TravelSky set to lose air ticket booking ground

Airlines will be able to sell tickets in China through the international global distribution systems (GDS) for the first time from Monday, which could break the monopoly enjoyed by the State-owned TravelSky Technology Ltd.

Chinese ticket agencies working on behalf of foreign airlines will be able to sell their fares via the global GDS into China, but Chinese airlines will still be restricted to using TravelSky, according to the new rules published by the Civil Aviation Administration of China. The ticket agencies currently have to sell fares offered by foreign airlines only through TravelSky's system.

As foreign airlines expand fast into China, more flight bookings have been going to TravelSky in recent years.

The booking of foreign airline flights through TravelSky was up by 28.4 percent in the first half of 2012 comparing with 2011, according to TravelSky's 2012 interim result.

Li Xiaojin, a professor at China Aviation University in Tianjin, said part of TravelSky's market share will certainly be lost to the foreign GDS, which offers higher quality and more services, such as hotel bookings, taxis and restaurants, which TravelSky does not provide.

Foreign airlines can also save costs by turning to foreign GDS.

The average service price being paid by foreign airlines to TravelSky is almost four times that of domestic carriers during the first six months of 2012, although Chinese carriers also had to pay higher prices to foreign GDS to sell fares overseas.

Some business insiders said that some foreign GDS may offer lower price to carriers in order to grab market share.

However, the new rules will have little effect on TravelSky's business, as they only involve foreign airlines and do not open up the market to Chinese airlines, TravelSky's main customers, said Xu Qiang, the president of TravelSky, according to the National Business Daily.

In the first half of 2012, 7.7 million bookings were made for foreign airline flights through TravelSky, while 156.9 million booking were made for Chinese carriers.

"Not all foreign airlines are using TravelSky's service in China now," Li said.

Some foreign airlines brought their own distributors when they entered China, allowing foreign GDS to provide services to their own offices in China rather than through local ticket agencies, according to the General Agreement on Trade in Service China signed in 2001.

Experts predict that at the start of the new rules, some foreign airlines will adopt a wait-and-see attitude.

"We will not take any action to enforce the new rules for a while, because they will be complicated to apply," said H C Kwok, chief representative and country director, China of the United Airlines Inc.

Li said he thought the new arrangements would improve TravelSky's service quality.

"The stiffer competition may be good for TravelSky, which needs to turn from being a monopolist operation into a real market player," he added.

wangwen@chinadaily.com.cn