JetBlue Airways last week detailed in its annual report why it likes the GDS channel. "The average fare purchased via this channel is at least 17 percent higher, justifying the increased distribution costs," it wrote. That JetBlue can charge more through global distribution systems is not a new observation. The airline has been noticing that ever since it rejoined in 2006
. But at the same time, the airline is booking a larger proportion of tickets in GDSs.
According to JetBlue, 2008 bookings via GDSs and online travel agencies accounted for 13 percent of all sales, making those channels combined "our second largest distribution channel" (behind the 77 percent that is transacted via jetblue.com). That compares to 8 percent for GDS and OTA bookings during 2007.
The average 17 percent premium for GDS bookings in 2008 would have equated to about $24 above the carrier's overall average fare of $141.37, though JetBlue did not break out specific average fares by channel (and the overall average fare excluding GDS bookings of course would have been lower). In 2007, CEO Dave Barger said
the airline was enjoying a a "$35 to $40 net fare premium" on GDS bookings.
As for the cost of GDS bookings, JetBlue explained that for 2008, "sales and marketing expenses increased 26 percent or $30 million, primarily due to $16 million in higher credit card fees resulting from increased passenger revenues and $5 million in commissions related to our participation in GDSs."