Tech Investment In Question For Now
The jury is still out on how the events of Sept. 11 will impact companies that provide travel technology. While some vendors claimed that corporations now are looking to use automation to cut costs more than ever, an immediate consensus on that could not be ascertained.
From the airline side of the business, however, there is no doubt about what's happening.
"All of our IT projects are on hold now, and nothing is sacred," said Al Lenza, vice president of distribution planning at Northwest Airlines. He said Northwest will continue to run its E-Biz Perks, a revenue-based Internet program for smaller companies. The carrier also "will salvage the large corporate version, but it probably will be developed in partnership with Worldspan. In general, we've got what we can salvage from current investments and after that, we'll leverage partnerships."
Lenza said there is a long list of items being reevaluated, including certain features for which the airlines pay extra to the global distribution systems. "We're pretty close to a decision on the GDSs," Lenza said on Sept. 27. "With a lot of these things, though, if you do something, it's probably a short-term move. You don't want to impact yields while you have poor load factors."
Clearly, though, the impact for all tech vendors on transaction revenues is significant.
Though Sabre said the ability to accurately forecast is limited—and assuming traffic volumes would be down 45 percent to 60 percent for the last three weeks of September—earlier this month the GDS anticipated 5 percent to 9 percent revenue growth in the third quarter over the same period in 2000. The company previously had targeted percentage growth in the high teens for both earnings and revenues.
In a Sept. 17 announcement, Amadeus cited a 72 percent drop in North American reservations during the week of Sept. 11.
GDSs Offer Contractual Flexibility
Joining Galileo and Sabre (BTN, Sept. 24), Amadeus and Worldspan announced measures to alleviate the impact of the Sept. 11 attacks on corporate clients and travel agencies. Both companies said they would waive fees for segment productivity shortfalls.
Self-Booking Vendors Help Clients
Like their GDS parents, Waltham, Mass.-based E-Travel and GetThere of Menlo Park, Calif.—as well as other self-booking providers—worked closely with clients in the aftermath of Sept. 11 to keep travelers and agents apprised of the latest developments. While facilitating the spread of useful information through their sites, both companies also took extra steps.
E-Travel, for example, advised clients of its ticket documentation controls and already was on the verge of launching GDS-bypass connectivity to Amtrak. An E-Travel spokesperson said that in light of what happened, "The interest level in our Amtrak capability is very high."
According to a GetThere spokesperson, the company "provided general services, such as Webcasts with a psychologist to bring travel managers together to discuss how to cope with stress and fears that their business travelers may have moving forward."
Biztravel.com Fails
Biztravel.com was a casualty of the down economy and the recent terrorist attacks. Designed for independent and lightly managed business travelers, the site on Sept. 21 ceased operations. It was majority-owned by Philadelphia-based mega agency Rosenbluth International.