Amadeus Cites Geopolitics and Tech as Trends Shaping the Future of Air Travel

Amadeus, one of the airline industry’s most important software suppliers, warned of “global trends that could have an impact on the future of our business," at a shareholder meeting Wednesday. Geopolitical events like the war in Ukraine, the “greater polarization we’re seeing all over the world,” and “an increase in the cost of living that could affect consumption by households and prospects of economic growth," count among potential risks.

Not stopping there, CEO Luis Maroto spoke of changes “in the behavior of travelers and society in general,” pointing to remote work and rising expectations among travel buyers of a “fluent transition between the off-line and the online experience.” Madrid-based Amadeus also acknowledged the growing insistence that companies operate sustainably. “Travelers, whether they be business or holiday travelers, are making choices with sustainability in mind.”

Maroto said the Covid pandemic “accelerated the adoption of digital technology,” and that “new technology has now gone mainstream.” This is true even of artificial intelligence (AI) and machine learning, he said, as millions of people use technologies like Apple’s Siri or Amazon’s Alexa. Generative AI, quickly gaining mass adoption with applications like ChatGPT, will further influence the future of travel search and travel applications. In 2021, Amadeus signed a strategic partnership with Microsoft, which itself has a close partnership with ChatGPT’s creator OpenAI. “New technologies will be key for the transformation of travel through applications and solutions, which will be flexible, agile, and resilient.”

In 2022, Amadeus processed 396 million travel bookings through its distribution platform, used by travel agents worldwide. This figure was up 92 percent from 2021 yet was still 32 percent shy of what it was in 2019. Amadeus is also the industry’s leading provider — in competition with Texas-based Sabre — of passenger service systems (PSSs); these are sometimes described as an airline’s central nervous system. In 2022, more than 1.5 billion passenger boardings were linked to its PSSs, most importantly Altéa, used by more than 200 different airlines including Air Canada, All Nippon Airways, British Airways, and Southwest Airlines. Amadeus also owns the Navitaire New Skies reservation platform used by many low-cost carriers like Ryanair and AirAsia.

Amadeus sells an array of other software solutions to travel agencies, airlines, hotels, and other travel companies, including products that help generate more ancillary revenue. Ancillary selling has been a hot topic for airlines and their software providers, with carriers eager to adopt the New Distribution Capability (NDC) standards developed by IATA. In 2022, Moroto told shareholders, 20 new airlines began distributing their NDC content through the Amadeus distribution platform, used by more than 28,000 travel agencies in some 130 countries. These agencies include large travel management companies like American Express Global Business Travel and BCD Travel, which corporations and governments hire to help manage their travel.

The NDC initiative, more specifically, represents an effort by airlines to take more control of their bookings and construct customized offers to individual customers within the confines of their own IT systems. Historically, airlines merely sent their schedule and fare information to global distribution systems (GDSs) like those operated by Amadeus. These systems would then create offers themselves, limiting the extent airlines could sell ancillary services, personalize offers, and showcase their products online. GDS operators like Amadeus, Sabre, and Travelport have in recent years added functionality to enable some of this. But airlines remain adamant about controlling their own content.

Amadeus for its part, earns transaction fees from airlines selling through its GDS, or using its PSSs. Calling itself the “leading technology company dedicated to the global travel industry,” Amadeus directs much of its energy to developing new solutions for all steps in the travel purchasing cycle. These are primarily six areas: Inspiring a travel booking, shopping for a trip, booking the trip, the pre-trip period, the trip itself, and the post-trip period. Originally, the company was founded by four European airlines: Air France, Lufthansa, Iberia, and SAS. That was in 1987.  

Today, GDSs remain highly relevant, even as many travelers book directly with airlines via their websites. That's because travel agencies, including leisure-oriented agencies like Expedia and Priceline, remain a favored opion for booking among many travellers. Some, for example, like their ability to allow for comparison shopping among different travel providers.

On the PSS side, nearly every major airline in the world now uses either the Amadeus or Sabre product. Delta Air Lines, Emirates, Turkish Airlines, and United Airlines are a few big exceptions.