Evolving Airline Distribution Models
While price remains a key competitive factor, it is no longer the sole driver of lowcost carrier business strategies.
LCCs now focus on other areas, such as merchandising, multi-channel strategies and
increasing partnerships. They also place more emphasis on:
➢➢ Maintaining low costs while compensating for rising costs of fuel and aircraft,
➢➢ Integrating new services into the current model and enhancing customer service,
Crossing international borders and experimenting with long-haul segments,
➢➢
Expanding market opportunities such as increasing international reach and accessing
the corporate segment by participating in a GDS.
With carriers veering from the fundamental low-cost strategy, it is no wonder that the
low-cost business model has been difficult to define in recent years. The result of this shift
is the emergence of the “hybrid” business model (Figure & figure). This model combines
the cost-saving methodologies of a pure low-cost airline with the service, flexibility and
route structure of a full-service carrier. (Figure & figure) demonstrates this phenomenon of
evolving models based on three Carriers.www.sabreairlinesolutions.com
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Hybrid distribution model (2008)
Source: www.sabreairlinesolutions.com
Hybrid Model 2010
Source: www.sabreairlinesolutions.com
The trend toward a hybrid business model impacts the requirements for IT systems
and drives the need for a more sophisticated and flexible technology environment. There
are many reasons successful hybrid airline executives invest in leading-edge technology
with the right technology partner, such as:
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➢➢ Moving to a new passenger service system (PSS) that supports the current model as
well as enables future capability requirements,
➢➢
Requiring technology to evolve and support the airline’s scale of business,
➢➢ Requiring a provider with deep industry experience and sophisticated delivery
methodology that meets current and future demands,
➢➢ Looking for greater revenue-producing code share and interline partnership
opportunities,
➢➢ Expanding ancillary revenue,
➢➢
Identifying marketing opportunities to gain more accurate insight into customers’
behaviour patterns and needs.www.sabreairlinesolutions.com
Therefore, as a hybrid carrier, it is crucial to acquire technology that “sets you free”
to focus on your changing business challenges. With the right technology, hybrid carriers
can propel their businesses forward, responding more quickly and effectively to changes
than ever before.www.sabreairlinesolutions.com
Conclusion
The models are GDSs and other distribution system explained above are practiced
currently but there are strong possibilities that these models keep evolving and changing
accordingly as and when the industry is requires the change. As the dynamics and environment
keeps demanding more and changing its nature, these models also keep evolving. Many
organisations do not work with same business models due to the environmental pressure
that keeps changing rapidly. In order to cope up with the changing pace and expectation of
the markets these GDSs keep aligning or changing their business models to ensure offering
products and services that matches the needs and requirements of the customers across the
World.
Self Assessment Questions
1. What is Global Distribution system?
2. Explain the significance of GDSs to Indian Tourism Industry.
3. What are the functions of GDS?
4. Compare and contrast CRS and GDS.
5. Explain the two sides of GDS market.
6. Discuss the history and growth of GDSs.
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7. How does CRS participate in e-tourism?
8. What are the Driving forces of GDS and CRS at Global stage?
9. How does a Hotel Distribution system function?
10. What are the values created by GDS to the tourism sector?
11. List down the major GDS that control the tourism market across the world.
12. Explain the contribution of SABRE GDS to the world Tourism industry.
13. Compare each of the major GDSs.
14. Explain the competitive advantage of World span in the tourism industry.
15. Critically analyse the Abacus and its association with various other partners to
operate.
16. How do these GDSs integrate to operate in tourism industry?
17. Explain the traditional Hospitality distribution model
18. Explain the dis-intermediated model of distribution system.
19. What are the changing dynamics of these models?
20. Explain hybrid Airline distribution model.
21. Explain the comprehensive GDSs model.
