Transcript No Slide Title

Shay Mitchell
General Manager
Galileo Netherlands
The Growth of Low-Cost Carriers
‘MARKET CHAOS’ – WHERE DO WE GO FROM HERE?
23rd September 2003
Chaos
• Economic recession
• War
• SARS
Travel Market Changing
• Low Cost carriers
• Airline disintermediation
• Airline Direct Connect
• Commoditised GDS
• Profit margins shrinking
• Online vs. offline
Growth of Low Cost Carrier Concept
• Ever growing list of Low-Cost Carriers in
Europe
• Full-service airlines adopting the LC model
• All carriers trying to sell more and more
directly to the consumer
• Direct connect considered to be more cost
effective, (true or false?)
Impact on the Travel Agent –Dramatic!
• Commission reductions (7% -5%-1%- Zero?)
• Service fees as a replacement revenue
stream
• How many travel agents will survive?
• Those who do must embrace technology in
order to be more productive
• Using Customer Relationship Management
• Finding niche markets
Impact on the GDS –Dramatic!
• Shrinking market due to channel shift
• New role of travel solution provider
• Forcing a change in the GDS/Travel
Agent/Airline relationship
• Reducing revenues and lower margins
• FA arrangements not sustainable in the
future
GDS Market Shrinking
• Holland down 18%
• UK down 12%
• Germany down 10%
• Italy up 6%
• Spain up 17%
Source: MIDT data
Where does the consumer stand and what
are his/her needs in a so called Book Direct
Market?
• Widest choice possible
• Price guarantee
• Ease of booking
• Dynamic packaging
• Servicing and sales support
• Can this be provided through a single
supplier website?
Content – What we provide
• 35m fares
• Private Fares now 50%+
• 6220 formulae
• 47.000 travel agency locations
• 493 Airlines
• 52.000 hotel properties
• 292m bookings LY
Technology – Direct Connects
Paper ticketing
Integrate bookings
Multi carrier itineraries & pricing
BSP credits for E-tickets
BSP hand off functions
Ground services
Mid & back office hand off
Partner access to bookings
New preferred airline supplier
Corporate policy management
Itinerary changes
Private fares
Married segments
Technology – Supplier Direct Connect
• Unsustainable burden on Web and
airline reservation systems
• Loss of integration
• Limits consumer choice
• Economic model is flawed –
Hidden costs of going direct
• Ask the expert - GDS
Areas of Focus
• Content
•Technology(Increasing Productivity)
• New Business Model
“Content, Content, Content!”
Low Cost Carriers In Galileo
• Virgin Express
• Virgin Blue – Australia
• Westjet in Canada
• BMIBaby
• Kulula -South Africa
• SkyEurope - Bratislava
• FreshAer -Ireland
• Air Majic - UK
Galileo –Airline Supplier Initiatives
• Airline Content Retention in Galileo
through;
• Basic Booking Product – Europe
• “Preferred Rates Programme” in USA (Full
service airlines –web content)
• One-to-one discussions and agreements
with Airline suppliers in EMEA focusing on
web fare distribution at lower cost
Content – Low Cost, No Frills
• Basic Booking Product
• “Low cost” GDS booking
product “Custom Fares”
• Integrated web fares
• Super PNR?
Divisional Overview
Cendant
Divisional
Overview
Travel
Real
Estate
Hospitality
Travel
Distribution
Vehicle
Services
Financial
Services
Cendant’s Travel Assets for EMEA/AP
Vacation Rental
•38000 Properties
•17 EU Countries
•4m Consumers
Hotels
•600000 Rooms
•6000 Properties
•180m Room Nights
•US, UK, Ireland
Distribution
•#1 AP
•#1 MEA
•#2 Europe
•Corporate Tools
•Preferred Content
Car Rental
•#1 world-wide
•Owned in AP
•Owned in N.America
•Licence in EMEA
Technology -Solutions
• Is about efficiency and cost reduction
• Fare Shopper
• E-Tracker
• Agency Private Fares
• Airline Private Fares
• Custom Fares
• Corporate Booking Tools
• Galileo Web Services
GDS – New Business Model
• Maximise the airline content
Full service & Low Cost Carriers
• Add wide range of new content
• Deliver new technical solutions
to create efficiencies
• Greater value rather than FA?
Alternatives to FA
• Improved Corporate/Leisure
Booking Tools
• Internal automation for cost
take-out
• TDS not GDS
• Stronger partnership
agreements with customers
and suppliers
The Galileo Challenge
As part of the Cendant
Travel Distribution
Services Group, Galileo
is re-inventing itself, in
order to forge clearly
defined new
partnerships with its
travel agency partners
and suppliers for a
prosperous future.
Come Join US