“This will ensure that Delta permanently and into the future has the lowest reservations costs per enplanement, because we won’t be paying a mark-up,” Anderson said.
The company will control passenger reservations in its entirety and will have the flexibility to create new systems independently. “Right now, the rest of the industry has these systems on shared-development software, which is the lowest common denominator,” he added.
In other words, such systems are designed to suit the needs of several airlines. By bringing the technology Travelport currently hosts in-house, Delta will have the ability to design passenger services and crew scheduling software to its — and not generic — specifications, he explained.
The systems currently run by Travelport are used to support 180 Delta applications, the carrier says. The deal does not affect Delta’s global distribution system agreement with Travelport, which was renewed last year.
Full financial terms of the deal were not disclosed, although Anderson characterized it as a no-cost deal, saying, “We didn’t pay anything.”
Travelport will continue to host Delta’s infrastructure at its Atlanta data center and is entering into a shared-services agreement with the airline. Additionally, Delta will directly employ 175 current Travelport employees from July 1.
The company is focused on building new passenger-experience software programs, although much of the development work is not being disclosed for competitive reasons. One program that is being deployed and is an example of what Anderson sees as exhibiting the potential of the Travelport deal is Delta’s Viper rebooking system. This program rebooks passengers whose schedules have been interrupted during irregular operations.
The system is capable of processing “tens of thousands of [passengers]” in seconds and allows passengers to view alternate itineraries – including on other airlines — on a smartphone app. Viper also can offer refunds, during a major irregular operation if alternatives are not available. “We want to be one of the best consumer products companies in the world,” Anderson said.
The Viper system is one way Delta can leverage data it collects from passengers, and Anderson believes this is critical as data becomes more integral to any company’s customer-service systems.
The Travelport deal goes against conventional wisdom, which in the late 1990s and early 2000s saw airlines divest reservations and scheduling systems to third-party vendors.
“For the record, I never wanted to divest this system,” Anderson said. “We’ve been wanting it back for a long time.”
Delta transferred the passenger and crew systems it is acquiring today to Worldspan in 2003. Travelport acquired Worldspan in 2007.
“This is seismic,” said Atmosphere Research Group founder Henry Harteveldt. “It gives Delta control over its business destiny.” The airline will not have to rely on third-party vendors to create new programs and customer-facing products and it can bring such products to the market faster, he added.
“Technology needs have grown exponentially since then, and technology has become more affordable,” he said. “It is now more practical for an airline like Delta to bring this back in house,” as data — and control over data — becomes more important.”
“When you use a third-party provider, if something goes wrong, you have someone else to share in the blame,” Harteveldt said. “In taking this back in-house, Delta can only blame itself if something goes wrong.”