Air Canada and ITA Software will introduce in 2007 the first phase of a new reservations-management system that would enable the airline to shed the decades-old legacy system that it inherited from British Airways and greatly enhance its ability to introduce new products.

Lise Fournel, the airline's chief information officer, said that Air Canada had invested "tens of millions" in the plan, temporarily dubbed Project Athena, to overhaul internal reservations, inventory control and seat availability, check-in and airport operations systems.

Fournel said replacing its Res III system, which grew out of the British Airways Babs system, with scalable servers and modular software from ITA would enable Air Canada to maintain its business plan of swiftly introducing a la carte fares and subscription-based content.

In the new environment, she added, the airline, which faces heated competition from low-cost carriers in its domestic market, will achieve "very significant cost savings."

Cambridge, Mass.-based ITA will develop the new system, host it in Boston and Winnipeg, Manitoba, and use it as a basis for striking development deals for reservations systems with airlines around the world, officials said.

Air Canada created a stir in May when it pulled its rock-bottom Tango fares from GDSs, arguing that they don't have the technical ability to offer the airline's inventory in the flexible way that the airline does on its consumer and agent Web sites.

"This is not a distribution system," Fournel said of the new res system. "It is internal as well as facilitating the purchase through AirCanada.com. It will offer our agents a much better product to better serve our customers as well as offering our customers, if they elect to deal with us directly, a much easier way to do business with Air Canada."

Airline spokesman John Reber said there was no update to the dispute with the GDSs and that talks were ongoing with Sabre, Galileo, Amadeus and Worldspan. Tango Plus fares are available to U.S. agents through Air Canada's Web sites and the GDSs, he said.

ITA's development of the internal res system is expected to enable Air Canada to roll out new products at a pace that will challenge GDS capabilities.

For example, Air Canada in July introduced multitrip Flight Pass products in the corporate market, enabling companies to prepurchase credits for flights on Air Canada and regional carrier Air Canada Jazz. The airline is eyeing a similar subscription product for the leisure market.

Flight Pass products, available for U.S.-Canada and domestic travel, can be purchased at www.aircanada.com/agents but are unavailable in the GDSs because they don't offer the technology to support these products, Reber said.

"From a software point of view, the way ITA works is everything is generic, so when we do want to make some changes, you don't necessarily open the code," Fournel said. "You can just add some modules. It offers great flexibility."

ITA has downplayed its distribution business in recent months and hopes to use the res system it develops with Air Canada as a foundation to pursue new technology/hosting projects with airlines around the globe.

To contact reporter Dennis Schaal, send e-mail to tweditorial@ntmllc.com.