Each month, ExpertFlyer sits down with an executive in the travel industry to provide insight to changes in the landscape and how it affects the way you do business. It’s another way ExpertFlyer is providing additional information to empower the business traveler.
This month, ExpertFlyer sat down with Michael Valkevich who is Senior Global Account Manager, Amadeus IT Group, Madrid, and Travel Expert Blogger for Fast Company.com. As the leading provider of IT solutions to the travel and tourism industry, Amadeus provides distribution, IT and point-of-sale solutions to help customers adapt, grow and succeed in the fast changing travel industry. The company services travel providers, travel sellers and travel buyers.
“The future of travel technology is going to be focused on tools that are lighter, faster, and better-designed.”
— Michael Valkevich, Sr. Global Account Manager, Amadeus IT Group
Tell us about Amadeus and how you are powering the travel industry?
Well, we’re a truly global travel technology company with a two-fold focus. We basically provide IT solutions, which are tailored to the travel industry – which has a lot of unique needs and challenges. We also distribute travel provider supplier content — from airlines, hotels, car rental companies and the like — through our global distribution system; and we provide interfaces to that system for anyone who sells travel. The IT and distribution areas go hand-in-hand and tend to reinforce each other. We also do business in nearly 200 countries; our employee base of more than 10,000 is made up of more than 120 nationalities. The company is very committed to technology research and development, so that’s an important part of our DNA.
Why do you think that there hasn’t been a new Global Distribution System (GDS) created since Worldspan in 1990 given the advancements in technology since then? What are the challenges to running a GDS?
Well, there certainly have been some attempts, but successfully replicating the scope, content volume, scalability, and reliability of a GDS in processing millions of travel transactions is not a particularly easy thing to do. GDSs were invented by the airlines, because they needed a cost-effective way to reach a broad-base of prospects to whom they might sell their product. Air carriers leveraged their computerized transaction-based systems to do it. That evolved quickly and continues to evolve. But getting lots of travel content and proving value to travel suppliers is predicated on “footprint,” so there’s a barrier to entry in terms of critical mass. Furthermore, there is no doubt that the technological barriers to entry are high; GDSs handle outrageous amounts of transactional traffic. Just to give you an idea, in 2009 Amadeus processed 670 million billable travel transactions. And we are held to very stringent standards on security and reliability. It’s similar to the credit card or banking industries.
Actually, the analogy to credit cards leads to the next part of your question: it’s fundamentally a two-sided business model. We need to deliver value to the participating travel suppliers who rely on us to deliver their products to a broad and valuable shopping audience, as well as to make sure our end-users, which include travel agents and consumers, are happy and operating efficiently.
“Do you see companies that provide a distribution path, but don’t themselves hold reservations (like Farelogix), as competitors to you or niche players?”
Considering that Amadeus is essentially “everywhere” in the global travel industry, it is not surprising there are companies who position themselves as our competitors. The global travel industry is a significant business segment in the world. And like any company, we keep a close eye on the competitive landscape.
That said, we are very focused on delivering the right solutions for our customers and engaging in the right partnerships in the travel industry. There are lots of our partners with whom we work because of the significant value we can offer our customers by combining forces.
“What is the biggest problem/opportunity that you think a GDS like Amadeus can help to solve in travel, but up until now has not?”
Well, it may not be the biggest problem, but as a die-hard road warrior, I’m going with a selfish answer: automating passenger re-accommodation. As I type this I am stranded on a multi-destination, international trip being hindered by the monster snowstorms in the U.S., I am frantically working with my travel management company (TMC) to re-route, cancel, and re-book my flight. Amadeus offers a suite of airline solutions, which has set a precedent for successful, groundbreaking airline technology and it facilitates automated re-accommodation. So, as more airlines continue to adopt these kinds of new technologies, I hope this type of stuff isn’t so stressful in the future.
How does personalization and customization of fares to individual flyers represent an opportunity to GDS’s like Amadeus?
At Amadeus, we want to continue to do what we’ve always done best as a travel technology company. At the most basic level, we want to facilitate selling travel the way users want to buy it and sellers want to sell it. And obviously, there needs to be a mutual value for everyone involved when it comes to this type of thing. Customizing fares has been around forever, and it’s a great opportunity for us and one we are excited about. Amadeus has airline retailing technology in place today. We have airline customers working with these solutions right now and it is absolutely opening up merchandising opportunities for them and personalization advantages for their passengers. And travel shopping and buying trends are always evolving, so there is no way to just say, “There, we’ve crossed the finish line” — because there is no finish line, and because the technology, the industry, and the travelers are always evolving. It’s about providing a framework for optimal selling and buying; and that takes a very consultative and involved approach to not just the technology, but to the sales and merchandising aspects, as well.