Marketplaces - What's old is new again....

TravelCranky Flier is putting together a great series on distribution in the travel industry. Today's post focuses on Global Distribution Systems and how they're impacting the evolution of ticketing. I have always found the structure of the travel industry interesting, because it is essentially the mature evolution of a B2B marketplace-powered vertical. Of course that evolution never happened in other verticals for many different reasons, especially the overfunding and imploding of marketplaces during the dot-com era. With the reemergence of marketplaces and the increasing B2B aspiration in the minds of founders and funders, it's worth taking a look at travel to see how it applies.

The GDS environment is clearly a supplier-funded model of a marketplace. The Cranky Flier author calls it a quirk, but it is not unusual - one side has to pay, and it's either the buyer or the supplier. For marketplaces that simply act as a middleman, you need to pick which side you're on, and it's usually the side that finds the most "value" in connecting to the marketplace. A GDS initially provided a lot of value to airlines by helping them to connect travel agents and customers to airlines - and for this service, airlines paid the GDS a fee.

However, the travel industry is also an example of how market structures evolve, and where technology can blow things up. With online ticketing, online search, and the ability for airlines to go direct the value that a GDS as simply an efficient transaction hub provides is eroding. What these GDS marketplaces need to do is figure out where else they can (or will) add value for either the buyers or the suppliers.

What they do have is the transaction - that's a powerful place to be. How they leverage this solid base is up to them.