The GDS makes about 10 dollars per seat. A portion of that (2-5 dollars depending on the negotiation) goes back to the agency
The real kick is "full content agreements" - the airline has to promise not to undercut the final fee charged by GDS/Agency. This ensured nice profits for the GDS ecosystem, but airlines are starting to fight back by pulling out of them (and hence increasing prices for indirect bookings)
I'm having a hard time believing that trend will spread to major airlines, I mean the entire point of the GDS is that it gives everyone a "level" playing field in terms of knowing how to price seats.
I mean its the same situation as every man-in-the-middle platform right? You have players who hate paying the middle guy, and try to spin off, but everyone else gets too much value to break off
It has spread to major airlines, in fact they're the ones pushing for it: LHG, IAG, AFKL are all fighting hard. Their dream is that with stuff like NDC it will become magically possible to have a marketplace without middlemen, we all know that's impossible. But they'll use it as a lever to lower commissions until we hit a new equilibrium
Why is it impossible to have a marketplace without a middleman? Retailers can show prices on their website, hotels can show prices on theirs, same with airlines?
The airline shows a price. The middlemen are on the different system that has a higher price - a price higher by enough to account for their profit.
Sometimes the middlemen are worth paying. They might be better at searching all your alternatives and so they can find a route that you didn't find at all in your search. They might know something that you didn't think of (yes the non-stop is $100 cheaper, but wouldn't you prefer two 8 hour flights and two hours to walk around an airport over 16 hours in your economy seat?) They might guarantee your cruise doesn't leave without you if your flight is late. Only sometimes though.
How many people go to a specific hotel website, rather than booking.com or whatever?
It’s the same issue for airlines, you don’t want to have to open 10 tabs every time you want to search for an itinerary, so there will always be middlemen. The airlines just want to make sure the middlemen don’t have as much power :)
The real kick is "full content agreements" - the airline has to promise not to undercut the final fee charged by GDS/Agency. This ensured nice profits for the GDS ecosystem, but airlines are starting to fight back by pulling out of them (and hence increasing prices for indirect bookings)