Compiled by Satyaki Dutta
The Global Distribution System (GDS) is one of the most important tools for the travel industry. It is an online system or network that functions across the globe and connects the travel service providers or vendors to the travel agencies in real time, by providing a centralised service that covers the bookings of airlines tickets, car rental, hotel rooms and more.
The system enables automated transactions between travel service providers/vendors and travel agencies. The travel agencies use the services and products to provide travel-related services to the end consumers. It deals with worldwide data, rates, inventory, offers real-time availability of airlines, hotel rooms, car rental, tickets of local commutes and many more to make the booking easier for the operators and vendors alike.
American Airlines and IBM, launched the first automated reservation system Sabre (semi-automated business research environment) in 1959, it was completed in 1964 as the first largest civil data processing system, accessible throughout the world. After the deregulation of the Airline industry, it became more important.
Now, the GD systems run independently and their major subscribers are airlines and travel agencies. There are three major GDS in the market- Amadeus, Sabre and Travelport (Galileo and Worldspan) in both B2B and B2C platforms.
GDS does not hold date inventory, it is held on the vendor’s reservation system itself but it has a real-time link to the vendor’s database. The status of inventory is updated by the system in real time. Thus managers can view rates change and can further change the price or make a special offer. Agents can view all the changes instantly and suggest the new updates and offers to clients at that time itself.
According to the data, we can see that 2015 was a very successful year for the travel agents using global distribution systems for bookings. Travel-Click research data shows that the amount generated by bookings through GDS was around 62 million, which was 61 million in 2014 and 42 million in 2009. There was a total revenue generation of US$12 billion in the second quarter in the top 50 global markets. Among those bookings, GDS integration covered 16.3 percent.
Among the major GDS, Amadeus was founded in 1987 in Spain. European airlines Air France, Iberia, Lufthansa and Scandinavian Airline, created Amadeus Marketing SA to provide a neutral global distribution system for the European market. Travelport on the other hand was created with the amalgamation of erstwhile Galileo and Wordspan. Sabre is the oldest, but still running with high profit till date.
The above graph shows the revenue of selected global distribution systems in 2017. The global distribution system Amadeus generated revenue of approximately 5.81 billion U.S. dollars in 2017, while in case of Sabre it was 3.6 billion U.S. dollars and Travelport generated 2.45 billion U.S. dollars only.
If we take the air market share in the recent times in consideration, we can see the following image:
So, we can conclude that Amadeus plays one of the most important roles in case of GDS nowadays. The annual worldwide revenue of Amadeus from 2010 to 2017 is shown in the graph below. In 2017, Amadeus generated approximately 5.81 billion U.S. dollars in revenue, up from 4.71 billion U.S. dollars from the previous year. The recent revenue generation of Amadeus is shown in the following graph:
The annual worldwide revenue of Sabre Corporation from 2012 to 2017 is shown in the following graph. In 2017, the corporation generated 3.6 billion U.S. dollars in revenue, up from 3.37 billion U.S. dollars the previous year.
Many experts opine that by the end of 2020, GDS will be obsolete because many of the airlines’ vendors are adopting the strategy of “direct selling” to their wholesales and retails (consumers). The inception of multiple website that can compare the price across the internet can potentially eliminate the need for dedicated GDS for point-in-time prices and inventory for both travel agents and end-customers. Anticipate, GDS may evolve like other technology/software-based systems.