GDS providers vie for Indian low-cost airline business

With the rise in share of low cost carrier capacity in India, global distribution companies have renewed the efforts to bring budget airlines' ticket distribution on their platforms.

Global distribution systems or GDS refers to travel reservation tools which are used by travel agents around the world to make bookings. These are popular amongst full service airlines and both Air India and Jet Airways use it. However Indian low cost carriers (LCCs) do not use the systems.

Globally the prevailing norm was that low cost airlines did not subscribe to the GDS for travel distribution because of higher costs but the trend is now changing with AirAsia, EasyJet, Ryan Air and Tiger signing up with GDS providers.

GDS providers including Amadeus and Travelport are making a pitch to Indian LCCs to sell their tickets on their platforms to increase their revenue and boost ancillary sales.

SpiceJet had tied up with Amadeus for the latter's corporate booking tool in 2012 but sources said there was negligible business from that platform.

"In India the competition amongst the airlines is intense and low cost airlines can look to indirect distribution channels which can help increase the yield per passenger through more corporate and travel agency bookings,'' said Damien Hickey, vice president (Asia Pacific) of Travelport.

"We have invested in product which makes it easy for LCCs to file fares and sell merchandise and ancillary services. We are actively involved in discussions with LCCs in India and the feedback is positive,'' he added.

Travelport owns Galileo and Worldspan distribution systems which are distributed in India by InterGlobe Technology Quotient, a sister concern of IndiGo.

So far however the Indian LCCs have not committed to use GDS platforms because of attached costs and utility. GDS providers collect a transaction based fees from airlines. Also LCCs contend that they are registering high load factors and hence do not need to switch to other distribution platforms.

"However it is only a matter of time before Indian LCCs move to GDS platforms. Once Indian LCCs expand their foreign network they will have to move to GDS as it increases the sales coverage and enables agents from around the world to access inventory,'' said an industry expert.