Amadeus last week won the contract for Southwest Airlines’ new reservations system, finally landing one of the four major U.S. airlines as a res customer and beating out 20-year incumbent Sabre in the process.
The deal could also lead to Southwest appearing in the Amadeus GDS, where it has never before participated. The two sides said they are talking about that possibility.
The prospect of a reservations upgrade with the Amadeus deal also renewed speculation that Southwest might join the rest of the industry and start charging baggage fees and/or offer assigned seating, despite the airline’s continued assertions that it will not.
The deal makes Southwest Amadeus’ largest airline I.T. customer as measured by the industry metric of passengers boarded.
Southwest had long been shopping for a new internal reservations system, a project that took on a new urgency when it acquired AirTran.
In 2012, as Southwest prepared to expand its operations beyond its domestic routes, it chose the Amadeus Altea system to handle its international reservations, which went live in January for flights that will begin on July 1.
It turned out to be a good fit.
“We could not be more impressed with the experience of Amadeus and the capabilities of their product,” Southwest CEO Gary Kelly said in a statement.
And while the move gave Amadeus the inside track for the rest of the Southwest system, Scott Gutz, president and CEO of Amadeus North America, called it “a big deal for Amadeus in North America.”
Amadeus Altea is a suite of airline solutions that offers a variety of services beyond reservations. These include e-commerce solutions, account management, revenue management, flight management and more. It can build merchandising platforms and solutions and can make them available in GDSs.
U.S. agents can purchase ancillary services for 19 airlines, Gutz said.
Southwest is initially using three functions: reservations, inventory and departure control (systems that handle passenger check-in and boarding), Gutz said.
However, the carrier hinted that it might add more functionality in the future.
“One of the factors in choosing Amadeus was the option for future capabilities if our business decides on that direction,” Southwest spokeswoman Marilee McInnis said.
‘We will have flexibility’
Potential add-ons could include advanced revenue management capabilities, codeshare/alliances and enhanced network planning, McInnis said, adding, “We will have flexibility if we want to implement different strategies. Our business plan won’t be restricted by technology.”
The deal could also pave the way for Southwest to appear in the Amadeus GDS. The two IT partners have never had a GDS contract, but both Southwest and Amadeus said last week that they were talking about a GDS agreement.
“We are in active, ongoing discussions,” Gutz said.
McInnis said, “We continue to listen to what Amadeus has to offer for GDS, and conversations are ongoing.”
For many years Sabre was the only GDS with which Southwest had a GDS contract. In 2007, it also signed a contract with Galileo.
Right now, agents working in the Amadeus GDS can access Southwest content only by using BookingBuilder, agency software that automates accessing and booking non-GDS content.
Agents also use SWABiz, Southwest’s free corporate online booking tool, which gives them access to Southwest’s website-only fares. Amadeus will power SWABiz once the single reservations system is implemented.
“BookingBuilder does a great job of capturing everything so that we can transmit all the data to our clients,” said John Millsap, travel and technology support specialist at Christopherson Travel in Salt Lake City.
Southwest’s internal reservations and inventory system comprise several components. The core reservation function runs on a version of Braniff’s old “Cowboy” system, which has been managed and hosted by Sabre for 20 years. AirTran uses a Navitaire system, which Southwest intends to phase out.
While migrating from these systems to Amadeus’ Altea will create new opportunities for Southwest, McInnis said it does not presage baggage fees or assigned seating.
That assertion echoes Kelly’s public stance. During the airline’s fourth quarter earnings call, he said that Southwest would not charge fees for checked bags or changing flights in 2014.
Still, Kelly has also said, “Never say never” on bag fees. For example, on CNBC’s “Squawk Box” in January 2013, he said, “The customers will tell us whether they would prefer to have extra fees or whether they would prefer to have everything bundled.”
Southwest currently has the technological capability to charge for bags, but uses it only when a customer has more than two bags or has overweight or oversized bags.
Nor does Southwest have any plans to start assigning seats, McInnis said. “Southwest has tested assigning seats in the past, but our customers have told us loud and clear that they don’t want it, and we have a better operation with open seating.”
Amadeus has more than 100 Altea customers, including British Airways, Lufthansa, Air France-KLM, TAM and Singapore.
Southwest’s contract with Sabre runs through 2016, Sabre said.