How the GDS deregulation will impact China’s travel distribution market?
Mr. Bart Tompkins, the newly appointed Managing Director of Amadeus’ China operations, took an interview with TravelDaily to share his views of the new regulations, and also the future of travel technology in China.
At the China Travel Distribution Summit in Shanghai, Mr. Bart Tompkins, the newly appointed Managing Director of Amadeus’ China operations, took an interview with Travel Daily to share his views of the new regulations, and also the future of travel technology in China.
TravelDaily: What does the change in CRS regulations mean for the travel industry in China?
Bart Tompkins: The new regulations, approved by the Civil Aviation Administration of China (CAAC), mean that for the first time foreign airlines in China can opt to use global distribution systems (GDS) to distribute content via Chinese travel agents in China, something that was previously restricted.
We see the introduction of the new CRS regulations as a first step to the eventual deregulation of travel distribution in China. This first phase will allow Amadeus to start to introduce new, cutting edge technology that will greatly benefit the Chinese travel industry through enhanced customer service, reduced IT spending and new opportunities.
Following the introduction of the new CRS regulations, travel agents in China, who use the GDS, will have access to the most advanced travel technology that streamlines their business operations, increasing efficiency and maximising profits.
TravelDaily: What can Amadeus bring to China?
Bart Tompkins:Amadeus takes the market opening very seriously and we understand that the Chinese market functions very differently from the markets in the US and Europe. We believe that open market access and a level competitive playing field will not only benefit new entrant GDS companies such as ourselves, but also benefit incumbent players in the local market, with the result being a much more vibrant travel distribution industry.
Amadeus is currently the world’s leading technology provider for the travel and tourism industry. We provide the Amadeus Selling Platform, our travel booking tool, to 38.3% of the world’s travel agencies. We also work with the majority of the major Chinese airlines, including Air China, China Southern and Hainan Airlines.
Research and development is in Amadeus’ corporate DNA and since 2004 we have invested over EUR 2 billion in R&D across the world to ensure we continue to deliver the solutions that meet the needs of our customers, and that includes China. Every customer need is different, and our partnership approach means we constantly deliver on our customer expectations.
TravelDaily: China has been referenced as the world's largest Internet market set to reach 538 million internet users. How will Amadeus leverage this growing trend?
Bart Tompkins:According to travel research firm Phocuswright, travel transactions booked completely online in China are still in their infancy. However, as a result of China's high internet and mobile phone penetration rate (500+ million internet users and 1+ billion mobile phone users), Chinese consumers are increasingly going online to explore their travel options. However, while online travel websites are being heavily used in China, usage is linked to travel research rather than for making actual travel bookings. We often hear that when travellers obtain information about ticket availability online, it isn't available when they try to book it. This is where Amadeus can really add value; we can keep databases refreshed and accurate to encourage more online bookings and ensure up to date information is displayed online.
TravelDaily: Does Amadeus have any plans to expand in China? Which business area will be the main focus for the rest of the year?
Bart Tompkins:Clearly, China is a huge opportunity for travel, both from a technology and provider point of view. According to IATA, 800 million additional travelers will travel by air by 2014, and over a quarter (214million) will be from China, raising the need for more choice and competition in travel distribution.
We have good and growing relationships with travel agencies in the market and we are working with them to deliver travel agency solutions, such as mobile apps, retailing, search and business intelligence tools that will help to improve their business workflow.
TravelDaily: Is anyone currently using Amadeus technology in China? What is their feedback?
Bart Tompkins:Amadeus has a variety of products that can be successfully deployed in the China market. An example of a product that can be immediately applied is the Amadeus Master Pricer, the most revolutionary and comprehensive low fare search solution, which will make low fare travel search a more streamlined process.
We also work with HRG, a corporate services provider specialising in travel, expense and data management, to facilitate hotel distribution and bookings in China. Additionally, we have partnerships with the majority of the major air carriers in China, including key relationships with Air China, China Southern Airlines and Hainan Airlines to provide e-commerce technology. In fact, our relationship with Air China has been strengthened through an extension of our partnership which sees the Amadeus Mobile Solution being adopted by the airline.
We have connections with a large number of travel agencies in China, from online travel agencies to multi-national customers to ensure they understand what Amadeus has to offer them. As with all our customers, we aim to make their lives easier through technology and partnership. In China, this will involve the implementation of powerful API and web tools within their existing infrastructures.
TravelDaily: In your new role as Managing Director of China, what experience will you bring to help Amadeus grow in China?
Bart Tompkins:I personally led the market entry in Japan and Russia for Amadeus, as well as worked in Amadeus’ global headquarters in Madrid, Spain. Of course my experiences help me, but I see each market as being very individual and offering new challenges. We are very excited about the potential of the Chinese market, and we look forward to working alongside the relevant Chinese authorities to support the growth of the Chinese tourism industry.
TravelDaily: In what areas does China share similarities with other markets and in what way is it unique?
Bart Tompkins:Every market represents a unique set of challenges and we approach each market with a dedicated team of local experts with industry know-how to meet specific local needs. We do not try to fit a ‘square peg in a round hole’. The real difference between China and other markets is the scale. The projections of Chinese tourism are jaw dropping. We feel that right now, travel technology needs to be aligned with the rapid growth of the travel industry and general infrastructure in China, such as 3G connectivity and high speed rail links.
TravelDaily: What are your views and forecasts for the travel industry in China, across the region and globally?
Bart Tompkins:Amadeus puts great emphasis on researching current and future travel trends. It is through these efforts that Amadeus can maintain its global footprint with local insights, and also how Amadeus can make judgments on technology development.
One of our latest research papers, entitled ‘From Chaos to Collaboration’, focuses on a variety of markets, including China to deliver insights on global travel trends. Specifically for the Chinese market, visual online applications are more important to travellers than in other markets. Also, Chinese tourists are twice as willing as American tourists to provide personal information to streamline traveling.
The Chinese Government recently emphasised the need for service industries in China to evolve, in order to support long-term economic stability and growth. The Government also expressed the need to use technological innovation to support that evolution.
Amadeus is aligned with these views. We have seen in many markets outside of China, in Asia and further abroad, how technology can help the travel industry to leapfrog ahead, and make a greater contribution to GDP.
Amadeus believes that travel industries with healthy competition are those that offer the best incentives for consumers to travel, which in turn promotes organic growth for all players in the industry.
Airline distribution and IT strategies are now reaching a turning point in China with the travel distribution market set for positive change in the near future. Amadeus is currently offering solutions in mobile, search and business intelligence technologies that are shaping the traveller experience. This same technology will be brought to China.