Amadeus, which has long been seeking an airline reservations system deal in North America, has broken through with Southwest Airlines.
Southwest and Amadeus announced that they have signed a deal whereby the Amadeus Altea platform will host Southwest’s international service, which is operated by the merged AirTran Airways.
AirTran currently uses Navitaire for its reservations system, and Southwest and Amadeus will be working on migrating Southwest’s international service from Navitaire to Amadeus in 2014.
Southwest is the largest carrier in the US in terms of domestic passengers boarded, but, except for AirTran’s routes, doesn’t offer international service on its own.
But, the contract amounts to a split-decision of sorts: While Amadeus will handle international for Southwest, the airline for now will stick with its SAAS reservations system, a Sabre product, for domestic service.
However, the Amadeus-Southwest contract also has an option for Southwest to transition its domestic service to Amadeus, as well.
At one point in the past, Southwest had indicated that Sabre and Amadeus were finalists to win a contract to provide a new passenger services system to the airline, but then Southwest put off the decision, citing the priorities of its AirTran integration.
“This agreement is a milestone for Amadeus, both in North America and beyond,” says Luis Maroto, Amadeus CEO. “Indeed, not only is Southwest an industry leader in terms of its size, the airline is also the global ‘standard’ for low-cost carriers, celebrating 39 consecutive years of profits.”
Amadeus has been left at the altar in North America before.
In 2005, Amadeus and United Airlines agreed to transition the airline’s reservation system from Apollo to the Amadeus Altea platform, but the contract was never implemented.
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I guess this means that the Amadeus team in Chicago will be an early tenant in the new International Terminal in Houston Hobby
Amadeus has probably chosen the most challenging customer for entry into the North American market given the differences in Southwest’s business model and Amadeus’ traditional customer base. This gives Amadeus the system functionality it needs to chase down and compete in almost any market segment for PSS aggressively.
Amadeus also announced their deal with Expedia on the same day.
Amadeus can consider themselves “relevant” again in North America and are sure to win additional business from US carriers in our view.
In looking at this announcement in context, the other news of yesterday was that the rumour mill was running hot on a US Airways and American Airlines getting together. The context is interesting. Further a few questions will arise. Firstly is this a good decision? Let’s consider some of the other information pieces that are relevant.
While Southwest (WN) renewed its current agreement (termed “multi year”) with Sabre in February 2012, this marks Amadeus third win in the “Split Decision” category, the others being ANA (Japan) and its decision to split its hosting system by awarding the international business to Amadeus. http://www.amadeus.com/amadeus/x201148.html. Previously Virgin Group in Australia had V Australia hosted in Amadeus while the rest of the group’s airlines were in Navitaire.
Many would question the ability of an airline to split its hosting between multiple systems. While I agree with Richard that this will be a challenge, I think WN actually will have a simpler time of this. At least for a while because the systems will be isolated. The only other experience 1A has with LCCs has been with its “Pioneer”System and what I believe was the sole customer Norwegian. Effectively a cut down version of ALTEA.
Those who are down stream of the new hybrid solution will have to step up to the mark. Namely the GDSs and the interline carriers. WN’s participation is fairly unique in the former and it has few partners in the latter. Again that is just the current picture. For the US’s third largest branded airline and largest domestic carrier t(in pax numbers) here is no avoiding them. As WN continues their expansion, interline must have been a consideration for international operations.
This will not be a trivial implementation. Best of luck to the teams doing the work. If its successful it also signals a willingness of airlines to further develop their business models. And this will probably put the question of the value of the GDS squarely on a lot of people’s agendas.
Interesting as always!
Cheers
Timothy: Actually, having Amadeus handle international for Southwest seems like it will be a complex integration and the systems will NOT be isolated. In fact, three systems — Sabre, Navitaire and Amadeus — will have to interface for a time.
As Southwest’s chief commercial officer said during its first quarter 2012 earnings call:
“Yes, Terry, obviously, they’re all passenger records, and the systems have to talk. So there is a — there’ll be a period of time where Navitaire, which is the AirTran system, Sabre, which is our current RES platform and Amadeus, which will be the international platform, are all talking to each other. That’s all contemplated in the plan. And obviously then, as we move on through the AirTran integration and then make our ultimate RSR decision, we’ll be back to one system over a period of years here. But yes, they will talk to each other to pass passenger information back and forth, just to enable a really good customer experience for our international passengers.”
Thus, a very complex split-decision in this case.
I wont disagree – much. However let me say that while this looks complicated. WN has an uncanny knack of being able to remove some of the unnecessary complexity. Hence my tentative confidence that the WN approach will make it less complex than it sounds.
Having worked closely with hybrid systems for airlines. I can assure you that this is more than just possible.
Cheers
Timothy
I guess this is not the first instance of a mult- res solution for an airline. JAL, Virgin and others had done this and reasonably successfully. In JAL’s case, it was Unisys and IBM for domestic and INternational respectively. It has it own sets of challenges. However, this will be the first time for Sabre and Amadeus working on one airline instance for a reservation solution not to mention the added migration challenge from Navitaire, a ticketless system.. While Sabre has a few recent Navitaire migrations (Jetblue, westjet etc), not sure if Amadeus has had any such experience. Technically, both Sabre and Amadeus are connected in the GDS context and thus, I don’t forsee very many technical problems. However, the biz functionality compatibility will be a handful. Particularly working complex multi-segment itineraries including domestic and international segments in terms of pricing, ticketing and revenue/sales reporting…Much of the complexity can be managed if the customer stays clear and firm on their requirements and I am sure Southwest will do just that. The real issue will be the down line integration with other biz applications such as rev mgt, rev acc, ops, ffp, etc. that could see some challenges. I am sure it will be an exciting and challenging project for all stakeholders… Let the games begin…. Both Sabre and Amadeus will be under considerable pressure to keep SWA happy and this can only mean good service and attention for SWA from both and eventually SWA will have the best of both worlds albeit the interim headaches..Cheers.
On further thought, several ways of minimizing complexity and hence the headaches can be done with a few creative mechanisms. Will blog about them as I think about the challenges and possible ways to handle them, for what it is worth. For instance, SWA may choose to keep everything point to point (even if the pax itineary may be for a connection O&D) and work it much like a multi-segment connection for a typical multi-carrier bookings made in a GDS.. This can be worked the same way as direct connect availability and dc sell works in today’s airline GDS context. Pricing, Ticketing, Dcs and other systems may need to be re-adapted and that is also technically feasible with additional work from all parties. Sched changes, FFP redemptions and O&D pricing and RM will still be challenging, nevertheless..SWA may need to consider interline ticketing tand ETCI between its domestic and international businesses inside the same airline much like these concepts work across multiple airlines with interline and check-in arrangements. DIrect distribution bookings (web, call center etc) will also need to be thought through carefully as a single unit working across multiple res platforms with agents cross-trained on Sabre and Amadeus entries.. Not a very pretty sight, but can be made to work successfully assuming close coordination between all stakeholders..