows it’s not declining.
“Intermediation is increasing not only with existing agencies but new players because travelers want to compare. The level of loyalty is low, customers are buying destinations, buying trips and no single global provider can offer trip services into all destinations with the same level of service. They are still geographically based and still in silos so the intermediary is the only player that can provide that need - the basket of elements of the trip and the ability to compare.”
The company compares its historical measurement of airline trips sold through the direct or indirect channel and that it has remained stable for the past decade. In addition, Valmorbida says, travel as a whole is growing 6%.
“What we do see is that agencies are becoming very different animals. Maybe people don’t associate what is being sold via a mobile app or online as an intermediary but it’s just because they are more and more digital. They are becoming larger and larger entities and more sophisticated agencies that command market capitalisations larger than some of the airlines.”
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It begs the question: Where do platforms such as WeChat fit in, or Google and Facebook?
He says they are different ways of distributing the travel product but all intermediaries who may at some point need air content or fulfillment services.
And in terms of the market consolidating to a handful of platforms that distribute travel, Amadeus sees it maintaining its local feel with strong players in individual markets operating with local payment options, language and within local regulations.
“Even the largest players only concentrate one or 2% of industry sales. No distribution channel controls a large part, so even though the industry is consolidating and that is accelerating, every player is creating very much market driven and specific interfaces. WeChat is working and tailored for that market, but the question is how many similar models will pop up in different regions or will WeChat make the necessary adaptations to provide similar value propositions in different places. The market is open for both possibilities.”