Saturday, March 16, 2019

As part of cost cutting, Jet Airways tries new distribution strategy

Air travel, for all its innovation on cabin experiences and new aircraft, still struggles with finding new distribution channels for selling its inventory, which are the seats in the aircraft. A global business by nature, air travel distribution is built on the back of Global Distribution Systems (GDS), those clunky terminals you would have seen back in the day when you headed to your travel agent to purchase a ticket.

A GDS, as it is called for short, is a network of computers that connects the travel agent to the airline reservations system in real time.  The GDS systems were first launched back in the early 60’s, when Sabre, then owned by American Airlines and Apollo, owned by United, found their way into travel agencies.

Amadeus, which now has the biggest market share, was founded in 1987 by Air France, Iberia, Lufthansa and SAS, all of them are European airlines. For much of the time since then, the GDSs ruled the way ticketing was done, till the time the internet came around.

And while ticket distribution and sales have now become more graphic oriented with the advent of the online travel agents, the pipes on which the ticket sales ride are still the same, with GDSs more or less performing the same functions as in the 60’s. Essentially, like fibres and satellites are the pipes of the internet, GDS are the pipes of the air travel industry.

But why do you need them? Simply said, to distribute. For instance, let’s say, you need to fly to far-flung New Zealand from India. There is no Indian airline that directly flies to New Zealand, so you need a ticket which is intertwined between many airlines.

For instance, let’s say, a Bhopal-Delhi-Singapore on Air India, which then hands over to Singapore Airlines to fly you to Sydney and from there Air NewZealand to your end destination. But since it is all on the same ticket, Singapore Airlines has information about the fact that you would come from Air India and it needs to wait for you.
16/03/19 Ajay Awtaney/CNBC TV18