To cut its costs, Delta Air Lines is re-acquiring data, intellectual property rights, and staffing to about 180 vital back-end applications from travel technology company Travelport.
The announcement means that Delta, the third-largest carrier in the US, is now the only one to have both its reservations and operational systems under its own direct control.
One reason Delta had an easier time making the move than other airlines might is that both its and Travelport's operations centers are both in the same city: Atlanta.
The airline will be able to customize the systems that support its reservation systems for delta.com, airport kiosks, and (soon) its mobile platforms. The vertical synergy is similar to its recent investment in an oil refinery.
Central to this complex agreement is that Travelport is still providing Delta's hosting infrastructure at its Atlanta data center.
Travelport's powering of the passenger service system (PSS) and flight operations software was a unique arrangement it had with Delta due to a legacy contract from when, in 2007, it acquired Worldspan (which was previously owned by Delta).
Until this move, Travelport employees, who are mainly in Atlanta, worked only on Delta's back-end processes, which power systems used by the airline.
Once the roughly 175 staff members are hired by Delta on July 1, there will not be any staff left as surplus and therefore there will not be any redundancies, a Travelport spokesperson said.
In an interview, the spokesperson added:
The decision was taken on a strategic basis, ie Travelport will continue to provide hosting services to Delta relating to Deltamatic and OSS.
The new agreement allows us to focus on the prime areas that we are basing our future growth on.
These areas are our travel commerce platform, our Technology Services and enhancing our existing “community based” solutions, including fares and shopping, Rapid Reprice, EMD and Business Intelligence.
As customary, financial terms of the deal have been kept secret.
The airline told an Atlanta-Journal Constitution reporter that the move requires a "minimum cash outlay."
A Travelport spokesperson says there will be minimal financial EBITDA impact resulting from this new agreement.
Delta re-affirmed its ongoing, separate agreement with Travelport's global distribution system arm for airfare and seat availability distribution to travel agents worldwide.