Description
Please review the case study and then answer the questions below based on the case information. Your submission should be written in an essay format with proper MLA citations included for all additional resources. For information on using MLA, see the Syllabus & Course Info page of the course.
The major computer reservation systems that have developed were (in most cases) examples of joint ventures. The major world-wide systems now generally termed Global Distribution Systems enable automated transactions between vendors and booking agents to provide travel-related services to the end consumers. The major GDS operators are:
Sabre, based in Dallas, Texas, owes its origins to American Airlines which developed the system until it was sold by the airline in 2000.
The other three major GDS systems were all developed by consortia of airlines which traded as separate joint-venture companies until they were sold by their respective airlines.
Worldspan and Galileo, although they both continue to trade separately, are part of the TravelPort corporation based in Atlanta, Georgia. Worldspan was developed by Delta Airlines, Northwest Airlines (now merged with Delta) and the now defunct TWA. Galileo was operated as a joint venture between a number of European airlines including British Airways, KLM and Aer Lingus.
Amadeus, based in Madrid, Spain, was developed and operated by another joint venture company owned by a consortium of European airlines including Air France, Lufthansa, SAS and Iberia until it became an independent company in 2005.
There are also a number of smaller, more regionalized GDS providers including Abacus. The company, which is based in Singapore, unlike the global suppliers outlined above, continues to operate as a joint venture company. It is owned by a consortium of leading Asian airlines including All Nippon Airways, Cathay Pacific, China Airlines, Eva Airways, Garuda Indonesia, Philippine Airlines, Malaysia Airlines, Royal Brunei Airlines, and Singapore Airlines.
In addition to GDS suppliers there are hundreds of Alternative Distribution System (ADS) channels that are operating. These can be viewed as hybrid distribution mechanisms as they provide web-based visibility while gaining their information from the major GDS systems. These suppliers include well-known names such as Travelocity, Expedia and e-Bookers and Opodo (which was itself owned by Amadeus until it was sold in 2011).
Questions:
- Why might joint ventures be the favored method for developing GDS systems? Is there another partnership strategy that makes more sense?
- What competitive threats might affect further growth of GDS and how might they respond?
