Delta Air Lines (NYSE: DAL) and Travelport finalized an agreement in which Delta will reacquire the data and intellectual property rights central to its passenger service and flight operations systems. As a result, Delta will be the only U.S. airline to directly control these critical technology systems, making it better able to build the next generation of technology that will improve the travel experiences of its customers.
The move is the latest innovation in Delta's continued effort to rethink and reshape the airline business. Earlier this year, Delta announced industry-leading changes to its SkyMiles frequent flyer program to differentiate it for premium travelers; Delta also has made strategic investments in Virgin Atlantic Airways, AeroMexico and GOL over the last several years; created Monroe Energy to provide 80 percent of its annual domestic fuel needs; transformed its fleet strategy including a significant reduction in 50-seat aircraft; and invested billions of dollars to improve the customer experience including investments to facilities in Atlanta, New York, Los Angeles and Seattle since 2010.
"These systems are the data and operational backbone for more than 180 technology applications used to run our airline every day," Richard Anderson, Delta CEO said. "By bringing the systems along with the highly skilled people who support them under Delta's direct management, we gain greater flexibility and control over the technology enhancements that will continue to improve our operational performance and passenger experience. This transaction builds on our ongoing efforts to build a stronger airline for our shareholders, employees and customers while reconfirming the importance of our strategic partnership with Travelport."
The agreement between Travelport and Delta will aid Delta's continued effort to rethink and reshape the airline business through the following:
- Transfer of direct control and operations for Delta's passenger service systems and flight operations systems.
- A transition of the development software which does not require a technology migration event so there is no effect to Delta customers.
- Travelport will continue to be a key partner with Delta. Travelport will continue to run the system infrastructure for the Delta platform in its Atlanta data center. The transition of more than 175 technology professionals to Delta is effective July 1.
- No impact on Delta and Travelport's existing Global Distribution Systems agreement which was previously renewed in 2013.
"Having successfully assisted Delta through its transition onto these systems after its merger with Northwest Airlines, it is a natural next step to move this activity back under Delta," said Gordon Wilson, Travelport CEO. "In the meantime, Travelport and Delta have consummated a new long-term hosting agreement whereby Travelport will continue to run the systems infrastructure and hosting for the Delta platform in our Atlanta datacenter on our hardware and with our systems monitoring and support. This is testament to the high levels of service, expertise and customer orientation that Delta sees in Travelport. It also underscores the massive credibility and reliability that Travelport has delivered to Delta over the years and which Delta wants to continue to benefit from running forward."
The previous arrangement whereby Travelport personnel, who are predominantly located in Atlanta, worked exclusively on the Delta passenger service and flight operations software dates back to when Delta was an owner of the Worldspan system which Travelport acquired in 2007. The agreement between Travelport and Delta allows each organization improved ability to focus on the core business functions necessary to run their respective organizations efficiently.
The financial terms of the agreement have not been disclosed.
Travelport is a travel commerce marketplace providing distribution, technology, payment and other solutions for the $7 trillion global travel and tourism industry. With a presence in over 170 countries, approximately 3,600 employees and 2013 net revenue of $2.1 billion, Travelport is a privately owned company comprised of:
- Our Travel Commerce Platform (formerly known as our global distribution system or "GDS" business), through which we facilitate travel commerce by connecting the world's leading travel providers with online and offline travel buyers in our proprietary business to business ("B2B") travel commerce marketplace. As travel industry demands evolve, we are utilizing our Travel Commerce Platform to redefine the electronic distribution and merchandising of airline core and ancillary products, as well as extending our reach into the growing world of travel commerce beyond air, including to hotel, car rental, rail, cruise-line and tour operators. In addition, we have leveraged our domain expertise in the travel industry to design a pioneering B2B payment solution that addresses the needs of travel intermediaries to efficiently and securely settle travel transactions. We also utilize the extensive data managed by our platform to provide an array of additional services, such as advertising solutions, subscription services, business intelligence data services, and marketing-oriented analytical tools to travel agencies, travel providers and other travel data users.
- Our Technology Services, through which we provide critical IT services to airlines, such as shopping, ticketing, departure control and other solutions, enabling them to focus on their core business competencies and reduce costs. We host the applications that manage reservations, inventory management and other related critical systems for Delta Air Lines.
Delta Air Lines serves nearly 165 million customers each year. This year, Delta was named the 2014 Airline of the Year by Air Transport World magazine and was named to FORTUNE magazine's top 50 Most Admired Companies in addition to being named the most admired airline for the third time in four years. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 319 destinations in 57 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry's leading trans-Atlantic joint venture with Air France-KLM and Alitalia as well as a newly formed joint venture with Virgin Atlantic. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Minneapolis-St. Paul, New York-JFK, New York-LaGuardia, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita. Delta has invested billions of dollars in airport facilities, global products, services and technology to enhance the customer experience in the air and on the ground. Additional information is available on delta.com, Twitter @Delta, Google.com/+Delta, Facebook.com/delta and Delta's blog takingoff.delta.com.
SOURCE Delta Air Lines