Delta to change core technology

Mainframe-to-Unix move aimed at extending ability to compete online

Uncoupling much of its business from the legacy systems that helped take it aloft, Delta Air Lines Inc. is migrating its internal fare-searching and ticket-pricing functions over to Web-friendly software.

The move comes as the airline industry scrambles to update its IT systems to handle the competitive pressures created by the Internet.

Vince Caminiti, the vice president of e-commerce at Atlanta-based Delta, said he expects the new search engine to help the airline calculate lower fares and handle the increasing amount of business transacted over the Internet. The new engine was developed by ITA Software Inc. in Cambridge, Mass.

"We need to do this to take full advantage of the Web as a distribution channel," Caminiti said.

Delta's in-house fare searching engine, called Deltamatic, was built in the late 1960s and was designed to pump orders through a transaction-processing facility mainframe. In September, the airline signed a deal for an undisclosed amount to put ITA's pricing and reservations software on a farm of Hewlett-Packard Co. Unix servers, which will allow the TPF mainframe to focus on transactions. The system is currently under construction; Delta didn't reveal when it will become operational.

ITA had earlier supplied the booking engine for the soon-to-be-launched online travel site Orbitz. Delta is one of the five partner airline owners of that site.

"We saw what they could do for Orbitz, in terms of finding low fares and handling all of this online demand, and we thought, 'Why not bring that in-house?' " Caminiti said. "The challenge of e-commerce is finding ways to improve the things you've always done to do them better."

Internet-based sales have created a particular problem inside the travel arena. While many dot-com businesses have failed, travel sites are booming as consumers purchase increasingly greater numbers of airline tickets and hotel rooms online.

Henry Harteveldt, a senior analyst at Forrester Research Inc. in Cambridge, Mass., estimates that online travel sales will rise 38% this year, from $12.2 billion to $16.7 billion.

"Yet the problem for the airlines is not the ticketing; it's the messaging hits for the prices," he said.

Third-party online distribution channels perform roughly 10 fare searches for every purchase they make, which puts tremendous stress on the airlines to push out real-time data and the lowest available prices.

David Beitel, vice president of product development at online travel agency Expedia Inc. in Bellevue, Wash., pointed out that archaic airline reservations systems weren't constructed with messaging in mind. He said no airline has yet figured out how to supply that information in 100% real time.

He noted that computer reservations systems like Worldspan LP and Sabre Inc. cache availability and often push that out to online channels.

"Then you get into how long can you trust that information that you cached," Beitel said.

In March, Dallas-based Southwest Airlines Co. and Fort Worth, Texas-based online travel agency Travelocity.com Inc. mutually agreed not to sell Southwest's tickets over that channel because the two parties couldn't come to an agreement on how to supply live availability information to Travelocity customers.

Last month, Fort Worth-based AMR Corp.'s American Airlines Inc. subsidiary reabsorbed 250 IT workers that had stayed with Sabre when American spun it off to help tackle this very problem.

"External demand is something we're very concerned about and very keen about," said American Airlines CIO Monte Ford. "We have to figure out where this demand is going and get there before it happens."

United Air Lines Inc., a subsidiary of Elk Grove Township, Ill.-based UAL Corp., is also trying to solve the problem.

"Every time a request comes across, it slows the system, and the number of requests are growing daily," said Scott Garner, managing director at United NetVentures, which coordinates United's e-commerce initiatives.

"It's a matter of constantly upgrading our traditional yield-management systems, which were created for an off-line world."

Jeremy Wertheimer, president and CEO of ITA, said retrofitting his software to operate in conjunction with an airline's legacy systems proved every bit as challenging as building a brand-new system for Orbitz.

"You have to get around organizational traditions," he said. "It wasn't so much any one requirement that caused a problem as the sheer number of requirements you have to meet."

Last year, former Delta CIO Charles Feld called the Deltamatic reservation system "our heart and lungs." But Caminiti said the time is right to perform major surgery on those core systems.

"Our customers want more information and better options," he said. "This is what we need to do to deliver it to them. You have to be willing to make deep changes in order to make e-commerce work for your company."

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