Specialist background
- Experienced air IT executive with deep knowledge of the distribution business globally, responsible for USD 2.7bn in revenues, managing airline industry relationships
- Deep knowledge of Amadeus and Travelport and is well-placed to discuss how new technologies such as NDC and new players such as Google Flight Search will disrupt the current business model
- Well-versed with airline vendor selection and partnerships, criteria for vendor selection and ease of product incorporation into the business
Questions
1.
If you had to compare Sabre and Amadeus from an airline IT standpoint, the PSS systems that they provide, which one would you say is better? How do you see the industry structure playing out over the next five years?
2.
What do you mean by the same? They're the same base infrastructure in the IT system, so when somebody is logging on to the PSS system or the revenue management system or the revenue accounting system, it looks and feels the same, and the functionality is the same, is that what you mean?
3.
The American airlines, such as United and Delta and stuff, why have they not moved over to Amadeus or Sabre?
4.
I thought Delta does not use either, they use their own system?
5.
Maybe it was a hybrid, where Sabre went in and created the system for Delta, so it looks like a Sabre system but Delta paid a one-time up-front fee for them to create the system?
6.
If you think about the size of the PSS industry today, and you think about the size of the ancillary products, which are revenue management, revenue accounting, anything else, I guess like flight scheduling, etc, how big are those combined compared to the PSS, and what is the market opportunity for someone like Amadeus to keep upselling their existing customers?
7.
Today, the majority of the market share for revenue management is owned by Pros, in revenue accounting it's Accelya, which I think is an Indian company?
8.
If you think about those companies vs Amadeus, what are the advantages and disadvantages of having Amadeus against those smaller IT software platforms?
9.
That's Sabre, though. What about Amadeus?
10.
If I look at the most recent quarter, Amadeus announced the following upsells. They upsold Korea Air on their customer loyalty suite, they upsold on All Nippon Airways, the Japanese airline, on anytime merchandising functionality, they upsold Mauritania Airlines on revenue management, and they upsold Mongolian Airlines on the Altéa NDC, and Arajet on revenue management system. It sounds like every quarter they're upselling a bunch of different airlines on a bunch of different IT products that are not PSS, so why are they winning all these mandates when you're saying that the smaller programs are better and cheaper than them?
11.
What you're telling me is that a lot of the bigger carriers would rather switch out from Pros to Amadeus for the revenue management system because they feel like they would get a better bundled price, and because it's all in one system, then?
12.
Why would people choose Amadeus instead of Pros?
13.
If you had to think about what percentage of Amadeus's air IT revenue is currently PSS vs other products, what would you say?
14.
In air IT, which is PSS and all these other products, the average pricing is somewhere around EUR 1 per passenger boarded. Over time, when they get more products sold to existing customers, that revenue per passenger boarded increases. That's fine, I understand that, it makes sense, but I want to understand just purely on the base price, which is if, today, Amadeus is charging Lufthansa or Delta for its PSS system EUR 1 per passenger boarded, is there anything structured in the agreement which says, "There will be a 3% revenue inflator every year"?
15.
Let's talk about NDC. I want to get a sense for, when you talk to Amadeus, what they say is currently they get paid EUR 5 per booking roughly on every GDS booking. The way they explain it is that, over time, some airlines want to move to offer more of their inventory through NDC, and not the traditional GDS system. They also say, Amadeus, that they are themselves, or they have already developed, an integration of NDC into their platform and, over time, they expect to keep a majority of those bookings that go through NDC within their platform. Firstly, I want to understand if you agree with the above statement or not?
16.
Correct, that was my next question. My next question was, what they also said is, instead of EUR 5, they would get paid EUR 2.50 going forward on NDC, but they would not give any of the kickback that they give to travel agents, so the net effect on their gross margin or gross profit from that shift to NDC would be zero?
17.
It sounds like you don't agree with what Amadeus told me, which is that they will not provide any kickbacks to travel agents for NDC work. Is that correct? Do you agree with it?
18.
Do you this is a 2023 or 2024 issue, or do you think this is much more, if we wake up in 2027 there will be a very different scenario?
19.
On a separate note, Amadeus has this hospitality IT segment. It sounds like, just looking at the website, it is a mixture of booking software and a marketing and revenue maximisation type of software. Is that right? Then, I want to understand what the revenue model is for that software. How is Amadeus making money on that software?
