PASS Consulting Group

E-Commerce in the Travel Industry

Interview with Michael Strauss, chief executive officer, PASS Consulting (11/3/2005)

Michael Strauss, chief executive officer, PASS Consulting feels one of the biggest challenges in the industry has been direct distribution and airlines going straight to the consumer by emphasisng their own web and corporate booking engines as well as establishing and supporting the new GDS entrants, also known as GNEs. "This is challenging because airlines and distributors concentrate on the supplier perspective and both travelers and agents have to juggle many information and inventory sources. We continue to remain independent and we work with all the GDSs and any other potential information sources as a content pipeline and aggregator," says Strauss.

"We consistently work with GDSs on how to deal with new challenges in the market and see the opportunities for everyone to benefit in the midst of those challenges. One opportunity that we have found in all this is the chance to provide value added service to offerings and embracing new channels rather than fighting them," adds Strauss.

Strauss shared his viewpoint on new trends with EyeforTravel.com's Ritesh Gupta ahead of Travel Distribution Technology 2005 scheduled to take place in London this month. Excerpts:

In August this year, Farelogix Inc., RADIUS, and PASS Consulting signed of a Letter of Intent to explore the development and distribution of a prototype point of sale system that integrates technologies developed by each party. How do you assess this development from industry perspective? What kind of progress have you made?

First, the PASS Multi-GDS connectors, the Farelogix platform and the PASS Virtual Travel Organizer as a graphical user front end is fully integrated and released. This product includes all the GDSs, web scraped information, contract management fares and direct connects so it is the most complete source of information available.

With the RADIUS wheel we prototyped functionality to point of sale, so that agents will seamlessly be offered competitive flights or hotels for specific cities or city pairs--an airline or hotel would not want to lose any customer, even at a lower price. This will only become effective after the buying decision of the customer for a competitive product. This product offering is particularly innovative as it is full service and any agency would be prepared for anything, no matter what kinds of shifts occur in inventory distribution.

Our plan is to release a commercial perspective of the product in the 4th quarter of 2005 with pilot customers. In 2005, the wheel should become available to all RADIUS shareholders, including those who will utilise the VTO outside the consortium.

How do you think PASS Consulting has differentiated its offerings?

We are distinctive because we are coming from a consultancy perspective. For nearly 25 years we have provided solutions that are based on reusable components, which can be customized to the needs of our clients. We started in the travel industry in 1998 by first offering a product on a licensing base. But we never forgot our roots and concentrated from the very beginning on customizable workflow solutions including the right look and feel as well as the enhancements needed to get the job done. Our ability to remain independent is also highly valued as we are able to adapt and adjust to any changes in the marketplace.

How are GDSs evolving and what impact will this have on travel providers, agencies and the end user? What role should the GDS of the future adopt?

It all depends on the GDS' decision to fight new entrants or learn how to work with them. We provide the answers to overcome this obstacle. Agencies and end users are confused and that is where PASS comes into play-no matter how this challenge works out, we can easily change to adapt.

The agencies can see that if there are better deals-and the vendors can see better ways to distribute-they will find each other. Agencies can also be more flexible by using the VTO to work more in tune with their customers. If there is an uncomplicated trip they could charge X and for a complicated trip with many changes to it they could charge Y. The agent can easily use the VTO to create fees as appropriate.

The GDS of the future should focus on more complicated bookings because they are experts in that arena.

What alternative means of distribution pose a real threat to GDSs? Will direct connectivity, meta-search or switch technology push the GDS out of the picture?

Alternate distribution sources are not a threat, but GDSs may change what inventory they carry. The GDS might not be used for simple bookings but it is still of value and we are focused on taking advantage of any new opportunities. GDSs also can find new opportunities to use PASS to get a foothold in agencies that would not be able to otherwise. Meta-search is only around because pricing is so complex and meta-search is another player in the supply chain that may face challenges as the terrain changes.

Hotel GDS distribution has never been regulated. Will hotels now see costs rise as the GDSs start to charge them for premium display?

If the GDS strategy is to charge for a premium display, then it adds complexity and some hotels may opt for direct distribution. It depends if the GDS is able to add value to the transaction.

Where do you foresee the industry headed in next year or so?

The battle will continue between direct distribution and GDSs. There will be more diversity in distribution. Companies will want to focus on value added services-door to door, cell phone services, etc. It all helps to make things simpler and easier for the traveler.

Since the industry has struggled with the challenge of complexity in pricing, pricing will finally simplify like with Jet Blue and Southwest. In the long run, simple pricing will be the winner.

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