Future of PSS Solutions

Posted by Lakshmi Narasimhan
Comments (1)
January 16th, 2008

Airlines are one of the earliest adopters of technology in the field of reservations, check in and departure. These systems are mainly on TPF (IBM) or USAS (Unisys) and are main frame based. The dilemma of the airlines to move to new technology probably could be due to doubts on the efficiency of new technology in meeting the split second response and ability to handle large volume of transactions in real time and that is one of the main reasons that majority of the airlines are still using systems that are 30+ years old in technology.

With the advent of new technology resulting in direct contact with customer, the justification for CRS, shifted from operational efficiency, to marketing strategies, to competitive advantages of essential business tools, etc. This progress contributed to fundamental changes in the structure of the industry. In large part, network externalities created by these systems, possibility of avoiding the intermediate layer GDS, drove these changes.

As we all know, Air Travel is not an isolated activity and the customers are looking for comprehensive package of which air travel is only one component. Sensing this and also due to the threat of airlines marketing directly to customers, GDS have actively started providing connectivity to all the players thus helping the agents provide customer service with a single window. Further many have started forward integration, reaching out to the customers with their own websites.

The new systems of CRS/GDS, called GNE (GDS, new entrants), pronounced “genie”, are internet-based access and distribution systems not requiring data in the system to be stored, unlike traditional CRS/GDS antiquated mainframes which required advance storage in order to book (and where they made most of their revenue in the past.). The GNE can search multiple individual travel sites (airlines, car rental agencies, hotels, tour operators, cruise lines, etc.) as well as other consolidated travel sites (Expedia, Travelocity, Orbitz, etc.), and other airline/car/hotel/tour/cruise, consolidators/wholesalers/discounters, etc., all at the same time; create a virtual data set for use in the GNE, and then present the data under many different parameters/filters for the purpose of creating a travel arrangement, i.e. a Passenger Name Record (PNR.). Unlike traditional CRS/GDS systems, elements of the PNR do not have to be booked thru the same supplier of data; each element can be booked directly with each individual supplier, thus lowering data storage costs. The GNE then creates a master record of the arrangements booked, i.e. a Super PNR (SPNR), and provides a summary of the arrangement for the traveller.

It is likely that global distribution systems new avatar will lead to the fragmentation of airline inventories across different distribution channels. Airlines will seek to increase the proportion of sales they make directly on their own website, thereby reducing their costs. Providers of channels of reservations (GDS, Airlines, Portals, etc) need to go the extra mile and demonstrate their value to corporate clients clearly. Corporate clients are most concerned about ensuring access to the widest possible range of airline products and tariffs, at the same time as distribution costs are removed from the value chain. It is going to be a challenge for each of the service provider to stay afloat unless they invest on technology and come out with a ‘single point’ solution.

Comments (1)

Binoy Mathew - January 21st, 2008

The key advantage of GNEs is that it can be integrated with corporate/agency POS applications so that travel segments can be sourced directly from airline/hotel reservation system/preferred GDS. This will be a good bet for new online travel companies in reducing their costs as well as improving the flexibility in connecting to various sources.

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