It's back to the future for Delta Air Lines, which has brought in-house two key technology platforms, its reservations and passenger services system and its flight operations systems, acquiring the rights to both from Travelport.
In addition, Delta is hiring 175 Travelport staffers, the developers and programmers who had worked exclusively on these systems at Travelport. Travelport will continue to host these systems at its data center in Atlanta.
"This is a gutsy, bold move for Delta," said industry analyst Henry Harteveldt. "It's like the Trainer oil refinery," he said, referring to Delta's acquisition of a refinery near Philadelphia in 2012. It takes Delta back to the days before airlines sold off their IT departments, which in Delta's case was Worldspan, now part of Travelport.
Delta said in a press release that the move makes it the only U.S. airline that directly controls what Richard Anderson, Delta's CEO, described as the airline's "data and operational backbone for more than 180 technology applications used to run our airline every day."
Delta's passenger service system, Deltamatic, runs such fundamental, passenger-centric functions as reservations, check-in, standby lists, baggage and ticketing, said Paul Skrbec, a Delta spokesman. The operations system handles functions such as aircraft maintenance, weather briefing, crew scheduling and more, he said.
"The name 'Deltamatic' conjures up the image of Don Draper in his office," said Harteveldt, referring to the protaganist of the TV series "Mad Men."
"But this is definitely not a retro move, this has nothing to do with nostalgia, this is very much Delta having more control about what it does in the future. For example, if it wants introduce a new product, hopefully it can bring it to market faster than it was able to do previously."
He called the move an "investment in a strategically critical asset."
"It is bringing not only the functionality but the people in-house," said Harteveldt. "Delta's management teams and tech teams are now all together. It's no longer a matter of 'We need to see what Travelport can do' if something needs to be done," Harteveldt said.
Skrbec said that bringing these customer-centric systems in-house is important in a world of big customer data because it will give Delta the ability to effectively mine all that customer information.
"And the good part is we have 175 employees who are absolute experts and will become Delta employees," he said, adding that the new department should be able to find efficiencies in programming that will translate into a better customer experience.
One example Skrbec gave of improved customer experience is with Delta's airline partners, who can share in the benefits of Delta's investment.
Harteveldt said the development was a win-win for both Travelport and Delta.
"Travelport gets some cash," he said, "and secondly, Delta and Travelport have agreed to a long-term hosting agreement."
Gordon Wilson, Travelport's CEO, said that Delta and Travelport have a new long-term hosting agreement; Travelport will run the systems structure and hosting for the Delta platform.
Anderson said that the deal reconfirms the importance of its strategic partnership with Travelport.
The move does not require a technology migration, so it should cause no disruption for customers, according to the airline.
The move has no impact on Delta and Travelport's existing Global Distribution Systems agreement which was renewed in 2013.