PSS and GDS Customers Might Want To Revisit Their Contracts

This is a salutory warning to those who interact with external (typically GDS based and PSS based) systems. This post should be read by airlines, travel agents and third party technology providers to the passenger industry.

In the overall scheme of things the unprecedented events since April 15th of the Volcano should cause those who pay bills to the GDSs for products and services to go back to look hard at their contracts.

If you have a contract that has threshold clauses in it - then definitely pay attention.

Let me pick on 4 customer types:

Airlines - IT Customers
Airlines - GDS - Participating Carriers (PCA)
OTAs - GDS subscribers
Travel Agents - GDS Subscribers

I also recommend anyone who has a signed GDS contract as a third party technology provider should also read this post.

In the next few weeks and months the airlines are going to be getting a lot of extra charges from, amongst others, Amadeus (the bills will come due after the IPO). Amadeus is on the record as saying that the volcano will have minimal impact on their IPO and are steaming ahead with it. What they didn't say was if the impact will be bad. It just may be - as more than one person who reads this blog told me - positive. The airlines didn't cause the mess but they are going to be paying for it no matter what. But all that extra processing is going to be an additional cost for the airlines. All those passengers who were checked in and then had to be "de-boarded" Hmmm that will be interesting to see how that works in those contracts. (PSST Hint to other PSS and airline IT vendors - if you didn't cash in on this gravy train more the fool you!)It is very important that the bean counters examine their invoices from their vendors VERY CLOSELY over the next few months to ensure that all the costs that are in the contract are correctly charged and that the Airline IT guys don't try and slip in some extras in there. I liken this to an unscheduled maintenance on a car. You get the bill and the estimate just doesn't match what you were quoted for!

For PCA based agreements - the cancellation costs that may be accrued needs to be carefully studied. Every airline accounts receivable person worth his salt better be on his toes. Also those nice bill auditors - people like Kale Consultants - should get into the act and make sure that they are poised to check and support their customers - the users.

For OTAs, the big ones at least, they should be OK (GDSs have a habit of turning a blind eye to larger users) - however head back to your contract and look at the threshold clauses. You will like be breaching them. Hitwise and others reported record breaking traffic which translates into a lot of extra hits for NO ADDITIONAL revenue. For smaller OTAs and those whose IBE is provided by a third party - indeed the 3rd party technology providers as well - go check out your contract. I just checked mine and I cringed. Fortunately I had no traffic on it last week!!!

For regular travel agencies whether or not you have an online presence via a booking engine, you need to make sure you have checked your activity. For those bookings that were canceled or re-booked by you - you should be OK. But for those cases where you helped your stranded clients and looked for viable options for them (because you are a customer service operation) and didn't generate additional GDS bookings - you will be hit by a double whammy - additional traffic and several days of no revenue.

With BA and others shutting out inventory, other airlines generating schedule change messages onto queues - there was an AWFUL lot of airline initiated traffic that resulted in extra hits with no corresponding revenue.

If you are one of these people - it may be a good idea to pull out your contract and have a deep look at it. If you are adversely affected - you might want to consider this next time you are sitting round the table whether its for a cold brew or its a hard negotiating session.

You have been warned

Cheers

Volaris Deals Another Blow to Navitaire

It seems that there are a lot of rats leaving a potentially sinking ship. Over the last 12 months we have seen Westjet, Jetblue and now Volaris all have announced their exit from Navitaire’s OpenSkies/NewSkies environment.

So there is something going on here that we all need to understand. It is the change in distribution paradigm.

Smart airlines are beginning to realize that the power of distribution has now passed from the GDS into the central core of the airlines business. As such the role of the GDS and the functionality requirements have changed. It also means that the Airlines internal IT systems have to have significantly greater functionality than exists in the LITE PSS systems such as Navitaire.

For many years I have argued that there needs to be a Distribution Manager functionality that was simple and functional available to the airlines. Clearly Volaris et al feels the same way.

Listen up people – the world has changed. Anyone stuck in the old world needs a wake up call. This is it.

Cheers

Westjet Cuts Over to Sabre PSS

So the aggressive guys at Westjet went from announcement to implementation in about 9 months.

WOW!

So that must be a record for an airline of that size to make such a migration in such a period of time.

Kudos to the Sabre team for the work done.

There are some clear lessons here that can be applied to many airlines who are currently reviewing their PSS infrastructure.

The Professor therefore thinks airlines should consider their position as follows:

1. Changing your PSS is not as traumatic as has been believed. If you are focused and set a clear goal and objectives - you can do it in a reasonable time. Remember one of the Professor's cardinal rules - no project should take longer than one year.

2. The complexity of a PSS system is no longer a black art. Focus works.

3. Navitaire is pretty vulnerable and has done little to support the increased complexity of the airline model. Now they are paying the price with major defections of jetBlue and Westjet. There are other customers who are not happy. Chaps - this should be a wake up call.

4. Sabre is VERY hungry and given the loss of their anchor customer American to the new Jetstream product of HP/EDS - you can expect great deals and good service from Dallas - the like of which has not been seen in decades.

5. Amadeus is NOT the only game in town. There are good choices possible, available and desirable. From the big guys (Sabre et al) to the mid/small size guys - Results, Radixx etc.

6. the importance of the Distribution manangement system means you must take the time and have a clear layer between the PSS and the GDSs. Don't believe the BS from the bigger players that their systems answer everything.

7. Examine your costs and check very carefully on the offers from the vendors. Focus on the bottom line not just the headline price. AND make sure that your invoicing works in a comprehensible manner. PSS and GDS vendors have long since obfuscated the true cost of the service.

8. Finally remember that there is the out of pocket cost but also the internal service costs surrounding things. Watch this one.

Cheers

No Secret Any More - AC Cans Polaris PSS

The slow painful lack of progress with the Air Canada Reservations Project known as Polaris has come to a dead stop with AC writing off C$67 million. More importantly the depth of the work left to do was an astonishing C$40 million. This clearly indicates that the project was no where near done. Even if you discount a large amount of money for implementation, there is a clear indication that this project had some significant hills to climb to reach an "implementable" solution. Sadly ITA software is left without its anchor customer for what is a significant amount of their future revenue expectation.

And the big winner in all this?

Amadeus?

Once again carrying all before it - Amadeus is fast becoming the only game in town for large scale reservations systems PSS. ....Well maybe not.... Amadeus has many problems of its own with the UAL implementation not making any visible progress. There are now some pretty good alternatives for large scale legacy airlines.

Mature solutions are from: Mercator (the core system of Emirates and several other airlines), itself an adaptation of the old Swissair Atrraxis system.
SabreSonic (as deployed at AA and many other carriers) the latest iteration of the venerable system from Sabre.
Horizon (although I am sure that I will get flamed by SITA who think its a brand new system)
EDS-Shares - Continental, Virgin Atlantic and US Airways are the biggest users.

There are some good solutions at the lower level of LCC and simple carrier level - such as Navitaire New Skies and Results or TikSystems (Amadeus's newest best friend).

Still trying to make headway are Unisys's Air Core, and IBS's solution.

The market for PSSs remains in churn with some big contracts still up for grabs. Lufthansa's exit from the market has left a hole. The cooperation between UA and CO should be interesting and we will be keeping an eye on this. They might yet decide to go to something different away from Altea. For sure there are a lot of people making trips to Chicago and Houston!

Actually there is one certified winner in this. IBM who managed to stay behind the scenes and retain the value of their relationship with AC. Couple this with the recent outsourcing of many of QF's IT functions to the Software and Services Giant and the boys in Armonk must be smiling.

For the rest - stay tuned.

Westjet FINALLY chooses its Next Gen PSS

After first choosing not to stay with Navitaire (its current provider) then selecting AiRes but abandoning that choice - Westjet took a hard look at all of their options. The 2 finalists were Sabre with its tarted up Sabre Sonic CSS and Amadeus Altea/Pioneer hybrid.

The envelope please - Sabre wins.

Actually I am surprised Given that Frontier already looked at the issue and decided that SSCSS didn't hack it for them. Maybe Sabre offered them some special secret source.

For Amadeus - it might be a final nail in the coffin for Pioneer which has been a bit of a dud in the market.

For Navitaire who had hoped to hang on - it must be a bit of a blow. Esp since Volaris is retaining NewSkies.

Exciting times for all

EDS and Microsoft in bed together?

Here is an interesting item that deserves some attention. Air Transport World reports via its ATW Online site a 4 part agreement between EDS and MS.

Citing Jim Dullum the veteran head of the EDS Travel and Transportation unit, ATW reported four key components in the new agreement. The first is that EDS will have access to MS resources dedicated ..."to the building and design and completion of our flight ops systems." The second is that Microsoft will set up a 24/7 help desk to support EDS. The third is "a go-to-market component" under which Microsoft actively will market and sell EDS reservations and flight operations products. Finally, the companies have adopted a commercial arrangement "that gets away from standard software licensing fees. . ."so as our business improves, so does what we pay Microsoft," the EDS spokesman was cited as saying.

This signals a second run at the market. Previously MS was involved in the design and build of Navitaire's "New Skies" Reservation System. For reference from MS go here: http://download.microsoft.com/download/4/c/6/4c600ca6-a041-4aab-9ad4-e74f3089ffec/GEMS14686/Navitaire_Solution_Brief.doc

As the players involved in the Airline IT market struggle to come to terms with a shifting environment and a now very powerful Amadeus, I believe we shall see more similar announcements such as this.

In the mean time - this will perhaps breathe life into the EDS Travel unit which previously has signaled its intention to sunset the old Swissair system ATRAXIS. EDS is also looking to retain Sabre as a customer who is being notably quiet on the subject of what it will do for a next gen Res system. Will EDS try and bring all 3 of its supported systems (SHARES, ATRAXIS and SABRE) into one common set? That would be interesting.

Cheers

Timothy