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Why airlines like Southwest® are looking to the GDS to reach high-yield business travelers

May 18, 2020
Jason Clarke
By 
Jason Clarke

When Southwest Airlines® became a full participant on Travelport, travel agencies described it as a ‘game-changer’. But it’s equally a huge step forward for the airline, and reflects their desire to better service corporate travel buyers, and to enable them to sell Southwest offers. In this blog, we’re exploring why airlines are changing their distribution strategies to include the GDS platforms. We’ll also touch on how GDS participation could enhance an airline's recovery, and help to position for future success.

Obstacles airlines face in the corporate travel purchasing process

Airlines have long recognized the potential value that the corporate traveler segment holds, as these customers are less likely to base their buying decisions solely on price. With costs covered by their organization, business travelers prioritize getting a superior travel experience, and want more ancillaries like pre-clearance, assigned seating, checked luggage, and meals. More recently, organizations also want and expect their employees to be productive whilst travelling, and so airport fast track, lounge access, and WiFi access have become popular add-ons.

However, while airlines recognize the potential this lucrative customer segment holds, accessing business travelers has remained a real challenge. The main reason for this is: corporate travelers are usually not responsible for booking their own journeys. This is instead tasked to agencies or travel management companies (TMCs), who typically use a GDS, such as Travelport, for the majority of their operations. This is driven by the benefits in workflow integration, the associated efficiencies, and the breadth of content available.

Most airlines are all too aware about this gap in their reach, and are now adapting their distribution strategy to overcome it. And so, those airlines that still rely solely on agents’ willingness to work outside the GDS are more likely to lose out on corporate travel business.

By becoming a partner with the GDS, as Southwest has done, airlines can harness the potential of the extensive global travel agency network. For example, the participation of Southwest in the GDS will allow business travel managers in the US to book, modify, and cancel without having alter their efficient, normalized and well-tested processes. This will add an entirely new level of service that the airline has until now not been able to offer.

In a recent blog post we highlighted some such advantages this will have for our US agency customers, notably that by enabling them to stay within the GDS workflow Southwest are increasing agency productivity, which will ultimately deliver results back to the airline.

What other benefits can the GDS offer my airline?

These factors explain how airlines on the GDS could stand a better chance of securing more corporate bookings. But equally, airlines that are already on the GDS also have to make sure their offers reach the people booking, and are effectively communicated to them.

Because agencies and TMCs service the end traveler, they have the best understanding of their needs. Yet part of the problem in the purchasing process is that agents themselves may not be familiar with — or immediately understand — what they’re getting for their customers. Evaluating options can be confusing, especially when there’s lots of different permutations of ancillaries to choose from, which makes it difficult to explain to the end customer. For an airline this leads to poor brand awareness and differentiation, and also makes it harder to upsell and cross-sell offers, to understand buyer behavior, and to engender customer loyalty.

To tackle this, airlines can use various GDS tools to better communicate their value proposition to business travel bookers. Travelport’s Rich Content and Branding helps airlines grow their reach through brand differentiation and by explaining and showcasing products and features. The GDS also offers the ability to engage with Digital Media Solutions ranking to promote new routes and target specific audiences.

 

Southwest Blog

 

How might GDS participation help airlines respond to current and future industry challenges?

These are extraordinarily challenging times for the travel industry. Yet, amid this uncertainty, many airlines are readying themselves for when border restrictions gradually begin to lift, and travel recommences. The most urgent issue for airlines during this time is securing a high-quality revenue pipeline — which is obviously critical for cash flow and ensuring business continuity. In this sense, business travel represents a significant opportunity, not only because this is a higher-yield segment, but because business travel is commerce driven it will need to return to stability and growth.

As such, it’s crucial that airlines stay one step ahead, and are well positioned to capture a share of the travel wallet. Southwest took the decision to become a full participant with Travelport last Autumn, long before the current challenges facing the industry became a reality. Once travel recommences, airlines like Southwest, who are already on the GDS, should benefit from a competitive advantage with agency bookings. But there are other, unprecedented ways that the GDS could be leveraged to enhance recovery too.

Going forward, airlines can use the GDS as a way to communicate to agents what business travelers should expect when flying with their airline. This provides more control over their brand reputation, especially when it comes to traveler safety measures, airline policy, and other procedures. This should also help to rebuild traveler confidence overall. Useful tools like Travelport’s Rich Content and Branding can be personalized or tailored — which is useful as different regions/routes open up at different times, and with different policies and regulations.

Furthermore, visual communication using rich content will help brands stand out to agents and prevent offers being reduced to a price point during competitive periods. The aviation industry needs to avoid a price war, which would be a race to the bottom for recovery. This is especially true for large scale global airlines, who will have a higher cost base to cover when they return to flying.

Through all the above, it’s clear that participating on the GDS leads to better communication between airlines and corporate travel buyers. Enabling them to understand and sell offers is key to reaching the lucrative end traveler, and driving a quality pipeline of revenue through our extensive agency network. In this way, Travelport can help you get into position to ensure future success.

Read the original Southwest Airlines press release here.

To find out more about how the GDS can help your airline, contact us today