Skift Take
For a couple of decades, distribution technology giants like Amadeus dictated contract terms to the airlines. But airline groups are leading a revolt to try to impose a new model on the middlemen. It's too early to say who will get the upper hand.
Airline groups are attempting to rein in the distribution business of Amadeus, the travel technology giant. But the Madrid-based company said Friday that it is not feeling an impact — at least not yet.
During a first-quarter 2018 presentation to investors, Amadeus said it had seen no financial impact from the pushback by airlines against distribution companies, who are trying to get travel agents and online travel agencies to book directly with them.
"We need to manage this evolution very careful," said CEO Luis Maroto of the new deals. But he said there had overall been "a positive outcome of the evolution of the different agreements that we have had with airlines."
Amadeus reported its first-quarter 2018 earnings that showed modest, but steady growth.
Amadeus generated $644 million (€544 million) in earnings before interest, taxes, depreciation, and amortization. It also grew its revenue by 3.1 percent for the period, year-over-year, to about $1.47 billion, or €1.23 billion.
Taken together, that means that its profitability represented 44 percent of its revenue — a figure that has been consistent for countless quarters.
The comparable figure for airlines worldwide is profitability representing 8 percent of revenue. For large airline groups, it's a bit higher, but still about half of Amadeus's level.
Jealous of those margins, some airline groups have recently begun coaxing travel management companies and other corporate agencies to book directly via new technology systems, kicking the middlemen out of the distribution chain.
Amadeus is one of only a few airfare distribution companies in the world. It and its peers touch a majority of the airline tickets purchased worldwide every year, either when the tickets are searched for, sold, or fulfilled at airports.
Airlines dislike the fees they pay the middlemen, partly because they are jealous of the profits the companies earn.
In November 2017, Air France-KLM joined Lufthansa