Travel Weekly's Technology E-letter: Nov. 15, 2006

WORLDSPAN increased its operating margin in the third quarter despite lower fees from airlines because of new content agreements and decreased revenue from Expedia. Like Sabre Travel Network, Worldspan has been able to maintain margins during the quarter ending Sept. 30, when new airline agreements became effective. Worldspan stated that it increased its operating income margin half a percentage point to 15.1% because of reduced incentives paid to travel agencies, staff cost reductions and lower technology and depreciation expenses. Worldspan CEO Rakesh Gangwal stated that "the revenue decline in the quarter was largely offset through efficient cost management, which kept our profitability healthy during the quarter." Worldspan's net income fell 14% to $15.5 million on revenue of $212.5 million, an 11% decline. A leader in powering agency Web sites, Worldspan's electronic distribution revenue decreased 12% to $195 million. The company attributed the majority of the decline to decreased transactions from Expedia, which has turned to Sabre and Amadeus to diversify its GDS providers.

EXPEDIA INC.'S net income declined 28% in the third quarter to $59 million because of lower operating income, the elimination of interest income from IAC InterActiveCorp  and higher interest expenses, the company said. Revenue, driven by merchant hotel sales and offset in part by reduced domestic air revenue, rose 5% to $613.9 million. Expedia Inc. Chairman Barry Diller pointed to sluggishness at as Expedia's domestic revenue increased just 3%. "Much progress has been made, though it's been slow to come through in the performance of our largest point of sale,," Diller stated. Expedia Inc. CEO and President Dara Khosrowshahi stated that the company is laying the groundwork for "sustained transaction and bookings growth over the longer-term."

BCD TRAVEL TURNED TO FARELOGIX to help "insulate" the travel management company's "customers from the uncertainties surrounding access to travel inventory," said Dee Runyan, BCD Travel's executive vice president for products, technology and supplier relations. The Farelogix FLX Platform enables agents to source content from multiple GDSs; direct-connects with American, Northwest, Continental, Spirit, AirTran and Emirates; private fares; and the Web. Implementation is under way with several of BCD's corporate clients in the U.S. Farelogix CEO Jim Davidson said BCD became Farelogix's largest customer. Other partners include the Carlson Leisure Services Group, American Express Canada and Portaga. Davidson said that now that the GDS-airline deals largely have been settled, "rational minds are taking over." Davidson said agencies like BCD are looking to the future and do not want to be hamstrung if airlines drop out of particular GDSs.

FARECOMPARE, which picks up airline fare changes from ATPCO before the GDSs and most online agencies do, began offering an Airline Pricing Report as a subscription service. The report, delivered three times daily Mondays to Fridays and once a day on Saturdays and Sundays, has two sections. The first provides an overview of fare changes by airline, and the second lists "all fares that have changed by market and carrier, indicating the difference to previous price points by advance purchase buckets," the company stated. The report is more comprehensive than FareCompare's e-mail alerts, which focus on particular departure cities and city pairs.


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