GDS to perform reservations and ticketing GDSs and LTDs
What is a GDS?
GDS stands for Global Distribution System. This a term used to describe the
large and sophisticated electronic travel reservation systems currently in use
throughout the world.
How many GDS systems are in operation today?
There are currently four major GDS systems in operation – Amadeus, Galileo,
Sabre and Worldspan. There are some other smaller local GDS systems, mainly
in Asia, but these four are by far the most used systems, comprising the vast
majority of the global bookings in the GDS industry.
What’s an LTD?
In the past several months, several new companies have announced plans to start
operating systems that they claim to be alternatives to GDSs. The GDS industry
in general refers to these new entrants as LTDs – Limited Travel Distributors –
because they are limited in geographic scope, limited to working with only a
handful of airlines and agents, and limited in the types of transactions they are
capable of handling.
Capacity for Change
How flexible are the GDS systems? Are they able to change with the changing
The GDS companies have a proven track record of not just meeting the changing
needs and demands of travel suppliers, agents and the international traveling public;
they are consistently the thought leaders and innovators in the global travel
What innovations have GDSs brought to the travel marketplace?
GDSs are responsible for some of the most important innovations in the travel
industry: innovations like e-ticketing; travel e-commerce; graphic seat selection;
and the ability for agents and travelers to view on one screen, public,
private/negotiated, consolidator and Web fares.
Scope of Services
What services do the four major GDS companies offer?
GDS companies offer far more than just simple air travel bookings. GDS systems
are capable of booking:
- • One way and roundtrip airline
- • hotel rooms
- • rental cars
- • tours and packages
- • cruises
- • insurance
- • restaurant reservations
- • theatre tickets
- • itinerary changes
- • complex international routings
- • rail
- • ferry
- • limousines
What services do LTDs offer?
Once operational, LTDs state that they will be capable of booking:
- • One way and roundtrip airline seats
Can a traveler book his or her entire itinerary through a GDS system?
Yes. A traveler can book an airline reservation, airport transfers, a rental car, hotel
reservations, sightseeing cruises, theater tickets and dinner reservations and more –
all in a single itinerary, through a single GDS system.
LTDs have claimed that they can save airlines money by processing reservations
for just $3.00 per ticket. Can the GDSs match this?
Comparing the LTD fee with the GDS fee is like comparing apples to oranges.
The LTD fee is a basic transaction fee to purchase a simple one-way or round-trip
airline ticket in the US market. The fee charged by GDSs for these same simple
bookings is comparable to that of the LTDs.
GDSs, however, also handle more complex and global transactions, provide
additional services requested by customers, provide training to travel agents and
travel suppliers, offer help desk support for customers and remit payments to travel
Additionally, while GDSs use the one-stop shopping integrated business model,
LTDs use a business model where many different companies provide services. This
approach will certainly shift costs in the travel distribution marketplace, but it won’t
necessarily reduce costs.
Customers have demanded the more integrated approach of the GDS model because
they have seen that more fragmented business models have proven to be an
inefficient way of doing business.
What additional services or capabilities does a travel agent or travel supplier
receive from a GDS that they would not receive from an LTD?
A typical itinerary booked through a GDS will generally be more complex. It will
often have several flight segments. The fees will include a transaction fee, a fee to
cover costs for call center operations and other support services, among other costs.
A typical itinerary booked through an LTD will most likely have only one or two
flight segments (only for a few airlines and only in the U.S.) and include only a
transaction fee. LTDs have publicly stated that they will not remit any payments to
travel agents and will not offer any support services for travel agents and travel
What is the $12.50/booking GDS fee that’s talked about so much in the media?
There is no single GDS fee. The usual fees vary from GDS to GDS and from
transaction to transaction. In essence, there is no basis in fact to accept a
$12.50/booking GDS fee as the norm. Further, some GDS pricing is now valuebased
and not cost-based, and takes into account the differing values offered to
airlines for different types of services provided.
What is the relationship between GDS systems and the airlines?
GDS systems have multi-year contracts with hundreds of airlines to manage their
complex and ever-changing reservation needs.
What is the relationship between GDS systems and travel agents?
Travel agents have multi-year contracts with GDS systems to gain access to the
broad range of travel offerings to which GDSs provide access. These contracts
provide multi-year guaranteed levels of compensation for agents, and assured
agencies have certainty about their cost of automation.
Do all airlines book their reservations through GDS systems?
Most airlines use GDS systems; however, some airlines still manage reservations on
their own proprietary systems. Jet Blue Airlines, for instance, operates its own
proprietary reservation system.
Some have characterized GDS systems as outdated, inflexible and expensive. Is
No. GDS systems use the fastest, most reliable enterprise architecture available.
They use open systems, including the latest systems technology on the market for
communications interface, including XML and EDIFACT. GDS systems are
proven as fast, efficient, reliable, secure, comprehensive – and global.
How many transactions do GDS systems process per second?
GDS systems are capable of processing up to 17,000 travel-related messages per
second during peak times, with response times of a fraction of a second.
ITSA, the Interactive Travel Services Association, is the industry representative for travel
distribution companies throughout the world.