Travel technology giant Sabre has appointed Sean Menke its new chief executive, to replace Tom Klein, who chose to step down earlier this year.
Until now Menke was in charge of Sabre Travel Network, the company's global distribution system (GDS) arm.
Before coming to Sabre, Menke was chief operations officer and executive vice president at Hawaiian Airlines and CEO at Frontier. As a former airline executive, he knows how such executives think about distribution -- a key insight for Sabre as it seeks to expand its business worldwide.
Years ago, as COO at Air Canada, he was the individual that pulled the airline's content from Sabre in frustration at how the GDS was displaying its content relative to Air Canada's competitors.
Today he believes that things have changed. The industry's needs have evolved, and GDS technology has improved, too. He touts Sabre's new tools for helping airlines sell "customized" fares and ancillary products, plus new options that will be offered to travel agencies next year with the launch of the next-generation agency desktop Sabre Red.
Here's an excerpt from Tnooz's interview with Menke from this past summer.
Tnooz: How did your years of working at airlines prep you for your current gig?
Menke: When I was the chief commercial officer at Air Canada in 2005, the president and CEO of Air Canada was a gentleman by the name of Montie Brewer.
I had worked for Montie at United when I was a young analyst. I spoke to Montie about what they were trying to do there and ended up going to Air Canada.
Montie’s work was the foundation relative to my views on distribution but more specifically on just how to make airlines work.
Or trying to figure out how they work, because I don't know if they ever really work.
They're just a difficult beast, be it labor, be it fuel, be it regulatory. It's one thing or another.
For me when I look at that experience, you know, the Frontier experience as well as just the Hawaiian experience, the best thing that I'll leave you with is people always wonder from a sales and distribution side of the equation why isn't there more time and attention focused on it.
But there are so many things that are going on for a CEO or COO. They’re distracted by other urgent matters, in short.
Tnooz: So what is on airline CEO minds right now that outsiders may not appreciate?
Menke: When you look at suppliers, specifically the airline side of the equation, your net revenues are coming down.
If you look at the shift from indirect to direct, that's completely flattened out.
They're trying to figure out how they drive more revenue is what it boils down to.
Tnooz: What’s changed?
Menke: Specifically on the airline supplier side of the equation is that there's been an evolution in distribution.
What has transpired is it has become more complicated. When you introduce branded fares, when you introduce ancillaries, when you begin to continue to grow on a codeshare basis, it gets more complicated.
For me and sort of where I sit today, I feel I am well placed to dialog with suppliers, because I was on the forefront of things that were happening on the supplier side. I was very engaged. I know essentially what works and what doesn't work and what the difficulty is with what's taking place.
At Air Canada, for example, when you're trying to change distribution in your home country, that’s not so hard, from a leisure perspective.
But when you want to influence how corporations look and book, that's a little bit harder, right? Because now you're really getting into how TMCs work and that mid-office, back-office area.
How do your changes impact a codeshare partner? How does it impact an alliance partner, a joint venture? How do you look at it in where you don't have strong point of sale at an international locale?
Tnooz: But as a GDS exec, you would say that.
Menke: Very clearly in North America I can point to who is doing better among the airlines.
I can point to essentially their distribution strategy, how they're aligning with agencies, and then I can point to others that are doing it completely different and you're actually seeing a different situation relative to the performance out there.
I can't prove that's exactly the causation, but I do believe it's a driver relative to the ability to engage and create stronger relationships on the agency side.
Yes, the business model needs to evolve, but airlines can't do it on their own. There is a GDS network that's out there that actually is broad that actually can be the platform to allow you to be successful in what you're trying to accomplish.
This leads me to the APIs that we developed that have fed into our soon-to-launch revamp of Sabre Red Workspace.
If you can help sell the products and services the way that airlines want, how do we make sure that we're then looking at the economic model that essentially incentivizes the agency community to want to take further actions, which means workflow, to be able to sell those products and services?
Tnooz: Back up a sec. Montie and Air Canada, they were pioneers of branded fares. They experimented with pulling out of the GDSs. So you've heard that kind of debate and discussion from the supplier side, in trying to assess the value of the third-party channel. What is it that you now see? How are airlines now thinking about these issues? What’s changed?
Menke: The primary reason I pulled Air Canada content from Sabre was that we couldn't sell the products and services the way that we wanted, and the important part of that was is we were competing against a low-cost carrier in that marketplace.
Essentially when we were selling a seat through the GDS, it was the lowest fare that was out there, so it was always selling, call it the Tango fare. If you remember Tango.
Tnooz: Right. I remember Tango fares.
Menke: That's what it was, and it wasn't the ability really to sell up into Tango Plus, Latitude. That was the driver. Apples-to-apples, fair comparisons. In doing that, we just wanted to be able to have the products displayed in a particular way. The GDS couldn't do that.
If you look at where we have evolved to today as an industry, is the technology is there but it's not completely there. I still think there's more the GDSs need to do to be able to enable that.
That's where the mindset has also changed from the perspective of everything was, "I can do it all direct. I think I can get everything direct."
There's a wall, right? That's what I was talking about when you get that flattening out, and we've really seen this in North America that if you look at the GDS share in North America it dropped to probably, and this is just based on our numbers, probably about 48 percent, and we're seeing it start to come back up.
That's my point. You can only go so far with direct distribution. Because most corporations need and want to book through the GDS. Plus a lot of your codeshare stuff is booked through the GDS. Plus foreign points of sale booked through the GDS.
There's been this realization over time is, at an airline, I can only take it so far, and I have a revenue issue, so why am I not looking at all my distribution channels and the ability?
It shouldn't be indirect versus direct. It should just be distribution, and it's incumbent upon us to make sure that we're helping them sell their products and services the way that they want, and then enabling essentially the agencies to sell those products and services.
Then it becomes a discussion really between the suppliers and the agencies on that compensation model on what takes place.
Because we've done our job in enabling the technology to be able to serve it up.
Read in full Tnooz's in-depth interview with Menke from this past summer.
Sign up for Tnooz's daily email newsletter for more news and analysis.