Amadeus and Galileo will be quietly pleased that this morning's story about Monarch Airlines exiting stage left from the GDS came on the eve of the long Easter holiday break.
A good day to find yourself buried in bad news, as the saying kind of goes.
Monarch is now only one of two major airlines in Europe not on any of the Global Distribution Systems.
The second, unsurprisingly, is Ryanair.
Monarch MD Liz Savage [come and witness her on a panel with, er, Amadeus at the Travolution Summit on the 21 April!] said the airline had seen a "huge decrease in the number of direct GDS sales".
This was primarily as a result of travel agents using other methods such as directly on monarch.co.uk or through its Avro sister brand.
Nevertheless, Monarch's decision says a lot about the extent airlines are going to in order to trim or their distribution costs.
A Monarch spokesman told us the move was not, as some suspected, linked to existing contracts with Amadeus and Galileo running out.
In other words, Monarch simply pulled the plug regardless.
So what is all this saying about the relationship between airlines and their distribution mechanism.
It could be said that Monarch's direct consumer sales are now of sufficient volume online (the huge monarch.co.uk branding programme over the past 12 months will have helped) that the airline has decided to go for broke and take the initially risky non-GDS route simply to simplify its channels - and reduce costs.
Ryanair was always the black sheep (for many reasons) of the air industry in Europe - even easyJet is using the GDS for business travel sales - but Monarch has now clearly taken a similar view that its own distribution programme is enough.
By allowing XML connections, web sales and the Avro partnership, Monarch may - like Ryanair - be confident it can achieve a similar reach as before.
The GDSs will be hoping that other airlines do not feel the same.
But if cost is an issue for airlines, distribution may well be further up the review schedule than people actually thought.
UPDATE: Good counterpoint from a business travel perspective from Murray Harold.
Distributiion is high up on the review schedule, or airlines' wish lists. In the U.S., when airlines and GDSs get around to their next round of negotiations in a couple of years, the airlines will be working hard to push all of their distribution costs on the GDSs and travel agencies. Things are going to really heat up, once again.
And I believe distribution costs were a primary issue in Sabre's recent spat with multi-source distributor Farelogix. Sabre cancelled a developer's agreement with Farelogix and I think the untold drama behind the scenes revolved around Sabre's being miffed that Farelogix is cutting much cheaper distribution deals with airlines than does Sabre with the same airlines.
Monarch's exist is a harbinger of much more distribution drama to come.
Good article, Kevin.
Kevin - great piece as usual.
This is forever part of the long evolution process. Fragmentation and diminished value coupled with a certain degree of economic disability being felt by all is driving a thorough re-evaluation of all forms of distribution. This is but one example of an airline making a rational decision.
Let's be clear though that the GDS never was a big part of Monarch's business so you have to be careful not to overstress the importance of one airline's move.
That said - as the airlines approach 50% distribution via their NON-GDS channels - the airlines will look to optimize their distribution to the most performing and efficient mechanisms at a cost effective price. Whether that includes GDSs is not longer a sure thing. Perhaps - dare I say it - a degree of rationality and common sense is emerging in the market?
Oh joy! What a thought for the Easter bunny.
Cheers
Timothy
The question for the Global Distribution Networks as well as for travel agents and other airlines is: are we noticing a panic-driven, crisis-caused tactical move, or are we at the beginning of a new strategic development : the start of the post GDS era? Airlines with a relatively simple connection structure and a solid client base are definitely tempted to go for a web and call center combination, reducing their distribution cost dramatically. Whether this temptation is realizable, is another issue: it requires a sound investment in brand building and communication, as well as ultra reliable and accessible web-tools.
For the GDS companies, today’s crisis may turn out to be the ultimate paradox: as most of the airlines are running short of cash, only those that have made the strategic choice to “go it alone” years ago, will be able to follow Monarch’s example. The others will be forced to continue to embrace a cost-expensive but investment-cheap distribution system.
Just a quick gamble: the ultimate distribution system for legacy carriers could very well turn out to be a combination of the newest web technologies and a fine selection of High Street travel agents.