Unisys Enters Airline Res Market

<H1>Unisys Enters Airline Res Market</H1><H2>Computer Giant Readies Expense Management And Airline Res Systems</H2><H3>By Cheryl Rosen</H3><I>Blue Bell, Pa. </I>- Unisys Corp. is launching a two-pronged assault on the travel industry, making it the latest technology titan to stake a claim.

On the one hand, the systems giant in April quietly began demonstrations of a new automated expense management system to a select group of corporate travel managers. And on the other, it announced the purchase of an airline reservations system for small and midsized carriers, just a week after IBM purchased a similar system (<I>BTN</I>, April 22).

Unisys spokeswoman Ann Macey acknowledged that the company will roll out an online expense reporting product for the corporate market in the next 30 to 60 days. The product "does have a name, but I can't tell you that yet," she said.

The system will not be part of a larger modular system that includes an automated booking piece, like those hitting the market from several agencies and CRSs, she said.

American Express spokeswoman Melissa Abernathy noted that the entry of Unisys into the expense reporting arena "definitely confirms the strategy we've espoused since 1981: that corporations need to streamline the travel expense reporting process and that a lot of costs can be cut by reengineering that process."

With Amex studies showing the cost of the processing expense reports running as high as $22 apiece, Abernathy said, "there is some serious fat there to be targeted."

Still, she cautioned travel managers to assess the provider of travel technology they are considering as well as the system itself. "Our position is that corporations need to carefully consider whether the provider is a company that specializes in travel and travel expense management, or just a technology provider," she said.

Meanwhile, the entry of Unisys and IBM into the reservation side of the business-although the impact on travel managers is less obvious-also is a development that bears watching. There seems to be a mini-revolution brewing in the travel technology arena, as a growing vendor list of technology providers and an emerging customer base of small airlines are putting their heads together and developing reservations systems without the support of the traditional CRS players.

The Unisys agreement with Ft. Lauderdale, Fla.-based software developer Sysops Inc., under which it will market an "affordable turnkey operation for airlines," was announced at the travel industry's first conference of independent airline reservations systems, held recently in Washington, D.C. In attendance were not just Unisys and IBM, but also a group of Siemens representatives-who acknowledged that they, too, were searching for an independent res system to bring to market.

Unisys program sales and customer management director Michael McNamara noted that while this is Unisys' first foray into providing a turnkey solution for start-ups, the company has a 30-year history in the travel industry, and its Worldwide Information Management unit provides reservation services to 140 airlines and 21 railroads.

While the new systems are designed to allow start-up carriers to manage their reservations and sell tickets, industry insiders note that when the Internet becomes a viable channel of distribution, such systems also can be used to connect corporations and their suppliers directly.

Under the terms of the agreement, Sysops will retain ownership of the AVOPS Computer Reservation System, but Unisys will provide sales and marketing, documentation, installation, training, support and system modifications, and links between the system and the GDS. "If an airline wants to use the system, it will come to us and we'll offer a turnkey solution, including system integration and ongoing support," said Unisys program director Cynthia Crowley.

"What we've done today is tackle the distribution needs of the emerging market of low-cost carriers," Crowley said. Crowley said that the system will allow a corporate travel manager or agency to get on the Internet and book small airlines that aren't on a CRS. But she emphasized that Unisys does not see itself taking on the role of a CRS.

"This system is not intended to compete with the CRSs; it's to solve the specific problems of a specific market," she said. "The airlines are under such pressure to reduce their distribution costs in every way, and that's particularly true of the start-ups. But start-ups are looking for different solutions than the major carriers are."

Sysops managing director Scott Hawkins said there is a renewed interest in independent solutions among small and midsized carriers, and a growing belief that such systems offer flexibility in a rapidly changing distribution channel.

"The pendulum is swinging back to letting airlines control their own systems," Hawkins said. "The CRSs provide a valid distribution system, but they have to realize that their technology is dated and they charge too much to use it. "

With a growing number of booking options available in the marketplace, including kiosks, disks, CD-ROMs and Internet sites, "there's a whole new class of middlemen between the airlines and the consumer," Hawkins said. "But I think those options will never be as popular as sites that connect an airline with its customers-and we'll see more of that over the next two years."

With Sysops, Unisys hopes to bring many of the capabilities it developed for the mainframe system that handles those major airline customers down to the low-fare carriers, he said. One program, for example, tracks customers service issues and brings them to the attention of the reservation agent at the point of sale, bringing up reminders to the agent like "this passenger was bumped twice in a row-offer free upgrade."

James Foster, executive vice president at Ft. Lauderdale-based consulting firm The Park Group, called the pairings of Unisys with Sysop and IBM with Shaked Computer Systems "interesting," although he questioned "whether companies of this size still have the nimbleness to make the systems work."

Where the mergers will surely impact the market, he said, is in the competition they bring to the CRSs. "There is no question that the entry of IBM and Unisys in the market will impact the CRSs," he said. "No one would have believed three or four years ago that this many independent reservation systems would be under serious consideration by this many carriers. It's a powerful message to the CRSs that clearly they cannot stand where they are."

"These little guys are a big threat to the CRSs," agreed independent software developer Richard Eastman. "Big corporate cultures get bogged down in the politically correct way to do things. Small software developers have an advantage in their ability to be flexible and change as the environment changes."

Tom Woodall, editor of Travel Distribution Report and host of the conference, noted that two years ago, American Airlines technology guru Max Hopper said there was nothing on the horizon that would replace the mainframe reservation system. "But we didn't have the Internet then," he said. "Since that time, the airlines have adopted some of these independent distributed systems and proved that they are very viable in a light-to-medium-volume environment. There's a lot of renewed credibility in small systems this year."

While noting that CRSs continue to grow and handle increasing volume, Woodall said they are nonetheless "looking over their shoulders" at the new technologies. But he wouldn't count them out just yet. "Everyone in the industry is highly nervous about their future, because the technology and the distribution system are changing so quickly," he said. "But frankly, I think the CRSs will evolve and embrace new and more open technologies to keep their distribution channel viable."

In the meantime, Woodall said, the new large players like IBM and Unisys "are seeing the trend, and they're going to buy and peddle every system they can." Before the res-system conference, he said, "IBM called us and said they want to be on every single panel we have.