Four Major GDS Systems;
Amadeus, Galileo, Sabre, Worldspan
By: Samipatra Das, Consulting & Valuation Analyst
October 2002 – The travel marketplace is a global arena where millions of buyers (travel agents and the public) and sellers (hotels, airlines, car rental companies, etc.) work together to exchange travel services. Among the “shelves” on which buyers search for travel services are world’s global distribution systems and the Internet distribution systems. These systems have become electronic supermarkets linking buyers to sellers and allowing reservations to be made quickly and easily. Nowadays, more travel is sold over the Internet than any other consumer product. The Internet is a perfect medium for selling travel as it brings a vast network of suppliers and a widely dispersed customer pool together into a centralized market place. Nearly 37 million of America’s more than 162-million active Internet users have already purchased travel online. Online travel bookings exceeded $23 billion in 2001, and are expected to reach $63 billion by 2005.
However, any discussion of the Internet as a distribution channel for travel needs to start with an understanding of the existing electronic distribution infrastructure, the Global Distribution System (GDS). The airline industry created the first GDS in the 1960s as a way to keep track of flight schedules, availability, and prices. Although accused of being “dinosaurs” due to their use of legacy system technology, the GDSs were actually among the first e-commerce companies in the world facilitating B-2-B electronic commerce as early as the mid 1970s, when SABRE (owned by American Airline) and Apollo (United) began installing their propriety internal reservations systems in travel agencies. Prior to this, travel agents spent an inordinate amount of time manually entering reservations. The airlines realized that by automating the reservation process for travel agents, they could make the travel agents more productive and essentially turn into an extension of the airline’s sales force. It is these original, legacy GDSs that today provide the backbone to the Internet travel distribution system.
There are currently four major GDS systems:
In addition, there are several smaller or regional GDSs, including SITA’s Sahara, Infini (Japan), Axess (Japan), Tapas (Korea), Fantasia (South Pacific), and Abacus (Asia/Pacific) that serve interests or specific regions or countries. In this article, we will provide a closer look at the four major GDSs.
Founded in 1987 by Air France, Iberia, Lufthansa, and SAS, Amadeus is the youngest of the four GDS companies. Amadeus is a leading global distribution system and technology provider serving the marketing, sales, and distribution needs of the world’s travel and tourism industries. Its comprehensive data network and database, among the largest of their kind in Europe, serve more than 57,000 travel agency locations and more than 10,500 airline sales offices in some 200 markets worldwide. The system can also provide access to approximately 58,000 hotels and 50 car rental companies serving some 24,000 locations, as well as other provider groups, including ferry, rail, cruise, insurance, and tour operators.
Upon its inception, Air France, Iberia, Lufthansa and SAS held equal shares of Amadeus Global Travel Distribution S.A. Shortly after the formation of the company, however, SAS sold its shares to Amadeus Data Processing. The three founder airline shareholders currently hold 59.92% of the company: Air France (23.36%), Iberia (18.28%), and Lufthansa (18.28%). Remaining shares are held publicly.
As the youngest of the four GDS companies, Amadeus has done remarkably well during its short tenure. Yet, in many ways, the company remains an anomaly. Amadeus has the greatest number of travel agency locations with the highest productivity per terminal in the world, yet its booking share is Number 3, and its revenues are dwarfed by Sabre and, to a lesser degree, by Galileo. While the company is Number 1 in locations worldwide, serving the greatest number of countries, it provides the fewest U.S. destinations of the top four GDSs. As with its competitors, the future for Amadeus will continue to be linked to the technological and structural changes that are revolutionizing the travel industry. Amadeus appears to be adapting well (albeit cautiously) to the shift of business to the Internet. Having acquired e-Travel, Inc. from Oracle Corporation in July of 2001, Amadeus now has a new business unit dedicated to delivering solutions to e-commerce players worldwide. The e-Travel solutions integrate all components of a managed travel program into a single Internet-based service that enables travelers to book air, car, hotel, and rail services, all within corporate guidelines. With its strong company infrastructure worldwide, impressive product set, and growing customer base, Amadeus is one of the most significant players in shaping the future of the GDS.
Galileo International was founded in 1993 by 11 major North American and European airlines: Aer Lingus, Air Canada, Alitalia, Austrian Airlines, British Airways, KLM Royal Dutch Airlines, Olympic Airlines, Swissair, TAP Air Portugal, United Airlines, and US Airways. It is a major player in the GDS business throughout the world: North America, Europe, the Middle East, Africa, and the Asia/Pacific region. Galileo International is a diversified, global technology leader. Its core business is providing electronic global distribution services for the travel industry through its computerized reservation systems, leading-edge products and innovative Internet-based solutions. Galileo is a value-added distributor of travel inventory dedicated to supporting its travel agency and corporate customers and, through them, expanding traveler choice.
In 1997, Galileo International became a publicly traded company, listed on the New York and Chicago Stock Exchanges. In October of 2001, Cendant Corporation acquired Galileo International for approximately $1.8 billion in common stock and cash. Currently, the company is represented in 116 countries, and serves travel agencies at approximately 45,000 locations. Other travel suppliers include 500 airlines, 227 hotel companies, 33 car rental companies, and 368 tour operators.
Galileo’s competitive strengths include market share, well-balanced and global presence, relationships with diverse groups of travel vendors, technologically advanced information systems, highly skilled personnel, and a stable product line. Compared to other GDS companies, Galileo is a cautious follower when it comes to technology. However, in response to the growing demand of web-based travel, the company has established successful relationships with entities such as Go, UK’s best low-cost airline; subsidiaries such as Highwire, Inc., providing Internet-based tools and services to the corporate travel market; and Sheperd Systems, an industry leader in the provision of sales and marketing intelligence systems and services within the travel industry. Additionally, Galileo has sponsored membership to the THOR Worldwide Negotiated Hotel Rates Program, and has a state-of-the-art development center supplying information and systems support to travel agencies operating more than 178,000 computer terminals, all of which are linked to the Galileo’s Data Center. Galileo’s primary weakness, its singular focus on the distribution side of the business, is also its perceived strength. Based on its competitive strengths, Galileo is pursuing a strategy that includes expanding its global distribution, strengthening customer loyalty, leveraging technology, and capitalizing on opportunities created by increasing Internet use. Galileo sees the GDS industry as having the ability and potential to provide electronic distribution and many components of e-commerce to other industries, and is utilizing its strengths to provide expanding services to its growing customer base.
For more than 40 years, Sabre has been developing innovations and transforming the business of travel. From the original Sabre computer reservations system in the 1960s, to advanced airline yield management systems in the 1980s, to leading travel web sites today, Sabre technology has traveled through time, around the world, and has touched all points of the travel industry. In July of 1996, Sabre became a separate legal entity of AMR (parent company of American Airlines), followed by a successful initial public offering in October in which AMR released approximately 18% of its shares to be publicly traded. Sabre, represented in 45 countries, is a leading provider of technology for the travel industry and provides innovative products that enable travel commerce and services, and enhance airline/supplier operations.
Headquartered in Southlake, Texas, Sabre connects more than 60,000 travel agency locations around the world, providing content from approximately 400 airlines, 55,000 hotel properties, 52 car rental companies, 9 cruise lines, 33 railroads, and 229 tour operators. In addition to being one of the leading GDS companies, Sabre also provides a broad range of products and services that enhance travel agency operations and their ability to serve the traveler.
Sabre-connected travel agencies use Sabre web- based technologies and low-fare finding solutions to create new sales opportunities, drive operational efficiencies, and improve customer service. Among the company’s recent innovations is Sabre Virtually There, a personalized web site service that automatically gives travelers up-to-the-minute details about itineraries, while also providing a wealth of information about their destinations. Sabre owns Travelocity.com, the industry’s leading online consumer travel web site. In 2001, Travelocity.com’s 32 million members used the site, generating more than $300 million in revenues. Travelocity.com offers innovative technologies that help consumers find the best air, car, hotel, and vacation reservations. Sabre also owns Get There, a provider of web-based corporate travel procurement, including the purchase of air, hotel, car, and meeting planning services. Customers include more than 800 leading corporations.
Sabre’s competitive strengths include market position, global reach, stable product line, diversification of revenue streams, and intellectual capital. The Sabre business model is a strong one, and continues to make significant progress in advancing both its electronic travel distribution and its information technology solutions businesses. Revenues have been growing steadily, and the company has embarked on a strategy that fully embraces diversification of its customer base and revenue streams. Sabre is considered to be one of the most significant and competitive GDSs due to the fact that it anticipates and takes advantage of the changes in the information economy and develops innovative practices, leveraging both human resources and technology systems.
Founded February 7, 1990, Worldspan was originally owned by affiliates of Delta Air Lines, Inc., Northwest Airlines, and Trans World Airlines, Inc. It is currently owned by affiliates of Delta Air Lines, Inc. (40%), Northwest Airlines (34%), and American Airlines, Inc. (26%). Since its 1995 advance into the world of Internet technology for the travel industry, Worldspan has successfully developed the strategies, solutions, and services to ensure the company’s long-term success in the new web-based world of travel distribution. Worldspan provides worldwide electronic distribution of travel information, Internet products and connectivity, and e-commerce capabilities for travel agencies, travel service providers, and corporations. Worldspan currently serves 20,021 travel agencies in nearly 90 countries and territories. Headquartered in Atlanta, Georgia, Worldspan connects approximately 421 airlines, 210 hotel companies, 40 car rental companies, 39 tour and vacation operators, and 44 special travel service suppliers.
To escalate the delivery of web-based technologies and services to its customers; Worldspan has forged a number of new partnerships and equity agreements with leading travel technology companies. Resulting technologies, joint developments, and an expanded realm of solutions and Internet travel products are enabling the company and its customers to participate in a spectrum of e-business opportunities. Some of the successful partnerships have been with companies such as Datalex, a leading provider of e-business infrastructure and solutions for the global travel industry; Digital Travel, a global online tour provider; Kinetics, Inc., developer of technology and solutions for the airline industry; OpenTable.com, an Internet-enabled restaurant management tools system; and Viator, a major provider of Internet-based content, technology, and distribution services, including data management, hosting, and e-commerce. Additionally, in 2001, Orbitz LLC was launched on the Internet, using Worldspan as its Internet Booking Engine, and in 2002, the launch of Worldspan ePricingSM made Worldspan the first GDS to introduce a revolutionary new multi-server-based technology, offering an unprecedented selection of pricing options to all of Worldspan’s customers.
Worldspan has a legacy of industry firsts that are not well known. The company therefore has an opportunity to raise the industry’s awareness of its accomplishments and more importantly, its future strategy. Worldspan continues to look at benefits of creating its own consumer brand and has been partnering with different companies to expand the services that it can provide to its customer base. Worldspan believes in focusing on its core competencies, and is determined to be perceived as a distribution facilitator across all channels. It is increasingly getting a clearer sense of its capabilities and building its appetite for technical and commercial challenges. Through the company’s revolutionary e-world ideas, offerings, and services, along with its agility and eagerness in meeting the needs of the travel distribution market on a global scale, Worldspan and its customers are transforming the way travel is distributed, bought, and sold.