Worldspan to Win-Win-Win: Paul Blackney Speaks to ITN Exclusively About New Pricing Strategies

Twice awarded `Travel Industry Man of the Year,` by the Travel Agency Magazine, Paul J Blackney, CEO and President for Worldspan, has previously been recognised for his expertise in technology and distribution in the travel industry. Now claiming that the current industry model `is broken` Blackney has made it his mission to find a win-win-win solution for suppliers, agencies and Worldspan.


As a 30-year veteran in travel distribution systems and technology, Paul Blackney
was named chief executive officer of Worldspan on October 11, 1999. He is highly articulate with a knack for expressing technology in simple terms.
On his appointment 3 years ago, Blackney commented “The world of electronic commerce, automation technology and travel services is abundant with opportunities”. On interviewing Blackney, it is clear that this enthusiasm and opportunism has stayed with him to this day.


When I asked Blackney to comment on his achievements at Worldspan, he immediately referred to his team stating that his achievements were company achievements. “We are clearly the industry leader in online travel and the application of e-commerce in the travel industry”. Blackney hastened to justify this statement. “On a global basis, more than 60% of all the transactions that involve the sale of travel are in one way or another powered by Worldspan.


“Unique to Worldspan is its recognition of the metamorphosis that is taking place in the distribution of travel. We have worked with that change in order to facilitate it. I think that if you talk to both suppliers and distributors of travel they will say that Worldspan is the GDS that is willing to think out of the box, try other things and come up with the solutions. I consider this to be a major accomplishment for the company”.


Although Worldspan has been able to embrace many changing aspects of the industry, the travel business model is currently in crisis and increasingly unworkable. It has become apparent that GDSs and their participants are not receiving the best value for their money. Suppliers are paying increasing booking fees which, in turn, drive many of them to consider developing alternative distribution systems. Blackney has highlighted this issue in a recent press release
, stating “The system is clearly broken and we need to find a solution”.

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At the root of the problem, Blackney revealed to ITN that there may exist an inequality within the current GDS pricing models. “I think there is a clear perception on the part of the supplier community that they pay all the freight and don`t get all the benefit. This community is led principally by airlines but also echoed by the other suppliers of products such as cars, hotels, cruises, tours and so forth”. He adds, “We could argue about whether that perception is true, or untrue, but the reality is that we are having to deal with what a major segment of the distribution chain believes to be true”.


Blackney also reveals that he sees the situation to have arisen in part due to the inducements that GDSs offer to distributors - a re-distribution of suppliers` money.


Blackney`s latest plan to restructure today`s pricing model follows other recent Worldspan initiatives to lower distribution costs. Earlier examples of this are the Worldspan Corporate Online Program, a program that leverages the efficiencies of Internet booking solutions to lower distribution costs, and Worldspan Web Airfare, technology that delivers to distributors the broadest possible access to Internet fares at no cost to airlines.


The goal of Worldspan`s new pricing model initiative is to ensure that suppliers and others involved in the distribution process receive clear and recognisable value for their purchases of GDS services.


In order to deliver this winning solution, Blackney discloses, “We need to listen in an organised fashion to everyone who is involved in the distribution chain to ensure that we have heard everybody`s opinion,” he added “we also need to gain the consumers perspective for all the components of distribution”.


Blackney is in no doubt that Worldspan will deliver the solution. He comments: “Once we have that data, I am absolutely convinced there is a win,win,win out there, because I know in my heart of hearts that the lowest and most efficient form of electronically bringing buyers and sellers together is Worldspan”. According to Blackney we can expect to see this model by late summer, early fall.


In true competitive spirit, Blackney contended that the plans announced by other GDSs to assist travel agencies “don`t deal with the basic problem” and that they are “short-term”. I asked him to justify the statement. He responded “From my perspective, their programmes appear to be aimed towards keeping the status quo. Whilst the status quo may have been a comfortable position for GDSs in the past, the status quo from Worldspan`s perspective is not a sustainable proposition and we do not intend to deal with it that way”. Applying his knack for simplifying matters, he added, “As I see it, the light is coming down the track and a train wreck is about to happen if someone doesn`t do something about this”.


Clearly these issues are exercising the GDS/ CRS systems at large. Worldspan`s competitors are also wrestling with this predicament. For instance,
Sabre`s
Eric Speck acknowledged in his speech
at ITB Berlin
that the travel business model needs to be reformed. He referred to the wider industry environment and a common need, or objective to find a better way of working. Adding conviction to the situation, Eric also referred to “A build up of pressures causing the normal travel industry model to break”.
Galileo
also claim to have been tackling this problem, having recently invested in products such as Basic Booking Product
, enabling travel agents to book on low cost carriers such as Go and Virgin Express. They have also recently added Web Fares Search Solution
to the Galileo system to enable travel agents to retrieve the best available prices for their customers. In response to Worldspan`s press release, Pat Minogue, General Manager of Galileo in the UK commented:


“The challenge for GDS companies is two-fold: Firstly how can they evolve their systems to provide greater depth and broader range of information to travel agents and suppliers that will help them deliver a better and more comprehensive service to their customers? Secondly, what is the most appropriate pricing model for these services? You can`t tackle one without the other.

“At Galileo, we see a future where pricing is set dependent on the value that customers will obtain from our services and solutions. For some time now, we have been working closely with our customers and partners as to how we can do this in the future”.

So the race is now on to find a solution and Blackney is convinced that Worldspan will be there to deliver, stating, “whatever the consumer wants, Worldspan will be there to facilitate that”.
Seeing a very bright future for Worldspan, he concludes: “Worldspan is a great company and it has always been an innovator. I think we are going to continue to expand on those strengths and we will continue to exploit our willingness to think outside the box and ensure that our customers remain competitive, our shareholders remain financially rewarded and our employees have a secure and exciting place to work and develop their careers and to provide for their families”. 

www.worldspan.com

 

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