Relevance of Global Distribution Systems (GDS) in Modern Travel Technology

 

1. Introduction

Global Distribution Systems (GDS) play a critical role in travel technology, enabling seamless integration of various travel services such as flights, hotels, and car rentals from multiple providers. GDS systems offer real-time access to inventories, pricing, and availability, catering predominantly to travel agencies, corporate travel management firms, and tour operators. Its architecture is complex, designed to support:

• Wide network reach
• High transaction volume
• Secure data exchange
• Real-time communication across systems

Despite evolving business models and new technologies, GDS remains a cornerstone in the travel industry’s technology ecosystem. This article explores the architecture, components, and current relevance of GDS within the rapidly evolving travel technology landscape.

2. Technological Evolution of GDS

The origin of GDS can be traced back to the 1960s when American Airlines, in collaboration with IBM, developed the first GDS, known as Sabre. Initially designed to handle airline reservations, Sabre paved the way for other systems like Amadeus and Travelport. These systems evolved beyond airline reservations, incorporating services such as hotel bookings and car rentals.

Over time, GDS platforms have embraced cloud computing and transitioned from traditional data formats like EDIFACT to modern standards such as XML and IATA's New Distribution Capability (NDC). EDIFACT, though crucial in GDS's early stages, restricts airlines from fully marketing their products and services. NDC, by contrast, enhances flexibility by supporting dynamic pricing, bundled offers, and personalized travel experiences. This shift allows richer content and greater control over the distribution process, benefitting both airlines and consumers.

3. Core Components of GDS

The GDS architecture comprises several key components:

Search, Booking, and Reservation System: GDS facilitates a unified search across multiple travel service providers, ensuring accurate inventory and availability. Its booking engine manages complex pricing, scheduling, and availability rules across different suppliers, handling the complete booking lifecycle, including cancellations and modifications.

Data Processing: With thousands of transactions processed per second, GDS requires robust data processing capabilities to ensure fast and reliable communication between suppliers and agents.

APIs and Integration: Modern GDS platforms provide extensive API support, allowing seamless integration with third-party systems like travel apps and websites. APIs enable developers to access flight schedules, availability, and booking systems, extending GDS functionality.

Payment and Settlement: GDS platforms handle payments through integrated payment gateways, facilitating the secure collection and disbursement of funds. They also generate invoices and receipts for service providers and customers.

Reporting and Analytics: GDS platforms offer reporting and analytics features, allowing stakeholders to analyze booking trends, sales, and market dynamics. This data is invaluable for travel agents and service providers in optimizing their strategies.

4. Overview of GDS Integration Architecture

Figure 1: Integration Architecture of GDS

The integration architecture (Figure 1) of GDS is a sophisticated system that connects various modules to facilitate efficient travel bookings and data management. Key components include:

• Central Reservation System (CRS): The central hub of GDS, where inventory, pricing, and availability are stored and updated in real-time by airlines, hotels, and other travel service providers.
• APIs: APIs allow real-time data exchange between GDS and external platforms, enabling travel agents and online travel agencies (OTAs) to seamlessly access data.
• Databases: GDS relies on highly scalable databases to store vast amounts of information, including customer data, booking details, and supplier inventories.
• User Communication Interface: Initially, GDS platforms utilized command-line interfaces for travel agents. However, these systems have evolved to offer more user-friendly graphical interfaces, enhancing usability. Examples include Amadeus's Selling Platform Connect and Sabre Red.

5. GDS in Action: Airline and Hotel Bookings

Figure 2: GDS and CRS Integration

GDS seamlessly integrates with airlines' and hotels' CRS systems (Figure 2) to access availability data and manage reservations. In a multi-segment booking scenario involving multiple airlines and a hotel, the GDS holds the complete itinerary, while each service provider maintains relevant segments. For instance, if a passenger books an itinerary containing air segments of multiple airlines and hotel booking through a travel agency, the PNR (Passenger Name Record) in the GDS system would hold information on their entire itinerary, while each airline they fly on and the hotel they stay would only have a portion of the itinerary that is relevant to them. This would contain flight segments on their services and inbound and onward connecting flights (known as info segments) of other airlines in the itinerary. Let’s say a passenger books a journey from Mumbai to Hongkong on Cathay Pacific, Hongkong to Vancouver on Air Canada, and Vancouver to New York on Delta and a hotel stay in New York at Marriot through a travel agent, and if the travel agent is connected to Amadeus GDS, the PNR in the Amadeus GDS would contain the full itinerary, while the PNR in Cathay Pacific would show the Mumbai to Hongkong segment along with the Air Canada flight as an onward info segment. Likewise, the PNR in the Delta system would show the Vancouver to New York segment with the Air Canada flight as an arrival information segment. Finally, the PNR in Air Canada’s system would show all three segments, one as a live segment and the other two as arrival and onward info segments. Marriot CRS will store the passenger's hotel reservation details. This is illustrated in Figure 3.

 

Figure 3: GDS and CRS PNR System in a Multi-Segment Journey

6. Relevance of GDS in Modern Travel

Global Reach: GDS systems provide unparalleled global connectivity, giving travel agencies—both traditional and online—access to a wide range of suppliers. This allows customers to compare prices and availability in real-time across numerous travel service providers.

Efficiency: GDS enables quick comparison of flight schedules, room availability, and pricing, making the booking process faster and more efficient. Real-time updates ensure that travel agents have the latest information regarding availability and pricing.

Revenue Generation: For travel agencies, GDS is a significant source of revenue, integrating commissions and booking fees into the platform. Dynamic pricing models can also maximize revenue based on demand. For many hotels, GDS remains a major contributor (Table 1) to their overall revenue.

7. Challenges and Future Directions

Current Challenges: Despite its advantages, GDS faces increasing competition from direct booking channels, where travellers can bypass intermediaries. Low-cost carriers often avoid GDS due to high subscription fees, opting for direct sales to reduce costs. Additionally, the GDS workflow is complex and requires specialized training.

Future Prospects: The future of GDS will likely see deeper integration with artificial intelligence, predictive analytics, and personalization engines. As the travel industry recovers post-pandemic, GDS will continue to play an essential role in demand management, price optimization, and streamlining operations in an increasingly digital-first world.

8. Conclusion

GDS is a great tool for disposing of inventory last minute, adding to the revenue of Hotels and Airlines. However, the architecture of GDS is complex and requires heavy expenditure in IT infrastructure (cloud cost) and operations from the GDS providers, as it requires enabling efficient and real-time communication between suppliers and agents while providing travelers with the convenience of accessing a wide range of services. These costs are subsequently passed on to the travel service providers in terms of brokerage or subscription charges. This leads, the airlines and hotels to explore a new business model of direct selling to their wholesale and retail customers, moving away from GDS. To reduce the cost of maintaining GDS and ultimately pass on the benefit to the service providers, some travel tech companies establishing significant offshore capability. Also, as GDS platforms evolve and integrate new technologies like AI and predictive analytics to make it smart to offer a personalized experience, their relevance in the travel domain will continue to grow, offering both opportunities and challenges in the rapidly changing landscape of global travel.