Worldspan Corporate Online Pricing Strategy Gets Long-Awaited Industry Echo

22nd Jul 2002

Worldspan President and Chief Executive Officer Paul Blackney
praised Sabre`s new corporate online booking fee program to help reduce corporate travel distribution costs. The program, which mirrors Worldspan`s Corporate Online Program introduced in 2000, signals a greater awakening among other members of the GDS industry to the need for change in current approaches. However, Blackney stressed the more essential need will be a comprehensive new business model that is more equitable for all travel distribution constituents and travel products, including and beyond those that serve the Web-based, self-booking segment of the corporate travel market.

Blackney communicated that supplier needs were key to Worldspan`s decision to move toward a broader scope solution designed to eradicate disparity among participants in travel distribution. “Since introducing Worldspan
Corporate Online nearly two years ago, Worldspan has learned that suppliers overall are looking for a more comprehensive answer to reducing distribution costs, as online corporate travel represents only a part of their corporate business and only a part of their total travel offerings,” he said. “Other GDSs may also come to appreciate how merely applying a unilateral solution to the corporate sector, while it holds the potential for tremendous benefits, is deficient in prompting the critical mass movement necessary to restructure and strengthen the economics of our industry.”

In Forrester Research`s
Consumer Technographics North America brief of July 19, 2002, entitled GDS Fee Cuts: Baby Steps For A Mature Industry, Forrester senior analyst Henry H. Harteveldt said, “It`s good that a second GDS is addressing supplier concerns, but airlines need more help - fast. With its June 2002 announcement that it would review its business model, Worldspan showed vision.”

In Forrester`s October 2001 report, Travel: Direct Connect Isn`t Enough, Harteveldt said, “The cost of distribution is a major concern for suppliers of all types, especially to airlines: 67 percent of airlines cite distribution costs as their most urgent concern. Even so, airlines value GDS`s ability to help them sell and service valuable corporate accounts, along with helping carriers sell effectively in remote markets.”

Blackney added, “The GDS balances virtually every segment of the travel industry on a daily basis and it remains the best and most technologically sophisticated choice for the distribution and management of travel information worldwide. The system is not broken; it`s the economic model that needs to change. Going forward, value and costs must become more balanced among the entities receiving the benefits, including not only travel suppliers, but travel agencies, corporations, and the traveling public.”


In June, Blackney announced plans to restructure Worldspan`s pricing model to better reflect the value of the GDS and its distribution partners, and to disseminate more equitably the costs of distribution among all constituents in the travel distribution chain. With the announcement, Worldspan became the first GDS to publicly admit that the longstanding GDS business model is broken.

According to Bill Brunger, Vice President, Distribution Planning and Revenue Decision Support for Continental Airlines
, “We are very interested in Worldspan`s thought-leading initiative which moves away from the long-standing business model, by proposing a new strategy that addresses our entire distribution effort, including corporate as well as leisure products.”

Worldspan is progressing in developing a strategic, long-term GDS pricing model that promotes the viability of all forms of travel distribution, and is working aggressively toward a fall 2002 announcement. Jesse Liebman, Worldspan senior vice president ?EStrategic Projects, is leading a dedicated group at the company in developing a selection of new pricing models. Market research is under way, which includes dialogue and consultation with numerous industry leaders, including suppliers, industry associations and analysts, and travel agencies, in a collaborative effort to finalize the project plan.

“The evolution of online distribution and purchasing has forced myriad industries to devise new business and pricing models and it is a rocky road for every industry,” said Blackney. “Travel represents the largest volume of any product sold on the Web today and our industry is in the throes of this sea change. Worldspan is very enthusiastic about the dialogue that is taking place with industry leaders and we look forward to the opportunity to propose a business model that represents value to all suppliers, travel agencies, corporations, consumers at large, and to Worldspan.”
Better strategies and practices for online as well as traditional corporate travel distribution remain vital to Worldspan`s overall plan. Currently, Worldspan`s Corporate Online Program features a flat fee per booked segment through Worldspan Trip Manager®, a leading corporate online self-booking solution that`s in use by more than 1,100 corporations worldwide. Worldspan`s Corporate Online booking fee of $1.95 per segment is approximately half the rate charged by other GDSs. The program`s many benefits compliment Trip Manager`s increasingly sophisticated features by streamlining best content and fare availability from travel suppliers to corporations, as well as a Web-based fare offering.

Worldspan has been the catalyst behind numerous industry initiatives that have garnered change, evolution, and substantial growth within the global travel technology and travel distribution industries. As a result of its innovative ideas and ability to forge new channels of distribution, Worldspan has become the leader in worldwide travel e-commerce and over the past two years, it has grown to become the second largest GDS in the United States, serving more than 28 percent of the U.S. travel market.

Related stories on ITN:

Worldspan Launches Trip Manager Fulfillment Partner Program

(09/07/2002) Worldspan Delivers Airline Source e-certified Technology



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