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onebir
Joined: 17 Nov 2007
Posts: 48
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 Posted: Thu Mar 20, 2008 10:04 am Post subject: Low cost airlines & global distribution systems (GDSs) |
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Apparently quite a few have signed up with the GDSs so their tickets can be sold via travel agents - even though the booking fees are pretty high compared to their ticket prices:
"Industry experts say that the direct cost of distribution through GDS is around $3.5-4 (Rs 140-160) per segment (one-way trip). Besides this, passengers also end up paying travel agent’s commission. "
I imagine there's a fixed cost element in the airlines contracts with GDSs too.
I think these moves might reflect
a) the fragmented nature of internet flight searching - there's no engine I know of that searches budget & conventional carriers simultaneously & efficiently* - & possibly
b) relatively low internet usage in some of the countries concerned.
Both these factors imply the budget carriers have untapped potential customers sitting in travel agents - worth the booking fee & a (sufficiently low) fixed cost.
*skyscanner.net, if they manage to keep the route/airline information up to date, does a pretty good job for the budget carriers
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attitudetravel
Joined: 15 Nov 2007
Posts: 248
Location: London, UK
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| Posted: Fri Mar 21, 2008 2:56 pm Post subject: |
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| Quote: | | relatively low internet usage in some of the countries concerned |
I suspect that this plays a big part.
Low cost airlines such as Air Asia want to keep expanding but for that they need to keep their load rates as high as possible - and for that they need distribution. The current levels of internet penetration and credit card penetration in Southeast Asia probably don't give them the distribution they need. Turning to GDS for distribution seems like a desperate measure for a dedicated LCC given the additional fixed costs though.
Some time ago Nok Air in Thailand quite innovatively introduced Counter Service Plus which allows passengers to book flights over the internet and then make their payment at a 7-Eleven outlet.
That's only good for non-credit card holders who have internet access though. I'm sure there are still a lot of people in Malaysia and other countries to whom it would never occur to go to an internet cafe to book a flight rather than to go to a travel agent.
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Alan Lansdowne
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Last edited by attitudetravel on Fri Mar 21, 2008 3:08 pm; edited 1 time in total |
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attitudetravel
Joined: 15 Nov 2007
Posts: 248
Location: London, UK
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| Posted: Fri Mar 21, 2008 3:03 pm Post subject: |
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| Quote: | | there's no engine I know of that searches budget & conventional carriers simultaneously & efficiently |
Actually, that's exactly what Skyscanner is eventually aiming for, even though they started out just covering budget airlines. I met Gareth Williams and Barry Smith - two of the original three founders of Skyscanner - at a meeting in Berlin on March 6th.
This was the first time I had met them in person, but I reminded Gareth that a few years ago - late summer 2003, in fact - he had contacted me with regard to the possibility of including some of the Skyscanner functionality on attitude Travel. Obviously those three have had a lot else on their minds for the last four and a half years, but now we're in proper contact that may still happen.
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Alan Lansdowne
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attitudetravel
Joined: 15 Nov 2007
Posts: 248
Location: London, UK
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| Posted: Fri Mar 21, 2008 5:16 pm Post subject: |
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It would be useful to clarify which Asian LCCs are currently relying on which GDSs for distribution.
If I am not mistaken, the Abacus GDS already distributes seating for:
1) Air Deccan
2) Jetstar Asia
3) Firefly
4) Air Asia
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Alan Lansdowne
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attitudetravel
Joined: 15 Nov 2007
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Location: London, UK
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onebir
Joined: 17 Nov 2007
Posts: 48
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| Posted: Sat Mar 22, 2008 7:46 am Post subject: |
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| Quote: | | That's only good for non-credit card holders who have internet access though. " |
Unless there's internet access for booking at the 7-Eleven. It's a while since I've been to Msia, but I'd guess the 7-Elevens might be online for stock/accounting purposes...
| Quote: | | Turning to GDS for distribution seems like a desperate measure for a dedicated LCC given the additional fixed costs though. |
I think it really depends on the deal they got on the fixed costs - which I suspect will never be disclosed. The GDSs also stand to gain - they must have been losing market share & revenues as LCCs increased their bookings via their proprietary online engines. |
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MetalTraveller
Joined: 06 Dec 2007
Posts: 12
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