A new challenge that airlines are taking

Posted on December 15 2018

Today, airlines distribute and sell their products in two ways: through their websites (direct channel) or through travel agents and online travel sites (indirect channel). Of the one billion or so airline tickets sold globally each year, it is estimated that more than 60% are sold through the airline indirect channel. In the vast majority of the world, Sabre, Amadeus, and Travelport control the distribution of the airline product for the indirect channel sharing the market with approximately.

Amadeus GDS Bookings

– Worldwide Market Share 33%

Sabre GDS Bookings

– Worldwide Market Share 25%

Galileo GDS Bookings

– Worldwide Market Share 20%

The tensions between airlines and GDSs have been growing in recent years as carriers have increasingly made more revenue from unbundling their fares and offering services such as luggage, food and drink, priority boarding and seat selection as add-ons.This move has been hugely profitable for airlines but selling these services through GDSs is still in its infancy.

The GDSs charge the airlines for each ticket sold through their systems, with the average charge being in the $12 per ticket range. Multiply that $12 by 600,000,000 tickets per year and you get about $7 billion dollars. From these funds, the GDS pay the travel agency or online travel site a financial assistance incentive. As a general comparison, it costs airlines about $2 to $3 per ticket to sell through their own websites or using new direct connect technology available to them, their travel agency customers and even to the GDS. This provides an estimated 80% savings over the cost of the indirect channel. If the airline is paying $10 more per ticket to sell through the indirect channel, ultimately it’s the consumer that pays for that higher cost.

This made big names in the aviation industry such as Qatar Airways and Emirates to promote and urge their customers for direct sales through their websites and prioritizing the implementation of new functionality on their web sites and offering more exclusive deals that are available only through their websites, which we have seen continuously during this year from these two major airlines and its expected for many other airlines to follow these footsteps.

With this new trend and to better serve our clients with a competitive prices Babylon Booking is also starting the direct sale channel with the airiness through direct integration.