Feature of the Month
JetBlue Makes Its Own Rules With Successful GDS Re-Entry
Navitaire is Behind the Scenes of Another Remarkable Success Story
Since its launch in 1999, Navitaire has powered JetBlue's reservation and distribution strategy. After initially participating in the GDS channel in 2000, JetBlue moved away from GDS sales due to the rapid adoption of JetBlue.com by leisure travelers and the high GDS distribution costs relative to their average ticket price.
As JetBlue expanded to new cities catering to business travel, the demand for its upscale amenities, low prices and legendary customer service has steadily increased with corporate travelers. In response, corporate travel buyers contacted JetBlue to express their need to consolidate bookings through their designated corporate tools to support travel policies, reporting, card reconciliation services and security programs. In the US, many of these managed corporate booking tools sit on top of the traditional GDS platforms.
When coupled with the recent trends for GDS fee reductions, JetBlue determined that the time was right to allow targeted GDS access to meet its growth plans. Navitaire's existing GDS booking connections were ready to go when JetBlue concluded its negotiations.
Delivering Outstanding Results
With over 80% of its bookings continuing to come in through JetBlue.com, JetBlue says its measurements show that 66% of the GDS bookings are new customers at US$35 per-segment (net) higher average fares over JetBlue.com. The new channel is delivering on its goal to reach business travelers and increase profitability.
As further evidence, during JetBlue's third quarter financial results on October 24th, CEO David Neeleman described the incremental GDS bookings as "All really, really positive" by contributing increased margins and filling seats on off-peak days. He added, "As we project out, on an incremental basis, [GDS bookings] could add as much as $100 million in revenue for us in 2007." By augmenting their distribution channels to reach new travelers in new segments, JetBlue is well poised to grow their overall market, increase revenues, and improve profitability.
The Industry's Distribution Specialist
"Because some of Navitaire's most well-known customers have historically chosen not to use the GDS channel, some in the industry have assumed that Navitaire's reservation services cannot distribute via the traditional GDS," said John Dabkowski, Navitaire's managing director. "This perception is wrong, as over 45% of Navitaire's reservation customers distribute via one or more GDS companies today."
"Navitaire is firmly established as the industry's specialist in distribution, including alternative distribution. We offer the most distribution options in the industry and have the world's most proven online sales engine that sold more than US$8.5 billion in Internet reservation sales in 2005 - more than double the amount sold by our closest competitor," he continued.
"Navitaire recognizes the need for our worldwide airline customers to have a diversified distribution strategy to realize their growth plans. They require a high level of flexibility to tap into new market segments, and capitalize on emerging trends and opportunities. Navitaire offers next-generation airlines this capability through our comprehensive distribution suite comprised of direct sales options via the Web and call centers, GDS connectivity, Application Programming Interfaces (APIs), Web Services, code-share services, and ancillary sales capabilities. Together, these represent a powerful suite to increase revenues."
"Navitaire believes that JetBlue has done a phenomenal job of analyzing their distribution options, developing and executing an effective plan to achieve very enviable results - results that increase their revenues without jeopardizing their JetBlue.com success. As a business partner, we're energized everyday in our key role supporting the JetBlue team, and the teams at all of our progressive customers, as they discover new avenues to achieve high-performance results."
Optimize Your Distribution Strategy Now
JetBlue's results clearly demonstrate the value of optimizing your airline's distribution strategy across the prevailing distribution options in your regions. Navitaire provides airlines with the tools they need to flexibly and easily deploy their desired distribution strategy.
For example, JetBlue relies on Navitaire's distribution capabilities for:
- Direct sales through JetBlue.com using Navitaire's leading Internet capabilities;
- Direct phone sales via its home-based reservation agents and call centers;
- Direct connections to travel distributors such as cruise and tour operators with Navitaire's API suite;
- GDS sales via Galileo, Sabre and Worldspan (Navitaire also supports GDS sales via Amadeus, Abacus, and Axess) ; and
- Support for ancillary sales through dynamic packaging and travel partner sales.
"From David Neeleman's comments during their recent earnings announcement, it sounds like Navitaire may be supporting sales of JetBlue seats by international airlines serving JFK or even code-share arrangements in the near future as well", adds Dabkowski. "Navitaire stands ready to assist them - and all of our customers - to grow even more."