When British Airways and Iberia announced plans
to surcharge global distribution system bookings
in May, comparisons to Lufthansa Group were
hard to shake. As Lufthansa did in 2015, the International Airlines Group carriers this year opted out
of full content deals with GDSs, surcharged those
bookings and offered direct booking alternatives
for travel buyers to avoid the fee.
Eyeing its moves in distribution, CEO Willie
Walsh told investors in November 2016: “We are
not going to model this on what anyone else has
done because we are not the same as Lufthan-
sa, for example. What they have done may have
worked for Lufthansa. It is not necessarily what
will work for us. ”
With the creation of a “private channel” for
select travel agencies to avoid the surcharge
when booking through GDSs, IAG certainly distin-
guished its corporate travel distribution approach
from Lufthansa’s—and, for that matter, Air France-
KLM, which followed IAG in announcing its own
Amadeus was the first GDS to enable a private
channel framework with IAG. Sabre and Travelport
followed. In this model, IAG invited travel agencies to continue to transact through the GDS but
spared their clients from paying 8 British pounds
per fare component or a local currency equivalent.
This was welcome news to travel buyers whose
TMCs avoided the cost and got to preserve established processes for booking travel. Still, IAG’s
private channel created a bifurcated world of corporate travel distribution. While the mega TMCs
and most of the largest corporate agencies in BA’s
home market received a private channel nod, it left
other agencies that don’t get such a deal at a price
disadvantage. This has troubled the have-nots in
the agency community.
This year, Walsh said IAG was gunning for
“structural change” in distribution, adding, “the
nature of the relationship between GDSs and airlines is not sustainable, and we want to get that
changed.” The change has come.
It takes two to tango. While the International Airlines Group initiated a new “private
channel” concept in travel distribution this year, the British Airways and Iberia parent
needed a willing partner on the distribution side to do the dance. Enter Amadeus.
In October, a month before BA and Iberia enacted a distribution surcharge on global distribution system
bookings, several major travel management companies revealed they’d reached a deal, facilitated by Amadeus, in which the airlines would shield their corporate customers from the airlines’ GDS-booking surcharge.
In the ensuing months, Sabre and then Travelport followed suit on similar deals that allowed travel
agencies, handpicked by IAG airlines, to book on their systems without surcharge.
Amadeus SVP of travel channels Decius Valmorbida was instrumental in fostering the model at the
first-mover company. He cited demand from the two primary users of the GDS. “We have seen both
the agencies and the [IAG] airlines saying, ‘I would like to have some resellers with access to different
content and to different commercial conditions.’ We have seen both sides ask us, ‘What if we could
come into commercial terms that are different than what is the standard GDS commercial offer?
Would you as a technology provider be able to power that?’ Our response has been, ‘Absolutely.’ We
have the infrastructure, we have the technology and we can facilitate those agreements.”
The modus operandi of each GDS for years had been to secure equal access to airline content
for all agency subscribers, and the private channel has deviated from convention. Amadeus called
private channel “a workable option for specific contexts. It gives travel agencies and TMCs access
to a full range of content and servicing capabilities, while also giving airlines the ability to sell their
content in a way that meets their strategic business objectives.”
Indeed, as Amadeus seeks to address “the issue of content fragmentation,” it noted that “the
private channel is just one of the many models we’ve been exploring.”
Private Channel Partner
AMADEUS SVP OF TRAVEL CHANNELS
Agree with his policies or not, one can’t deny the global travel disruption U.S.
President Donald Trump’s executive orders regarding travel to the U.S. have
caused. His first so-called travel ban, issued Jan. 27, restricted citizens of Iraq,
Confusion, uproar, protests at major airports, legal challenges and condemnation by major corporations
ensued. Judges in New York, Massachusetts and Virginia blocked certain aspects of the order and temporarily halted deportation for individuals with permanent U.S. resident status or valid visas but not before the
federal government detained 746 people over 26. 5 hours on Jan. 28 and 29 and provisionally revoked about
60,000 visas, spinning lives into limbo. Nearly 50 cases challenging the order were filed in federal courts
within four days of the order.
In March, Trump replaced that order with a narrower one that dropped Iraq from the list of banned countries; confirmed that green card holders, those with temporary student and work visas and visitors with a
“bona fide relationship” with someone in the U.S. would not be affected; and suspended Syrian refugee
applications for 120 days rather than indefinitely. This second order also faced legal challenges immediately; more states, businesses and universities joined the fight and filed injunctions that claimed the ban
remained unconstitutional and harmed states’ business communities and economies. Federal judges in
Maryland and Hawaii blocked the order in March, and in May, after the 4th Circuit Court of Appeals upheld
a nationwide injunction, Trump vowed to take the case to the Supreme Court. In July, the courts forced the
State Department and Homeland Security to revise its definition of a “bona fide relationship” to encompass more family members and entities like employers and universities.
Again preempting higher court action, Trump in September issued a third version of his so-called travel
ban. This one indefinitely restricted travel from five of the seven countries in the first order, excluding Iraq
and Sudan, and adding Chad, North Korea and Venezuela to the list. Federal courts in Maryland and Hawaii
blocked the order before it was scheduled to take effect in October. However, on Dec. 4, the Supreme Court
reinstated the third ban, and so it will be in effect through appeals, which could be destined for the Supreme
Court. Oral arguments on the Hawaii case began on Dec. 6.