Despite this summer’s agreements with Amadeus and Travelport, selling direct is still in the airline’s DNA, says Southwest Business VP Dave Harvey.
After years of holding out on placing full content and booking capabilities Global Distribution Systems, Southwest Airlines finally made the move last summer after signing agreements with Amadeus and Travelport.
That deal, which also saw the establishment of Southwest Business, a unit dedicated to serving corporate travel programs, also included an expanded reporting and settlement contract with the Airlines Reporting Corporation (ARC).
Those arrangements signaled greater momentum behind Southwest’s distribution strategy. In July, Southwest signed on to join the NDC Exchange, created by ATPCO and SITA that enables API connectivity between airlines and sellers using New Distribution Capability (NDC), an XML-based data transmission standard set by global aviation industry trade group IATA.
In an interview at ARC’s TravelConnect conference in Leesburg, VA, Southwest Business VP Dave Harvey outlined the low-cost carrier’s decisions and why it’s slowly been embracing GDSs while balancing its long-held emphasis on direct bookings on its own website and through its call centers.
“Everything we're doing in the marketplace is try to be bold to Southwest Business,” Harvey told ARC President and CEO Mike Premo. “The response from our customers has been off the charts. So we're, we're thrilled, and now we've just got to go make it happen. We've got to go deliver and make money.”
The new strategy around outside booking channels for Southwest stemmed from feedback from travel agencies, who, in representing corporate employee travel programs, told Harvey that the airline was simply “a pain in the neck to work with.”
Harvey did try to make clear that while direct online selling is still at Southwest’s core. For example, he pointed to the development of Southwest’s online corporate travel booking portal Swabiz, which last year began adding hotels and mobile features, expanded reporting, and other functions aimed travelers from small-to-midsize companies.
“We’re still direct-oriented, and that's in our DNA,” Harvey said. “I should mention that we were first to market with Swabiz back in 2000, our direct connect API in 2010. “Those are still very powerful channels and a lot of customers prefer that.”
The bottom line was that travel agencies don’t like to make special accommodation for airlines that like to transact differently from their competitors. In the end, the new distribution agreements under Southwest Business was a bid to satisfy that lucrative constituency and help Southwest retain and win a specific class people traveling for work.
For Southwest, the concern was that it doesn’t cannibalize direct sales in the process.
“Out of the gate, we just got to make sure we're servicing the agency community well, but we're going to target the top 50, top 75 agencies,” Harvey said. “This is a B2B story. This is not a B2C leisure. We are know that there'll be a little bit of that traffic out there, but we're much more oriented toward the government and corporate travelers. We now have a team that's calling on them, understanding priorities, roadmaps, friction, coming up with creative waivers and favors the whole, the whole arsenal of tools to better service the agency community.”
In characterizing these moves, Harvey said the team had talked about “Southwest growing up over 50 years,” adding, “We've done things unique, kind of the coloring outside of the lines. It really was just a prioritization and getting to it.”
The growth that Harvey’s team discussed referred back to changes that have come since the $1.4 billion acquisition of rival low-cost carrier AirTran in 2010, as well as Southwest’s international expansion in recent years.
“A lot of companies, they don't die of not having enough good ideas,” Harvey said. “They actually die from indigestion. Our CEO, Gary Kelly, our CFO, Tammy Romo, they are great about noting that we hardly ever say ‘No.’ We just say ‘not now.’ Working with the GDSs has always been an opportunity, but it's just garnering enough focus in the industry. But for us, it’s about gathering the resources within Southwest to do it the right way, to do it the Southwest way, so, when the time has come, we're coming to the party in a very clear and big way.”
Several TravelConnect audience members were struck by the fact that Sabre was not included in the agreements Southwest ironed out with Amadeus and Travelport.
That curious omission was also noted back in August when Southwest Business made the announcement about working with the two other GDSs.
As TravelWeekly’s Robert Silk reported at the time, the arrangements with Amadeus and Travelport were viewed as a way to build functions that would augment and even go beyond the existing relationship the airline has had with Sabre.
For example, TravelWeekly noted that Amadeus and Travelport would be able to show travel agencies full visibility into all Southwest Business fares. In comparison, Sabre only shows flight schedules. Also, if a traveler books a Southwest flight through Sabre and wants to change or cancel the order, they have to call the airline as opposed to handling it online through the channel it was purchased on.
“Our plan is to be multi-GDS,” Harvey said. “We've got a longstanding relationship with Sabre. It's a very good relationship. We've got kind of active dialogue. But there’s nothing to report now. Longer-term, we know that that is absolutely a need.
“Right now we've got a very, very heavy tech implementation plan going with the aforementioned other GDSs,” Harvey added. “We don't want to disrupt that plan. We want to get to market as fast as we can with those industry-standard solutions. So Sabre would be after that, maybe later in 2020 or by 2021. That's absolutely on our roadmap.”