Demystifying the Global Distribution System: A Travel Tech Guide to GDS
Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Origins of Global Distribution Systems
The travel industry as we know it today would not be possible without the advent of global distribution systems (GDSs). These technologically advanced reservation networks laid the foundation for how travel inventory is stored, displayed, and sold. Understanding the origins of GDSs provides context on how the travel booking experience has evolved over time.
In the early days of commercial aviation, the 1950s and 1960s, airlines stored flight information on large plastic boards. Known as "shuffling boards," reservations agents would shuffle around physical plaques representing unsold seats. This manual process made it near impossible to quickly check seat availability across different airlines. Airlines later upgraded to storing data on magnetic tapes, but there was no way for travel agents to easily search schedules across airlines.
American Airlines changed the game in 1968 when it launched Sabre - the world's first computerized reservation system. Sabre centralized flight, fare, and availability data so agents could seamlessly book travel. The "SABRE" name was an acronym for Semi-Automated Business Research Environment. Though primitive by today's standards, Sabre was revolutionary for its time.
Seeing the success of Sabre, United Airlines launched Apollo in 1971, while Trans World Airlines launched PARS in 1972. These airline-owned and controlled reservation systems greatly improved productivity for booking travel. However, agents could only book flights on that specific airline's network.
The Airline Deregulation Act of 1978 shook up the industry, paving the way for new entrants. Forward-thinking travel executives realized the powerful potential in connecting these reservation systems. This led to the creation of multicarrier distribution systems not owned by any one airline.
The first major multicarrier GDS was Galileo, launched in 1971 by United Airlines and TWA. Galileo connected both airlines onto one platform available to all travel agents. This gave agents access to inventory across multiple airlines for the first time. Galileo was spun off as an independent company in 1987.
Following this, American Airlines, Delta, and Eastern Airlines jointly launched Worldspan in 1990. Shortly after, Sabre transitioned into its own GDS company as well in 1996. These three companies became the main global distribution systems in North America.
In Europe, airlines formed the Amadeus GDS in 1987. Amadeus brought together carriers like Air France, Iberia, and Lufthansa onto a common platform. This allowed smaller airlines to gain wider distribution through major airlines' networks.
The benefit of GDSs was that they centralized travel content onto one database accessible to all agents. Instead of managing dozens of airline contacts, agents could search flights, rates, and availability across all connected vendors on one screen. This saved enormous time and costs.
Another key factor was GDSs use of interlining. This allowed agents to seamlessly book connections on multiple airlines. Interlining was a gamechanger for selling complex itineraries beyond what any single carrier offered. All airlines benefited from expanded reach.
By the 1990s, GDSs evolved to integrate content beyond just flights. Chain hotels and car rental firms signed on to distribute their inventory. GDSs became a one-stop shop to book full trip packages. Customers could more easily comparison shop rates and availability across vendors.
While airline deregulation unlocked growth, technology innovation fueled GDSs. The rise of the internet expanded distribution from travel agents to consumers directly. Computer speeds increased exponentially enabling faster search results.
Yet the core GDS value proposition remains delivering comprehensive travel content across vendors worldwide. Whether booking online or through an agent, GDSs still power the backend of most reservations today. Travelers expect to efficiently search and book flights, hotels, cars, and activities all in one place. GDS muscle and reach has made this seamless shopping experience a reality.
What else is in this post?
- Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Origins of Global Distribution Systems
- Demystifying the Global Distribution System: A Travel Tech Guide to GDS - How GDS Connects Airlines, Hotels, and Travel Agencies
- Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Major Players in the GDS Space
- Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Benefits and Drawbacks of GDS for Travel Companies
- Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Future of Distribution Systems in the Digital Age
Demystifying the Global Distribution System: A Travel Tech Guide to GDS - How GDS Connects Airlines, Hotels, and Travel Agencies
Global distribution systems are the connective tissue that links airlines, hotels, car rentals, rail companies, travel management companies (TMCs), and ultimately the end consumer. At their core, GDSs provide the vital networking infrastructure enabling suppliers to widely distribute offers and travelers to efficiently shop and book content.
For airlines specifically, GDSs unlock access to thousands of travel agencies worldwide. Instead of establishing connections with each agency, an airline simply files its fares and inventory into the GDS. This content is instantly searchable for every connected agency. Similarly, hotels and car rentals can tap into new customer bases by listing rooms and vehicles.
GDSs were a massive productivity leap compared to the era of printed schedules and manual typewritten reservations. Hands down, GDSs accelerated an agency's ability to service travelers. Agents could instantly display flight options across multiple carriers rather than wasting time thumbing through schedules. Response times for booking requests or making changes dropped remarkably.
How exactly do GDSs technically make this happen in the background? At a basic level, GDSs act as a centralized database connected to the supplier and buyer systems via an application programming interface (API). Airlines push their offers and seat availability through the API which the GDS indexes into its database. When an agent makes a search request, the GDS scans all inventoried content to return relevant results.
Digging deeper, we find how airlines structure their offerings is vital for GDS connectivity. At the core are fare families - buckets of seats sold at different price points and terms. Airlines define complex fare rules controlling eligibility based on dates, flight numbers, and other factors. There can be many fare families, each with sub-divisions across booking codes.
Mapping this intricate fare data into the rigid structure of a GDS database is hugely challenging. Airlines don't want products dumbed down while GDSs push for conformity. Finding common ground enabled airlines to maintain commercial control while letting GDSs store content.
Beyond crisp technical linkages, GDSs opened opportunities for agency differentiation. In particular, travel management companies leveraged GDSs to deliver specialized corporate booking tools. TMCs integrate GDS content with client travel policies to guide booking compliance. Traveler preferences and loyalty status also steer results. GDSs enabled customization giving TMCs an edge versus leisure agencies.
On the hotel side, representation on the major GDSs became vital, especially for chains competing for business travel accounts. Large TMCs had substantial negotiating power to demand hotels sign up for GDS participation as a condition of preferred partnerships. Independent properties could also tap into GDSs to gain exposure to new corporate channels.
For all players, GDSs enabled modern merchandising. Airlines could spotlight premium seating or bundled ancillary offers to stimulate purchases. Hotels pushed out promotions to fill rooms during slow periods. Car rentals upsold upgrades. No matter the product, GDSs allowed suppliers to hit the right customer with the right offer.
Yet for all the connectivity GDSs unlock, there is also competition. Many low-cost carriers initially shunned GDS participation given the content fees and reach through online channels. However, most mega-LCCs now offer some level of GDS content.
On the hotel side, supplier direct bookings and alternative channel managers look to bypass GDS costs. But most chains stay active on GDSs to maintain brand visibility, especially for lucrative corporate bookings. Even as new avenues emerge, the connectivity of traditional GDSs remains vital.
Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Major Players in the GDS Space
There's a saying that goes "competition breeds excellence." This rings true in the world of global distribution systems. While there are just a handful of major GDSs, each competes intensely to sign up travel suppliers and agencies. The unique traits of each GDS creates diversity in the marketplace. Travel companies can partner with different GDSs depending on technical needs, targeted customer segments and commercial approaches.
In North America, the legacy GDS duopoly has long been Sabre and Travelport (parent company of Apollo, Galileo and Worldspan). However, Amadeus has made strong inroads in recent years due to its global footprint. Meanwhile, Travelsky is China's main GDS serving local travel brands.
Sabre is likely the most consumer facing GDS brand. From its early roots with American Airlines, Sabre has grown into a multi-billion dollar travel technology company. Beyond its GDS, Sabre offers an array of software solutions for airlines, hotels, rail operators, and agencies. For example, Sabre's Revenue Optimizer helps carriers maximize sales through pricing algorithms and trip mining tools. Its SynXis property management system drives major hotel chains worldwide.
A signature Sabre innovation is the first handheld device for agents, launched in the 1980s. This untethered agents from their desks and paved the way for mobile bookings. Today, Sabre Red Workspace remains a popular tool for agencies to manage clients. Sabre's online booking portal GetThere also has a major corporate footprint.
Arch-rival Travelport operates three distinct GDS brands. Apollo (formerly owned by United Airlines) has major traction across agencies worldwide, especially in Europe. Galileo (initially a joint venture between British Airways, Swissair and Alitalia) maintains an intense focus on serving European airlines.
Worldspan's sweet spot is packaging dynamic air-hotel bundles for leisure agencies through its TripManager tool. A major plus is Travelport's distribution strength in Asia Pacific through local offices across the key markets. As examples, Travelport operates the Galileo distribution system for Air China. In India, Travelport powers the Sirena GDS connecting regional travel agencies.
Since its formation in 1987, Amadeus has risen into the top ranks globally thanks to its scope in Europe and beyond. Amadeus offers strong connectivity to full service network carriers like Air France/KLM, Qantas and Finnair. Star Alliance and oneworld airlines are also well represented. Given its Madrid headquarters, Amadeus not surprisingly has deep ties across Latin America.
For travel agents, Amadeus provides intuitive interfaces like its Selling Platform Connect. This graphical booking environment simplifies complex fare options into colour-coded calendars showing best sales opportunities. Aplus and Smart Pricer ancillaries tools highlight extra passenger revenues.
Beyond travel distribution, Amadeus offers IT solutions covering reservations, inventory, departure control, loyalty programs, revenue accounting and other key functions airlines depend on. A particular strength is availability of Amadeus services through cloud delivery for smaller carriers.
Looking eastward at China's booming travel market, Travelsky has the homefield advantage. Jointly formed by airlines including Air China and China Eastern in the 1990s, Travelsky gained an early grip on Chinese airline distribution. Foreign GDS penetration in China is very limited given Travelsky's capabilities and built-in customer base.
Travelsky deploys an impressive technical infrastructure to handle China's enormous passenger volumes. In 2021 alone, Travelsky transmitted over 317 million flight reservations. Its rail booking engine encompasses 5,400 stations nationwide. With China's growing middle class flocking to airports, Travelsky enables convenient shopping for flights and ancillaries.
Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Benefits and Drawbacks of GDS for Travel Companies
For travel suppliers and intermediaries, global distribution systems (GDSs) offer both blessings and burdens. GDSs provide invaluable exposure to expand reach into new markets. The tradeoff is ever-increasing participation costs that cut into slim profit margins. Suppliers also cede some control over how products are displayed and sold.
On the plus side, GDSs unlock global visibility for an airline, hotel or car rental firm. Instead of establishing costly direct connections with thousands of individual travel agencies, a supplier need only interface once with a GDS. This plugs the supplier into instant access to all subscribing agencies and OTAs. So a small hotel chain can compete for bookings alongside major brands.
Access to corporate travel buyers is a huge GDS benefit. Large travel management companies rely on GDS technology to serve business clients. Negotiating preferred rates with TMCs gives suppliers a crucial pipeline to win corporate bookings. This high-yield segment is hard to tap into otherwise.
GDSs also enable creation of strategic airline alliances connecting partner flight networks. Alliances leverage GDS connectivity to interline schedules and coordinate frequent flyer programs. This gives expanded route options to flyers while allowing airlines to codeshare on more city-pairs.
Travel intermediaries likewise gain from GDS efficiencies. Agents can display fare and rate options from many suppliers with minimal effort. Response times drop when booking, altering or cancelling client trips. Automation reduces manual work processing reservations.
GDSs drive conversions by letting agents compare options across suppliers. An airline with a higher fare may lose out to one with more suitable times or better connections. Travelers pay less time shopping around which improves agent productivity.
Yet a major gripe is GDS fees eroding already slim profitability. Transaction charges apply each time an agent makes a booking. Display fees add up when searching availability. Fees usually increase year to year putting cost pressures on suppliers.
Some low-cost-carriers dodged GDS participation given these expenses plus ready online visibility. But most airlines ultimately joined major GDSs, often reluctantly. Savvy corporate buyers demand GDS access as a condition of preferred deals. Losing corporate accounts compels airlines to grit their teeth and pay GDS rates.
Network carriers in particular rely heavily on business travel requiring GDS presence. While painful, GDS costs are the cost of doing business with high-yield flyers. Still it's a bitter pill for airlines also paying hefty credit card merchant fees.
Hotels likewise decry hefty GDS expenses, especially chains catering to the leisure segment. Often a travel agent booking costs the hotel more in GDS fees versus an OTA reservation. Like airlines, hotels make a difficult choice between GDS visibility or losing bookings.
GDS payment models also frustrate suppliers. Bookings often still use outdated merchant models. The supplier covers GDS costs then must “reclaim” fees from the agency. Agencies may push back, late or underpay.
Some GDS pricing schemes seem schemey to hotels. One model charges full fees if the guest ultimately stays at a hotel, even if not the one originally booked. So if a traveler changes hotels on arrival, both properties pay fees.
Supplier agreements also require mandatory content inclusion. All qualified rates must be filed into the GDS, even promotional codes meant to encourage direct bookings. This erodes control over distribution strategy.
Lastly, GDS bias in displaying content angers suppliers. Contract clauses allow GDSs to spot preferred travel partners higher in search results. Customer exposure hinges on beating out rivals for top placement.
On the other hand, agencies chafe at GDS costs on their side of the equation. Subscription fees, booking charges, and added fees for IT maintenance and training drain budgets. But the efficiency GDS technology provides makes ditching them unwise even given the frustrations.
Demystifying the Global Distribution System: A Travel Tech Guide to GDS - The Future of Distribution Systems in the Digital Age
The travel world moves at warp speed propelled by technology innovation. Suppliers and sellers worldwide remain locked in perpetual competition to capture traveler eyeballs. This forces global distribution systems (GDSs) to continuously revamp their models to remain relevant booking channels. How the interplay between new entrants and existing powerhouses shakes out will shape the future of travel distribution.
GDSs must boost value in a digital age where consumers comparison shop across multiple platforms with ease. Legacy GDS strengths like displaying schedules and availability still matter. But travelers expect added insights to identify the ideal flight, hotel or package. GDSs are muscling up technology to deliver personalized recommendations and ancillaries.
Artificial intelligence powers next-gen shopping experiences. Travelport offers virtual consulting bots to tweak recommendations as customers respond. They also identify precise customer needs to serve tailored offers. Sabre’s AI aaS (AI-as-a-service) platform taps into predictive data analytics to optimize revenue. Responding to real-time market dynamics lets airlines dynamically adjust pricing.
Rich content remains crucial. American Express GBT enriches GDS content with detailed amenities and property photos. Seeing a hotel pool or suite layout engages customers versus plain text descriptions. Travel agencies also want visuals to inspire travel and upsell premium options.
As shopper adoption of mobile booking explodes, GDSs enable frictionless transactions on the go. Social media-like interfaces on apps keep younger buyers engaged.Mixin machine learning helps surface personalized ideas and relevant deals on-demand. Mobile optimization is vital as reliance on brick-and-mortar agencies fades.
How GDSs integrate supplier direct channels into their workflow will be telling. Airlines and hotels crave more control over customer data from direct bookings. But agencies feel loyalty when they influence a booking. GDS-backed tools like Sabre Red 360 give agencies visibility into supplier databases to bookdirect rates with traveler consent. This helps agencies retain their function.
With corporate travel rebounding post-pandemic, GDSs must demonstrate they can deliver compliant bookings that satisfy travel managers. Automating policy enforcement for approvals, supplier preferences and program tiers makes a GDS indispensable. So does tapping unused ticket credits and monitoring unused reservations to control waste.
Small-to-midsize companies are an underserved segment GDSs are targeting. These buyers lack IT budget and in-house expertise deploy travel management software. GDS self-booking tools provide enterprise capabilities without the enterprise price tag. Flight opinion algorithms also help smaller firms benchmark airfare deals.
For all sectors, duty of care initiatives reinforce the value of GDS data. Tracking traveler whereabouts via mobile, real-time destination risk alerts, and emergency booking transfersautomatically increase safety. This positions GDSs as vital duty of care ecosystem partners.
Asia Pacific holds major opportunity as rising middle classestake to the skies. GDSs like Travelport build on-ground expertise here to help Western suppliers expand in the region. Capturing Asia bookings requires nuance to navigate varied languages, travel norms and payments systems per market. GDSs bridge those gaps.
Part of the region’s appeal is the explosion of low-cost carriers like AirAsia, Scoot and VietJet. Many avoid GDS participation but online travel agencies have forced the model open. Now GDSs integrate LCCs into results while securing incentives to boost their visibility. Price-sensitive travelers win through increased fare transparency.
The cruise sector equally benefits from GDS exposure. Enabling holistic search across cruise operators unlocks incremental bookings. GDSs also integrate loyalty status and past guest preferences to personalize results. Through Apollo, Travelport already drives significant volume for cruise heavyweights like Royal Caribbean.
Rail travel distribution gains momentum, especially in Europe. GDS rail modules overlay best connections, departure stations and classes across a fragmented web of carriers. Germany's Amadeus-backed RailDataShop channels real-time train availability. Similar models can spur rail ticket sales elsewhere as consumers seek transport diversity.
How Google disrupts travel distribution remains a huge wildcard. Its Google Flights displays airline schedules and fares without cooperation from GDSs. Whether Google tries becoming an actual booking channel could massively overhaul consumer shopping habits. GDSs are unlikely to cede competitive ground.
The impact of blockchain is another unknown. A distributed encrypted ledger could let parties transact directly without GDS clearinghouses. However solutions like Winding Tree lack the commercial agreements and critical mass adoption to truly threaten GDS utility yet. But decentralized models are worth monitoring.