Sabre's Farelogix purchase holds great potential for work on NDC

|
Photo Credit: Fizkes/Shutterstock

Though it was unexpected, industry analysts predicted last week that Sabre's $360 million acquisition of Farelogix will benefit both companies: Farelogix expertise in IATA's New Distribution Capability (NDC) will bolster and accelerate Sabre's work in that space, while Sabre's size and scale will be a boon to the smaller Farelogix.

Farelogix offers airlines solutions to create and deliver personalized, differentiated offers across sales channels. The acquisition was announced last week. Though subject to regulatory approvals, it is expected to close later this year or in early 2019.

The move came as a surprise to industry analysts. "For Farelogix, there's a limit to growth, and there's a limit to scalability. All those things you solve by having a bigger company," said Norm Rose, senior technology and corporate market analyst at Phocuswright. 

Farelogix CEO Jim Davidson suggested scale was indeed part of the calculus. He called the acquisition a "tremendous opportunity for our employee base. We're 225, I think you guys [at Sabre] are 10,000."

In a media call about the acquisition, Dave Shirk, Sabre's executive vice president and president of Sabre Travel Solutions, said one of the main drivers behind the purchase was to further the company's efforts in offering NDC solutions. Another was Farelogix's pool of around 225 technology professionals.

"We believe it will make us the leader in NDC-based [solutions] and offer an order management-based solutions," Shirk said.

Rose predicted that Farelogix will accelerate Sabre's work in NDC, and agreed with Shirk's assertion that the acquisition will propel Sabre to a position as an industry leader in NDC. But its positioning in relation to its GDS peers Travelport and Amadeus is "very hard to measure."

All three GDSs hold high levels of NDC certification from IATA. Level 3 is the highest, and Sabre is Level 3 certified as both an IT provider and an aggregator. Amadeus, too, holds dual Level 3 certifications as an IT provider and an aggregator. Travelport is Level 3 certified as an aggregator and Level 2 certified as an IT provider. 

Travelport also said last month that it was the first GDS to manage a flight booking using the NDC standard.

Analyst Henry Harteveldt of the Atmosphere Research Group  said Farelogix "gives Sabre a significant advantage" on the NDC front compared with its peers.

"It definitely puts Sabre far ahead of where Travelport is right now, and Amadeus is likewise, in my opinion as an analyst, also ahead of where Travelport is," he said. "If executed in the right way, I think this could allow Sabre to overtake Amadeus on the NDC front."

Sabre hasn't always been a champion of NDC. But this summer, Sabre also announced its Beyond NDC initiative, an effort to develop, test and integrate technology that will process NDC offers and orders (Amadeus has its own initiative called NDC-X, while Travelport is working with major travel management companies and airlines on NDC initiatives).

If Sabre integrates Farelogix capabilities into its agency desktop, the Sabre Red Workspace, agents could also reap the benefits from this acquisition, Rose said. 

It could mean practical support of NDC coming through the GDS, which, for many agents, is the center of their technology stack.

"The travel agent will be able to sell ancillary services or understand the unique nature of the quote that's been established by the airline," Rose said. "So it's a big win for the travel agency community."

Comments
JDS Travel News JDS Viewpoints JDS Africa/MI