And will it return control to suppliers, intermediaries and travel managers?
The sad ending of Thomas Cook should have prompted everyone in the industry to rethink and revalue the existing business model. Despite its having a huge market share and millions of passengers, Thomas Cook’s toxic mix of wrong strategies, slow decision-making and competition bypassing it at top-speed became the foundations of its coffin.
This is also happening within airline, hotel and other travel company markets. Even market darlings such as Uber face challenges with labour, financial losses and legal challenges. We all know the success of TUI, Expedia, Booking, Airbnb as well as metasearch engines like Kayak. At least the leisure sector landscape has changed over the last decade and we do see clear winners who have a deep understanding of their market and an ability to execute their business plans.
The picture in the business travel sector looks quite different. With the huge decrease in airfares, more options for accommodations than ever and ever-increasing traffic, the role of the travel manager has moved to procurement. Another nail in the coffin is the rigid distribution of services.
NDC adoption is proceeding at a snail’s pace. Despite it entering the airline market 12 years ago, only a few airlines and the GDSs have invested and launched solutions. If the same pace is applied to all the world`s airlines, the launch of NDC will extend well into the next century. Many will be happy because changes hurt and the existing structure with travel management companies using GDS does work but with a cost and many limitations for progress because of ancient (basically obsolete) technology.
It works but real changes and developments stopped decades ago.
The last three decades have been buoyant for the airline industry including the business travel sector. The advent of Open Skies did initially have a negative impact but has since been outpaced by a huge and constant growth in air travel because of lower airfares, more competition and globalisation. As well as this growth the airline’s loyalty programmes have enabled airlines to retain their travellers.
The pain for the airlines was the historic dependence on an infrastructure including the Bank Settlement Plan (BSP) and ARC in the US, clearing houses and IATA licences with rules all going back to the end of the Second World War.
Any other company and industry would long ago have designed, bought or developed their own distribution, especially because most airline income has for a long time been generated in carrier’s home markets. Despite the low-cost carriers (LCC) and others creating hubs around the world to avoid cross-border law and rules as well as better logistics, there are only two basic business models: (1) the legacy GDS based on achieving the highest possible price targeting business travel and less focus on capacity utilisation or (2) the LCC model where the lowest price won the passengers and full flights the target.
Today both models are owned and controlled by the GDSs. There is a third option. In China Travelsky handles local traffic and is cheaper than other GDSs for the airlines. But it is a monopoly.
Individual or network carriers need their own tailor-made distribution for their home markets to enable them to control their income at a fair pricing.
The companies need to be able to negotiate the right product to help their business. This can include extras such as ticket changes, refunds, meals, seating, excess luggage, priority boarding and disembarking, access to lounges, upgrading, special offers and much more. Everything can be in line with the individual company policy and business requirements.
Business travellers need access to all these options to ensure that their business trip itself is appropriate for its objective. At the same time corporates need to know where their data ends up, being stored and protected. Business travellers and travel arrangers also need a user-friendly searching and booking tool with access to accommodation and local transport content including bus, train, metro, Uber, etc.
Huge sums are being invested in upstart travel companies both in leisure and business. The main problem is that no matter how smart and intelligently they are built, they still rely on the existing infrastructure. In business travel many personal profiles are used numerous times and time is usually more important than price.
The existing model must be changed and my view of a future business model follows.
The traveller, their profiles and data In the EU profiles and data are now legally owned by the person. If hired by a company and in need of travel they can authorise the company to use it. Today most companies happily share their travellers’ data all over the world from the intermediary through the transport company to the accommodation at the destination. Not to mention the social media.
Regulations are being followed but this process is too vulnerable in today’s world. The old way of distributing personal data must change.
Searching and booking tool A simple and user-friendly search and booking engine, showing precisely what the policy allows, is essential. This includes any rate caps, whether by product or destination, and it should be able to handle different individual hierarchy levels and what is or is not included in the offerings. It will tell the booker if a booking is within policy, needs approval or outside policy. These already exist, but we know from the travellers that they prefer the simplicity of leisure OBTs.
Using relevant data from the traveller’s profileEvery supplier does not need access to all the data. Any provider nominated by the company needs relevant data. For example, International SOS must receive the reservation data.
Any changes to a booking should be made according to the individual agreement the company has with the supplier or by standard guidelines such as these:
In such an environment companies need a professional travel manager as the value of finding tailor-made fares and accommodation rates with a range of suppliers combined with instant data and protection of that personal data far exceeds the cost.
What is missing?
First and foremost, 24-hour service or even better concierge/VIP service. This service is more valuable on offline bookings than online.
And that suppliers become aware of these issues and become ready to deliver.