Air Transport World

Bypassing the middleman: Airline efforts to avoid GDS fees through so-called 'direct connect' systems are showing results, but is it worth it? (IT - Distribution).(global distribution system costs)

Airlines have been hacking away at distribution costs--one of their few "controllable" expenses--since the mid-1990s, culminating in the elimination of base agency commissions by most of the Majors last year. But distribution costs remain stubbornly high, in large part owing to global distribution system segment fees, which rose an average 6%-plus annually between 1990 and 2000. Agencies still book a hefty majority of tickets and issue virtually all of them through GDSs. That applies to online agencies as well: Even Oribitz, the website created by the five largest US airlines to reduce their distribution costs, uses Worldspan, generating GDS segment fees for the carriers.

But from Orbits's inception, its goal was to create direct connections to airlines' internal reservation systems and bypass Worldspan altogether. …

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