Summary
The relationship between airlines and their distribution channels called Global Distribution Systems go back four decades. Although the relationship changed significantly during this time, all changes took place in the last ten years with the most significant one happening in 2006.
Analysis
Year 2006 will go down the books as the year of change in travel economics. The current agreements between airlines and Global Distribution systems (DCA-3) either expired or will expire by the end of the year. At the mean time, both parties worked for the last eighteen months on new agreements code-named Efficient Access Solutions (EAS).
The new agreements created instant winners, potential winners and many fighters for survival, over the next twelve month a lot will change in the space.
While many of the airline industry problems are chronicle in nature such as gas prices, aging fleet and labor cost, one area they could save on is distribution cost. In the end of 2003 and after several brutal years, the major airlines decided to take matter in their hands by introducing new breed of fares (WEB Fares) and controlling the access to these discounted fares.
The concept proved revolutionary when the distribution channels (GDS) had to negotiate with the airlines and offer cache and incentives to access WEB fares.
Three years later (2006), the new agreements although slightly different demonstrate the newly founded influence of the airlines and threaten the existence of some of the major players in the space.
