AirTran thinks selling seats through Sabre and Travelocity will give it an edge over low-cost rivals like Southwest and JetBlue.
AirTran Airways has decided to fly in skies that its competitors have abandoned. In a move counter to recent airline distribution trends, low-fare carrier AirTran has agreed to provide all of its airfare inventory to Sabre Holdings' Corp.'s two prominent channels: the Sabre Travel Network computer booking system used by travel agents, and online travel agency Travelocity.
The move is in direct contrast to the strategies of two of AirTran's two biggest rivals, Southwest Airlines and JetBlue, both of which have eschewed dependence on the booking systems used by travel agents. JetBlue pulled out of its modest commitment to Sabre last December, amid rising sales on its Web site and shrinking business via the Sabre channel. Southwest, meanwhile, depends almost entirely on its own Web site, as well as a proprietary booking portal for travel agents, generating literally none of its revenue from the systems run by Amadeus Global Travel Distribution, Cendant's Galileo, Sabre, and Worldspan.
The deal is a significant one for Sabre, which has been facing growing challenges from next-generation distribution platforms offered by young companies such as Farelogix, ITA Software, and G2 Switchworks. Those firms all promise airlines lower distribution fees " often less then half of what Sabre charges " because their networks have been built from the ground up using Web services technologies.
AirTran determined that the cost of selling inventory through Sabre was something it could absorb in exchange for access to a widely used channel in which low-fare carriers have a limited presence. AirTran execs couldn't be reached for comment, but in a statement, Kevin Healy, VP of planning, indicated that the airline had to spread its wings. "As our airline evolves, the channels of distribution must also evolve," said Healy. "Distributing through multiple Sabre Holdings channels lets us conveniently serve our customers and maintain our low-cost structure."
As part of the deal, AirTran has agreed to make Travelocity's private-label booking business, Travelocity Partner Network, the sole supplier of hotel, cruise, and AirTran Vacations inventory on the AirTran site.
Sabre execs also were unavailable for comment, but Hugh Jones, chief operating officer of Sabre Travel Network, said in a statement that the addition of AirTran's inventory was good news on multiple fronts. "We are excited about the opportunity to have a full-content deal over a long period of time with a leading low-cost carrier, as well as expanding the [Travelocity Partner Network] private-label booking business." Terms of the deal were not disclosed.
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.