TMCs Eye Merchandizing Opportunity But Question Enablers

Travel management companies are open to the idea that airlines will pay them to merchandize, but not if it requires them to start paying for distribution technology to enable it. At least, this was the message from a couple of TMC executives speaking at The Beat Live last month, and please do comment below if you disagree (or agree!). [more]

"We have been approached about the possibility of paying the GDSs," said TS24 CEO Tammy Krings. "That will not happen in our world. That, I think, is a very risky proposition and something that most regional agencies and smaller agencies--and probably even megas--would not be able to absorb. [We cannot] justify the reengineering of the model. Maybe in four or five years, but not today."

Amadeus and Travelport have been touting new desktop solutions for which they want to charge TMCs. In theory, one tradeoff is the potential for these solutions to enable merchandizing--and that the airlines will share some revenue for ancillary sales--but TMC execs seem skeptical. The same dynamic applies with American Airlines' direct connect model, in which TMCs would be expected to incur tech development costs but AA could potentially pay them to upsell.

"The airlines are making noises about sharing that revenue," said Protravel COO Tony Shepherd. "I think merchandizing is great, but how you get it is the problem I have. I can't have a direct-connect relationship with 195 airlines. If I have that direct-connect relationship with all those airlines, then I just become a GDS by another name. So the jury is out on how we get there."

Said Krings, "Airline merchandizing may turn out to be a catalyst for changing the model. I could see a more intimate relationship between the agency and airline that has more to do with expectations than finances, and that will require more technology. But the agency community struggles with changes requiring us to invest in technology."