Budget airline Virgin Blue will stick to its stand-alone bookings system OpenSkies and a Web-based sales model despite interfacing difficulties when processing inter-line bookings from other overseas airlines and travel agents.
Inter-line agreements operate when international airlines offload passengers to domestic carriers for the local sections of long-haul flights; currently they make up around 15 per cent of Qantas' passenger load.
Virgin Blue uses the low-cost, Web-based OpenSkies booking engine from Navataire, a subsidiary of Accenture. While the product works well for Web-only bookings, it was not designed to interoperate with mainframe-based systems such as Amadeus (which Qantas uses), Galileo or Sabre - all used by major airlines. While no figures are available, there is consensus that OpenSkies is vastly cheaper to both implement and run than the likes of Galileo.
Several aviation analysts have questioned the scalability of OpenSkies after Qantas indicated it will start its own cut-price airline, and whether Virgin will be forced to interface with Galileo's Global Distribution System (GDS)-driven systems to compete and survive against a newcomer.
While Virgin Blue's head of strategy David Huttner acknowledges OpenSkies' limitations, he dismisses outright recent criticisms as sour grapes.
"We have a system that is very modern. It doesn't interface well with traditional airline systems [which are] based on technology that's 30 years old. We are deflating Qantas' entire value proposition, that’s the issue," Huttner says, adding there is a "glut of industry experts out there saying that we have to switch [booking engines]. And we don't."
Macquarie Equities analyst Ian Myles says that while Virgin Blue will likely experience some growing pains due to a rapid entry into the market, it can probably afford to live without the luxury of an inter-line interface.
"It tends to pick up the back of the plane [economy passengers], so [the inter-line interface] is not as important to it. Inter-line is high yield for Qantas. You typically get a better seat yield out of international traffic. If you look at what happened this year, that's what kept it going," Myles says, adding that Virgin could "easily" survive any assault from another domestic carrier.
"Virgin is now very well entrenched, it is here to stay."
Huttner makes no apologies for cutting the margins out from under travel agents, thus forcing them to book through the Web rather than his competitor's booking engines (in which they have invested) when booking Virgin Blue fares.
"The vast majority of travel agents [booking Virgin Blue] book on the Net today, because we pay them a per cent more commission if they book on the Net. Some major corporate travel agents are [complaining] that they use 'fancy' reporting systems based on GDS technology-like stuff for the government. It's a farce," he said.
"If they make us more money, we will pay them more money - that's the way it works."