Live From the Masters - The True Cost of Distribution

A great panel...Tim Claydon -Jet Blue, Al Lenza- NWA, Dean Sivley -Cendant, John Stow- Sabre, Jeremy Wertheimer-ITA Software,

NWA- Al chided Sam about the $7.50 charge, he said that he would " like to have a bill for his NWA segments at that rate". He commented on $4 , or $5 as the cost.
Cendant - Costs should evolve (following on Sam Katz's themes)
Jet Blue - Out of the GDS completely - not willing to pay GDS pricing
Sabre - $9 range for DCA, Can't focus on simple transactions. If the simple transaction model works, we'll do it. I am worried about integrating it back into the system. Sabre will increase fees if all their left with is complex transactions
ITA- the cost of doing an incremental cost of doing an additional segment is minimal. The ITA software does complex itineraries.
Sabre - changing prices - international airlines is different than SWA. - The key is value based priced
NWA - 2/3 rds of network is competitive with LCCs and thus high GDS fees don't let us compete. The problem is more than price. Disputes like the one with Sabre and diputes are likely to come out. The value of G2 and ITA is an ability to avoid that.
Cendant - echoed value pricing. He rejected Alex's view of another layer
The discussion then shifted to a discussion of service and charge card fees.
NWA - our charge card fees were higher than our GDS fees
ITA - In the old world - the credit card was limited. In the new world direct settlement is needed.

Live from the Masters - Sam Katz

"Owning the Value Chain" - having the most value to you. Sam began by emphasizing the global aspect of travel echoing Trip's initial comments. He mentioned that one focus must be on the stability of provider (an obvious reference to the GNE startups) Goal is to take best practice from all Cendant entities. Strategy for Travelport / Orbitz, travelport serves more than 500 companies , Orbitz for Business . (so far this is stategy has not changed). The focus is on content (stressed importance of merchant hotels). Sam said "this is a economic discussion". Point to point $7.50 - $10.00. 40-60% of that is revenue share. The GDs retains $3 to $4 is kept for distribution. Unclear issues range of content, reporting, integration... Schedule based searching verses leisure type of searching not consistent in new GNE models. Cendant believes that they are best positioned to get LCCs.

My take is that Sam's had a clear message. The financial incentives are going away. The GDS will lower fees to compete by eliminating the financial assistance.

Live from the Masters Conference in DC- G2 Switchworks

First up Alex Zoghlin..."Myth Vs. Reality" What exactly is the "new" distribution model?"Alex began with Sam Gilliland quote saying the GNEs are a solution looking for a market, comparing it to H.M. Warner Bros. comment regarding talkies. He went on to compare quotes from Worldspan and Amex with comments about the birth of telephone or other "new" technology at the time. Alex believes that the "fracturalization" of supply is increasing not decreasing (I agree!). You need to what you need to do today and what is needed tomorrow. Tools today don't have all access to content. G2's "Super PNR" provides a single customer record to consolidate disparate content. Alex doesn't believe that there is a one stop solution. One monolithic company as a solution no longer works. Partnerships with TRX, universal client (green screen terminal) The key is to move to "touchless' transactions.
John Stowe from Sabre - countered saying that the "universal translator" is old technology. Alex then quoted lots of functionality that doesn't exist. John then said Getthere has automated refunds and exchanges. Cheryl Weldon form Worldspan chimed in characterizing G2 as another layer another component with additional costs. "Thank you for telling me what I offer". This has nothing to do with technology. The idea of a queue rejecting an e-ticket is foreign to G2.

Comments: This was a great start to the conference. Fireworks between G2, Sabre and Worldspan. Interesting positioning by Worldspan characterizing G2 as another layer that adds cost. Alex was light on specifics but gave the audience the impression there was a lot more functionality coming...