The MacNair Travel Leadership Blog

How Travel Management Companies Find the Best Airfares

Posted by Mike MacNair on Sep 24, 2015 12:00:00 PM

How-travel-management-companies-find-best-airfaresOne of the most common questions that we receive in our requests for proposals (RFPs) is what technologies we use to find the best airfares. I have also found that it’s a mystery to most people how online travel agencies (OTA’s) find the best fares, or where online tools secure data for their fare displays. It can be confusing, and I’d like to answer some questions that show how the best Travel Management Companies (TMCs) use the right technologies to uncover the best schedules and fare opportunities for their customers.

1. What is a GDS?

A global distribution system (GDS) is a network that enables automated transactions between third-party suppliers and travel booking agencies to provide travel-related services to the end consumer. A GDS can link services, rates and bookings, therefore consolidating products and services across all three core travel sectors: air, hotel and car. One of the best GDS systems, and the one that we work with, is Sabre.

The GDS is used primarily by travel agencies and TMCs, in both online-only and office-based settings. These businesses use the GDS system to make reservations with a particular vendor, such as Delta or Hertz. The GDS holds no inventory, but provides a “real-time” link to the vendor's database.

For example - when a travel agency requests a reservation on a particular airline, the GDS system routes the request to the appropriate airline's computer reservation system. This enables a travel agent with a GDS connection to choose and book various flights, hotels, and other travel-related activities with all the vendors in the world who are part of that GDS.

2. Where do OTA’s and airline websites get their fare data?

OTA’s primarily secure their fare data through the same GDS that TMCs utilize. Airline websites are connected only to their internal reservation system.

3. Why do some travel websites have different fares than others?

There are a number of reasons that can include:

  • Travel websites can customize their online displays adding special fares or discounts.
  • Supplier preferences that allow certain vendors to be included and others which are not included.
  • Proprietary branded fares or rates unique to their sites.
  • A specific connection to third party tools (described below) that open up other supplier and rate opportunities.
  • One site may have a direct connection to a vendor reservation system which allows it to access a different (lower or higher price) before another site.
  • Finally, the algorithms by which fare options are included or excluded differ by website – causing fare differences especially on multi-leg international itineraries.

4. What is the difference between the Global Distribution Systems?

An in-depth analysis would uncover more details, but from the standpoint of the small-to-medium enterprises (SMEs) reading this article, the primary difference to the consumer is the content agreements that the GDS’s have in place with the suppliers. For most of the travel booked in the US, the content is uniform across all GDS’s, making the secondary technology selected by the TMC an important component.

5. Is it important that we work with a TMC with access to multiple GDS’s?

For the majority of the SME market the answer is no - as long as secondary technologies are used to fill the gaps of the primary GDS. There are pros and cons in having more than one GDS. Operationally you must staff and operate concurrent systems to manage bookings from both platforms. That takes time and money and can drive operational glitches. The pros may be a slightly wider access to certain suppliers around the globe.

In the US, the big difference is how these GDS’s interact with Southwest, as they are the one airline carrier that is not a consistent user of the GDS system. The best way to determine the impact to your organization is to analyze GDS access compared to your specific travel requirements.

6. What other technologies are used to help enhance fare search?

Our experience tells us that the combination of secondary fare search technology combined with the right GDS is a more important consideration than how many GDS’s a TMC utilizes. Technologies such as BookingBuilder, Travelfusion, and Trip Console are set to supplement a GDS.

They work like this: Every time an agent or on-line user looks at flights and fares, these technologies advise the user whether any non-GDS or low-cost carriers fly that route. The agent/user can bring up the GDS and web fares. If a flight or fare that isn't in the GDS is chosen, it takes the user to the airline website and makes the booking with just a few clicks. It pre-populates most of the information from the traveler's GDS profile and no information needs to be re-keyed. Once the reservation is made the technology writes the booking information to the GDS so the data is available for accounting and client management purposes.

7. How do these systems really differ when it comes to Southwest?

Sabre has access to all domestic schedules and fares except for some of Southwest’s “wanna get away” fares which are restricted to A TMC can use third party technology to check an itinerary on Southwest booked in Sabre (through an agent or on an online booking tool which pulls fares from Sabre) against fares on Southwest directly and rebook the trip at the lower, more advantageous rate. Two great questions to ask your TMC are, 1) are Southwest’s lowest fares available in the agency’s online booking tool? And 2) how do the agents access Southwest’s lowest fares? The response will be highly dependent on the TMC and its technology.

8. Why shouldn’t I just let my people go to some of these websites?

Two reasons - they will not have the ability to consistently search for rates unbiasedly and will think they have found the best rate without having all the data. This happens often in the US with Southwest. Travelers are directed to their site directly for booking, but as we all know they are not the lowest priced, best scheduled provider all of the time. Secondly, data and leverage are lost and productivity goes down due to the time spent searching multiple websites.

9. What are the limitations of the GDS’s and are international rate desks still important?

As with any system, the GDS’s have their limitations. Even though they have been proven as the best resource for travel procurement, there are some areas where other tools can help address their deficiencies. We’ve mentioned some of those above (BookingBuilder, Travelfusion, etc.), but here are some other areas where the human factor still comes into play.

  • Flexible geographic fare search - a traveler looking for a fare from a few possible departure cities on the East Coast to a few possible cities in Europe
  • Multi-leg pricing - experts can consider alternatives that reduce the ticket price, i.e. an itinerary may price out cheaper when issued as three or four different tickets
  • Securing ancillary services - some airlines have not yet released the ability for TMC’s to pay for baggage/seats/priority boarding in the GDS and as such humans can make that happen

Additionally, for the online user, the online tool may not take advantage of all the functionality available in the GDS and may limit availability and service functionality

10. What are branded fares?

Many airlines are offering “branded fares” that include additional items like a discounted checked bag or expedited boarding in the ticket price. The industry is learning how to bring these fares into the picture for customers with tools like Booking Builder, additional GDS options, and Sabre branded fares. JetBlue just increased their branded fare options and the majority of this content is available through Sabre.

But, more options mean more challenges – finding the best value can be even more confusing - and these options are not yet displayed in a logical and consistent way. Assess the impact by comparing your requirements with available functionality. Check your travel policy, and address branded fare allowances. And lastly, watch as the best TMCs evolve to consider these options for you.

This topic is a great deal more complicated that one might think. Clearly, an educated consumer and travel manager gets the best value. In fact, we’d enjoy speaking with you in more detail on this topic – contact us to start the conversation.