Finding its niche in the travel galaxy(1)

In a travel market rife with competition and dominated by giant Global Distribution Systems (GDS), one company is trying to find its place in the value chain.

And Galaxy Distribution System Ltd is convinced it has enough differentiation from the other GDSs to make a difference to the travel supply chain.

Galaxy is by no means a new company - founded by chairman Alwin Zecha and IT director Robert van Meurs, it has gone through a couple of transformations in its bid to find its place.

It was relaunched in August 2002 and a new and full team was assembled in Bangkok to push the revamped and upgraded product. Leading the charge is Paul Casey, president and CEO, who was hired by Zecha. Casey previously ran Continental Airlines in Hawaii.

Galaxy is now confident it has found that place and recently held its first global National Marketing Companies (NMC) conference in Bangkok to share details of its plans as well as its new product, Galaxy TDS (Travel Distribution System).

More than 30 of its NMCs took part in the two-day conference.

Galaxy bills itself as "specialising in online global travel distribution systems for ground services" and it said its TDS "enables professionals worldwide to immediately access, book, confirm and settle payments online and at the best possible prices".

One benefit is that settlement is either via IATA's Billing and Settlement Plan (BSP) or a Galaxy BSP, cutting out payment hassles for both inbound and outbound tour operators.

TravelWeekly asked Paul Casey and Robert van Meurs, what makes Galaxy different.

Q: What differentiates Galaxy from other GDSs?
Casey: Our cornerstone is ground services. We are a private trading platform for inbound tour operators to distribute their inventory and make them available to overseas buyers.

We are using our NMC network now to sign up inbound tour operators to both trade with buyers and to load inventory, and to recruit retail agents to expand the distribution network.

We see that travel agents' income has shrunk; airlines are cutting commissions and travel agents need different revenue streams.

I used to work with an airline and airlines look at travel agents as an expense item.

Travel agents have to throw away the rule book and find new ways to grow revenues.

Q: How will Galaxy compete with GDSs such as Abacus which are also trying to expand their non-air business? Abacus for instance is developing its HotelSmart programme and sourcing rates from hotels in the region.
Van Meurs: One, Abacus does not have a BSP payment system on ground services and two, by default, there is an inherent conflict - there is a barrier to trade with inbound operators. For example, a major wholesaler which trades with Abacus might not look kindly on matters if Abacus goes directly to the suppliers.

Casey: We are a neutral party to the inbound operator and travel agent, offering cutting edge technology."

Q: Why would an inbound operator choose to share their revenues with another party such as Galaxy? Profit margins are already small as is.
Casey: To get more business, and we provide global access. Inbound operators have clients which are spread geographically - it is a global business. We would bring incremental revenues for an inbound operator and they can trade privately with their buyers on the Galaxy platform. And by extension, travel agents worldwide.

Q: What are your revenue streams?
Casey: Transaction fees provided by a variety of people. We are providing a facility, we have technology that is bullet-proof. One of the things that attracted me to join Galaxy was how simple and elegant the platform is.

Q: Investment in technology is expensive. How can a player like you compete with the major GDSs which have invested billions into their infrastructure?
Casey: We will never be an Abacus, Sabre or Galileo, we don't wish to be. We are smaller and nimbler; we can make quick decisions.

If you know the amount of money the Galaxy founders have invested in their technology, you would be amazed at the level of sophistication and ease of use that they've got without spending lots of money.

Van Meurs: We have an advantage - we are using newer technology, while the GDSs are using 20-to-30-year-old legacy systems.

Q: I understand you had some implementation problems with your first launch in March?
Van Meurs: Yes, we had a soft launch in March and it bit us back at the rear end. We had problems with agents who were using Windows 98 technology - the majority of personal computers which by the way are provided by the GDSs are on that technology, and are unstable. There are no incentives for travel agents to upgrade.

As such, we had to redevelop our technology to overcome the obstacles.

Q: So you were ahead of the curve - your technology was too ahead of the market?
Van Meurs: That's one thing we have learnt - you can't change the market, you have to adapt to it. We adapted our product to fit the travel agency environment.

Q: How will you then erase the perceptions that's been created as a result of this first hiccup?
Casey: Try us, and you will be sold. There is no cost at all to the retail agent. Here's a free tool he can use to grow new revenue streams.