One thing that has become clear as a result of the conflicts between American Airlines and global distribution systems and online travel agencies:  there is, at the least, a need to change the transaction model.

One thing American Airlines is right about is lowering the costs per ticket sold via these systems.  In a modern world, the IT infrastructure should provide lower costs now.  If the GDS companies want to retain this business, they need to come up with an e-commerce model that works for present day airline needs. 

Those needs are accomodating the unbundled services and fees that airlines are now using to enhance revenue as well as upselling customers into better services.  The present systems are basically the same old distribution systems that have existed for decades with a web interface on the front. 

The airlines would be better served by establishing a standard for others to work from.  The requirements for what airlines need today and what they may need tomorrow should be established first and the GDS companies and online travel agencies need to re-think their own business model some too. 

But allowing one airline to push out of the system and establish its own standard doesn’t necessarily permit transparency.  These companies need that transparency because they do their business on the basis of schedule and price.  Their value added is in offering you the best available fare for your schedule and in establishing complicated itineraries. 

The transaction costs associated with offering fares/tickets through such a system should be less than $1.00 per ticket if operated under a modern and well designed system.  It’s no more a complex purchase than buying something on Ebay. 

Airlines have an industry group and they can write these requirements and they should.  GDS and OTA companies have a place in this industry as well and they need not fear their imminent demise but only as long as they do move along with the times.  It’s 2011 now and systems that date back as far as the 1960’s should be put to bed no matter how much renovation they’ve gone through.

Filed under: Airline News by ajax