Aviation Exchanges To Merge

Acknowledging their similarities, two new online aviation business-to-business marketplaces joined forces last week to create a larger and broader Web-based supply-chain powerhouse.

The announcement of the merger between Dallas-based MyAircraft and AirNewco in Washington continues a trend of consolidation between different Internet-based marketplaces within a single industry, analysts said.

Under a new but not-yet-determined name, the company will broker the purchases of aviation services and aircraft parts through a neutral business-to-business exchange for buyers and suppliers. The Washington-based business is scheduled to launch its Web site in next year's first quarter.

AirNewco was announced in April by six airlines and currently counts as members Air France, American Airlines Inc., British Airways PLC, Continental Airlines Inc., Delta Air Lines Inc., Iberia Airlines, Swissair, United Air Lines Inc. and United Parcel Service of America Inc.

MyAircraft, created in February, is a joint venture among aerospace suppliers including United Technologies Corp., Honeywell International Inc. and The BFGoodrich Co., as well as software vendor i2 Technologies Inc.

Jim Taiclet, president of aerospace services at Honeywell and co-chairman of MyAircraft, said the new company will help buyers and sellers better manage inventories and resources.

Open Invitation

"We invite and encourage other airlines and the business and general aviation world" to participate, Taiclet said. "[They] can certainly be customers that benefit from the critical mass that we'll be able to put together here."

Ari Bousbib, vice president of corporate strategy and development at Hartford, Conn.-based United Technologies, said the company will earn revenue through subscription and transaction fees.

Both exchanges faced competition from rival groups, including Aeroxchange, which is being created by a team that includes America West Airlines, FedEx Corp., Northwest Airlines Inc. and Oracle Corp.

Harry Wolhandler, an analyst at ActivMedia Research LLC in Peterborough, N.H., said the merger follows similar shakeouts in other sectors. In the automobile industry, Ford Motor Co., General Motors Corp. and DaimlerChrysler AG teamed to develop a single business-to-business exchange called Covisint. And in the construction industry, two of the largest online marketplaces, Bidcom Inc. in San Francisco and Cephren Inc. in Palo Alto, Calif., announced a merger of their own last week. Bidcom and Cephren will form San Francisco-based Citadon Inc. to strengthen their market position.

Such moves represent "a logical rationalization," Wolhandler said. "If there's overlap among both parties, then it becomes very natural."

Shawn Willett, an analyst at Current Analysis Inc. in Sterling, Va., said the joining of the two aviation exchanges "is an inevitable part of the process."

"The value of a marketplace is that everybody is participating in it," Willett said. "It just makes sense that it's going to be hard to have a lot of different marketplaces in this same vertical [industry]."

Copyright © 2000 IDG Communications, Inc.

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