Blackney Backs Corp. Focus

By BTN / October 15, 2000

Blackney Backs Corp. Focus

Nearly a year to the day after returning to the GDS business as Worldspan's CEO, former Apollo head Paul Blackney discussed the role of the GDS for corporate travel buyers at Travel Technology World this month with BTN's Jay Campbell and David Meyer. Blackney also discussed Worldspan's strategy for the corporate market and its recent $11 million investment in booking engine vendor Datalex.

BTN: What are the benefits for travel managers and for Worldspan in signing direct GDS contracts?

Paul Blackney: Travel managers can control where their business goes. If you do business with XYZ Travel and they are automated with Worldspan and their contract comes up and they get a better offer from somebody else, the travel manager then finds their business switched from one GDS to another and that may or may not be in their best interest. But there is not a plethora of those things out there. If we make a deal with XYZ Corp. that their business is going to go through Worldspan, at that point and time I don't much care what travel agent they pick, because the travel agent, if they don't have Worldspan, is going to have to get Worldspan. That's why we have a corporate sales force basically going out. We're not subverting our agents or anything else, but clearly, corporations that are automated by travel agents who use another system are targets of ours. If we can get the corporations to say, "My business goes to Worldspan," and they're with an agency who has somebody else's automation, clearly the agency has two choices: They can convert to Worldspan or they can lose the client. We don't like putting anybody in that kind of position but, nevertheless, our job is to make sure the bookings go through Worldspan.

BTN: The corporation then has to meet market share transaction goals?

Blackney: If you were a medium-size company and had absolutely no control whatsoever over what your employees do relative to booking, that's probably not a very good strategy to follow. If you were a medium to large company that had a strong travel manager and, more importantly, had a strong, enforced travel policy, than I'd say, if you know what your business is, corporations are used to making volume purchase agreements and commitments all the time.

BTN: Airline contracts seem to be a little more flexible.

Blackney: Well, also an airline seat is of no value until it flies. The technology we put into a corporation or a travel agency is of value whether it's used or not and has a cost associated with it whether it's used or not. So to expect some level of performance in return for that kind of investment is pretty much a normal way of doing business.

BTN: Would you further explain the investment in Datalex, which earlier this month filed its IPO (see story, page 4)?

Blackney: We've got Trip Manager and Datalex has Bookit--they're both booking engines. They're slightly different in that Trip Manager is geared for managed corporate travel and Bookit is more generic than that, but it is conceivable we could marry the two of those and try to get ourselves to where the products may have different names and different interfaces. From a business objects perspective, the object that does the booking, the object that does the change, the object that does air, car and those kind of things, we'd kind of like to have those core objects be the same. That way you don't have a different methodology for doing booking in one product than in a different product.

BTN: Is Worldspan's Commercial World Net product for lightly managed travel still on the shelf?

Blackney: I guess it is. I don't think it is being sold very aggressively at least; Trip Manager is what we are selling.

BTN: Do you have any plans for a customizable product that's designed for the midmarket?

Blackney: We have a product like that called the Travel Button. It basically will allow anybody to stick the ability to book all aspects of travel onto a Web site and it's customizable so it doesn't look like Worldspan; it looks like whatever your Web site is or whatever you want it to be. We're finding more and more entities that want to incorporate booking travel into their Web presence and this is a good way to do it.

BTN: That's not specifically a business product?

Blackney: No, it's a product for whomever.

BTN: Is there a way to broaden Trip Manager for something kind of in the middle?

Blackney: I think there are other products that we could use to accomplish that end. The Bookit product, for instance, is not a managed travel product. It has some managed travel components, but they're pretty light. If you are looking for a lightly managed product, that would probably do a reasonably good job.

BTN: We were told the investment in Datalex amounts to $11 million after the exchange rate.

Blackney: That's about right.

BTN: What kind of decision-making power do you gain?

Blackney: Well, I'm on the board of Datalex now and we have strategic software and marketing agreements with them that transcend our investment.

BTN: Is there a role for the GDSs to provide better, more robust data to their corporate clients?

Blackney: I think we're looking at providing, to use your exact words, better and more robust data to all kinds of places. That runs into certain issues, but they're all, I think, overcomable.

BTN: Has one of the issues been your airline ownership?

Blackney: No, that's not an issue. Our airline owners are a breath of fresh air from my experience. I find it a pleasure to work with Delta, Northwest and TWA. I'm not going to say anything negative about anybody else, but I find it a pleasure to work with them.

BTN: The concept of the GDS as the data warehouse seems to be a tremendous opportunity.

Blackney: That is an opportunity that I suspect everybody is looking at. GDSs have been an e-business for 30 years, but we didn't realize the value of the data. And the data in our business still is approached very transactionally and not in a database or analytically. I think there is great value to lots of people in the data that exists. I'll give you an example. When you want to fly, you ask for what's available and the person looking at the screen--whether it's the consumer or a professional intermediary--looks and sees a flight that's sold out. So, the decision that's made right there is, "I can't book that one, so I have to book one of the other ones." The suppliers have no way of really knowing, "Was that the flight that they really would have booked instead of this one?" The way the systems are designed, you lose all the buying intent right off the bat. There is a very imperfect body of science on a lot of these transactions. I think we can do a better job of making worthwhile information available to people.

BTN: Is it the case that sometimes a traveler counselor will look at a fare class and see zero but it's not actually zero?

Blackney: No, it would actually be the opposite of that. You'd see one when it was actually zero if you were going to try to do it the hard way. In point of fact, there was a time in a former life when we actually considered trying that. To throw ones up instead of zeros to see what happened for a period of time just to see who really wanted to buy the sold-out flight. But the disservice it would have caused meant everybody thought better of the idea and didn't do it. That would be a credibility problem.

BTN: So how long will it be before the corporate market will take advantage of better data?

Blackney: Oh, I'd say in the next year. Outside of the transactional environment, GDSs are terrible on origin and destination. They're all segment-based systems. I mean, you sell Grand Rapids to Orlando and in the transaction you look at it as Grand Rapids-Orlando, but when that gets stored and becomes data for analysis purposes, it's a Grand Rapids-Detroit and a Detroit-Orlando that are not necessarily married together. Clearly, it needs to be done more in a database environment that allows analysis in a better way than a transactional database certainly provides for.

BTN: What are the differences between your partner ITA Software's faring engine (BTN, Oct. 2) and the Best Fare Search system you've developed with Expedia?

Blackney: ITA runs on Sun Microsystems; BFS, surprise, surprise, runs on a Windows NT platform. I think the goals are reasonably the same. It's a very unique business. There are not a lot of businesses out there that are doing 8,000 transactions a second and delivering sub-second response time on complicated transactions like fare searches and that kind of thing.

BTN: What are you doing with hardware these days?

Blackney: We will have added 16 major IBM processors to our complex this year, which is about a third of our capacity. We've replaced all the old technology. Water-cooled boxes are gone or will be gone by the end of this month with air-cooled C-Moss boxes that are much smaller. There are some great advantages for us on that. If we were building a new data center, you could build a data center today without all the kinds of things you used to have to build in a mainframe data center, like the chilling water that runs through the floors, to put water through the radiators of these computers. And then all the recovery stuff that has to exist in the floor for what happens if a pipe bursts. As we get more and more into Web hosting for customers, we've had to take square footage in our data center and put secure cages in it so we can physically isolate the servers of one customer from the servers of another, because we have to let the customer's employees in at times to do stuff on their own servers. And the last thing you want is the guy from Priceline going over and punching the button on the Expedia server.

BTN: Is there any value for Worldspan to buy inventory?

Blackney: Airline inventory? No, No. If we do that then we are going to start becoming our customer's competitor. That's a different business. It doesn't have a lot to do with technology. Probably it has more to do with Las Vegas. I've never been a good gambler so, I don't know. The other thing with taking inventory is I suspect you'd have no problem at all getting a very good price for a block of seats from Chicago to New York on any of the carriers that fly it on the Tuesday 2:00 p.m. flight, but that's not where you want the inventory. You want them on the 7:00 a.m. Monday morning flight and the 3:00 p.m. Friday afternoon flight, and I suspect that inventory isn't going to go for the same price as some of the other stuff. That's why airlines have huge yield management systems. I just don't see a real reason for us to get into that business.

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