Aviation investment firm, 777 Partners, recently acquired two travel technology companies – AeroCRS and WorldTicket. The two companies join a growing portfolio of airlines and travel tech firms, including Air Black Box, Bonza, Flair Airlines and the Value Alliance.
The investment firm has committed $100 million to support the travel vertical as it recovers by delivering disruptive travel technology solutions that create new commerce channels and improve next-generation retailing, distribution, interlining and passenger connectivity.
WiT catches up with Adam Weiss, CEO of 777 Partners’ Aviation and Travel Group, on the fund’s ambitions in aviation.
What was the thinking behind the last two acquisitions? Why those two companies?
777 Travel Group’s vision is to solve a persistent challenge in the airline industry – the dilemma and inefficiency of legacy systems. Some of these systems used by airlines were built in the 1960s and 1970s, and they all share several major shortcomings compared to modern technological infrastructure in other industries.
First, these systems are siloed, which doesn’t allow for cross-functional processes to exist. Their code base is inflexible, which doesn’t allow for agile changes. Instead, any modification takes months via change requests, and they don’t enable the airlines to make modifications or customize for their own parameters to meet today’s challenging market demands.
Subscribe to our newsletter below
Second, they are ill-adapted to meet the needs of LCCs and ULCCs, business models that didn’t exist when these legacy solutions were built; specifically, the need to reach more customers with a broader network and with low IT investment and provide airline customers the capability to open up revenue channels beyond conventional ancillaries.
And finally, from the traveler’s perspective, providing a user experience consistent with digital retail frames of reference for efficiently planning and executing travel across itineraries and modalities. This need for flexibility can’t be met with legacy systems. Solving this challenge is an issue we are passionate about – and it’s a goal we know we can accomplish.
In addition, the top 1% of airline reservation systems – just four big players – control 75% of global aviation traffic. But the bottom 50% only manage 1% of the remaining traffic. Of that 1%, regional and startup carriers driving industrywide PB growth to constitute an outsized share. We knew that if we could acquire the right companies and integrate them into our portfolio, we could strengthen our footprint in tiers 3 and 4 to dimensionalize the network effect and create more integrated sales opportunities. Our acquisitions of Air Black Box and, more recently, WorldTicket and AeroCRS are executions of this strategy.
Many of WorldTicket’s and AeroCRS’s products are focused on helping airlines expand their global sales reach without adding complexity or risk. WorldTicket has its W2 product that allows airlines to enter the GDS without the associated cost and complexity, while AeroCRS has a network and ancillary marketplace that helps Tier 3 & 4 airlines distribute more broadly to new audiences and drive incremental revenue. Combined with Air Black Box and our proprietary technology, these products create a comprehensive product portfolio that can serve airlines of any size as they reevaluate and improve their distribution and retailing strategies.
These two companies – WorldTicket and AeroCRS – are primed for growth: they have over 120 airline customers combined, a broad and differentiated product suite, international reach, and many talented employees.
With these two acquisitions, the travel group’s combined offerings now include ancillaries, baggage management, booking and hosting solutions, disruption and IROPs management, distribution, payment and settlement services and ticketing to airlines and travel companies worldwide. What’s missing? What’s next on the horizon?
777’s mission is to build a platform of interoperable, modular products through acquisition and in-house development that enable airlines, airports, and other travel companies to evolve their business models and regain control of passenger relationships. Our focus is on finding ways to free airlines from the constraints of their legacy systems and give them more control and power, and we are always looking for like-minded companies that align with this vision.
Whether that takes the form of acquisitions that have commonalities with our existing portfolio that might help us grow bigger and stronger, or if it takes the form of new features, new technologies, and new products that expand the capability of 777 Travel Group – that is yet to be seen. What is certain is that we see incredible opportunity in the intersection of loyalty, fintech and digital wallets.
How much have you got left in the war chest? Out of the $100 million – and what kind of return is 777 expecting from the $100 million? Thus far, has aviation and travel returned the kind of return 777 was expecting and are used to from your other sectors of investment?
We can tell you that we have observed significant traction with the combined W2 (WorldTicket) and Air Black Box value proposition. In this space, we’re the only provider to offer a single seamless connection that allows airlines and travel operators to grow their networks and audiences and distribute their inventory throughout the global GDS ecosystem with minimal cost and complexity.
We have also achieved some important WorldTicket customer wins with well-known airlines, including Gulf Air, TAP, Royal Jordanian, Saudi, Ethiopian, Gulf Air, and Blue Air, as well as the successful launch of our WorldTicket multimodal product with Germany’s leading rail operator, Deutsche Bahn, and a network of 50 global full-service carriers including Cathay, Emirates, Etihad, Lufthansa, Qatar, and Singapore. On the AeroCRS side, we have over 90 airlines in our customer base, including Lift in South Africa and Safari Link in Kenya.
We’re also excited about the innovation that keeps coming out of our portfolio companies – innovation that is effecting change in the industry. We firmly believe that we’re at the start of a significant structural shift in travel technology.
Ultimately, we have momentum, we’re onboarding customers at scale and we have a tech stack and product platform that positions us well for post-pandemic travel industry dynamics. As long-term investors in the space, we are confident and committed.
What happened to your aviation and travel investment during the pandemic? What did you do to support your portfolio? Perhaps cite one specific example?
Like many companies involved in the travel industry, while operations were effectively “on hold,” we used the time to rethink and rebuild for the future. We made significant investments in re-architecting and rebuilding our virtual interlining platform into one integrated solution with features that airlines have been asking for.
We also benefited from customers (airlines) seeking to improve and retool their processes and technology while operations were slowed down. For example, AeroCRS was of interest to many startup airlines looking for one-stop solutions and others that were re-evaluating their distribution and technology partners.
In acquiring a bunch of startups to build up your ecosystem, founders are critical to the continued success of those businesses. What’s the biggest challenge in ensuring these founders remain motivated and engaged while being integrated into a bigger ecosystem?
In any sectors that 777 invests in, we find that our shared service approach comes alive. Many entrepreneurs want to join us, as together, we can help their businesses get to the next level by helping them focus on the things that matter most – driving value – while we focus on the support side functions such as human resources, capital, software engineering, and data science.
You are fairly new to the aviation and travel sector – what’s the biggest lesson you’ve learned through the pandemic?
Travel is a magnetic industry with human dimensions of an immense magnitude. We are determined to play an impactful role in democratizing it. Low-cost airlines stimulate economies, travel technology enables better customer experiences, and for the airlines, incremental revenue at a lower cost. We learned how fast the industry changes, especially during the pandemic. That was a critical time for our company and airlines and travel providers to capitalize on the opportunity to make structural changes.
We may be relatively new, but our team comprises experienced, seasoned investment professionals, talented software engineers and aviation executives who left their positions despite significant opportunities for vertical mobility because they believed in what we are building,
What’s the biggest tech innovation in aviation you’ve seen that happened during the pandemic?
Interest in software in a historically stagnant industry constitutes innovation. We have seen a lot of interest in software.
Progress on Air Black Box in particular – as it was powering the Value Alliance and airlines in Southeast Asia begin recovery, what’s the status of this project and partnership? What investments have been made in ABB in the past two years to support the Value Alliance and in general?
Our entire Air Black Box platform has been re-architected and rebuilt as part of a more integrated platform so airlines can benefit from additional value-driving features. Airlines throughout Asia were hit particularly hard by the pandemic, as you know. We’re working with Value Alliance airlines to realize the full potential of an alliance of low-cost carriers underpinned by our technology’s cross-selling and connectivity capabilities.
A new airline, Northern Pacific Airways, is starting flights between North America and Asia via Alaska, with plans to launch by late 2022. You had plans to launch an airline to fly from North America to Asia – any update on those plans?
There are no current plans on the airline side; we’re focused on supporting Flair in Canada and Bonza, our startup airline in Australia, acquired in October of 2021.
You invested in Flair Airlines in 2018 – what happened to the investment through the pandemic, and what’s the biggest lesson you’ve learned in operating an ultra-low-cost carrier? Can that model work elsewhere?
A common playbook flexed to local market needs based on customer behavior, and the competitive dynamic is at the heart of a successful ULCC. Non-seat revenue is a tremendous opportunity and has been critical through the pandemic and continues to build into a market-leading position. There are learnings from all successful low-cost carriers that need to be adapted for local customers and needs.
Flair has emerged from the pandemic stronger and more resilient and is set to be a structural winner from the changes in Canadian aviation by offering more choice, increased competition and lower prices. We are very proud of the human impact Flair has made on the lives of everyday Canadians. It is profound and meaningful to be a part of an airline that has made air travel and all the experiences it avails accessible to much of the Canadian population, which was previously cost-prohibitive.
What other tech/travel trends are you keeping your eye on as travel begins its recovery globally?
While we keep our ears to the ground for news on all trends on the travel front, we are particularly interested in automation, sustainability, blockchain, fintech and the growth of regional and domestic airports.
* This article originally appeared on WebInTravel.