The travel press have been playing up ITA Software's recent announcement with Air Canada as a sign that the GNEs have been unsuccessful in their quest to replace the GDS. Again I must reiterate a theme from my prior blog entries: this shift in distribution is not about us verses them (GNE verses GDS) but about the ever increasing likelihood that a single GDS will lack total travel content. Why is ITA focusing on airline automation? The answer is very simple. The majority of airlines still run their reservation platform as a partition of a GDS and thus some of the same inflexibility that exists in the GDS mainframe infrastructure also exists in the airline reservation systems. The underlying message here is that airlines want control over their distribution platform and there is no better way to seize control than to implement an entirely new airline reservation platform that is independent of the GDS. I've known for some time that this has been a main focus of ITA and thus the announcement was not surprising. Airlines want to control the level of fare inventory through different channels. It is this underlying desire which will likely increase the level of fragmentation in the market. Despite all the flurry of GDS announcements regarding their new airline contracts, no single GDS has signed all the major carriers. In addition, as details of the distribution deals surface it is likely that some of the travel agents may opt-out of the deal limiting their ability to gather complete content. The major TMCs (American Express, CWT, BCD) have already built (Amex TravelBahn, CWT Symphonie) or are in the process of building (BCD Project Renaissance) their own internal systems to aggregate content. At the end of the day the need for a GNE (with a focus on 2nd tier TMCs) will be more important as a tool to aggregate content across GDS as it will be for direct connection inventory. Both G2 Swtichworks and Farelogix recognize this and each has promoted this capability. By the end of this year, some of the smoke will clear giving us a clearer picture of who has what inventory and at what price. Who pays for this access is still unknown as TMCs will struggle on whether to pass on this cost their corporate customers. The bottom line is that fragmentation is here to stay. This will not only impact the corporate market, but the leisure market as well.