Southwest leads the way to operate a new route

TravelMole guest comment by Matthew Hall, vice president, supplier business development EMEA, Galileo

It’s interesting to see that Southwest Airlines, the original and most established low cost carrier in the world, sees GDSs as an important part of its business model going forward as it targets the corporate travel market.

Indeed, their CEO was recently quoted as saying that the GDS fits with their strategy to win more corporate accounts and more business travellers, whilst maintaining control of their distribution.  

JetBlue is also stepping up its efforts to court business travellers and has confirmed this week that its decision to return to GDS distribution is resulting in incremental revenue.

The low cost trend in the UK has been one of the great travel industry success stories, but to continue the dramatic growth we believe that the airlines need to take a leaf out of the book of Southwest and JetBlue, not to mention their more traditional full-service rivals, and offer their tickets for sale via the global distribution systems (GDSs).

By making their full inventory available on GDSs, low cost airlines will become more accessible to travel management companies and their corporate clients.

This is a move which would require a significant shift in their business models but would undoubtedly attract more corporate clients. In 2006, the 30 members of the Guild of Travel Management Companies accounted for more than 75% of all business travel bookings in the UK (source: Guild of Travel Management Companies).

And the GTMC is on record as backing GDSs as its preferred method of completing transactions. This would also be of benefit to corporations who increasingly want to have access to the lower costs provided by low cost carriers who are now operating from major city airports as well as the regional airfields.

By having these fares available through a GDS, the TMC would also benefit from increased efficiency, as they would no longer need to spend valuable time searching the individual low cost carriers’ websites individually or via screen scraping applications.

To continue to grow and develop, low cost carriers have to look at new markets and sources of revenue. It will take a change of mindset for some, but it does not have to mean loss of control of their distribution.

The GDS/TMC combination could well be the best possible route to take.

*See easyJet to sell via GDSs story