Airline Reservation System Hits TurbulenceBy Mel Duvall | Posted 2007-07-25 Email Print
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Discount carrier WestJet pulls out of a joint project to build a passenger reservation systems based on Internet technologies and takes a $30 million write-down.
A next-generation airline reservation system that promised to use a wide range of Internet technologies, including Web services, to make discount airlines more competitive has lost a key launch customer.
WestJet Airlines, a discount carrier based in Calgary, Alberta, served notice in January that it would shelve a computer reservation system being developed by Travelport of Parsippany, N. J., unless the two companies could reach an agreement to rescue the project. On July 19, WestJet said in a statement that it had officially pulled the plug on the reservation system and would take a $30 million (U.S.) write-down.
The reservations system was developed by Travelport, but WestJet, a fast-growing airline that serves 35 cities in Canada and the U.S., served as a partner advising in its design. The system, called AiRES—short for Airline Reservation System—was originally set to go live at WestJet in mid-2006, but the airline was forced to set a revised target date of mid-2007.
In January, with further delays on the horizon, WestJet said it was suspending all work on the project. WestJet had an internal technology team of about 150 working on the project as well as about 50 outside consultants.
Flo Lugli, president of airline solutions for Galileo by Travelport, which handles sales of aiRES, says WestJet's decision does not mean aiRES has been a failure. Lugli says Travelport delivered a reservation system to WestJet that fulfilled the requirements originally developed for the system, but that WestJet's needs changed over the course of the project.
In fact, she notes another airline, Virgin America, is due to go live with aiRES in August.
According to Lugli, when Travelport initially partnered with WestJet in September 2005, WestJet was a pure-play, low-cost carrier. As the airline grew, however, its needs and requirements changed. Most notably, WestJet wanted the ability to partner or code-share with U.S. and international airlines, a capability that is now only provided by more sophisticated and expensive reservation systems like those offered by Sabre Airline Solutions.
In time, Lugli says aiRES will add the functionality WestJet desires, but the two companies could not come to terms on timing.
"The real challenge is that in order for an airline to cut over to a new reservation system, it has to decide its go-live functionality—in other words, a code lockdown," Lugli says. "We could never get to that point with WestJet."
In its July 19 announcement, WestJet said it determined it could not gain the functionality it required in time to meet its expansion plans. WestJet said it will instead continue to use its current reservation system, called Open Skies, from Navitaire of Minneapolis. Navitaire's Open Skies platform is used by a number of discount airlines, including JetBlue.
"Our current reservation system has been upgraded and is fully supported to meet our strategic plan for the remainder of 2007 and throughout 2008," WestJet president Sean Durfy said in a statement. "We will review our options for a new reservation system, from a variety of companies including Travelport, to meet our strategic plan beyond 2008."
WestJet signed an agreement with Travelport in September 2005 to partner in the development of aiRES. At the time, Travelport was a subsidiary of Cendant, but the division was spun off as a standalone company to the Blackstone Group of New York for $4.3 billion in August 2006. It is now a conglomeration of travel services including the Orbitz travel Web site, the Galileo travel industry reservation system, and GTA (Gullivers Travel Associates), a travel wholesaler.
Cendant initially launched the development of aiRES in August 2004, when it announced a business alliance with IBS Software Services, a software development company headquartered in India. At the time aiRES was launched, the companies said it would be designed to replace less flexible, expensive legacy passenger reservation systems like Sabre, by harnessing Internet technologies and more open systems such as J2EE, Linux and Web services. This open architecture would allow airlines using aiRES to more easily plug into a wide range of business partners' systems. It would, for example, allow a customer returning a rental car at the airport to simultaneously receive an airline boarding pass and book a hotel while checking in at an airport kiosk.
While WestJet was to be the launch customer for aiRES and had been the largest airline to sign up for the system to date, Travelport has also secured Virgin America and RAK Airways, a discount airline based in the United Arab Emirates, as customers.
Brian Clark, vice president of planning and sales for Virgin America, which is based in Burlingame, Calif., says that unlike WestJet, which planned to host and maintain aiRES internally, Virgin America is letting Travelport host the system and is accessing it online.
"That has probably made things easier, because there's no finger-pointing," Clark says. "If there's a problem, it's their problem."