When will the GDS era end?
The airline industry's MacGuffin keeps chugging along, but surely not forever
For how many years into the future will airlines still be using GDS? Will we still be talking about NDC ten years from now?
Let’s use some simple statistics to get an idea.
We all know roughly how long a plane or smart phone lasts for because we have lots of data. Psalm 90 in the King James Bible says that “the days of our years are threescore and ten”. Ancient people had data too.
Guessing the lifespan of planes, phones and people is easy. Actuaries can estimate precisely how much longer we each have left, on average.
But for one-offs like airline GDS there is no historical data to rely on. The best we can do without any further info is assume that we are exactly half way through the GDS era and that there is an equal chance of GDS being replaced each year.
This makes sense intuitively. The older something of unknown lifespan gets, the more likely it is that we will still see it alive next year.
There is good reason to think that GDS and NDC will be around for a while. It suits sly tech vendors to keep them on the horizon but never quite arriving. That way they can sell more ‘solutions’ that do little but cost airlines billions which could be better spent on passenger experience or staff salaries.
This means that GDS and NDC are what literary types call a MacGuffin, a device intended to further a story while being incidental to the plot. The holy grail in King Arthur is one example. The glowing briefcase in Pulp Fiction another.
Airlines will keep on searching for NDC but like King Arthur’s knights will never find it. Revenue management system programmers like PROS (see article) build whizzy algorithms to persuade airlines that all is well. King Arthur’s knights called on wizards like Merlin to cast spells. Same difference.
So how long with GDS and NDC last? Let’s build a model…
SABRE was apparently founded in 1960. This year is 2024. So the GDS has ‘lived’ for 64 years and our best guess is that we can expect another 64. Our best guess that the GDS will be replaced this year is then 0.78% (1 / [64 + 64]).
Carrying the model forward, GDS has a 99.22% chance of surviving this year (1 – 0.78%), a 98.44% chance of lasting two years (99.22% squared) and 97.67% of three (99.22% cubed).
Ten years: 92%
Twenty years: 85%
Thirty years: 79%
Simple statistics suggests there is a 79% chance that airlines will still be talking about GDS in 30 years. To be honest, I think that is a bit depressing.
Now NDC is younger than GDS. Much younger. So we have no reason to expect it to be as durable. The project was launched in 2012, 12 years ago. It’s modelled annual replacement chance is then 1 / [12 + 12] = 4.17%.
This means that there is a 65% chance we will still be talking about NDC ten years from now. Not great. Still, at least there is a 35% chance we won’t!
oliver AT ransonpricing DOT com