The Crs Paradox
Today, any agency worth its discounts will scornfully tell you thats not possible not even on the Net. A year or two from now, they could be talking very differently if computer reservation systems developers start looking at the option of hawking their software on the worldwide web.
Their motive for doing so, ironically, is the increasingly sophisticated software they plan to offer Indian travel agencies eager to improve their dated services.
Over the past two years, the spur for all this activity has been the growing spends on corporate travel and entertainment, which currently stands at an annual $2.1 billion, up from $1.8 billion in 1993. Spends are expected to touch the $3 billion mark by 2000.
Till 1994, the operative CRSs in India were only available with individual airlines and selected travel agents. This was mostly because up until then the major users of CRS were public sectormonopolists Indian Airlines and Air India, with their much-publicised tie-ups with SABRE, which connects over 26,000 travel agents in 70 countries, for a joint global reservation system known as SITAR.
The hitch, though, was that the network was only available for authorised IA and AI agents. This meant that 80 per cent of the countrys travel agents could not access the systems and mostly relied on expensive (and unreliable) telecoms systems to contact hotels and airlines.
Between 1993 and 1994, as the travel and tourism business gathered pace, CRS companies like AMADEUS and Galileo ushered in the long-awaited technological evolution in India. For travel agents who subscribed to them, the benefits were huge. Processing time was halved and they were given access to over 350 airlines and 200 hotels. Before that, typically, a travel agent had to communicate with the airlines and hotels individually for any booking.
There are so far four main CRS companies in India of which the two market leaders are AMADEUS and Galileo, which have an 80 per cent market share between them.
AMADEUS is a European CRS company which came to India in 1994. By mid-1996 its CRS system was being accessed by 698 agencies in 30 different cities in India. Another 420 agents are waiting for connections, which are likely to come through in the next two months. The installation cost of this software is only in terms of a bank guarantee which is equivalent to the equipment and software it provides. There is no subscription fee. The earning of the company comes from commission that it receives on each booking done through their system.
Says Ankur Bhatia, director, AMADEUS ensures a 60 per cent reduction in the time taken for a booking and its Pro Minim 2.0 is by far the most user-friendly window system available in India.
Galileo International is an American company formed in 1993 through the merger of two companies Galileo International and Covia Partnership. In the global market Galileo provides its service to 32,000 automated travel agencies and operates more than 120,000 terminals. In India, it operates in 29 cities and covers 550 locations. Says Gary Roberts, country manager, India, Galileo/Asia, We already have a 78 per cent share in West Asia, and in India ever since the companys inception we are growing at a healthy pace.
Other, smaller companies are upbeat too. Take ABACUS, a company jointly owned by ALL Nippon Airways, Cathay Pacific, China Airlines, EVA Air, Garuda, Hongkong Dragon Airlines, Malaysia Airlines, Philippine Airlines, Royal Brunei Airlines, Silkair, Singapore Airlines and Worldspan Travel Information Service. The company claims to have a 90 per cent share in most of its partners home markets.
In India, ABACUS has tied up with Tata Consultancy Service, and has plans to introduce its exclusive network called ABACUS Transport Network (ATN), which will be an alternative to the Sita network, the only networking system available to CRS companies in India.
Says K R Srinivasan, director, ABACUS, CRS in India reflects a tremendous drive for automation in the country as a result of which, between last year and mid-1996, we have already managed to give 180 connections.
So far, though, most CRS users in India have focused on ticketing. Many of them are now extending their services to hotel bookings as well. AMADEUS has started offering the Indian Hotel Reservation Services (IHRES) in addition to AMADEUS Hotels, through which travel agents can access 31,000 hotel properties. IHRES provides access to 50 other hotels in India which are not affiliated to any international hotel chain.
ABACUS has also devised software called Hotel Source Direct Availability, through which it is even possible to access the internal database of the participating hotel companies to give morecomprehensive information about such things as rate types and rate rules.
For all its obvious benefits the CRS systems available in India operate at an elementary level. The system only takes care of the first part of the travel cycle in which basic information required forbooking is gathered and transferred.
As yet, the market for CRS companies is large and undeveloped enough for any real competition. CRS is currently being used by over 650 travel agents in the country.
The situation could change if travel agents switch to the concept of neutral tickets, which are essentially tickets that dont carry the name of any airline. Right now, travel agents in India have to stock airline-specific tickets, which limits the range of business they can do. Travel agencies have not been able to use such neutral tickets because of the lack of a body like a central bank through which transactions could be carried out between the agents and the airlines. As Atul Mathur, director, travel and travel management services, American Express, India, says, CRS can never be fully effective till travel agents are made free from stocking tickets of different airlines. But for agencies to make that transition, the BSP or Billing Settlement Plan has to materialise following which, a centralised banking system acting as a mediator between the agents and the airlines will emerge.
How is this different? Instead of paying airlines for individual bookings, travel agents will pay them a consolidated sum every week. Travel Agents Association of India expects to introduce the BSP over the next year.
How will this help? Explains Mathur, If the BSP is implemented next year, CRS will help ensure security in pecuniary transactions and in reducing paperwork.
The introduction of the BSP, however, could change the nature of the industry as well. This is because with BSP, individual agents will be allowed to access only two CRSs, a rule to prevent big travel agencies from monopolising the business.
That is when the real battle among the CRS companies will begin and this could alter the nature of the business quite radically as well. If the number of CRSs a travel agency can use is limited under the BSP, many in the travel trade anticipate that CRS companies could start looking for business elsewhere.
One possibility, Mathur points out is for CRS developers to start hawking their systems on the Internet. This could be bad news for travel agencies. Accessing CRS on internet could minimise the role of travel agencies, he says. As he points out, corporate firms, which constitute most agencies bread and butter, are likely to prefer making their bookings directly on the Net.
Till BSP materialises, the scope for CRS companies in India is limited. But given the scope of changes sophistication can effect, agencies may just prefer it that way!