WestJet reaches deal to stay on Expedia, Travelocity
Canadian airline had been renegotiating with booking system that powers popular travel websites
WestJet and Sabre Travel Network came to an agreement Friday afternoon that will keep the airline on Expedia and Travelocity.
The Calgary-based airline was on the verge of ending its contract with the booking system that powers the popular online travel sites and other travel agencies around the world.
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For more than a year, WestJet had been renegotiating its contract with the company.
Sabre provides technology that runs WestJet's reservation system and also acts as a distribution service for the travel industry. Many travel agents use its software to book flights and hotel rooms.
WestJet said in October that it would pull out of the Sabre GDS as of Jan. 26.
One of the sticking points was cost. Travel industry analysts say that Sabre charges airlines around $5 per segment of travel, including each leg of a flight, each hotel room booked or car rented.
The airline wouldn't confirm how much Sabre charges, but did say pricing was one of the sticking points in the negotiation.
WestJet’s executive vice-president of sales and marketing Bob Cummings says it has a lot to do with keeping prices down for passengers.
"The economics are pretty critical to us, in respect to the cost of sale," said Cummings.
"The industry has razor-thin margins."
Expedia is the largest online travel agency in the world.
“I can't for the life of me believe that WestJet would want to be in a situation where the competition is visible in Expedia and WestJet isn't," said air industry analyst Robert Kokonis. "But again, there's a price for everything.”
It's hard to work out exactly how many WestJet tickets are sold on Expedia.
Kokonis estimates roughly half of WestJet's sales are direct through its own website, and roughly five to seven per cent of sales comes from Expedia alone.
Travel industry raised concerns
Travel agents had been concerned about the contract ending.
Sabre’s GDS is widely used by large travel agencies that serve the corporate market.
The Association of Canadian Travel Agents sent out a plea about a week ago, both to Sabre's chief executive and to WestJet CEO Gregg Saretsky, asking them to go back to the negotiating table.
The companies began talking again recently and extended the deadline to 7 a.m. MT Monday before coming to an agreement today.
Cummings said it was in the best interest of both companies to come to an agreement.