Sky is the limit for global ticket firms

Airline booking giants Amadeus, Galileo and Abacus are scrambling for their share of the mainland market after Beijing scraps monopoly

PUBLISHED : Thursday, 11 October, 2012, 12:00am
UPDATED : Thursday, 11 October, 2012, 3:03am

Beijing's decision to break the monopoly of state-controlled TravelSky Technology in online air ticket sales has put foreign players in a dogfight for the robust and thriving market.

Before the change on October 1, TravelSky, which is owned by the big four state-backed airlines - China Southern Airlines, China Eastern Airlines, Air China and Hainan Airlines - was the only computerised reservation system for flight bookings and ticketing on the mainland. It generated 2 billion yuan (HK$2.45 billion) in sales a year.

TravelSky is one of the highly regulated businesses that Beijing has promised to open up since it joined the World Trade Organisation in 2001.

After more than a decade of waiting, foreign travel companies, including European-based Amadeus, United States-based Galileo and Abacus, which is owned by Cathay Pacific Airways, Dragonair and Singapore Airlines, will get a foothold in the second-largest air traffic nation in the world.

These companies have so far been allowed to process only the bookings for overseas carriers, which account for just 4 to 5 per cent of total bookings. About 318.6 million reservations were made on domestic and international airlines on the mainland last year.

"It's a very exciting moment for us," said Winnie Lau, general manager at Abacus Distribution Systems (Hong Kong).

For international carriers alone, the number of bookings was projected to reach 16 million this year, compared with 12.83 million last year, she said. Hong Kong's projected booking volume is 11.4 million.

Abacus, which has a 75 per cent market share in Hong Kong, Taiwan and Macau, is to ramp up its operations in Beijing, Shanghai, Shenzhen, Guangzhou and Chengdu by hiring more staff to handle the expected increase in business.

It has appointed Ooi Chee Teong as the new general manager on the mainland, working alongside chairman Zhai Fuhua, an ex-official of the Civil Aviation Administration of China.

"We expect to see double-digit growth in our segment of flight bookings on foreign carriers in 2013," Lau said.

Amadeus China, a subsidiary of Amadeus, one of the world's largest global distribution system, also said it was preparing for the huge market on the mainland. China is set to be the largest travel market by 2015.

"Travel agencies are happy to have their hands on the most advanced tool to help them searching for the air fares in a more efficient way," said Bart Tompkins, the newly appointed managing director for Amadeus China.

Tompkins spearheaded the company's office openings in Russia and Japan before relocating to Beijing last month.

Amadeus had invested €2 billion (HK$20 billion) over the past eight years in upgrading their system to be more timely and reliable, Tompkins said.

The company will ramp up its three offices on the mainland and reach out to other cities when international carriers expand their network on the mainland.

Amadeus and Abacus said it would take four to five days to train agents and to familiarise them with their systems.

A new challenge will be the limited supply of skilled operators and Lau foresees a scramble for the relatively small pool of experienced people.

Tompkins said the size and the complexity of the agent network meant it would take a while for the newcomers to gain a meaningful share of the market.