Sabre Travel Network signed a "long-term" agreement to provide GDS services to Priceline.com, another erosion of Worldspan's position as the online technology leader.
Priceline president and chief executive Jeffery Boyd said a principle reason for the deal is that it "provides us with redundancy in case of technical problems at Worldspan."
In addition, he said, "There's a lot of change going on between airlines and GDSs, and having a relationship with Sabre gives us more flexibility to negotiate changes in the marketplace. It puts us in a stronger position to achieve low-cost distribution."
Priceline has used Worldspan as its sole GDS since its founding in 1998. During Priceline's conference call with investment analysts to discuss fourth-quarter and full-year 2005 earnings, Boyd said the company was already working on implementation of the Sabre deal. "We would not anticipate a long delay as was the case when Expedia signed with Sabre."
Expedia, which also has used Worldspan exclusively since its inception, signed an agreement with Sabre in 2004. In Expedia's earnings conference call with analysts, president and CEO Dara Khosrowshahi said implementation of the deal would be completed by the beginning of the third quarter.
But Amadeus will beat it to the punch: Khosrowshahi said Expedia is proceeding on the technology integration with Amadeus, with completion expected by the beginning of the second quarter.
"Having multiple distribution options in a deregulated environment is just good business," he said. "We remain committed to the GDS model for air connectivity." The new connections "provide the option, but not the obligation, of flowing segments to multiple GDS vendors," Khosrowshahi said.
"The timing and distribution of actual segments is not something we're going to discuss at this time, but I do want to stress that we continue to value our relationship with Worldspan, and it will remain a meaningful part of our GDS mix."
Under the leadership of Paul Blackney, Worldspan built a reputation as the GDS of choice for online agencies, powering Expedia, Priceline, Orbitz and Hotwire. The four companies accounted for half its transactions last year.
Worldspan and Orbitz are engaged in litigation, and Orbitz has linked with Galileo, the GDS owned by its parent company, Cendant Corp.
Worldspan also provided GDS services to a number of other online companies, including Lastminute.com, which was acquired last year by Travelocity, a unit of Sabre. Its move to the Sabre platform is under way.
Blackney departed after the sale of Worldspan in 2003, and his replacement, Rakesh Gangwal, has repeatedly said that the company needs to beef up its market share of traditional travel agencies. While Expedia and Priceline have cited the need for backup systems in the event of technical problems at Worldspan, deregulation of the GDS industry may also play a role.
Airlines are no longer required to participate in all four systems. AirTran took advantage of that fact in November, when it dropped out of Worldspan after the two companies could not agree to terms on a new contract.
That gave Orbitz an opportunity to link up with sister company Galileo; its contract with Worldspan allowed it to use another GDS in the event that a supplier was no longer available in the Worldspan GDS.
With airlines free to opt out of one or more GDSs, distributors want to make sure they will still have access to their inventory.