“The market penetration of Amadeus is around 60 percent and that of Travelport is around 30 percent. The financial condition of the airline is delicate and we cannot afford to take substantial risk and adopt an entirely new selling proposition which is vastly different from the earlier model,” former Air India CMD Rajiv Bansal
had written in a note on 29 November.
Similarly Commercial Director Srivastava objected the move saying that the assumption that all domestic booking on Air India currently made on Amadeus will not shift to Travelport. He mentioned that out of 100 travel agents who account for 91 per cent of Air India’s sales, sell through multiple GDS platforms.
“To summarise we are aiming to save Rs 1.5 billion on account of GDS costs as proposed which is about 2.5 percent of our estimated revenue. Any shift or drop in airline revenue of more than 2.5 percent nullifies the proposed saving in GDS costs. Therefore we may continue with existing GDS system,” Srivastava wrote in a note on 27 December.
The airline’s financial director Vinod Hejamadi also reiterated the same opinion in a note on August 21, 2017. “The travel agents may not take the move of the airline in right spirit which may affect our business,” he wrote.
In fact, Travel Agents Association of India (TAAI) - a lobby group of travel agents have objected to Air India's decision to select a single GDS service provider as it will hurt their revenue. Agents earn incentives from service providers and the airline's decision will hit them hard.
However, Travelport countered the argument saying that it has extensive reach in the distribution platform. Anil Parashar, President and CEO of Interglobe Technology Quotient, which distributes distributes Travelport's global reservation system products in India, said that the platform is connected with the major entities across the travel distribution platform. Parashar pointed all major online travel portals - Make My Trip, Yatra, Clear Trip, Ease My Trip. “They have almost 30 percent share of the airline booking market,” he said. Among the consolidators, Riya Travels, Akbar Travels, TBO which are the largest in the space have access to Travelport. Among the travel management companies, all the major entities like American Express, Carlson Wagonlit Travel, FCM Travel Solutions, Dnata Travel Services and BCD Travel have access to Travelport.
“The question of loss of distribution for Air India is completely meaningless. 80 per cent of all ticket booking platform are with Travelport - many of them exclusively on Travelport. We have participated in a proper tender process, submitted our proposal which Air India found efficient. Hence we were selected,” Parashar said.
Unlike low-cost airlines, Air India and Jet Airways rely on GDS providers such as Amadeus, Travelport and Sabre for distribution in India and abroad for a segment fee for every booking. It shares a portion of it with travel agents, thus increasing costs for airlines. In 2017-18 IndiGo’s sales and distribution costs were Rs 7.81 billion; Jet Airways spent Rs 28.2 billion.