Sounding Off: GDS consolidation can only be considered after survival

Each Friday, PhocusWire dissects and debates an industry trend or new development covered by PhocusWire that week.

The ongoing issue of GDS consolidation has many facets to consider, not least whether the relevant authorities would allow it.

For sure, it will be interesting to see if there are any rumblings but let’s not forget that Sabre and Farelogix were forced to call off their acquisition deal in May 2020 after the U.K. Competition & Markets Authority ruled against the transaction.

It was deemed anticompetitive, with the regulator saying it would lead to “less innovation in their services, leading to fewer features that may be released more slowly.”

Would the same apply to the GDS companies - Amadeus, Sabre, Travelport and Travelsky - in their current forms?

Past acquisitions - namely Galileo’s (Travelport) acquisition of Apollo in 1997 and Travelport’s acquisition of Worldspan in 2007 - were approved but the GDSs have changed since then, both through acquisitions and focus.

That raises the question of who might cosy up with who? 

The answer would require a detailed analysis of the various strengths of each individual GDS.

Amadeus and Sabre, for example, boast strength in their offering of not only traditional GDS services but also technology solutions for airlines and hotels.

Travelport had also been building up its non-air business in the years prior to it being taken private once more in late 2018.

The company had reported steady increases in its Beyond Air business up to that point. It had also invested heavily in its airline merchandizing platform.

It’s hard to see consolidation between Amadeus and Sabre, and the majority of Travelsky, which is listed on the Hong Kong Stock Exchange, is state owned.

So that leaves private equity-owned Travelport, which raises the question of what it offers either Amadeus or Sabre?

The merchandizing platform might be attractive although both have been developing their own capabilities in that area.

In addition, Sabre, now that the Farelogix deal is off, seems to be betting on what it can develop through its partnership with Google.

Or, perhaps some of Travelport's partnerships in India for example might be attractive

But, in his comment Alex Zoghlin comment highlights how bad things have been this year as rationale for consolidation.

The two larger GDS companies Amadeus and Sabre moved early to boost their liquidity giving them runway at least until the end of 2021.

It seems likely that they will all be in survival mode for the short to medium term.

And, perhaps given how bad things have been will lead to a much bigger shake-up in the distribution landscape - in how partnerships are struck, what content is distributed and by who and perhaps, most importantly, who pays?