Since the beginning of time in the travel industry, there has been a need for content aggregators of some description. It has never made any sense for your Mom and Pop travel agent on Main Street (or the High Street depending on where you are reading this) to have relationships with every airline, every hotel chain and every rental car agency in the world in order to fulfill the needs of their customers.
And hence, the original Global Distribution Systems (GDSs) were born. (This is actually ignoring the fact that originally GDSs were just automated booking systems for individual airlines (such as Sabre and AA) but we'll gloss over that for now.)
History of the GDS
In the emerging era of the GDSs (late '70s to early '80s), they served an enormously useful function of allowing travel agents to connect to multiple travel providers (by this time starting to include hotels and rental cars) in a single system, minimizing the need for development to multiple systems for the sellers. It also therefore provided a great service to the suppliers: because the GDSs were connected to a huge number of travel sellers, the suppliers could reach a broader audience than they could with direct connections themselves.
By the late '80s, the GDSs were starting to realize that they held an enormous position of power, providing a great deal of value both to the suppliers and the distributors, and since then have imposed a number of incremental price increases on fees in both directions, which, I guess unsurprisingly, has unsettled some of the players in the chain.
What is driving the likes of American Airlines away from the GDS?
As a result of this behavior, you are starting to see the "revolt", ironically starting in particular by American Airlines pulling out of the content aggregation portals and demanding direct connections to their system.
It is worth pointing out, however, that this is driven by three key points:
- The increase in fees from the GDSs (as mentioned above)
- The massive advance in technological capabilities of both travel agents and airlines, making a direct connection to the airline actually feasible, which was not the case 30 years ago; and perhaps most importantly,
- The significant concentration of the travel-sellers market in the last few years, concentrating consumer demand through a few key portals, and the decline of the Mom and Pop travel agent as a means to book travel on a regular basis (as exemplified in corporate travel by the growth of the mega-Travel Management Companies (TMCs), but also on the leisure side with the likes of the mega-Online Travel Agents (OTAs) like Expedia and Orbitz etc.) This can be seen in Travel Weekly's PowerList where the top 3 agencies make up over 50% of the top 20, and the largest (Expedia) is 43x larger than number 20 (Ovation Travel)
How does this relate to rail
The rail industry, in terms of ticket distribution, is roughly comparable to the state of the air industry in the late '70s and early '80s. Connecting to rail lines tends to be very technologically challenging, and the standards that have developed in the air market (ticketing standards, timetable standards, airport / station codes, standards on fares) do not exist in rail at all.
Not only that, but there is the added complexity of traveling by rail, in that there are 1000x more train stations in the world than there are airports, which therefore creates the exponentially more complex combination of routes. On some trains in Canada on Via Rail, you can request a stop at any point between two stations and there are 67 scheduled stops on the direct train between Toronto and Vancouver (taking three days)!
Therefore the need for content aggregation, journey planning, standardization of ticketing, station codes etc, are all critical to the success of major travel sellers like the TMCs and OTAs to be able to sell rail in an efficient manner.
Full Disclosure: this is exactly the problem that SilverRail solves, making selling rail easy for distributors, and providing straight-forward distribution solutions for carriers.
The future of the GDS
The concept of content aggregation is always going to be a powerful one, with new technological solutions constantly emerging (for example, Farelogix in air, and GDSx in middleware). Firms are also finding ways to make the data available through these aggregation systems more useful and practical to their customers (the obvious example being ITA Software taking GDS data and making it useful for agents). And new industries will continue to be covered (for example, CarTrawler in rental cars).
As long as the aggregators are providing value to their partners (both suppliers and distributors), and not taking advantage of their position in the chain, a role will always continue to be played in this space, even if the exact form does not remain constant.