Abstract
For decades, distribution has been a key ICT (Information and Communication Technology) area for airlines and this sector has been dominated by four (now three) Global Distribution Systems (GDSs) whose primacy has been threatened over the last four years by a set of new players, the so called GDS New Entrants (GNEs). GNEs emerged with the advent of the Internet and open source technology as ‘disintermediation’ facilitators and generated vast interest from airlines because they promised to reduce the cost of distribution. This paper explores the impact of ICTs on airlines with a focus on GDSs. It provides an overview of the changing market dynamics, analyses the environment that led to the appearance of GNEs and pinpoints the issues behind their until now failure to provide a true alternative to the GDSs. This analysis complements existing academic research in that it clarifies critical issues in the air travel distribution field and provides an overview of current industry developments.
Highlights
Internet technology and web based commerce have dramatically transformed the airline industry in the last ten years (Werthner and Klein, 2005)
Distribution has been a key Information and Communication Technologies (ICTs) area for airlines for decades and this sector is dominated by three Global Distribution Systems (GDSs) whose primacy has been threatened over the last three years by a set of new players, the so called GDS New Entrants (GNEs)
It provides a comprehensive review of the changing market dynamics, analyses the environment that led to the appearance of the GNEs, and assesses the issues behind their until now failure to provide a true alternative to GDSs
Summary
Internet technology and web based commerce have dramatically transformed the airline industry in the last ten years (Werthner and Klein, 2005). Web distribution combined with cheaper and more flexible technologies allowed new players on the market, low cost airlines (LCCs), to implement effective low-cost direct distribution strategies and intensify competition in the sector (Dennis 2007; Buhalis & Law, 2008). Traditional airlines could not afford to rely on outdated distribution strategies and had to invest heavily in new technology to support their online Web sites, as post-September 11 harsh economic conditions and low-fare carriers transformed the marketplace and the needs and preferences of passengers changed (Franke, 2004; Binggeli & Pompeo, 2005; Dobruszke, 2006). The extraordinarily dynamic nature of airline distribution makes any conjectures about future developments in the sector sound like crystal-ball predictions but experts seem to agree on a number of trends that are here to stay
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