GDS execs: AA's direct-connect incentive won't move the needle
Jamie Biesiada on August 04, 2017
Forming a direct NDC-enabled connection to American Airlines to take advantage of the carrier's $2-per-booking incentive will not likely be cost-effective for most travel agencies, said the CEOs of Sabre and Travelport.
During Travelport's earnings call on Thursday, an analyst asked CEO Gordon Wilson if he thinks U.S. agencies have the technology and resources to implement a direct connection with American.
Wilson said that with some "noticeable exceptions," they don't. He didn't elaborate on those exceptions, but corporate travel agencies Frosch and HRG have committed to doing the integration.
"I don't think they do, and I'm not sure that for $2 it would be worth their while to do so," he said.
Sabre CEO Sean Menke also addressed an analyst's question about AA's incentive during the company's earnings call on Tuesday.
While NDC-enabled direct connects may enable carriers to drive more revenue with dynamic offers, they are an added complexity for agencies, he indicated.
"A direct connect does not address the costs associated with making that work within an agency, the mid- and back-office capabilities," Menke said.
According to Wilson, making a direct connection with American would require agencies to "re-engineer" all affected systems like invoicing and quality control. He also said it would require ongoing maintenance.
"The one thing about APIs is they don't stand still," he said. "They're forever changing, so it's certainly a cost which today none of these agencies have to bear. I don't think there's enough to make them want to do that."
Travelport continues to work with airlines, including American, to integrate their APIs into its platform, he said. He also said that the GDSs are more than just content aggregators for agents.
"We are also the entire way they run their back-office systems, the way they issue itineraries, the way they issue invoices, the way they deal with schedule changes," he said.
Much of what agents do is generated from their passenger name records (PNRs) in the GDS, Wilson continued, which would be affected if they were to make direct connections with carriers.
"I just don't see it happening," he said.
Menke said GDSs will continue to work to offer more products to agents, like more airline ancillaries. The intention of NDC is to enable intermediaries to sell more airline products.
However, Menke said NDC standards haven't been consistent, and the GDSs need consistency, not "one-off solutions for specific carriers."
"There have been 17 standard changes in the last four years," he said.