Questionsover Qantas chanel

With the Qantas Channel set to make a major change to the way that airlines and agents do business, there is still unrest and uncertainty over what this new landscape actually means for businesses. Steve Jones explains.

Airlines the world over have long recoiled at their cost of distribution.

It is, in the main, unavoidable expenditure, with third party distribution integral to the practicalities of selling airfares. But that hasn’t stopped executives paying bills through gritted teeth, all the while pondering just how and where they can reduce spend without impacting sales.

At the sharp end of cost-cutting initiatives has traditionally been travel agents, with commission eroded, and in some cases eliminated. But what also irks airline boardrooms are the fees paid to Global Distribution Systems (GDSS), a pivotal but expensive cog in the distribution chain.

The International Air Transport Association said it is “aware of industry estimates” that airlines hand over more than US$7B (A$10b) each year to GDSS.

Yet times are changing, albeit slowly. With the creation of the Qantas Distribution Platform (QDP) and associated launch on 1 August of the Qantas Channel, deals between the airline and Sabre, Amadeus and Travelport are evolving. Unfortunately for agents, it is they who are likely to suffer the consequences of such a shifting commercial landscape, at least initially. With the carrier reshaping its technology to utilise IATA’S New Distribution Capability (NDC), it is understood GDSS will receive reduced fees from Qantas. The knock-on effect will be the disappearance of rebates the technology firms pay agents. A crucial revenue stream in an era of ever-dwindling commission is about to dry up.

Given business travellers’ reliance on Qantas, travel management companies are likely to suffer more than leisure agents. And it is smaller and mid-size corporate agencies who are particularly vexed. In addition to the loss of rebates, they are convinced Qantas and the GDSS have “looked after” the bigger players to help offset the financial loss and to avoid a “fuss in the market”. Meanwhile, smaller TMCS feel they have been left in limbo. Anger and frustration is simmering.

“I don’t understand why Flight Centre and CTM are not making a big deal of this which makes me think they have already been looked after,” one agent told travelbulletin who is set lose $100,000