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Airlines

Playing the middleman

The Hahn Air Group has developed a robust enterprise by offering distribution solutions to airlines of all business models, among them small, medium and low cost carriers. Keith Mwanalushi examines the importance of such visibility
 

Back in 1999 Hahn Air launched its ticketing platform business and since then has specialised in providing global distribution solutions to more than 300 air, rail and shuttle partners.  

 

Hahn Air Systems, a sister company of Hahn Air, is the global consolidation service connecting airlines as well as rail and shuttle providers to all major Global Distribution Systems (GDSs). "One of the latest carriers to join our network is the Mexican low cost carrier (LCC) Volaris," declares Alexander Proschka, Head of Hahn Air Systems. 

 

He explains that as a result of this partnership, Volaris is now able to make its flights available to travel agencies worldwide under the Hahn Air Systems’ reservation code H1, without having a direct GDS interface of its own.

 

"Using the H1-Air product, airlines are able to outsource all of their indirect distribution needs to us, relieving them of the complexities and costs that come along with distribution via travel agencies," Proschka continues. 

 

Volaris now has access to over 100,000 travel agencies covering 190 global markets and as a result, Hahn Air reveals that Volaris can now increase their sales potential and gain incremental bookings. "At present Volaris is available through the GDSs Amadeus, Sabre and Galileo, and more to follow soon," he acknowledges. 

 

Another addition to the fold is Greek domestic carrier Sky Express. The airline is already available in GDSs under the H1 code, but it recently signed an additional agreement with Hahn Air to become available for HR-169 ticketing in the Sabre GDS under its own GQ two-letter code.

 

Traditionally, the LCC model has relied solely on a direct distribution strategy. "The reason lies in the fact that the business is running on thin margins and many airlines think that indirect distribution is too risky and too costly. But this is clearly a missed business opportunity," Proschka surmises. For airlines that want to be profitable and have a vision of expanding beyond the status quo, he thinks complimenting a direct distribution strategy with an indirect one is essential.

 

Airlines have the option to outsource indirect distribution, while also eliminating risk and complexity. "With us for example, low cost airlines can enter the GDS world with only one partner, instead of joining each GDS separately. They don’t need to invest in the IT infrastructure or settlement vehicles traditionally required to sell via GDS channels, thereby keeping costs to a minimum. By selling their flights via the Hahn Air Systems code H1, they gain incremental revenue and tap into the global market," Proschka says. 

 

Having said that, there has been an ongoing argument that in the long term it is more beneficial for an airline to invest in its own GDS interface. "This is not true for every airline," Proschka argues. "There are many low cost carriers and smaller airlines that may experience trouble or find challenges when trying to enter indirect distribution channels."

 

For these airlines, he thinks the indirect distribution solution of Hahn Air Systems might be the solution: "The key benefits of H1-Air are that it enables small- and medium-sized carriers to introduce GDS channels to their distribution mix without adding the complexity of traditional GDS distribution. Negotiating with GDSs and acquiring the necessary knowledge is very time-consuming and requires substantial investment."

 

Proschka continues, adding that partner carriers can enter the GDS immediately, and can leverage on Hahn Air Systems’ expertise to gain their own experiences with the GDSs to then strategically plan their next steps. 

 

"These next steps might involve, for example, investing in their own GDS interfaces and forming interline agreements with other carriers. Airlines that have formed their own GDS contracts can then sell their services on the validating carrier’s ticket without having to establish BSP [Billing and Settlement Plans] memberships."

Here too, Hahn Air offers a solution with its HR-169 product. "Airlines that already have a GDS interface can enter into an interline agreement with us and make their services available to travel agents worldwide on the HR-169 ticket," Proschka explains. 

 

For most LCCs, code sharing or interlining has never made much business sense. The numbers have just never added up, as evidenced by easyJet in 2015 when the airline allegedly played down suggestions of becoming a feeder airline for legacy carriers at its new base in Amsterdam. >>


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