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Re-Intermediation Trend For Agents Will Be Short Lived

Written by Michèle McDonald Wednesday, 15 September 2010 14:18

While the “re-intermediation” trend — in which the growth of travel agency bookings outperforms growth in airline traffic — is continuing, agency gains against direct distribution are likely to be short lived, according to Amadeus chief executive officer David Jones.

Jones, who recently spoke with analysts and reporters to discuss Amadeus’ financial results for the first half of 2010, said the second quarter was the third in a row in which GDS bookings outperformed air traffic growth.

International airline traffic grew 7.9% in the first half, according to IATA, while GDS bookings were up 9.6% in the same period. Amadeus’ air bookings were up 9.8%.
While that may look like travel agencies are gaining ground against direct distribution, Jones cautioned that it is simply a correction of what happened during the worst days of the recession.

“It doesn’t change our longer-term projection,” he said. “We expect disintermediation to proceed, although at a slower pace. We think for the future we can expect a disintermediation rate of 2% per annum.”

Disintermediation – the elimination of intermediaries in travel transactions – has had considerable success on the leisure side of the business, much of which has migrated to the Internet. Traditional travel sellers and travel management companies, whose primary tool is the GDS, have maintained their hold on the corporate travel side.

In the first half of 2009, Jones said, there was very strong disintermediation due to the “overwhelming focus” travelers put on low price, which tends to drive more Internet bookings. At the same time, many corporations sharply curtailed their travel. “Now we are seeing a reversal of that,” he said.