Defining a low-cost carrier is almost an industry in itself. IATA has a list of twelve characteristics, but admits "that there is no standard business model or definition".
From an IT and distribution perspective, the most compelling definition of a low-cost carrier is an airline whose primary sales channels are direct. Traditionally, intermediaries are frowned upon as taking away margins, global distribution systems are too expensive, online travel agents commoditise the product - taking a cut and nicking your brand - while travel agents are only interested in what is good for them.
But like many of the entries in the theoretical low-cost rule book, this traditional focus on direct distribution is taking some interesting turns. And the three largest distributors of air content - Sabre, Amadeus and Travelport - are at the heart of the changing dynamics.
Some differences in approach between the three are starting to emerge, but one refrain is constant - as budget airlines mature, they need GDS distribution to expand beyond their core domestic markets, particularly if they want to attract higher-yielding customers from the corporate travel world.
Derek Sharp, president and managing director Americas and airline IT solutions at Travelport, explains: "We can accommodate LCC content from a technology perspective, but we need to figure out a value proposition for the LCCs."
Part of the value proposition is justifying to no-frills carriers the return on investment through working with a GDS. Commercial models employed by GDSs again vary. In the mega-billion-dollar industry, getting details of the exact money flows can be difficult. But Sabre and Amadeus differ from Travelport in that both have a strong business hosting airline IT systems, SabreSonic and Altea respectively.
Alessandro Ciancimino, vice-president airline solutions at Sabre, readily admits that there are "economies of scale that exist when negotiating with a vendor across multiple products". He referred to its relationship with JetBlue, the US-based airline that is seen as a no-frills carrier and uses SabreSonic.
"JetBlue started out in the GDS, but it dropped us in favour of a direct strategy," he explains. "But it was unable to convert the traffic that was coming direct that normally would have been handled by the GDS. Yields suffered so we started working together again."
Alexandre Jorre, commercial marketing senior manager for Amadeus IT Group Air Traffic Travel Intelligence Solutions, notes the increasing crossover between distribution and passenger service systems, "our current focus with the LCC community is on distribution and we try to separate the two very clearly". He adds: "We only charge when a booking is made, which shifts the distribution cost from fixed to variable."
Travelport does not have a direct competitor to SabreSonic or Altea, but it does have a relationship with Navitaire, a leading passenger service and computer reservation system (PSS/CRS) provider which has its roots firmly in the low-cost sector.
Sharp explains that Navitaire also had to adapt to the changing dynamics of budget airlines. "Navitaire operates a basic but efficient 'LCC in a box' product, at a price point which works for its core customers," he says.
"But as it has attracted more hybrid carriers, and its existing customers have moved into new areas, it needed a technology partner to provide these products. Travelport have built a range of bolt-on solutions which budget carriers can use to close the gap between their Navitaire CRS/PSS link and our distribution reach."
Travelport does not feel left behind by not having a wholly owned reservation system with which to horse-trade distribution costs. "There probably is a halo effect for airlines when in talks," Sharp admits, but he notes that "it's little surprise seeing as Sabre and Amadeus have invested billions and billions of dollars in these systems".
In addition to the nitty-gritty of distribution deals, there are wider industry issues that resonate at the edge of the low-cost distribution debate. Consolidations, partnerships, alliances and codeshares offer commercial as well as distribution challenges and rewards. Amadeus's Jorre points out that "LCCs are part of a dynamic ecosystem, new carriers launch, LCCs fail".
Amadeus started working with Volotea, a Barcelona-based budget start-up, from its launch in April 2012.
The airline needed and opted for GDS distribution from day one in order to sell a wide network of newish routes to secondary cities. Already, one in five of its seats are sold through Amadeus.
Travelport agrees. "Generally, new LCCs are open to GDS distribution earlier in their life cycle than five, 10 years ago, especially in Asia where a lot of our focus is," says Sharp, mentioning "good momentum in the conversations" with five or six big budget airlines in Asia.
Critical mass is essential for survival, Ciancimino claims. He thinks that EasyJet and Ryanair will continue to dominate, "as they are not really competing with each other on network or product offering". The trend towards full-service carriers launching standalone short-haul brands to feed the main airline is growing.
"Air France's Hop, Iberia Express, Germanwings," he notes. "All operate separately but marketing is centralised so often it is [the] same distribution deal."
Of all the no-frills airlines, EasyJet is the clearest example of an airline that has used distribution to drive a change in business strategy. It now works with the GDSs specifically to sell to business travellers who still use travel management companies, although leisure agents are also now on its radar.
Five years ago, 98% of its bookings were online. It now stands at 90%, with the balance sold through third parties including the GDSs. EasyJet told investors in 2012 that by 2015, it wants 20-24% of seats to go to business travellers, which will bring in £100 million ($154 million) of incremental revenues per annum.
Travelport has staked its claim to being the most advanced of the three in terms of its relationship with EasyJet. In January, it started to include EasyJet seats alongside traditional GDS content by connecting to EasyJet's API.
Sabre works with EasyJet in a similar way, while Amadeus has been an EasyJet distribution and technology partner for a number of years.
Sabre's Ciancimino suggests EasyJet was working with Sabre because of its strength in the UK and Italy.
He declines to be drawn on whether Sabre distribution was a way for EasyJet to sell to US-based Sabre-connected travel management companies and corporations, but points out that Sabre was working with EasyJet seats "on a global basis". Last year, EasyJet quietly launched a consumer site for US customers.
Having sorted out their early differences, the changing relationship between the GDSs and no-frills carriers will have an impact across the business. Many products developed for low-cost customers can also work for full service ones, too.
But it is also the changes within the GDS and budget airlines themselves that are driving this relationship change.
The distribution dilemmas are working themselves out - so long as nobody mentions new distribution capabilities.