Sabre and American Airlines have formally agreed to a deal whereby both US Airways and its sister carrier will use Sabre as the passenger service system for the merged airline.
While this is hardly remarkable (although we must remember that there is still a lawsuit in play between Sabre and US Airways), there are some key parts of the decision to go with Sabre as the main system which are worthy of note.
The announcement - an all but inevitable outcome, most observers of such matters agree - must be a bit of a blow for HP to have lost now "two" airlines.
AA’s decision not to select HP was all but secured once American (the old one, pre-bankruptcy exit) entered into an exclusive arrangement with Sabre. This not only hindered the Jetstream project but also caused a re-think by HP as to where to place resources for enhancements going forward.
Background
HP currently supports two platforms: AXRes (the former Attraxis system based on old Swissair PARS based system) and the SHARES multi–host system.
AxRes is now used by only a few airlines including Brussels Airlines and Swiss, both of which are part of the Lufthansa Group, and Olympic Air, which is now owned by Aegean Airlines.
SHARES was originally Continental's internal system, but during one of Continental’s bankruptcies the division ended up at HP via EDS.
The service later benefited when United ceased using Travelport’s Apollo Airline Reservation system and consolidated the world’s second largest airline into the platform. However, some wonder if HP will now lose US Airways at some point over the next two years as the carrier brand is eventually retired.
Prior to the merger, HP was in a re–bid process as Arizona-based airline’s contract was up for renewal.
Missing prose
The switch to SabreSonic by the all-new American airlines was noticeable in there were several important words that one would normally expect to be omnipresent, are in fact missing from the official announcement.
In fact, the key and components of "search" and "shopping" are noticeable by their absence. This is perhaps likely as the enlarged, Texas-based American has contracted that service to Google’s ITA Software, and being the first to deploy the so-called "Boom Box".
Also missing from the PR announcement is a word now synonymous with profit in any airline: "ancillaries".
Airline PSSs are very complex animals. In previous years the trend had been towards the monolithic hosted providers of Amadeus and Sabre.
Individual PSS instances inside an airline was decidedly passé as airline after airline migrated away from their own internal systems to one of the big players. This pair still dominate the market airline IT systems today.
The third largest provider is Navitaire, which has long had a focus on the low cost carriers - these airlines, as a group, represent the fastest growing segment of the airline passenger market.
After the big three systems come HP and SITA, each with a number of carriers on their servers.
Nu-breed of IT
Yet the emergence of airline merchandising and ancillary sales should be seen as critical new thinking. Once combined with search, airline "distribution" has morphed into airline "retailing".
Retailing as a part of the airline product mix has been brought forward through the services of companies such as Farelogix, Datalex and OpenJaw Technologies.
The emergence of this alternative form to the multi-host system appears to resonate with many airlines who perhaps find the "one size fits all" approach doesn’t meet their need for brand and product differentiation.
As airlines move away from competing purely on price and schedule, the value of brand and product is becoming critical to an airline's success. Thus a pure price, availability and schedule system appares to be no longer sufficient for any airline.
Clearly there is change coming to the airline product mix and thus the airline IT providers must adapt and change with it.
Farelogix's merchandising engine has already been adopted by several airlines. Datalex is the largest provider of independent airline web-based systems. In search, ITA Software and Vayant are powering new solutions based on new technology platforms (the now insolvent Everbread was kicking about here for a while, too).
Throw in systems bundling air and non-air products and the increased complexity of it all tells the same story - PSS-hosted systems are perhaps no longer sufficient for the modern carrier.
There are, of course, many challenges remaining as hosting, retailing and new methods and processes of distribution take hold - but at least now the IT providers are now on notice to step up their game.
What American’s announcement shows is that if the world’s largest carrier is going to be a player and an innovator, using multiple IT providers, then others may follow.
NB: Disclosure - author is a non-executive board director at OpenJaw Technologies.