Friday, April 07, 2006

What Do the AA, CO & LH deals with Worldspan Mean to the Changing Distribution Landscape?

During the last two weeks Worldspan has announced new five year contracts with three large airlines: American, Continental and Lufthansa. Do these contracts signal the end of the buzz around alternate distribution? In my view, major structural change in distribution will continue (and even accelerate) despite these announcements. Many pundits are quick to point out that it was these three airlines that seemed to be making the most noise about alternate distribution and that their agreements with Worldspan seems to contradict their very public efforts. AA and CO were in the news with letters to travel agents saying that they may not participate in all GDS. As part of the Star Alliance, Lufthansa's technology subsidiary (Lufthansa Systems) announced a new agreement with Farelogix to power an alternate distribution platform for Europe. The bottom line change that is happening in distribution is NOT only about GDS bypass, but overall distribution preferencing. In other words, there are major changes under foot to allow suppliers and distributors to direct where inventory is shopped, priced and fulfilled. This capability goes down to the individual reservation level and can be different at each stage of the booking process. This underlying ability to control distribution is at the heart of the changes happening behind the scenes between suppliers and intermediaries. It is essential that everyone stay tuned to this issue as I believe it will permanently impact both consumer and business travel reservation processing.

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This capability goes down to the individual reservation level and can be different at each stage of the booking process.

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