In November 2017 IAG group, owners of British Airways and Iberia introduced a new fee called GDS surcharge to all travel companies unless they had been granted a private channel agreement with them. This fee is added to all fares booked through online and offline travel agents and travel management companies (TMCs) who have not been granted such an agreement.
You probably won’t even know you’re paying this as the fee is included within the taxes on the ticket, the fee was £8 per one way trip so £16 on a return ticket. From September 2018, it has just been increased by over 10% to £18 per return ticket and this came on the back of similar fees introduced by Air France-KLM groups.
It gets worse, but to understand the full implications, plus the searching questions to ask your TMC, you must understand what’s behind this momentous shift within the travel industry. Make no mistake this is a momentous shift.
Most travel companies still work on a legacy booking system called a Customer Reservation System (CRS) which works on an alphabetical system which consisted of 26 characters so only allows 26 different selling classes or clarifications. The newer airline entrance into the marketplace use a completely different system that is numerically based and thus allows the airline much more flexibility when it comes to pricing and yield management.
An example of this would be if the airline saw excess capacity on a particular flight it would be very difficult, under the legacy system, to react swiftly and put a special offer into the marketplace to fill the empty seats. Under the old system the airline would feed special offers to air consolidators (wholesalers) who then may or may not alert travel companies to the potential of these offers. Under the new system the offer can be in front of any potential buyer in seconds.
The battle lines between the airlines and the CRS companies were drawn many years ago when the airlines perceived a reluctance by the CRS companies to embrace a more flexible approach to selling their products. As a result, the International Air Transport Association (IATA) that represents 90% of airlines and licenses all agents set about building a New Distribution Capability (NDC).
Airlines selected key TMC partners who were prepared to commit to developing this new channel with them, as a result of that commitment those TMC’s were given a private channel agreement which meant the GDS surcharge was waived, for a period of time. Over recent months the airlines have been assessing the progress and commitment of the TMC’s who were given this private channel, and several TMC’s have or are about to have their private channels withdrawn.
Add to this the publicly stated commitment from Willie Walsh CEO of IAG group that moving forward British Airways cheapest fares will only be distributed through their NDC channel and the same being true for Air France-KLM group, you can begin to assess the huge potential harm this could do to any business where travel is a component.
So, there you have it, you might well be paying £18 more per return ticket without even knowing it, and if your TMC does not have a private channel agreement you most certainly will not be getting access to the most advantageous prices in the marketplace.
If you want to check anonymously if your TMC has such an agreement, email me at email@example.com