The two largest systems for booking and selling air tickets – the American Saber and the Spanish Amadeus – have terminated their distribution relationship with Aeroflot. Now the company will have to sell tickets through other systems.
Some experts are saying that the real danger is if the inventory systems, which hold all the airline's data, such as schedules and fleet capacity, shut down. If other airlines experience a similar situation, it could completely stop ticket sales. Only Utair among the largest companies is fully connected to domestic booking systems.
According to participants in the market and experts speaking to Kommersant, the decision by Sabre and Amadeus to disconnect Aeroflot from their distribution systems will not have serious consequences. It only means that one of the many ways to sell tickets will be lost. Sabre, an American company, said it will end its distribution agreement with the Russian airline on March 3. They stated that they will remove all information about Aeroflot flights from their systems for buying, booking, and servicing tickets. Amadeus sent out a similar message. Aeroflot emphasized that they will continue to provide transportation for passengers.
Most Russian airlines use the global distribution systems (GDS) of the three largest booking systems: Sabre, Amadeus, and Travelport (UK). These GDS are the systems that each provider has in order to distribute globally. According to Dmitry Krasnov, an independent expert and former vice president of SITA in Russia, most airlines in Russia work with Sabre as a distribution channel. He explains that the GDS systems of the three major players are in strong competition for their share of the major international markets, which varies from country to country.
According to Mr. Krasnov, the issue looks more serious for Aeroflot and Rossiya because these airlines also store all their data in the Sabre inventory system.
An expert explains that it is common for a company to use the distribution system of the organization where it stores its resources, which also includes the inventory system. Therefore, if the carrier stores data in Sabre, it is cheaper to sell seats through Sabre, even if sales go through travel agencies. According to a source in the Transport Clearing House, 30% to 50% of sales are done through the leading GDS systems for different carriers, with the rest being direct sales and other channels.
Since 2020, Pobeda has been using the new booking system of the Spanish Newshore, integrated with Navitaire (a structure of Amadeus), on which the carrier had previously worked. S7 and Ural Airlines are fully connected to Amadeus. 59 companies are connected to the Russian Leonardo booking system (connected to the largest player Sirena Travel), with only one major carrier, Utair, using it as an inventory system. Other clients include NordWind, RedWings, and Rossiya for charter flights.
The shutdown of the inventory system, which holds information about schedules, seat availability, tariffs, and aircraft capacities, could be disastrous for carriers. Mr. Krasnov says that a simultaneous shutdown of inventory systems would be a huge loss and would actually stop the carrier's sales. He notes that there have been no such incidents anywhere in the world so far. According to people in the aviation industry speaking to Kommersant, Sabre even operates in Iran with special permission from the US Treasury. North Korea is the only country in the world without a GDS.
Mikhail Poluboyarinov, CEO of Aeroflot, September 2, 2021:
“We are going according to plan – the transfer (of booking systems in the Russian Federation. – Kommersant) will be completed in October this year. In any case, the transfer process will not affect our work technically.”
“Domestic booking systems, obviously, did not satisfy the needs of Russian airlines until recent events – for example, the functionality necessary for working in the OneWorld alliances in the case of S7, and SkyTeam – with Aeroflot, was hardly supported there,” explains Mr. Krasnov, noting that now the relevance of the work of Russian airlines in alliances is “a big question.”
According to Kommersant’s sources, airlines fear that foreign booking systems will escalate and turn off inventory systems. The change of booking systems, according to interviewed experts and sources in airlines, takes from one to two and a half years. In the most stressful scenario, the transition is possible at least in a year, one of Kommersant’s interlocutors says, noting that in this case, interruptions in work are possible.
The full cycle of S7 migration to Amadeus took about two and a half years. “One-time transfer of such data arrays will not work – this is a huge investment and amount of work,” continues Dmitry Krasnov. “In addition, the functionality of the systems also differs – Amadeus and Saber have invested hundreds of millions of dollars in their software. The airlines are also not sure whether domestic booking systems will be able to provide the same high level of functionality.”
So far, all known suspensions of flights to foreign countries occur due to the risk of withdrawal of aircraft.
Some market participants attribute this to the decision of S7 Airlines to cancel flights to a number of countries on February 25: on March 3, the company expanded the list of closed destinations, including, in particular, Thailand and Egypt.
S7’s official statement says that “the company was forced to partially reduce the flight program due to the restrictions imposed,” while flights to Dubai and Antalya remain.
A Kommersant source in one of the airlines claims that against this background, the carriers received a telegram from the authorities demanding “not to make decisions to suspend aircraft flights without confirmation from the Federal Air Transport Agency.” However, according to Kommersant, at least two more carriers are going to stop flying to some countries from March 4, as they received a demand to return the aircraft from European lessors.
