Key Market Issues

Travel suppliers face significant challenges in the new Internet-based environment. All supplier sectors face challenges from low-cost competition and thus need to drive more efficient, lower-cost distribution channels.

• Airlines
  Airlines have an urgent need to lower distribution costs. Competition is fierce. Low-cost carriers (LCCs) have successfully bypassed the traditional GDS-based distribution platforms and sell the majority of their inventory directly to consumers through their Web sites. A key obstacle that traditional carriers face in their drive to lower distribution costs is their reliance upon high-cost GDS technology, particularly in the corporate travel marketplace. In an effort to compete, traditional carriers are embracing new, simplified fare structures, but, even with simplified fares, the continued reliance upon high-cost GDS-based distribution prohibits the carriers from pushing a majority of their volume to lower-cost channels. LCCs have an opposite problem. As their networks grow, LCCs need to find better ways to tap the lucrative corporate travel market, as dedicated corporate portals do not allow the corporate buyer to compare LCCs with traditional carriers on an individual-itinerary basis. This lack of real-time fare comparison adds additional cost and complexity to the corporate travel purchasing process.

• Hotels
  The hospitality industry is a highly distributed and complex segment. The major hotel chains are seizing control over distribution by normalizing rates between wholesale, direct, and corporate channels. As alternate distribution platforms evolve, hoteliers need to also seek the lowest-cost, higher-value distribution channels.

• Car Rental Companies
  Most car rental companies own their own inventory and rate technology, and have limited reliance upon GDS transaction processing. Car rental participation in the GDSs stems more from market necessity than value-added services. As the corporate market moves to a more direct distribution channel, car rental companies can provide direct connections into these new platforms to reduce their cost of distribution.

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The Farelogix FLX™ technology provides an open, flexible, low-cost distribution platform for airlines, hoteliers, and car rental companies. Airlines have begun to encourage corporate buyers and travel management companies (TMCs) to use lower-cost platforms. FLX™ provides the Essential Bridging Technology (EBT^SM) to enable this transition to low-cost distribution, while recognizing the reality of a multi-source inventory environment. In addition, the FLX™ Platform provides unique channel-distribution capabilities that free airlines from the traditional system based on Airline Tariff Reporting Corporation (ATPCO) fare filings. Airlines can use the FLX™ Platform to manage and implement private fare distribution to multiple channels.

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Airlines can use standard EDIFACT or OTA-compliant XML messaging to communicate directly with the FLX™ Platform. Farelogix’s distribution fees are 80% lower than traditional high-cost GDS channels and are free of inefficient revenue-sharing formulas. Private fares are captured from traditional ATPCO filings, or may be distributed directly through the FLX™ VMS™, resulting in additional savings.

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