Travel Weeklys Technology E-letter: June 28, 2006

GDS NEW EXIT? In a move that signals its de-emphasizing of the new-entrant GDS market, ITA Software and Air Canada will soon announce a deal to develop an internal reservation management system for Air Canada, learned. The deal, to deliver what would be ITAs first airline host system, is in the final stages of negotiations, according to airline spokesman John Reber. When asked about the Air Canada deal, ITA President and CEO Jeremy Wertheimer acknowledged that, ITAs marketing efforts notwithstanding, the technology companys core business focus now is on developing similar airline res systems, not constructing an alternative GDS.

REACTING TO ITAS new approach, airline consultant Robert Mann of R.W. Mann & Co. termed ITA hugely competent but said a lack of desktops drove this. ITA and G2 SwitchWorks do not have enough traction among agencies to pursue distribution, Mann said. Legacy airlines need the ability to morph their hosting systems into tools that permit the construction in real time of forward-management tools, Mann said, offering that ITA and G2 can compete here [in the airline hosting sector] and win.

AIR CANADA decided to restore Tango fares (its lowest-priced fares) to its travel agent Web site [], effective July 7. But its going to cost Air Canada because its GDS contracts require the airline to pay a higher segment fee for offering fares on its agent site that arent distributed in the GDSs. Marc Rosenberg, Air Canadas vice president of sales and product distribution, said, We dont believe that travel agents should be held hostage while we progress with our GDS discussion. As to why it took two months to get the fares back on the agent Web site, Rosenberg said the timing was determined by contractual limitations, a reference to provisions in Air Canadas GDS contracts that barred it for a certain time period from having fares on its agent site that it didnt have in the GDSs. Air Canada continues to withhold Tango fares from the GDSs.

PRICELINE.COM, keeping its distribution options open, signed a multi-year distribution agreement with G2 SwitchWorks. Under the pact, Priceline has the option to begin using G2s fare-search functionality on and Priceline can also access air inventory through G2 for its retail and name-your-own-price products. Under the agreement, Priceline will have the ability to use G2 for air searches and then could tap into air inventory from G2, Worldspan or Sabre. Priceline currently uses Worldspan for fare searching and airline inventory and has done so on an exclusive basis for years. In February, Priceline announced a five-year distribution deal with Sabre, supplementing its Worldspan agreement, but the agreement has not been implemented, according to Priceline spokesman Brian Ek.

TRAVELOCITY BUSINESS picked up a major account, defense contractor Lockheed Martin, believed to be the largest corporate account to switch to a major online retailer. Travelocity Business replaces Navigant International as the corporate agency for Lockheed Martin, which was ranked 47th on the 2005 Fortune 500 list.

Technology Editor:

Dennis Schaal

Phone: (201) 902-1904

[email protected]

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