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Mumbai: Air India has sent shockwaves through the travel trade in India on their announcement of offerings its inventory solely through its select GDS and disconnecting its inventory of another GDS, due to which this may reduce the distribution capability of the Airline by about 40%.
A joint press release issued by TAAI and TAFI says: Air India has been reeling under tremendous financial challenges and instead of finding ways to increase its seat sales via an easy access through GDS channels, this move by the National Carrier is shocking. The response given by Air India is that this would save its distribution costs. It is a surprising decision since the Airline wants to save Rupees Hundred or two as distribution costs and lose thousands on a loss of seat sale. In our opinion, the Airline is threatened with a huge financial loss.
This move is taken the Airline without any prior discussions with the agents who are promoting Air India. As a national carrier Air India has a wider social responsibility to protect and act in the interest of the Indian travellers & small and medium enterprises. It seems from the recent article in the media that even former management of Air India was opposed to the move to a single Distribution System to avoid this threat of financial loss. Air India has completely ignored the support they have been getting from the Agency community who have invested extensively and continued to patronize the national carrier.
This move by Air India is also creating a monopolistic condition in the market. We believe that the press reports have raised concerns since they do not find the Airline’s decision making reasonable and justified, particularly to its agencies who are the strong distribution arm of the Airline.
Many travel agencies in India have been selling a large share of Air India seats on the GDS with whom Air India has disconnected its Domestic Inventory. For these agencies including those who do not have access or frequently sell the airline seats on the GDS preferred by Air India, it is quite evident that selling Air India would not be an easy proposition and thus they may opt for other airlines for their customers.
For several established agencies, usage of GDS is governed by Global Agreements they have entered into and thus switching over or training their staff to get used to this limited GDS access will be a difficult option to cope up with.
Airlines have interline agreements and agents book multiple-airline in one booking which has many different connections. With different airline offering their inventory on specific GDS, the seamless services offered by agents will be affected. GDS Companies are not evenly distributed across India or are able to service the travel trade in a uniform pattern.
Both the Associations, TAAI & TAFI, represented by its officers, on the 5th November 2018; had a detailed discussion with the Air India Senior Management and conveyed that this decision of going exclusive on a GDS would be detrimental to the Airline and this must be urgently reviewed. The Two associations said they are keen that Air India must not suffer any losses that would further damage the health of the Airline. The Senior Management promised to revert back in a day and on the 6th the Associations received a phone call from them to inform that there will be no change in Air India’s stand.
The most damaging part is that the Airline has chosen a lose-lose proposition with its travel agencies. It is our strong belief that not only the travel agents will suffer but the airline would suffer too. With such a move now, it seems like Chaos is going to reign in the coming days.
A recent article in the news mentioned the Debt-Laden airlines market share is at a historic low of 11.80% in September 2018. The Aviation sector is already reeling under the pressures of the high Fuel Prices and unfavourable Exchange rates. Under these circumstances, the move by Air India, a national and state airline, seems to be one-sided will affect their overall sales in the long run.
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