New Sabre Contract To Improve Navigant's Finances
Denver-based Navigant International earlier this month confirmed it had renewed for five years a GDS agreement with Sabre that helped it pay off $34 million in debt. Some portion of the $34 million came from Sabre in the form of an advance payment that "will have to be earned via segment fees in the future," said B. Riley & Co.'s Brett Hendrickson, an investor in Navigant and an analyst covering the company. "Sabre can afford to pay up front," he added, noting that it is Navigant's largest GDS. "Galileo and Worldspan contracts are not due for renewal for a while." Hendrickson said the debt payoff improves Navigant's chances of earning better interest rates and, in turn, better earnings.
Galileo Elevates Highwire In Restructuring
About 200 Galileo International employees in North America were "displaced" by a corporate restructuring aimed at cutting costs, focusing on higher growth areas outside this region and elevating the presence of the Seattle-based Highwire corporate self-booking subsidiary. As part of the realignment, Mitch Gross, formerly senior vice president and chief marketing officer, took over most of the responsibilities held by Dan Neuberger, formerly Galileo executive vice president and general manager for the Americas, who left the company. Rather than to Neuberger, Highwire CEO Marka Jenkins now reports to new CEO Sam Galeotos, who recently replaced Mark Miller. Miller and Neuberger played key roles in Cendant Corp.'s acquisition of Galileo, which closed about a year ago. "They needed a shakeup over there," said Dan Bohan, COO of Omega World Travel in Alexandria, Va. "Our relationship with them has improved 100 percent. They have just changed their attitude from 'Give me more segments, give me more segments' to a more cooperative relationship—and we didn't even give them more segments."
Online Agencies Consider Opening Door For TMCS
Bellevue, Wash.-based Expedia last week joined Sabre's Travelocity in saying it was considering creating a mechanism for travel agencies to book on their sites. Both Omega World Travel COO Dan Bohan and TQ3 Maritz Travel Solutions' corporate vice president of information technology Richard Spradling said such ideas were under discussion. "Travelocity has no formal business travel offering, and we're looking at all options," Spradling said. Meanwhile, Orbitz is in talks with TRX on providing further agency access to its fares; the airline-owned site already works with Navigant subsidiary Aqua, which recently said its AQUAQuest point-of-sale solution accesses and books "Internet fares" from more than 450 airlines via Orbitz.
In an unrelated statement, Expedia said it did not expect a disagreement with Northwest Airlines that prompted it to pull the carrier's flights from its site to affect the rollout of its corporate travel agency and booking product, set for later this year.
Air France Adopts New Domestic Fares, Adds U.S. Flights
Air France last month cut by 15 percent domestic fares on flights departing between 9 a.m. and 4 p.m. These off-peak fares, promoted to business travelers, are not applicable on flights to Paris Charles de Gaulle. The carrier said travelers "willing to adapt their departure to obtain the lowest possible fares" can use the Air France Alternative card, offering discounts of up to 40 percent. Also, a 30-day advance purchase will translate to a 30 percent rebate. Air France is the last of the major European carriers to tweak its domestic/short-haul fare structure to stimulate demand and defend against low-fare competition. Separately, Air France, among the healthier of the European carriers, for the winter season will increase systemwide capacity by 7.5 percent, year over year. The schedule includes 44 more long-haul flights, including 34 to North America. Flight frequencies pulled down after last Sept. 11 will be restored to Boston, Los Angeles, Miami and Washington.
Effect Of Iraq War On Hotels Measured
The consequences of a war in Iraq shifts hotel revenue forecasts noticeably downward, according to a report released last week. Consultants Torto Wheaton Research and the Hospitality Research Group arm of PFK Consulting said a war would have the greatest impact on chain-affiliated full-service hotels. In a short war scenario, meaning a conflict that concludes within three months, hotel profitability growth is significantly reduced. Should a long war scenario come to pass, profitability growth turns negative. The consultants factored the lodging industry impact of the 1991 Gulf War into their equation.