Travel distribution costs are clearly important but should not be the only issue, according to Jim Davidson, CEO, Farelogix.
“The cost benefit trade has to take place here,” he said during a panel discussion of “Alternate Approaches to Travel Distribution” at ResExpo 2005.
“If you just focus on getting costs down, is that going to give you the right opportunity to sell at the right price?” he asked.
He suggested that businesses needed to have control of their distribution costs. “You don’t have control today,” he said.
Another panel member, Pam Elledge, vp of sales and distribution, Delta Air Lines, made the point that legacy air carriers had nothing personally against GDS systems. But that they represented the airline’s most significant cost and that “there needs to be a change in the cost model.”
For the legacy carriers, that is particularly critical because start-up airlines often rely on the internet and have much lower distribution costs, she said.
“All companies are looking at finding the most efficient ways to get customers to fly our planes,” said panel member John Slater, managing director, Distribution Planning, Continental Airlines. He pointed out that airline ticket buyers have no concern for distribution costs but simply pay attention to the final price tag.
He said airlines are increasingly moving to the internet to sell tickets not only because of lower costs but also because internet success in driving customers, unlike more traditional advertising such as print or the electronic media, can be more exactly measured.
The panel agreed that fragmentation in the distribution system would continue in the future.
Report by David Wilkening
