Air Transport World

Biting the hand that fees them: European airlines are looking to supplement or circumvent their CRSs in efforts to reduce the cost of ticket distribution. (computerized reservation systems)

European airlines are looking to supplement or circumvent their CRSs in efforts to reduce the cost of ticket distribution

European CRSs--Amadeus, Galileo, Sabre and Worldspan--are growing in size, capability and cost. So is competition, as changes in marketing, demand, EU rules and national attitudes help pry markets open.

And while previous market-share and agency-conversion battles were fought over business travel, a key focus of European CRSs today is the leisure market as well as nonair-travel suppliers. Leisure travel traditionally was booked by tour operators and consolidators, often using their own reservations systems or videotext. That makes them key targets for CRS vendors, including the European ones with airline owners that, facing increased competition, no longer can afford to ignore the leisure end of the business.

Comparing European CRS activity is not easy. Each vendor uses measures that promote its own strength. In locations, Amadeus is No. 1 by far, with 22,300. Then come Galileo International, with 12,700, Worldspan, 5,400, and Sabre, 4,200. Amadeus's position is not so dominant in bookings. As for technology, Eric Speck, Sabre VP-Europe, admits: "It's not like the old days, when a big gap in capability" existed between U.S. and European CRSs. Over the years, the two European companies acquired U.S. partners and some U.S. technology: Amadeus, through its ownership of System One (ATW, 1/96), and Galileo, 38% owned by United, the parent of Apollo, which is No. 2 in the U.S. behind Sabre.

Even as CRS volume grows, costs of distributing via CRS are under attack in Europe as in the U.S. Mike Thorne, managing director of Galileo-U.K., which is 100% owned by British Airways, observes: "Everyone points to the CRSs as the bad guys. Every airline CEO knows his CRS costs to a 10th of a penny."

Desmond Butler, strategic distribution manager for British Midland, says his company's traffic has grown steadily since 1988, when bookings still went through Travicom, British Airways' former multihost system. But CRS expense went from 15,000 pounds to 1.5 million pounds ($2.2 million), or 21% of BMA's total distribution costs, last year. He knows the percentage is high because his lower-fare airline produces smaller (percentage-based) commissions. Still, he resents the fact that BMA pays the same fixed booking fee as does BA for a Concorde ticket; that his fees help mega-airlines spread their distribution worldwide, something he does not need, and that CRSs do a lousy job of controlling phantom bookings by agents trying to boost their payments. …

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