The European CRS Code of Conduct review will have little impact. Airlines don't like it when travel management companies move around their points of sale, but Amex does it under certain circumstances. GDS hotel distribution is second-class in Europe. All this according to American Express Business Travel vice president of global distribution strategy Bruno Peynichou, who met this week with The Beat's David Jonas during an Association of Corporate Travel Executives conference. An excerpt of their discussion follows.
Jonas: What is your take on what the European Commission seems poised to do with its CRS Code of Conduct?
Peynichou: From an Amadeus standpoint, I do not think it will change a lot their strategic positioning. The Code of Conduct forces the GDS to display certain content in a certain manner. That being said, there still are some major gaps that others such as Sabre and Galileo have in the other big markets--France and Germany--which anyhow gives Amadeus such a strong, powerful position that with or without the Code of Conduct they have a monopolistic situation. That will probably, hopefully be changed in mid-2008. Sabre specifically is making some significant development with SNCF French rail and Deutsche Bahn, which will give what they are missing today--the instant synch. As Amadeus has today, you would not only have a passive segment back into the passenger name record, but it is live. Amadeus right now is the only one that has that in both France and Germany. Sabre is about to change that. It was originally planned for the end of 2007, but now it should happen before the end of the first semester 2008. Regarding the Code of Conduct and the definition of whether Air France and Lufthansa are parent carriers, that again won't change much, because in the new rule anyhow, they will have the capacity to demote or promote a carrier, as they have today in the United States, whether or not it is a parent carrier.
Jonas: But a GDS would have less incentive to demote a carrier that owns (or partially) owns it.
Peynichou: They might. That is what happened in the U.S. At the end of the day, the travel management company controls that. We want to have access to every single carrier out there and own the display in how we push preferreds for the customers.
Jonas: Would American Express care to say whether those airlines (Air France, Iberia and Lufthansa) should be deemed as parent carriers?
Peynichou: We don't have an official position on that. Honestly, we do not think it will really change the landscape overall in Europe.
Jonas: Yet, EC seems to have gone--or is about to go--in a different direction than what many had thought.
Peynichou: You're right. And it will be interesting to see, philosophically, how it will evolve. What we are seeing is more of the technical gaps. For example, Air France had some historical links with Amadeus, in terms of how certain Air France content was displayed on Amadeus. They did not have those on Sabre. Those gaps are the ones that need to be bridged soon. We talked to Lufthansa and Air France, and they are willing to really open their eyes in terms of alternatives to Amadeus, whether through direct connects--which is an option--or through alternatives like Sabre. The message from Air France to us is clear: "I trust Amex to optimize my workload, because you are the experts in distribution. Tell me what is the best solution." That is how, for instance, we are discussing [TravelBahn DS] with Air France as we speak.
Jonas: Another topic getting some attention here at the Association of Corporate Travel Executives conference is the idea of point-of-sale ticketing versus point-of-origin ticketing, and how corporate clients would like to move around the point of sale for airline tickets, which airlines of course would not favor. What is the latest on that?
Peynichou: Now that we have euros, there could be a standard pricing structure, which does not exist today because the airlines have their home markets. In France, out of Paris [Air France] can charge more on Paris-New York than they can from London. They have a dominant situation at the Paris airport.
Jonas: Does it all come down to the leverage that the corporate client has?
Peynichou: You got it. What we have obtained from Amadeus, which we are piloting as we speak, is when we have a central call center--like the one in Sofia--we identify where the call is coming from and automatically have the travel counselor from his desktop switch to the relevant pseudo-city. If a German caller calls, it will automatically switch to the German pseudo-city with the fare from the German market. And vice versa, if it comes from Spain, etc. So, we'll have the ability to see all those fares, with the point of origin and point of booking, which could be different.
Jonas: The airlines must not like that.
Peynichou: They don't, because that allows us to benchmark the difference and outline that to the customer. They still demand from us the dedicated IATA for those customers so they can chase the volume at the point of origin for the ticketing.
Jonas: Do airlines audit how and where customers are booking tickets in this way, and penalize them in any way?
Peynichou: From what I know, they may cancel an agreement. It is hard to get to that extent. For the agencies, if you don't apply the right rules ... Lufthansa has done it in Germany; Air France has done it in France for a couple of small agencies. For our Lille call center, for instance, we'll try to get the same pricing, say, that a Belgian agent has. A lot of our customers depart from Brussels anyhow, and we need that in France to access those rates. We have those day-to-day discussions with the airlines to make that happen.
Jonas: What would an airline say if it was asked the degree to which client X is allowed to move around the point of sale?
Peynichou: From an airline perspective, the two things they will watch is where they can get the best yield--and that is usually out of their hub, and that they do not like to touch. The other piece is being able to chase the volume per customer. They are afraid, from a TMC perspective, that we would combine that in a non-dedicated pseudo-city or IATA.
Jonas: The other item is the new HotelHub European hotel content solution American Express announced this week.
Peynichou: It is our end-to-end workflow solution to optimize hotel booking. What we found is that the GDS in Europe is not the best in class for servicing, the way it is in the U.S. So, we designed the solution to connect with the relevant content, wherever its: GDS being one source, but also connections to individual properties and chains directly, as well as major hubs like Pegasus and Octopus, which negotiate rooms on a yearly basis and outsource to us part of the content. That solution still is a manual switch for the travel counselor point of booking to go to HotelHub. Moving forward, they won't even see that they are switching from the GDS to HotelHub. They will go directly into it.
Jonas: This is a separate Web-based browser window?
Peynichou: Yes. They can click on the city and see any rates negotiated by the customer or by Amex with color-coding for preferred and non-preferred. There is geo-coding, to see where the customer needs to go and what the best solution is. It is rolled out in France, and we plan to roll it out in the U.K. by Q1 and the Nordics. In Germany, we are piloting it now with one customer.
Jonas: How does all this work for individual properties that may not want to invest in this technology?
Peynichou: We have a standard format where they can give us access to content. For instance, they can give us room allocations with 24-hour last room availability release. If they want to give us more rooms, there is a standard application programming interface link whereby they can link that to HotelHub. They just need to access the interface and load however many rooms they want to allocate.
Jonas: Can this be translated to the online booking environment?
Peynichou: We are working on it as we speak. Hopefully by mid-2008, we'll have connections to all our online booking [tools] in Europe: KDS, e-Travel, GetThere, i:FAO, etc.