Near-monopoly Of Thai Amadeus To End

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THAI chief defends new sales regime

Near-monopoly of Thai Amadeus to end

BANGKOK: -- Thai Airways International is taking a bold step to ``de-monopolise'' its domestic computer reservation system and open the door for at least four or five new international service providers to enter the market.

President Kanok Abhiradee said the strategy would not only support national policies to strengthen the tourist industry, but would also help boost ticket sales and reduce costs for the national carrier.

Domestic ticketing for THAI is currently managed through Thai Amadeus, a joint venture between the carrier and Amadeus, one of the leading global distribution system providers. THAI renewed a 10-year contract appointing Thai Amadeus as the ``preferred service provider'' in 2003.

THAI's move to domestic e-tickets last November gave Amadeus a virtual monopoly, meaning that only travel agents subscribing to the Amadeus platform are able to issue tickets. International tickets are provided by a number of providers, including Amadeus, Galileo, and Abacus.

But THAI now is close to an agreement to expand domestic ticketing to Galileo, a unit of Cendant Corp, one of the world's largest providers of travel services.

Executives of Amadeus earlier warned that the deal with Galileo could cost THAI an extra 400 million to one billion baht per year, as booking fees would almost certainly have to increase to compensate for lower sales if other providers were allowed to issue domestic tickets.

Mr Kanok disputed the claim, saying that the push to liberalise the ticketing market would help lower IT-related costs and expand the airline's market reach.

The directive to open up domestic ticketing to other providers was also a strategy set by the THAI board and the government as part of efforts to boost the country's tourism sector.

Mr Kanok said THAI currently pays around 4.1 billion to 4.2 billion baht per year for ticket booking fees for both domestic and international travel.

About 72% of the expenses represent international travel, compared with only 9% purely domestic travel, while the rest is for tickets that include both sectors. The carrier has bookings for around 20 million route sectors per year.

Prajak Jamrusmechoti, a THAI senior executive vice-president, said the airline's booking costs now ranged from $3 to $6.50 per sector, depending on the market.

But low-cost operators, such as AirAsia or even THAI's Nok Air, incur much lower expenses, as Internet bookings cost just around $0.50 per sector.

While THAI would continue to see Thai Amadeus as its preferred partner, the airline is ready to hold talks with other providers to expand its distribution channels as well as negotiate lower booking fees.

Galileo has reportedly proposed a booking charge of about $2.60 per segment, compared to the $3.60-$3.80 charged by Amadeus.

While Thai Amadeus, a 55%-held subsidiary of THAI, paid around 415 million baht in dividends to THAI in 2004, airline executives say that cutting booking charges was crucial for cutting overall expenses.

``Imagine how great the potential savings would be if we could reduce the booking fee by just one dollar per sector, considering the volume of bookings and the increased amount expected as we grow our business,'' Mr Kanok said.

Tapping into Cendant's extensive business network, which includes hotel chains, Internet travel sites, Budget car rentals and a massive tourist information database, would not only help boost potential THAI ticket sales, but the country's tourism industry overall.

Cendant last year signed a contract with THAI and the Tourism Authority of Thailand to develop a global marketing campaign aimed at drawing two million additional visitors to the country.

The move to liberalise domestic ticketing came after Cendant argued that it was impeded in its efforts to meet the tourist arrival target due to the restriction on domestic e-ticketing.

Mr Kanok said TAT governor Juthamas Siriwan later requested that the airline allow Cendant to offer domestic booking services to help fulfill the tourism target.

-- Bangkok Post 2005-02-28