Airlines are starting to realize that better communication with travel management companies can benefit both sides. ARC wants to play a major role in this period of transition.
For all the talk of digital distribution empowering business travelers, a surfeit of choice has created fresh problems for both airlines and travel agencies.
Complex back-of-the-house systems limit the communication between carriers and travel agencies at a time when flyers are encouraged to book directly for perks and access to ancillaries. Increased cooperation and transparency, it follows, will directly benefit both sides of the equation.
Airline-owned Airlines Reporting Corporation (ARC) has acquired a majority share in NuTravel, a technology company providing solutions to global airlines, in an effort help solve some of these knotty problems. It did not disclose the price of the deal or current customers served by NuTravel.
While airlines compete with agencies to capture bookings and avoid commission payments, there has been a realization that both sides need to work more closely together as online and mobile booking have matured.
“We’re not going to see [an airline] merger every year like we did for most of the 2000s,” said Mike Premo, CEO of ARC. “They’ve got to go out and compete for every single customer. They’re really very focused on customer experience… Seeing travelers choosing to book at the place of their choice has created challenges for our agency customers, corporations, and in some cases even challenges for airlines when the customer needs service and their agents are not in a position to fully serve them because they are not in possession of [the whole itinerary].”
The ability of NuTravel build build front-end technology for airlines that meets the rigorous requirements of the corporate travel ecosystem, said Premo, is the core of what led ARC to invest.
The Big Problem
An ongoing issue in corporate travel is caused by different systems essentially not talking to each other; if a traveler books directly with an airline, for instance, the traveler’s travel management company likely won’t be able to track the booking or ensure it fits inside an employer’s travel policy. It also affects corporate negotiated rates for airfares, because that traveler probably isn’t receiving the reduced airfare negotiated by her travel manager.
NuTravel focuses on bridging that gap between airline distribution and corporate travel agencies. The company began its life building online booking tools, helping to build Air Canada for Business among other portals for JetBlue and Westjet. In 2017, it sold its online booking tool business to Certify and pushed ahead with a new strategy working more closely with air carriers on front-end solutions.
As progress is made connecting carriers and agencies, solving for this mess has taken on a new importance. ARC also partners with Blockskye, a company using blockchain to build technology for airlines, and owns a chunk of Traxo, a data aggregation service for travel.
NuTravel will continue operating as normal with its 25 employees and plans to grow its workforce as it signs more deals with airlines to help connect their consumer-facing apps and booking sites with the back-end of corporate travel management companies.
“This is a strategic play that gives us access to all the airlines ARC does business with,” said Carmine Carpanzano, co-founder and CEO of NuTravel. “It gives us the warm handshake instead of doing it the normal way, through the door.”
A variety of carriers including United Airlines, Delta Air Lines, American Airlines, and Air Canada own stakes in ARC, so creating new technology solutions for distribution has apparently become important for the wider world of aviation.
Whether these issues are solved any time soon is another matter entirely, as history has shown airline distribution tends to change at an extremely slow pace.
Photo credit: A promotion image for Air Canada. NuTravel build the Air Canada for Business online portal. Air Canada / Air Canada