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GDS distribution challenges in China

August 17, 2012 | Online Travel

Limited competition for travel technology - from distribution and connectivity to agency front- and back-office tools - has impeded market efficiency and burdened many travel sellers, reveals a new PhoCusWright paper.

Concern has been mounting for some time now about a slowing Chinese economy, with export growth suffering from Europe's and America's economic malaises. But no one seems to have informed the Chinese traveler, and the hefty pipelines of new hotels and plane orders indicate the industry is betting on substantial long-term growth. The total Chinese travel market is expected to nearly double between 2009 and 2013, when it will exceed US$105 billion1, and the online travel market will more than quadruple over the same period, to exceed $15 billion2.

Understandably then, pretty much any entity involved in travel distribution has been licking its chops at the prospect of getting a foothold in this burgeoning behemoth – none more so than the global distribution system (GDS) companies, whose growth is threatened by market uncertainty in Europe and the U.S, and global market share loss by traditional travel agencies amid the rise of supplier (and in particular airline) websites. Although China has agreed under its commitments to the WTO to open up its travel distribution environment for foreign competition, unfortunately for the GDSs – and for travel sellers in China – they may have to hurry up and wait.

GDS Distribution in China: Flying the Regulated Skies maps the current distribution landscape in China, and describes step by step what regulations the CAAC is likely to loosen. The paper also examines the potential implications for China's airlines, travel agencies, online travel agencies, the state-owned (and virtual monopoly) distribution and airline CRS provider TravelSky, as well as for the GDSs and international carriers. The bottom line: expect the CAAC to open up just a sliver of the market – more than nothing, but less than something – with a sufficient amount of bureaucracy and uncertainty in place to ensure slow and very controllable market developments.

Get the full story at PhoCusWright

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