on 05 February 2010 
(No Ratings Yet)While much of the attention in JetBlue’s cutover to the SabreSonic CSS as the airline’s reservations system provider has focused on new functionalities, Navitaire, the company that JetBlue largely discarded after a decade-old relationship, feels there are misperceptions about its capabilities and believes that the “true winner” in the conversion likely will be Sabre — and not necessarily JetBlue.
I reached out to Navitaire to get its take on JetBlue’s decision to convert to Sabre.
Until the transition, which began Jan. 29, JetBlue was using Navitaire’s Open Skies platform. Navitaire is transitioning its new airline customers to its New Skies system. The new platform uses a ticketless model, where funds are tied to a customer record and not an individual ticket.
Navitaire argues that ticketless New Skies is more efficient than the Sabre e-ticket model because New Skies has an integrated database, which circumvents the need to transfer data back and forth among multiple systems.
So, with little new development taking place for Open Skies, JetBlue opted for SabreSonic rather than transitioning to Navitaire’s New Skies.
Legacy Decision?
Navitaire believes legacy sensibilities played a role in JetBlue’s decision.
“Over the last two years, JetBlue has brought in all new management, creating a team that has primarily come from existing U.S. legacy carriers,” Navitaire says. “If they’ve only worked with and dealt in the legacy, traditional, IATA-bound world, it’s understandable that they would gravitate toward an industry e-ticket based solution that they are familiar with. In our experience, it’s hard for someone with a legacy airline background to truly understand the ticketless model, the cost benefits it delivers, and the flexibility that it enables.”
If economic concessions by Sabre drove JetBlue’s decision, Navitaire thinks they will be short-lived because of the alleged higher costs of operating the JetBlue-Sabre e-ticketing processes.
“With Sabre’s heavy reliance on GDS bookings, it’s in their best long-term interests to continue supporting the existing, old ways of business to drive more transactions and participation costs to their GDS side of the business,” Navitaire says. “They win on multiple fronts through improved/expanded content to agents, more agent and airline GDS transaction fees, more messaging fees from clients, etc. to line their coffers.”
For Navitaire, it’s all about the legacy world versus what it calls a “New World” approach, where airlines can be flexible and use hybrid models.
Navitaire speculates that Sabre doesn’t “have a New World-carrier ticketless product that’s positioned for the long run. If they did, American wouldn’t have opted to move away from Sabre” in favor of a new platform, Jetstream, to be provided by HP.
Misperceptions?
Speaking during JetBlue’s fourth quarter earnings call Jan. 28, a day before the cutover to Sabre, JetBlue President and CEO David Barger didn’t disparage Navitaire directly, but said the transition to Sabre would deliver a smorgasbord of new benefits.
“Transitioning to this new platform offers us the flexibility and robust tools to expand the products and services we offer our customers,” Barger said. “As a result, we believe the system will help improve the overall customer experience and further enhance the JetBlue brand. When fully implemented, the Sabre system will provide pricing flexibility that will enable us to attract more business customers, broaden ancillary revenue opportunities, and facilitate airline partnerships, all core initiatives for JetBlue.”
Navitaire believes that many in the industry have inaccurate, outdated perceptions of its products. In fact, the company says, it has 80 interline and code-share connections, ties to nine GDS platforms, a loyalty program and a travel commerce platform.
Codeshares
Navitaire says it supports codeshares on both Open Skies and New Skies. For example Virgin Blue, which is transitioning from Open Skies to New Skies, has bi-directional codeshares and interline agreements using Open Skies, Navitaire says. And, Jetstar, which had bi-directional codeshares and interline agreements through check-in on Open Skies, expanded them when it converted to New Skies last year, Navitaire says.
Navitaire points out that New Skies supports EDIFACT-compatible codeshares [Jetstar] as well as interline connections using APIs [TUIfly and Air Berlin].
Ancillary Revenue/Merchandising
Navitaire says its systems support a la carte ancillary services as well as bundled fares through New Skies and Navitaire’s Travel Commerce platform. Both systems, the company says, support locally hosted or externally connectioned inventory via APIs. Travel Commerce clients include Jetstar, Azul [founded by JetBlue founder and ex-CEO David Neeleman], Jazeera and Ryanair.
Navitaire concedes it is unaware of any comparisons of ancillary revenue functionalities — i.e. what can Sabre and others do versus Navitaire’s acumen– and adds, “It would be very interesting to see what is out there and get beyond the marketing promises into actual capabilities.”
“We’re certainly not in a position to comment on what Sabre can or cannot do, but based on JetBlue’s published information to passengers and agencies, it suggests there may be shortcomings given the JetBlue instructions to direct travelers and agents to contact the call center to book, change, manage or redeem various items,” Navitaire says. “Some of these require additional agency reporting outside of BSP/ARC.”
Pricing
Navitaire admits that Sabre has one advantage in that Sabre’s revenue management system supports O & D (Origin & Destination) forecasting and Navitaire’s SkyPrice revenue-management system does not. JetBlue had been using a revenue-management system from a third party, which does not support O & D, and presumably will be switching to Sabre’s.
Several of Navitaire’s airline customers use Sabre’s revenue management system, as well.
“We are developing our own O & D revenue management system and expect to build a better mousetrap,” Navitaire says.
Cutover Miscues?
Navitaire says it respects JetBlue’s decision to switch to Sabre and commends the airline for the work it did to make the transition.
“In the end, JetBlue faced a conversion off of Open Skies to either New Skies or one of our competitor’s reservation systems,” Navitaire says. “We would have obviously preferred a different outcome. We respect their decision and we have been honored to support their success over the past 10 years.”
Still, Navitaire points to alleged shortcomings in the reservations’ cutover, noting that many types of transactions — changes to existing reservations, credits and vouchers, agency credit shells, advance check-ins, TrueBlue redemptions and elements of new reservations — require call center support.
“This has got to be very costly,” Navitaire alleges. “This strongly suggests that the Sabre system is not customer centric, but transaction centric, and that the Sabre system (and e-tickets) was not able to accommodate several kinds of data that the seemingly ‘simple’ Open Skies system reservation-core stored and provided, with easy self-service customer access. It seems unusual that so many customer and PNR elements could not be converted in an accessible manner to enable self-service changes, Web check-in and customer credit, voucher and TrueBlue redemptions.”
JetBlue has been widely lauded — on Tnooz and elsewhere — for the transparency it has shown and the massive efforts it made to ensure a smooth transition in the switch to Sabre.
Whether some of the cutover problems that Navitaire points to are understandable bumps in the road or suggest lingering technology shortcomings, this remains to be seen.
Says Navitaire: “The Sabre marketing machinery can be quite prolific, but the track record to illustrate innovation and results isn’t always clear. Time will tell on promises versus results.”
Update
Au contraire, says Henry Harteveldt, Forrester Research’s principal analyst, airline and travel research.
Harteveldt says:
“Navitaire is correct that their ‘ticketless’ system may offer some efficiencies versus the Sabre e-ticketing system, but JetBlue’s decision to change was based on much more than that. In JetBlue’s assessment, NewSkies’ capabilities were clearly viewed as less robust than Sabre’s. The decision that JetBlue made had nothing to do with ‘comfort’ with network airline e-ticketing, but more to do with what Sabre could do in terms of helping JetBlue increase its revenue-generating capabilities compared to what New Skies was able to offer JetBlue.
“Navitaire also did not paint an accurate portrait of JetBlue’s ongoing customer service environment, either. Though it wasn’t ideal that JetBlue had to suspend some activities or conduct others only by phone during the cutover, doing so was a prudent business move given the complexity of the reservation system transition. JetBlue has been processing bookings on JetBlue.com for much of this week, as well as online check-in and supporting TrueBlue loyalty program account management. It is my understanding from JetBlue that other functions, including exchanges and refunds, will also be supported online.
“JetBlue is a more complex airline now than it was when it began 10 years ago. It is inevitable, in almost any business, that as a company grows and evolves — and becomes more complex as a result — that it requires different types of technology infrastructure to support the business. Sometimes the incumbent provider can provide that new infrastructure, and sometimes a new provider is deemed to have a better solution. JetBlue isn’t the only airline to have moved off Navitaire for Sabre. Both WestJet and Volaris either have done so or will be doing so. Even American Airlines, which literally created Sabre, is planning to move off Sabre onto the new Jetstream platform being developed by Hewlett-Packard.”
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Interesting to hear what Navitaire says, but IMHO it’s all about yield management, not “legacy” attitudes. You say that, “JetBlue had been using a revenue-management system from a third party, which does not support O & D, and presumably will be switching to Sabre’s.” As I wrote in my analysis of the implications of the switch for consumers, “A switch to a new yield management package that achieves a sustainable 1% increase in average revenue per available seat-mile will recoup the cost of a two-day transitional shut-down in less than a year.”
Edward: Yes, I read your analysis several days ago. Great stuff. You may well be right that yield management issues drove the decision. I’ve reached out to Sabre and JetBlue for comment and hopefully they can provide further insights.
I think that we have to look at the JetBlue transition as more than a “two-day transitional shut-down,” though.
I think the ramifications of the ongoing glitches — understandable that they may be — will be felt by the airline for much longer than the outright two-day shutdown.
Eastman’s “Off-the-Wall” Comments on some of the issues expressed in the story “Jilted by JetBlue….” …
“Navitaire believes legacy sensibilities played a role in JetBlue’s decision.”
This was … and is … probably the defining reason – both pro and con from the perspective of both Navitaire and Sabre.
Harteveldt touches on it when he reflects on how far JetBlue has evolved in the past 10 years; and justifies the JetBlue move on this basis. The reality check is that OpenSkies/NewSkies have ALSO come a long ways in the past 10 years; as has Sabre. The technology platforms in both cases have evolved to keep pace with the evolving needs of their users.
However, in the case of Sabre … that evolution was focused on providing an incremental transition around which its legacy-bound airline host users could begin to morph into the future. In the case of Navitaire’s OpenSkies/NewSkies product, it was conceived by David Neeleman while he was a Morris Air as an innovative alternative to the legacy systems and it was the core information tool around which he subsequently guided WestJet and then JetBlue into successful start-up airlines. The systems were created for different reasons … and evolved almost linearly to support the changing needs brought about by the new digital-driven information era we are all experiencing.
Navitaire is correct when it suggests that as JetBlue evolved, it brought in experienced airline managers with extensive experience using legacy systems. Those same managers were key in driving Neeleman out of JetBlue and to Azul in Brazil (where he is once-again successfully using the OpenSkies/NewSkies/Navitaire platform).
The point here is that the executives that evolved into management roles at JetBlue were born-and-raised (so to speak) in the airline world using legacy systems and thinking. It is a management structure and style that they understand and use in their decision analysis processes. These were airline managers … managers that need the tools, processes, and linear information resources that they had used for the past 25 to 35 years of their business careers. The tools, processes, and relational information resources offered by the Navitaire platform were, for all practical purposes, a “foreign language” to them.
We often hear the expression, “Out with the old, In with the new.” In this case, JetBlue’s legacy managers needed “Out with the new, In with the old”, in order to better understand and use the inventory information that was been provided to them.
That is not to say that the Sabre system is a legacy system. Sabre has come a very long ways in evolving the technology that drives its systems and processes. It is a very contemporary system. But even in its contemporary architecture, it generates and solves the airline business processes in ways that legacy airline managers understand and can use.
The Navitaire platform, on the other hand, remains very much an entrepreneur’s environment – with the ability to construct and re-construct business processes and needs pretty-much on the fly. The Navitaire platform is much more reflective of the way modern e-commerce manufacturing (yes, at their core, airlines are in the manufacturing business – manufacturing seats for people to fly A-to-B), e-inventory, and e-distribution is taking place. But e-commerce … with all of its nuances … is quite different than the approaches taken by legacy airline managers.
From a technology side, either platform could have served the need. But the approach used to “manage” information was seen in the Sabre case as based on traditional and legacy airline business processes – and in the Navitaire case as based on new e-commerce methodologies.
Thus, it seems quite clear to me that the decision to move from the Navitaire platform to the Sabre environment was almost solely the result of the perception of managers with respect to what they believe they needed to effectively manage and run the airline; or the need to see the information in ways tied to the legacy airline business processes.
“Navitaire thinks they will be short-lived because of the alleged higher costs of operating the JetBlue-Sabre e-ticketing processes.”
It’s not the e-ticketing process that is the issue; it’s the extension of the legacy-paper ticket processes that lead to a product-centric set of business processes that is the problem. For what it counts, this is a problem that is likely to hound the new Amadeus Altea’ product as well; both Altea’ and Sabre-Sonic are product-centric (seat) focused.
The Navitaire platform, on the other hand, is customer-centric. Most of today’s modern e-commerce business platforms are customer-centric. In the customer-centric model, the “product” is molded to fit the customer needs/demands. In the product-centric model, the “product” is created and served on a take-it-or-leave-it basis.
It appears to me that this customer-centric versus product-centric orientation is what led American Airlines to decide to build its own Jetstream tool instead of adapting/adopting either the Amadeus Altea’ or Sabre-Sonic platforms.
While on the surface, these two orientations appear meaningless in today’s airline world – they will represent monumental differences as technology compounds the speed and seller/buyer relationships as e-business becomes the norm of transactional services.
For pure reasons of economics and personal efficiency (not to mention, manufacturing and production efficiencies), the consumer-centric model will become the predominant business model over the next 10 years; at least, in the free-market economies of the world.
“JetBlue has been widely lauded — on Tnooz and elsewhere — for the transparency it has shown and the massive efforts it made to ensure a smooth transition.”
JetBlue AND Sabre have done one heck-of-a-job in this transfer. It is obvious that Sabre learned well from the hiccups it incurred in the past. Not only did they learn; but they applied what they had learned and transferred that knowledge to JetBlue. It’s been a most impressive effort … even to the monitoring of twitter for early indications of problems!
// Richard Eastman
Rather than blaming Sabre Navitaire should do some soul searching. At the moment an airline does not only rely on direct sales, e-tickets become a necessity. Even more at the moment that interline selling becomes an issue.
Navitaire plays the game “if you can’t convince, try to confuse” with it’s ticketless story.
I would like to advise interested people to read the story about ticketless at the AirKiosk web site: http://www.airkiosk.com
I found Henry Harteveld’s comments/response interesting—mainly for what wasn’t mentioned.
In the December 20, 2004 issue of InformationWeek it was reported that JetBlue was dropping Sabre due to high GDS fees and that “Bookings on Sabre, the computer network operated by Sabre Holdings Corp., account for just 2% of JetBlue’s sales…”
It was also reported that “The airlines have asked Sabre and Galileo—and competitors Worldspan LP and Amadeus Global Travel Distribution SA—to reduce their fees. But earlier this month, Sabre said it would proceed with its annual fee increase.”
This is important when you understand that in order to secure the JetBlue contract—and replace some of the market share that will be lost with the exit of American Airlines—Sabre Holdings Corp. agreed to waive all GDS booking fees for the 5 year term of the contract.
It doesn’t matter that Navitaire’s New Skies platform has connections to nine GDS platforms, the waiving of fees became the tipping point.
Also, I’m not sure which JetBlue.com website Harteveld has been visiting, but not the one I and most customers have hit.
He stated, “JetBlue has been processing bookings on JetBlue.com for much of this week, as well as online check-in and supporting TrueBlue loyalty program account management. It is my understanding from JetBlue that other functions, including exchanges and refunds, will also be supported online.”
Online check-in is not working on a consistent basis and most customers have had to call JetBlue to work through the issue. Additionally, with a cancelled flight, customers can no longer rebook their flight online. Now, they must call and have a reservations representative rebook their flight. And, TrueBlue Loyalty customers can no longer book reward travel online—now, they also have to pick up the phone and talk to reservations to use their TrueBlue points. This all leads to increased call volume which translates to higher operating costs generated with the hiring of more agents to man the phones.
JetBlue’s customers are tech savvy and they expect to be able to handle their travel needs online. Through call center booking fees, they have been trained to use JetBlue.com which translates to cost savings for the airline. With the decreased online functionality that has come with the switch to SabreSonic, customers now have to use their cell phone minutes sitting on hold waiting to get through to an agent. An increased cost that I expect many will tire of—very quickly.
So, AA is going to try and give this another shot and maybe this time it will be successful.
Ten years ago I worked on a R&D project between Sabre (which just then been recently spun off) and AA using Compaq servers to process just the PNR management. It turned out to be a major flop (again this was in 2000) – the server farm couldn’t come close to acceptable response time (again, just for PNR’s) TPF was providing and eventually the project was scrapped.
Once the project was scrapped the rumors begin about Sabre selling the infrastructure to with IBM Global Services or EDS (as we all know EDS won) and that in essence make Sabre a software company. This is interesting because HP now owns both Compaq and EDS. This is going to be an interesting product.
How can there be an article about JetBlue, Navitaire, Sabre, and New Skies without mentioning JetBlue’s failure to convert to New Skies back in 2006? Over half a year and millions in planning and execution by both organizations for naught. This time around could this be a case of “fool me twice…”?