British Airways has agreed significant price reductions with the Sabre and Galileo Global Distribution Systems (GDS) and now hopes to negotiate discounts from Amadeus and Worldspan too.
BA has become the first of the major European carriers to sign up to the three-year discount deals pioneered over the last year by Sabre in the USA. The agreements with Sabre and Galileo both begin in March. As part of the deals, BA has undertaken to ensure that its entire inventory is available via the GDS, so that travel agents will be able to access all fares including online discounts.
Airlines have long been demanding lower GDS fees and increasingly use online offers to bypass traditional sales channels. "It is the last line of our cost of sales where we have been unable to reduce our cost," says Ian Heywood, head of corporate sales at BA.
BA will not specify what price reduction it gained from Sabre and Galileo. In North America, carriers that signed up with Sabre's Direct Connect Availability product, which BA has now signed with, are understood to have obtained discounts of around 15%.
Despite being unhappy with GDS prices for several years, BA had made little headway in negotiating discounts. With an increasing number of online bookings, and rising commercial pressure, the timing of a change in approach was right, says Heywood. Alternatives like taking "inventory away from the GDS or surcharging all fares sold through the GDS" were not what BA wanted to do. "We believe GDS are an excellent way to distribute our product - the problem was on price," he says.
BA has also been in talks with Amadeus and Worldspan on price reductions. "To a certain extent the ball is in their court," says Heywood. From March, travel agents that book a ticket through a GDS other than Sabre or Galileo will pay a £3 ($5.5) per sector surcharge. The travel trade remains BA's largest global sales channel, representing 68% of bookings. The airline's website makes up 14% of bookings while other direct channels such as call centres make up the balance.
MARK PILLING LONDON
Source: Airline Business
