Consider the following:
- United Airlines has given notice to Travelport that the airline intends to migrate from Travelport’s Apollo reservations system in 2012 to HP’s SHARES system. United is one of Travelport’s largest customers in the Americas. Although United likely would still be a customer for Travelport GDS and other services, the loss of United’s reservations system business would be a blow to Travelport. As late as April 2010, Travelport was saying it didn’t expect United to drop out of Apollo.
- Travelport is locked in an all-out distribution war with another major customer, American Airlines, and fears massive customer defections if American prevails in the airline’s disputes with Travelport and Orbitz.
- Mergers rarely are good for reservations system and GDS providers and early this year Travelport had to deal with Northwest’s migration from the Worldspan-hosted PARS system to the Worldspan-hosted Deltamatic reservations system, following the Northwest-Delta merger.
Regarding United’s abandonment of the Apollo system in 2012, Travelport says its operations could be adversely affected because of the loss of fees from United “unless such revenue can be regained through the sale of other services to United or other carriers.”
Of course, if the migration is delayed, “the financial impact on Travelport may occur later in 2012 or may not occur at all,” Travelport states.
“One also has to wonder what this does to Travelportâ€™s ability to successfully proceed with a public offering,” says Henry Harteveldt, Forrester Reseearch’s principal travel analyst, referring to the spate of developments. Â ”I donâ€™t see Unitedâ€™s move as being helpful.”
“At the extreme, if Travelport were to lose any other major airline host accounts and is unable to replace them, one has to wonder whether the company will become an acquisition target,” Harteveldt adds.
Harteveldt believes Travelport’s loss of United’s reservation system business will put more pressure on Travelport to retain its major airline contracts, including its agreement to host the Delta reservations system on Worldspan.
Travelport, Harteveldt says, “will have to get very creative with its product development and bring itâ€™s ‘A game’ to the table.”