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
"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