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About this report
The four Global Distribution Systems (GDS) – Amadeus, Galileo, Sabre and Worldspan – have been referred to as the backbone of the modern travel distribution system (Bear Stearns, 2000 – Internet Travel: Point, Click, Trip: An Introduction to the Online Travel Industry, London: 1-99). They have processed more than 1 billion air bookings each, and another 250 million for hotels, cruises and other non-air content, generating over US$6 billion in revenues. Sabre and Amadeus own the largest civilian data-processing centres in the US and Europe respectively. The volume of global transactions through the GDS has risen 4% year-on-year to 343 million. Worldwide, the GDS reaches some 230,000 points of sale.

In light of this, there can be no doubt as to their significance, but is their role declining in importance? They have been compared by some to dinosaurs – once powerful, but now on the road to extinction. The GDS are well aware of this comparison – one GDS conference presentation even featured a dinosaur slide recently. However, the speaker inevitably rejected the comparison and exuded confidence in the future of the GDS.

The four major systems have enjoyed traditionally what has been, in effect, an oligopoly sustained by the high entry costs required to build the IT booking systems to link airlines, hotels and car rental operators with travel agents and consumers. They are operating in a fast-changing market typified by evolving patterns of consumer behaviour, the emergence of new online sales channels, and a low-cost air model. Most existing content deals between the GDS and the major US airlines that provide them are up for renegotiation in mid- to late 2006.

The following questions posed at the annual eyefortravel (www.eyefortravel.com) GDS debate indicate some of the key issues facing the GDS:

How are the GDS evolving, and what impacts will this have on travel providers, agencies and the end user? What role should the GDS of the future adopt?
Other than the distribution function, what more can your GDS bring to the supplier relationship?
Do the GDS really have a lock-on access to particular channels? If this exclusivity erodes, will they have to start basing their pricing on value rather than on power?
Do alternative means of distribution pose a real threat to the GDS, or will the evolution of the GDS model render the Global New Entrant model redundant?
How will deregulation in Europe effect the distribution equation for the GDS, agents and suppliers?
These questions pose points for reflection throughout the report and will be revisited in the concluding section. There are far-reaching technological, regulatory and commercial changes happening in travel distribution. The economic model is changing and evolving, and whilst no one knows exactly what the future will bring, this report aims to provide insights into the factors impinging on the future of the GDS.

About this report
The four Global Distribution Systems (GDS) – Amadeus, Galileo, Sabre and Worldspan – have been referred to as the backbone of the modern travel distribution system (Bear Stearns, 2000 – Internet Travel: Point, Click, Trip: An Introduction to the Online Travel Industry, London: 1-99). They have processed more than 1 billion air bookings each, and another 250 million for hotels, cruises and other non-air content, generating over US$6 billion in revenues. Sabre and Amadeus own the largest civilian data-processing centres in the US and Europe respectively. The volume of global transactions through the GDS has risen 4% year-on-year to 343 million. Worldwide, the GDS reaches some 230,000 points of sale.

In light of this, there can be no doubt as to their significance, but is their role declining in importance? They have been compared by some to dinosaurs – once powerful, but now on the road to extinction. The GDS are well aware of this comparison – one GDS conference presentation even featured a dinosaur slide recently. However, the speaker inevitably rejected the comparison and exuded confidence in the future of the GDS.

The four major systems have enjoyed traditionally what has been, in effect, an oligopoly sustained by the high entry costs required to build the IT booking systems to link airlines, hotels and car rental operators with travel agents and consumers. They are operating in a fast-changing market typified by evolving patterns of consumer behaviour, the emergence of new online sales channels, and a low-cost air model. Most existing content deals between the GDS and the major US airlines that provide them are up for renegotiation in mid- to late 2006.

The following questions posed at the annual eyefortravel (www.eyefortravel.com) GDS debate indicate some of the key issues facing the GDS:

How are the GDS evolving, and what impacts will this have on travel providers, agencies and the end user? What role should the GDS of the future adopt?
Other than the distribution function, what more can your GDS bring to the supplier relationship?
Do the GDS really have a lock-on access to particular channels? If this exclusivity erodes, will they have to start basing their pricing on value rather than on power?
Do alternative means of distribution pose a real threat to the GDS, or will the evolution of the GDS model render the Global New Entrant model redundant?
How will deregulation in Europe effect the distribution equation for the GDS, agents and suppliers?
These questions pose points for reflection throughout the report and will be revisited in the concluding section. There are far-reaching technological, regulatory and commercial changes happening in travel distribution. The economic model is changing and evolving, and whilst no one knows exactly what the future will bring, this report aims to provide insights into the factors impinging on the future of the GDS.