eyefortravel - Travel Distribution India '06

The meta-search revolution

ETW Staff

In a scenario where the role of GDS is witnessing a gradual change amidst reducing airline commissions and growing popularity of travel portals, one would ask how much leverage travel portals have as opposed to GDS pricing down the products.

Beatrice Tarka, CEO of Mobissimo, explains, "There is a little misunderstanding here. Travel agencies and GDS companies do not really compete with each other. Agencies such as Travelguru, Makemytrip, YatraOnline, etc are merchants that re-sell airlines inventory. GDSs are not merchants; they are simply service providers who provide a database for airlines and travel agencies to store their prices. They do not establish the prices of airline tickets and cannot sell them."

While travel agencies compete with legacy airlines and low-cost airlines, the airlines in turn try to reserve their special fares for their own websites. The agencies then try to use their purchasing power to negotiate large discounts for larger number of seats. Each travel agency will have its own set of prices and availabilities and those prices will vary from one travel portal to another.

Commenting on how much leverage does travel portals have as opposed to GDS' pricing down the products, Neelu Singh of ezeego1.com mentioned that " GDS is one of the many distribution tools to access rates and inventory. A travel portal accesses inventory from many channels. They may get from preferred suppliers, contracted rates, special deals from time to time. So you see it is more complimentary. Dynamic pricing is what ezeego1.com prides in. It is not a challenge but an opportunity for us to grow the market.

As far as Parallel shopping is concerned it is not only about price but also about availability, advice, time taken on the net, ease of connectivity. You may surf the website of a airline network but will get only fares of the respective airline. With ezeego1.com you get to choose a slew of airlines. Secondly, a host of hotel options, holiday bookings and attractions all on the same site. For example in the hotel accommodation section we would provide location of the hotel, their star category etc,. So it is not about pricing only."

But as GDS companies make their services cheaper, the airlines have all the interest to drive as much traffic (users) and transactions via their own website bypassing the travel agencies. The travel search engines such as Mobissimo, etc search traditional airlines, low-cost airlines as well as travel agencies to find out which price is located where. Does this kind of a situation form any challenge of dynamic pricing on travel portals? Tarka replies, "The travel portals usually evolve into consolidators in order to compete on pricing with airlines. They need to have a critical mass of users and transactions in order to negotiate with airlines for special discounts. They usually also tend to sell vacation packages (air travel, hotel, etc) to differentiate themselves from the airlines. Price is the most important factor in travel shopping."

When asked whether the challenge of comparison-shopping be reduced by consolidating large number of suppliers, Tarka says, "No." Elaborating on the same, she mentions that the Internet is heterogonous; the sources of information are very disparate and spread all over the world. "There are over 200 low-cost airlines worldwide, over 4,00,000 hotel properties and most of them are not listed on the GDS from where travel agencies pick up data. So it leaves users with the tedious task of going to each site one by one. While you may have one or two low-cost carriers or travel agencies merging together, you will always have several airlines each with their own set of prices."