industry note
April 18, 2006
Dear Industry Colleague:
After decades of U.S. federal government economic regulation, the global distribution system (GDS) industry is currently undergoing a marketplace upheaval that could bring with it acceptable changes or devastating losses to travel industry principals. Some airlines are endeavoring to structure a fundamentally new economic relationship among these principals -- airlines, GDSs, travel management companies (TMCs) and corporate buyers -- that could have irreversible, worldwide implications for corporate managed travel. No issue in a generation has been this important to the travel industry or corporate travel managers.
At issue is whether the lion’s share of benefits from a new distribution system model will flow primarily to network airlines at the expense of others, or alternatively, whether all principals’ interests will be taken into account. So far, TMC and corporate travel executives have been largely silent and unengaged; however, bottom lines are at great risk. The economics of the new model will likely be determined by this summer, when (for better or worse) most of the new airline-GDS agreements will be concluded. Many TMC and corporate travel executives are in danger of being surprised and unprepared for potentially radical change. However, corporate travel managers are in the best industry position to influence the outcome, if they choose to speak out.
The Business Travel Coalition (BTC) has taken several steps to bring transparency to this issue of strategic importance so that customers can influence the outcome and safeguard their interests. These steps include:
1. BTC wrote yesterday to American Airlines’ CEO Gerard J. Arpey and Continental Airlines' CEO Larry Kellner urging them to include corporate travel managers in the process of developing a new model for travel distribution. See this letter at BTC Letter to Airline CEOs Regarding Distribution System Reform.
2. BTC will publish tomorrow Wednesday a report entitled Post-Deregulation Travel Distribution: The Moment of Truth and Call-To-Action. This report spells out the current behind-the-scenes developments that could cause corporate travel budgets to swell in 2007. Download the report at http://btcweb.biz/btc_report_distribution_system_reform.htm.
3. This Thursday distribution system reform will be featured on BTC Radio, Talking Business Travel with guests Jean Covelli, Travel Administrator, Rich Products Company; Brad Seitz, Treasurer and Board Member, the Association of Corporate Travel Executives, and President of Topaz International; Jay Campbell, Chief Content Officer at ProMedia.travel and Founder of The Beat; and Paul Ruden, SVP Legal & Industry Affairs, The American Society of Travel Agents. Radio industry veteran and BTC Radio Commentator Jerome Greer Chandler will provide background. The show will air beginning at 6:00 am (EST) this Thursday and will be accessible indefinitely at http://btcblog.typepad.com/btcradio.
4. BTC and the American Society of Travel Agents (ASTA) have teamed up to give both TMC and corporate travel executives a platform from which their concerns can be voiced and interests represented on this issue. The Travel Distribution Working Group has been formed by ASTA and BTC to bring shape to TMC and customer proposals for sensible reform of the distribution system. If you are interested in membership information, please send an email to Kevin_mitchell@verizon.net.
5. With BTC participation, ASTA will be conducting an industry Conference Call on May 4 at 2:00 pm (EST) to discuss this critical issue. All industry participants are welcome to join this event. Registration for this event is at ASTA Educational Programs. Press may register by calling Liz Connolly at ASTA at 703.739.8710.