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Corporations Need To Take the Lead in Travel Distribution Reform

RADNOR PA., August 9, 2006–The interests of corporations are far more aligned with those of global distribution systems (GDS), rather than airlines, in the current airline-GDS negotiations, according to a heavily reviewed report issued Wednesday by the Business Travel Coalition (BTC). But unless corporate customers engage now they risk being on the receiving end of change instead of leading it and protecting their interests. 

The white paper, “Straight Talk: Global Distribution Reform – Avoiding the F-Word,” makes clear that corporations’ biggest nightmare outcome is airline content fragmentation (the F-word), which would drive increased costs and complexity while undermining corporate travel policies and ultimately raising prices for corporate customers. Fragmentation concerns stem from past airline practices, where they have made some fares available only through certain distribution channels, thus undermining corporations’ travel procurement programs.

“The strategic imperative for GDSs is to maintain comprehensive access to airline content, as this issue represents the very heart of the GDS business model,” the report says. “The strategic imperative for the airlines is the opposite.”

“Corporations require ironclad commitments to full content and narrow definitions for exceptions, and protections for travelers’ data. This happens to be in alignment with the self-interests of the GDSs.”

In the report, BTC urges travel managers to “communicate directly with airline CEOs that ‘full content’ is not negotiable – and it has to be ‘full,’ not a definition that has holes in it that undermine corporate travel programs.”

The report comes as negotiations between the largest airline, American, and the largest GDS, Sabre, have reached an impasse, and as a Sept. 1 deadline approaches, after which airline and GDS economics will change substantially. The deadline comes after most airlines and GDSs have reached agreements on new economics and content guarantees in the first round of industry negotiations since GDS deregulation in 2004.

According to BTC chairman Kevin Mitchell, “Corporate travel managers tend to see themselves caught in the middle of this battle of titans when in reality they are in the best position to shape the outcome of these negotiations. They must act, but they must do so quickly.” 

The report is available at http://btcweb.biz/btc_distribution_reform_report.doc (Should you have a problem with the preceding link, please use http://btcweb.biz/reform_report.htm)

Included in the report is an Executive Summary, written for non travel industry executives, for corporate travel managers to use with their senior management teams to educate them and engage them in this most important of travel management priorities.

BTC also organized a forum for travel managers. Some 150 prominent travel managers have already joined. BTC is planning hurry-up surveys, discussion forums, conference calls, additional reports and analyses. Travel managers interested in joining the forum can get more information at http://btcweb.biz/ctm_invite.htm