Behind the rancor and noise surrounding American Airlines’ attempts to change the current distribution model, Gordon Wilson, Travelport president and chief executive officer, sees something quite different going on.
“Call me ‘glass half full,’ but the airline dialogue has changed,” he said.
Rather than focusing on segment fees, many airlines are talking with GDS companies about how they can work together to sell more of their new optional products and services.
“And we have started to listen better,” he said.
In an interview with TTU during the PhoCusWright conference in Fort Lauderdale, Wilson said he also sees a new equilibrium in the airline-GDS relationship.
“A price point has been reached that is fair,” he said.
Airline segment fees have remained flat even in the face of inflation, and in some cases they have been going down.
“That’s a hell of a deal,” Wilson said.
“Now we are working together to grow in challenging times.”
While the drawn-out drama of American’s battle to upend the distribution system has gotten most of the attention, “American is the exception, not the rule,” Wilson said.
The GDS-airline relationship may have improved, but some airlines – justified or not – still resent that part of what they pay to participate in the systems is routed to agency subscribers in the form of incentives.
“The rebates are not going to go away,” Wilson said. “But the pace of growth is going to slow markedly.”
The incentives will still be a major part of agencies’ revenue streams, he said, but over time, the technology that Travelport provides to enable agencies to sell ancillary products and create tailored offers will become “more important to agencies’ long-term success.”
A key element of that shift will be the Travelport Universal Desktop, which, after a number of delays, is finally going to go live in a U.S. agency, Cain Travel of Denver, early in the new year.
“Global products take a long time to get right, and we had some missteps along the way,” Wilson said.
“We had to redo some things, but we’d rather put a good product out than meet a deadline.”
The desktop will help airlines sell more of their ancillary products, he said, and a number of carriers “are now embracing the channel” to boost ancillary sales.
American Airlines, he said, “could be earning more now.”
Wilson commended American’s commissioning of ITA Software to build an “availability engine” to marry customer data with tailored products.
“As airlines change, they’re going to need this,” he said. “Every seat on a plane will have its own unique attributes, and you need a merchandising engine to put this together in a package.”
When American is ready to push those packages out, he said, “we’ll be there, ready to catch them and put them out there” to corporate travelers.
Wilson described the period leading up to Travelport’s restructuring of its debt as “quite intense.” He reiterated that the backup plan – a Chapter 11 bankruptcy filing – would have applied only to Travelport’s holding company, an entity “that does nothing except hold a piece of debt.”
But when word of a possible bankruptcy filing got out, subscribers were concerned.
Travelport was able to get 100% of the lenders on board with the restructuring, so the bankruptcy filing was unnecessary.
That comes as a relief.
“We can get on with our investments in our business without having to answer all the questions about the debt,” Wilson said. “We fixed it. It’s done.”
He noted that the company’s most recent quarterly earnings conference call with analysts generated an unusually long question-and-answer session, and “now all the questions are about the product, not the debt. It’s so refreshing.”