today announced its 2004 pricing for distribution services offered to airlines. Effective 1 January 2004, the company will introduce a new, value-based pricing model, which recognises airlines’ diverse commercial strategies and the different benefits that the GDS channel brings to airlines today.
This new pricing model consists of a segmented booking fee structure, defined by the nature of each airline’s business profile and reach of operations. In the new structure, a booking is valued as standard or premium, depending on the worth of the reservation to the airline and the value added by the GDS to the process. The two pricing parameters are as follows:
Standard Value Booking Fee
Domestic and intra-continental reservations made within an airline’s home/prime market.
Premium Value Booking Fee
Inter-continental bookings, domestic and intra-continental reservations made outside an airline’s home/prime market.
The 2004 pricing will apply the following percentage changes, broken down by region, compared to Amadeus’ 2003 pricing, and will have no impact on contractual agreements that Amadeus currently has in place with travel agencies.
Itemised pricing for specific content and services
Additionally, Amadeus will be introducing an itemised pricing arrangement for specific optional distribution services in line with the requirements of each airline. This ensures greater choice and flexibility for airline customers in terms of the services they select from Amadeus. Itemised pricing will come into effect in 2005.
Low fare content
In order to provide its travel agency customers with the widest possible range of content, Amadeus will pilot in 2004 a reduced fee option for airlines to distribute selected low fare content through specific reservation classes. Travel agents will be able to choose to participate in this programme and could be asked to share in the distribution cost.
The pilot phase will allow Amadeus to work with both its travel agency and airline customers to determine the most suitable framework for the needs of the different markets.
A first step of a strategic evolution
Amadeus has presented this range of unprecedented and strategic pricing reforms as it recognises that the radical changes in the airline industry require a similar fundamental evolution in distribution pricing. An approach that goes beyond the current short-term, tactical response being offered in the market.
The Amadeus 2004 pricing is a first step towards the establishment of a value-based pricing framework. This will provide airlines worldwide with the flexibility they need to compete and will contribute to the long-term success of the travel industry as a whole.