ITA Software will charge airlines 40 cents per segment booked through its new "alternative" GDS, chief executive officer Jeremy Wertheimer said.
That's about 10% of what the traditional GDSs charge.
And unlike other alternative booking methods, some of which involve direct connections between airlines and major travel agencies, ITA plans to develop a full-service GDS, with hotel, cruise and car rental participation.
The system, whose working title is its IATA designator, 1U, was a natural next step for ITA, Wertheimer said. It already had the shopping and pricing "half" of a GDS -- it licenses the software to Orbitz and several airlines -- so it was logical to add the booking side.
ITA was heading in that direction anyway, but the effort got a jumpstart last summer, when "everybody got into high gear" over GDS fees, Wertheimer said.
The summer was marked by Northwest Airlines' move to collect a "cost-sharing fee" from travel agencies for GDS bookings. Northwest is one of a handful of airlines that has a dedicated agent Web site, and it was trying to drive agents to use it.
The carrier backed off, but the topic remained heated, and Wertheimer said several airlines approached ITA with a plea to "do something."
But if it weren't for the airlines' dissatisfaction with GDS fee structures, would there be a need for a new entrant? Would a new GDS simply reinvent the wheel with different technology?
Yes and no, in that order, Wertheimer said.
"One motivator is that every 30 or 40 years, you change your technology," he said. "There are various advantages, besides it being less expensive."
The old systems were built using mainframe technology, and although they have moved some functions to newer open-systems technology, there is a distinct advantage to building a modern version from scratch, he said.
"With smaller computers, you can be more flexible and have different versions," he said.
Making changes is easier, he said. "The famous example is when British Airways puts in a fourth cabin, and you can't [make the change] in the GDS."
Wertheimer believes that as airlines struggle to compete and to differentiate themselves, they "are going to do lots of clever marketing things" that need to be reflected in a travel agency system, and traditional GDSs simply are not nimble enough.
"It's just easier to write the whole thing from scratch," he said. "You can do it cleanly and in one piece, and the data are organized and carefully labeled."
The incumbents, on the other hand, have had to stitch together lots of different databases over the last three decades: TPF, frequent flyer, electronic ticket, Web site, etc., Wertheimer said.
And over the years, they have become "calcified."
"We've worked with GDSs before, and it's painful," Wertheimer said.
In addition, he said, in order to gain any modifications in the systems, suppliers and subscribers "have had to beg. You need to be able to generate your own kinds of reports."
"Since we're building it from scratch, we can say, 'What would you like?' And users can tell us that it's really difficult to keep track of this, or that thing doesn't properly transmit. We can make the processes more efficient."
ITA plans to connect the new system with hotels through Pegasus Solutions' traditional means, he said, but 1U will be able to more: It will go out onto the Web to collect data that is pertinent to a user's query.
ITA currently is working with car rental companies and plans to offer cruise bookings as well.
From an engineering standpoint, "air is the monstrously hard thing to do," Wertheimer said. While there is a certain amount of complexity in booking cruises, "there are 500 sailings a month with 10 different kinds of rooms, but it's not like having 100,000 flights every day."
Wertheimer noted that ITA Software's ability to find not only low fares but to seek out every available option "is the most differentiated thing we did," and the company plans to make that a hallmark of the new system as well.
"Our view has been that if you offer people information, you want them to trust you," he said.
ITA has been testing the new system and plans a release to a broad set of travel agencies this month.
Some time in the second quarter of this year, Wertheimer said, the system will be ready for a general rollout.
"1U" probably will not suffice as a name indefinitely, but Wertheimer relates an anecdote that may offer a clue to his druthers: "When I was an student, people used to give their programs funny names," he said. "Everyone did it except for one guy named Winston."
For lack of a name, he said, Winston's programs became known as "Winston's programs."
"That's pretty good marketing if you have the right product," Wertheimer said.