industry note

UK Travel Distribution Update

March 27, 2007

Because of an unprecedented showing of corporate empowerment, 28 February came and went with the threatened disruption to the travel distribution system in the UK averted. Major corporations from both sides of the Atlantic stepped up and made their views on access to airline content and distribution choice clearly known to British Airways (BA). As a result, Galileo and today Sabre, have reached and announced full-content agreements with the airline. We are hopeful that Amadeus and Worldspan will not be far behind. Travel managers pointed the industry in a positive direction that is reflected in these first agreements, a direction that BTC and its allies will continue to champion not only in the UK but around the world.  

Apparently, BA was able to secure somewhat better economics in return for guarantees made to the GDSs for full BA airfare content. While some unwelcome cost-shifting appears to be ahead, a different and far more troubling outcome was looming that included not only the wholesale shift of BA’s distribution costs to travel management companies (TMCs) and their corporate customers, but also the systematic withholding of critical airfare content from our preferred distribution channels.

Both TMCs and their customers will have to address a new cost-sharing model in light of new opt-in programs; however, full content was the necessary prerequisite for a successful deal from a stakeholder point of view, and the excellent news is that at least with the conclusion of the first two deals, full content has been preserved. In the end, BA listened to us -- the corporations that are the airline's best customers. A senior BA official explained to Travel Weekly that the airline "absorbed" a Signatory Letter signed by 117 corporations and transmitted to BA CEO Willie Walsh.

Advantage Travel Centres, the Belgian Association of Travel Management, the Guild of Travel Management Companies, the Institute of Travel Management, the Netherlands Association for Travel Management and the Scottish Passenger Agents’ Association provided tremendous leadership in educating and motivating their members on this issue. These leading organizations met with BA, conducted member meetings, scheduled educational Webcasts, supported a peer-reviewed Industry Position Paper and facilitated a Signatory Letter to BA.   

The lessons learned in the UK will apply to other airline distribution issues around the globe that impact the customer because they threaten the content that fuels our travel programs. Indeed, right now, only 321 kilometers from London, the European Commission in Brussels is engaged in an industry consultation regarding reform of the CRS Code of Conduct (Regulation No323/1999) that governs the rules of the European global distribution system industry.

The outcome of these proceedings will determine whether the distribution and airline markets will be competitive in Europe while the continent's largest CRS remains airline owned. This is an issue of the highest strategic importance to distribution system stakeholders including European corporations and those companies around the world with business travel activities there.  The Commission has invited comments; corporations should weigh in by the 27 April deadline.   To that end, BTC will be preparing comments and will invite your input and endorsement.  

What the GDS / BA showdown demonstrated was that when empowered and determined customers unite in the face of a threat to their interests, they can make a huge difference. Some corporate travel buyers were of the opinion that the GDS / BA contract issue was between the airline and the GDSs -- and sat on the sidelines.  It benefited all stakeholders that 117 major corporations from around the world perceived the debate differently and successfully engaged the issue to safeguard their companies’ interests.

The Business Travel Coalition looks forward to collaborating again with all participants seeking to build a better business travel industry.