BA says GDS model is ‘fractured’

Wednesday, 02 Oct, 2003 0

British Airways head of worldwide sales Dale Moss says the airline may look to bypass GDSs because the airline cannot reach an agreement with them on fees.

“It is a fractured model. They [GDSs] have driven market share with financial assistance generated from service fees they have levied from us. This model is busted if you are drawing fees from companies that are not making money,” he said.

“We are stuck with an old world cost structure married to a new world price structure.”

During a meeting with journalists on Tuesday, TravelMole asked Mr Moss about BA’s ongoing negotiations with GDSs. He said: “Sometimes I think we are making progress and sometimes I am not so sure. It is like trying to get peace in the Middle East – one day you think you are close, then the next [day] it changes.”

Mr Moss said the problem was that one GDS is not willing to reduce fees without the others doing the same. He said: “One GDS has to move in a synchronised way with another – they are concerned about the others getting market share.

“If there were a danger greater than just losing a bit of market share, then maybe there would be a rationale [for change]. The only way around it for us could be a GDS bypass.”

Mr Moss said he couldn’t say whether BA would remove its fares from a GDS if fees were not reduced, but added that the GDS model remained an important distribution channel for BA. “It delivers price, schedule and capacity”, he said.

BA head of corporate sales, Ian Heywood added: “Removing fares from GDSs is not our philosophy.” He used the example of Aer Lingus, which he said has removed its cheapest fares from GDSs. “You should have as wide a distribution of product as possible,” he added.

Remarking on whether he thought the US scheme – of GDSs offering reduced fees for full access to fares – could work in the UK, Mr Moss said: “I don’t think it is sustainable over time – they are just fixing stuff around the edges.”

Meanwhile, BA continues to increase the proportion of direct sales going through its website. According to BA it now receives 45% of point-to-point European bookings through BA.com, and revenue generated online is currently 90% higher than it was at the same time last year.

Read our previous stories:
09-Sept-2003 Momentum replacement working well, claims Galileo
18-July-2003 Northwest widens agency access to webfares
23-May-2003 GDSs: Booking fees will come down