Shay Mitchell General Manager Galileo Netherlands

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Shay MitchellGeneral ManagerGalileo Netherlands

• The Growth of Low-Cost Carriers
• MARKET CHAOS WHERE DO WE GO FROM HERE?
• 23rd September 2003

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Chaos

• Economic recession
• War
• SARS

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Travel Market Changing

• Low Cost carriers
• Airline disintermediation
• Airline Direct Connect
• Commoditised GDS
• Profit margins shrinking
• Online vs. offline

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Growth of Low Cost Carrier Concept

• Ever growing list of Low-Cost Carriers in Europe
• Full-service airlines adopting the LC model
• All carriers trying to sell more and more
  directly to the consumer
• Direct connect considered to be more cost
  effective, (true or false?)

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Impact on the Travel Agent Dramatic!

• Commission reductions (7 -5-1- Zero?)
• Service fees as a replacement revenue stream
• How many travel agents will survive?
• Those who do must embrace technology in order to
  be more productive
• Using Customer Relationship Management
• Finding niche markets

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Impact on the GDS Dramatic!

• Shrinking market due to channel shift
• New role of travel solution provider
• Forcing a change in the GDS/Travel Agent/Airline
  relationship
• Reducing revenues and lower margins
• FA arrangements not sustainable in the future

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GDS Market Shrinking

• Holland down 18
• UK down 12
• Germany down 10

• Italy up 6
• Spain up 17

Source MIDT data
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Where does the consumer stand and what are
his/her needs in a so called Book Direct Market?

• Widest choice possible
• Price guarantee
• Ease of booking
• Dynamic packaging
• Servicing and sales support
• Can this be provided through a single supplier
  website?

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Content What we provide

• 35m fares
• Private Fares now 50
• 6220 formulae
• 47.000 travel agency locations
• 493 Airlines
• 52.000 hotel properties
• 292m bookings LY

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Technology Direct Connects
Paper ticketing
Integrate bookings
Multi carrier itineraries pricing
BSP credits for E-tickets
BSP hand off functions
WHO PAYS?
Ground services
New preferred airline supplier
Mid back office hand off
Corporate policy management
Partner access to bookings
Itinerary changes
Private fares
Married segments
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Technology Supplier Direct Connect

• Unsustainable burden on Web and airline
  reservation systems
• Loss of integration
• Limits consumer choice
• Economic model is flawed Hidden costs of
  going direct
• Ask the expert - GDS

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Areas of Focus

• Content
• Technology- (Increasing Productivity)
• New Business Model

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Content, Content, Content!
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Low Cost Carriers In Galileo

• Virgin Express
• Virgin Blue Australia
• Westjet in Canada
• BMIBaby
• Kulula -South Africa
• SkyEurope - Bratislava
• FreshAer -Ireland
• Air Majic - UK

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Galileo Airline Supplier Initiatives

• Airline Content Retention in Galileo through
• Basic Booking Product Europe
• Preferred Rates Programme in USA (Full service
  airlines web content)
• One-to-one discussions and agreements with
  Airline suppliers in EMEA focusing on web fare
  distribution at lower cost

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Content Low Cost, No Frills

• Basic Booking Product
• Low cost GDS booking product Custom Fares
• Integrated web fares
• Super PNR?

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Cendant Divisional Overview
Divisional Overview
Travel
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Cendants Travel Assets for EMEA/AP

• Vacation Rental

• Hotels

Distribution
Car Rental

• 38000 Properties
• 17 EU Countries
• 4m Consumers

• 600000 Rooms
• 6000 Properties
• 180m Room Nights
• US, UK, Ireland

• 1 AP
• 1 MEA
• 2 Europe
• Corporate Tools
• Preferred Content

• 1 world-wide
• Owned in AP
• Owned in N.America
• Licence in EMEA

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Technology -Solutions

• Is about efficiency and cost reduction
• Fare Shopper
• E-Tracker
• Agency Private Fares
• Airline Private Fares
• Custom Fares
• Corporate Booking Tools
• Galileo Web Services

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GDS New Business Model

• Maximise the airline content -Full service
  Low Cost Carriers
• Add wide range of new content
• Deliver new technical solutions to create
  efficiencies
• Greater value rather than FA?

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Alternatives to FA

• Improved Corporate/Leisure Booking Tools
• Internal automation for cost take-out
• TDS not GDS
• Stronger partnership agreements with customers
  and suppliers

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The Galileo Challenge
As part of the Cendant Travel Distribution
Services Group, Galileo is re-inventing itself,
in order to forge clearly defined new
partnerships with its travel agency partners and
suppliers for a prosperous future. Come Join US