Amadeus is poised to announce its selection by Star Alliance partners Air Canada, Lufthansa and United Airlines for a global IT contract, including a reservations system—currently provided to United by Cendant's Galileo. An Amadeus spokesperson could say only Amadeus was "in talks" with Star. Meanwhile, American Airlines last week was unable to respond directly to word that it is seeking an upgrade to its reservations system.
AA's current reservations system provider, Sabre, is building a next-generation solution. According to an American Airlines spokesperson, "We look for a lot of things in development, and talk to a lot of folks on projects. There's no official statement on this subject."
While there is no timeframe for completing the Amadeus-Star negotiations, the only competing bidder, Lufthansa Systems, has dropped out. Lufthansa Systems had been working with Unisys.
According to Airline Business, the Amadeus IT package for Star includes inventory, sales and distribution and departure control. The magazine also reported that Amadeus is working with consulting firm Accenture, whose Navitaire unit hosts reservations systems for JetBlue and others, and that IBM may join the bid.
"Amadeus is moving more vertically into airline services," said Pascal Bordat, vice president and general manager of the global travel and distribution practice within Unisys Global Transportation. "If and when United gets onboard with Amadeus, it might not change Galileo's marketshare by too much, unless United and Amadeus enter a deeper agreement down the road. AA is looking for a next-generation system, despite its relationship with Sabre. They want to move on to a better solution."
Price Is Paramount
Sabre executives recently acknowledged that as airlines slowly invest in technology, price is paramount. "While we'd like to command a premium based on our functionality, we are competing in many cases on price," said Sabre CEO Sam Gilliland.
Bordat said airline decisions on IT systems increasingly are tied to GDS distribution relationships. "Alliances are taking back the power of the GDSs," he said. "What might happen is that an alliance goes with one GDS, and the GDS then only sells that alliance. Airlines still are not happy with the level of booking fees from GDSs. After the DCA-type agreements, you will see new models. Airlines are pushing their own channels to provide access to corporate clients.
"You will see platforms where you can easily integrate different suppliers where you can maintain direct connections," Bordat continued. "It wouldn't be no cost, but as little cost as possible. As airlines develop new alternatives, they will be in a stronger position to negotiate with GDSs as DCA-type agreements begin to expire."
Such agreements trade discounts for access to content. Amadeus last week became the latest GDS firm to announce such deals, adding Web fare content from Continental and Northwest airlines for North American agency subscribers as part of what it called a value-oriented pricing model
(BTN, Dec. 8, 2003). "Similar agreements are being discussed with other key U.S. airlines," according to an Amadeus press statement.
~David Jonas contributed
to this article.