Two companies seeking to bring new competition to the travel distribution realm today each announced new funding as they pursue travel agency business. Both G2 SwitchWorks and Toronto-based Farelogix--a newer name on the scene--identified new sources of capital and reiterated their value propositions as alternatives to existing global distribution systems.
Approaching its first birthday, G2 said Norwest Venture Partners and Texas Pacific Group, well known in the industry for providing support to struggling carriers, now are on board as financial backers. G2 for months has claimed to be actively handling live transactions between six major U.S. carriers and unnamed travel management companies. "The next phase is building out the infrastructure and driving marketshare," said CEO Alex Zoglin in an interview yesterday with
Business Travel News. "That requires help."
G2 also claims its system is more automated, more robust and more cost-effective than legacy GDSs. "We provide the infrastructure for agencies to manage the fractured supply chain," Zoglin said. "People are pigeonholing us as being a solution for certain direct-supplier situations, but we have a complete solution for all carriers."
Even so, many in the industry remain skeptical of new entrants' ability to take on existing global distribution systems
(BTN, Feb. 7), especially since none has identified any travel agency clients for their new distribution platforms. Nevertheless, airlines are keen to see these players gain exposure and influence distribution economics.
"The current GDS structure is very effective but it also is a very expensive way to distribute our product," said David Cush, American Airlines vice president and general sales manager. "The cost deficit is not sustainable. G2 and ITA are proposing significant cost reductions and we will support them. They can be viable alternatives in their own right and also bring pricing discipline to GDSs" as current GDS-airline deals begin expiring later this year.
As part of the new funding, executives at the supporting venture capital firms will join G2's board of directors, including David Bonderman, founding partner and managing general partner of Texas Pacific Group. Bonderman last year resigned from Continental Airlines' board of directors in a deal that led to former Continental CEO Gordon Bethune's retirement.
"The travel industry faces a wide variety of obstacles due to archaic technologies and outdated business processes," Bonderman said in a statement. "The market demands a more efficient, feature-rich alternative to the current offerings of existing global distribution systems."
Also claiming to offer independent faring and multi-source distribution technology, Farelogix today said Sandler Capital Management provided $6 million in new support. The funding will be used to expand sales and marketing and enhance its technology. Farelogix today also named to its board of directors Jim Davidson, the company's new president and CEO. A travel industry veteran, Davidson previously served as president and CEO of Amadeus Global Travel, North America.
Farelogix has supplied technology to the transportation sector in North America and named as clients American Express, Carlson Leisure Group and Navigant International.