Early next year, Amadeus will begin rolling out technical standards that it has developed in conjunction with ATPCO to enable travel agencies to sell airlines' ancillary fees through the GDS, David Jones, Amadeus chief executive officer, told TTU. The pace and urgency with which airlines have gone "charging in" to create new ancillary revenue streams is uncharacteristic of the industry, Jones said.
The development of electronic distribution and the protocols of interlining required a shared set of technical solutions, he said. But the rapid unbundling of air fares has led to a sort of anarchy, he said, with no time to develop a common method of dealing with the new sales strategies.
Where standards have not yet been defined, Amadeus will put in place its own message sets. On the "upstream side" -- the airlines -- Amadeus is building connectors to take data from airlines and translate it so it can be made available to distributors, Jones said. Distributors then would have the ability to provide true fare quotes with "apples to apples" comparisons of the prices they are paying for selected services.
"In time, the standards will catch up to the reality," he said. In his keynote address at the PhoCusWright conference, Jones also said he can envision an "evolution" away from the current GDS pricing model. The "overwhelming bulk of revenues have come from the provider side," he said. The logic of that economic model still applies, he said, but "we are trying to move incrementally away from the model where everything centers around the booking fee, and where that booking fee covers the entire bundle of functionality," he said.
In both his speech at the conference and in the interview with TTU, Jones stressed that Amadeus' role in the industry is evolving as an IT supplier to both airlines and retailers. (In both venues, he also declined to comment on Amadeus' reported plans for an initial public offering or on rumors of an Amadeus-Travelport merger.) In the wide-ranging interview, Jones said the recession has given a boost to the "community model" that Amadeus is developing for the hotel industry. Similar to the community concept behind the Amadeus Altéa platform for airlines, the integrated suite of hotel solutions is based on the sharing of development costs by participants. "Fixed costs become variable costs, which provides a buffer on the cost side," Jones said.
The challenge presented by the hotel industry is its "tremendous fragmentation," he said. The various technologies, proprietary and otherwise, used by hotels is a tangle of "spaghetti," he said, further complicated by the fact that most hotel chains don't own the properties that carry their brand. "They need more coherent data," he said. As for Altéa, Jones said that Amadeus has "mastered" the art of implementing the passenger services system with little down time for the carrier and relatively few post-transition snags. The company has developed methods that are "good, reliable and industrialized," he said.
While there is a "finite limit" on the number of migrations that can be achieved within a given length of time, Jones noted that Amadeus converted 15 airlines to Altéa in 2009 and will convert 13 in 2010.
Amadeus also is nearly at the end of its move to open systems, he said. In 2012, it will complete the saga that began 11 years and €100 million ago. Jones said 95% of the software currently being written at Amadeus is appropriate for open systems. The effort and the expenditure have been well worth it, he said. "I have no regrets."