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Corporate travel services company Hogg Robinson Group believes it has edged in front of the competition in the race to exploit the benefits around the airline industry’s preferred booking standard.
Since the the International Air Transport Association (IATA) announced plans to give airlines greater control of how their products were distributed, the travel industry has been scrambling to take advantage.
While this New Distribution Capability wasn’t an explicit attack on the global distribution systems that act as intermediaries in the world of flight sales, it would in theory make airlines less reliant on them.
In the era of unbundling, the new technology standard would also make it easier for airlines to personalize their offerings as well as saving them costs associated with using the likes of Amadeus, Sabre, and Travelport. Travel agents benefit from being able to access the same content airlines have on their own websites.
New Distribution Capability has three levels. The most basic allows for ancillary sales such as baggage to be added after the initial booking. Hogg Robinson Group, which makes the vast majority of its money from acting as a travel management company, has secured level three status and will now be able to handle the full spectrum of offer and order management with any airline that is at the same level.
There are 36 such airlines according to IATA, including American Airlines, British Airways and Lufthansa.
“This means that [Hogg Robinson Group] can offer, sell and service [New Distribution Capability] bookings and content through our own technology and across our network, something no other major global [travel management company] is certified to do,” said CEO David Radcliffe on an earnings call with analysts following the release of the company’s interim results.
Despite increasing its ability to connect directly with airlines, Hogg Robinson has no plans to cut out the global distribution systems entirely.
“We don’t so much see this as a move away or a shift, if you look at how the industry will evolve I may still continue to use a [global distribution system] quite significantly if they are connected with the airlines in a particular way to provide me with content,” said chief operating officer Bill Brindle.
Hogg Robinson Group reported a 5 percent fall in pre-tax profit to $17.7 million (£13.3 million) in the six months to the end of September. Revenue dipped by 1 percent to $215.4 million (£161.9 million).
The decline in profit and revenue was largely as a result of a deterioration in performance in its travel management division where the impact of client losses and a slowdown in sales during reflected in a 12 percent fall in client travel bookings.