Aash Shravah, general manager of travel management company JTB Business Travel, submitted the following guest column on why now is the time to rethink entrenched distribution economics.
Why are the global distribution systems still paying us? When we're the ones using their software, their technology, shouldn't we be paying them? This is a question I have been asking for a number of years.
Typically, companies provide a product or service, and the consumer pays for it. In the travel industry, brands like SAP Concur, Cvent, Prime Numbers Technology and WorldAware all offer valuable services that agencies gladly pay for. But when it comes to the GDS world, the opposite is true: The GDS pays the travel agency. Why is that?
Well, there is a reason for it. Back in the early days of travel, airlines owned the GDSs and needed travel agencies to use their own technology, so they paid. Those days are long gone, and yet nothing has changed. No one bothered to evolve.
I'm baffled as to why this old model of paying a travel agency is still used today by the GDSs. I see it as another indicator of how our industry needs to be more open to innovation and change. This backwards distribution model wreaks havoc on the airlines and the very technology they once created and owned.
Technological advancements have drastically slowed. Content is no longer available to the travel agency and its customers. A gap has been created that prevents travel agencies from being able to offer the same content that's available on airline websites. This gap is not about to be closed anytime soon, no matter what anyone says.
It's time for a new approach. The flow of money from the airlines to the GDSs to display their content and the GDSs paying travel agencies for bookings is old and has to go. A new model has to be created where the GDS pays the airline for their content and in turn the travel agency pays the GDS for the technology. It's that simple.
So why has nothing changed? I'll tell you why I think no one is moving to change. We've all drunk the Kool-Aid that has been served for so long we can't remember why we started in the first place. Plus, travel agencies won't admit they are willing to pay, instead of being paid. The GDS provides an information database and they should charge for its use. The airlines provide flights, and they should be paid for the content. The travel agency delivers customers to the airlines, and they should be paid for that. Wouldn't it make more sense if, like other industries, each one is paid for the product or service they provide?
It is said innovation is born out of necessity. And there's never been a greater need for change thrust upon the travel industry than now. With Covid-19 having decimated everyone's business, this is the perfect time to streamline and modernize the travel industry. Everyone will benefit—GDSs, travel agencies, airlines and travelers.
It's time for the GDS to stop paying travel agencies.