Travel Weekly's Technology E-letter: Jan. 24, 2007

TRAVELPORT retained banker UBS to gauge the prospects of an initial public offering of Orbitz and possibly other online holdings, according to a New York Times report,. Under this scenario, Travelport would sell about one-third of Orbitz's equity and list the stock on New York or London exchanges. Travelport, which is in the midst of securing regulatory approvals for its $1.4 billion purchase of Worldspan, is seeking to pull off an Orbitz IPO in the second quarter, according to the report.

FARECAST introduced Fare Guard, a novel approach to soothe consumer angst over air fare price volatility. The new service enables a consumer to protect a low fare for seven days for a $9.95 fee. For example, a consumer would pay $9.95 to safeguard a $280 fare when Farecast posits that the fare will remain stable or decline over the next seven days. The consumer then might book a low fare of $305 up to seven days later and Farecast will issue a redemption check for the difference between the protected price ($280) and the lowest fare ($305) on the day of booking, or $25. The consumer isn't locked into booking the $305 fare and can book a higher fare (perhaps $312), but the redemption check will only reflect the differential between the guarded price and the low fare on that route on the day of booking. If consumers don't book after purchasing a Fare Guard, they forfeit the fee. Farecast issues e-mail updates about fares that reflect the searched city pairs for seven days following the purchase of the Fare Guard. "If fares increased, you will see the Fare Guard redemption value," Farecast stated. "If fares dropped, you will see the savings opportunity." If the low fare on the day the consumer books a flight is the same or lower than the guarded fare, Farecast keeps the fee. "Essentially, we are putting our money where our mouth is and giving customers peace of mind," said Hugh Crean, Farecast president and CEO. The Web site, introduced in May, uses ITA Software search technology for fare shopping, and transfers consumers to airline Web sites for bookings. The exception to that is for bookings of multicarrier flights. Farecast refers consumers to Orbitz for these bookings.

SABRE was wooed by a strategic partner beginning in late 2005 and intermittently until Dec. 8, 2006, a day after Travelport announced it intended to buy Worldspan. Sabre ultimately accepted the $4.9 billion offer from private equity firms Texas Pacific Group and Silver Lake Partners at $32.75 per share on Dec. 12. The hitch between Sabre and "Company Z," as Sabre identified the prospective strategic buyer in an SEC filing, was a disagreement about a buyout price and the prospect that the deal might not close because of undisclosed concerns. Also, Sabre revealed, that TPG and Silver Lake are contributing only about $1.4 billion of their own equity toward the $4.93 billion buyout. The remaining $3.6 billion is coming from debt financing.

EXPEDIA INC. apparently is flexing its ample muscle in the distribution chain as it negotiates new marketing agreements with American, Delta and Northwest, and the result is that some American and Delta content on has at times, at least, been unavailable for booking. Flights from United, US Airways, Continental and AirTran, all of which have inventory agreements with Expedia Inc., face no such issues. One of the issues with the three holdouts apparently relates to deals they have struck with Worldspan, which still powers a substantial portion of bookings, and the compensation that receives from the airlines and the GDS when it sells certain fare classes, including those for some international routes, through Worldspan. Expedia ceased selling American's domestic first and business class, as well as international fares, Jan. 8 because it said it decided to stop using Worldspan for American bookings and transitioned them to Sabre. And, American, in its own version of events, said Jan. 11 it pulled these flights off to save on distribution costs. Meanwhile, some of Delta's inventory has been available on one day and missing the next. The dispute apparently relates to Expedia's economic relationships to the airlines and the GDSs. Expedia, it is believed, does not participate in Worldspan's and Sabre's preferred channels and may be subject to surcharges from the airlines.

WORLD TRAVEL HOLDINGS, the company that purchased National Leisure Group last July, expanded its already ample partner mix for cruises in deals with JetBlue, Kayak and, as previously reported, SideStep. In the past few weeks, SideStep launched a dedicated cruise section with CruisesOnly, a WTH-owned cruise agency; WTH will power JetBlue's online cruise product on a private-label basis; and launched what it called the first metasearch product for cruises, using four of WTH's cruise brands. "We want to be wherever customers are shopping for cruises," said Simon Goodall, WTH director of business development. He added that WTH wants to increase its presence in metasearch engines like Kayak and SideStep. According to Kayak, 26,000 cruise searches were performed on Jan. 21, which was 10 days after it launched its metasearch cruise product. Kayak said that in the next few months it hopes to integrate major cruise lines into its search engine. The JetBlue deal adds to a portfolio of airlines for which WTH provides technology, supplier relations, a sales center and customer service, including American, Delta, Continental and US Airways. JetBlue said the partnership will simplify cruise buying for travelers who fly the airline to cruise ports of call but buy cruises through another Web site. The search engine, however, is not limited to cruises arriving or operating from cities that JetBlue serves. WTH's deals with Kayak and SideStep are different in that SideStep users will only be able to search via WTH's CruisesOnly site, while Kayak users will have access to four of WTH's brands: CruisesOnly, Cruise, and Vacation Outlet.  Sidestep users who reach CruisesOnly will not have to pay the site's normal processing fee of $19.95. This waiver will not be extended to Kayak users, who will pay a $19.95 service fee for booking on one of the four WTH sites.

Technology Editor: Dennis Schaal

Phone: (201) 902-1904

[email protected]

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