Between the Devil and the Deep Blue Sea
"Between the Devil
and the Deep Blue Sea"
In this new era everyone is latching on to the use of technology across industry verticals to do things in a better way. In the Travel and Travel distribution domain, the core function of a GDS Company remains effective distribution but responsibility of a GDS today goes beyond just distributing seats.
GDS is seen as a primary technology enabling partner not only to the Airlines but to Travel Agencies as well. To the Airlines, GDS allows them to reach agents, optimize revenues, manage seat sell-ability with integrated up-sell capabilities, reduce costs and find new ways to maximize revenues. While most progressive Travel Management Companies look up to the GDS for integrated content, to help enhance the revenue streams, channel maximization, manage agency network, manage travel financials etc. etc.
Travel agencies are taking interest in a whole range of products apart from Air and understand the benefit of technology enablers with diverse interfaces like integrated accounting packages and mid-office/back office etc. Up to a large amount skilled man power that was expended on cliché manual exercises can be automated and the energies can be focused on selling more content.Challenges faced by the Travel Agencies
- Increasing & Ruthless Competition
- Reducing Customer Loyalty – customers today are deal seekers
- Decrease In Profit Margins: Difficulty in tracking payments and pending payments
- Ever Increasing Operating Costs; Lots of paperwork: Contracts, Vouchers, Invoices, Billing, Client info, Booking info. Difficulty in managing booking details, client information
- Shift From Being Product Centric To Customer Centric: Strong need to Offer what customers want than offering what Travel companies have. Lack of flexibility to choose between deals, complete information is missing
- New Channels Of Distribution: Lack of diversified selling channels therefore Limited target market
- Ever Changing Market Dynamics
- Unable To Push Or Sell Last Minute Inventory: Difficulty in moving the inventory faster resulting in loss of revenue
Technology’s role in the space of inventory distribution and reach has been unprecedented, giving both principal and agent the access and flexibility to enhance the value of the inventory itself. The luxury and convenience of the past has become a cause of pain in the new era. Today the principals in particular want to know what is it that the GDS companies can do to justify the high cost of distribution they demand.
Challenges faced by the GDS
- Lack of loyal customers with Increased & Fierce competition among GDS’s leading to Agency business Churn
- Direct distribution from Airlines & Other Suppliers
- Lack of Agent Relationship Management
- No detailed insights into destination, type of travel sold etc – target content
- No new revenue opportunity
Watch out for the next article that would be a postmortem of how the GDS sees the Indian Travel market and how the GDS aims towards bridging the gap….