Distribution: Airlines Explore Web-Based Booking EnginesDistribution: Airlines Explore Web-Based Booking Engines

When United Airlines assembled its biggest business and travel-agency clients in January to introduce them to some up-and-coming travel-technology providers, it hoped to build momentum for a new wave of distribution alternatives it believes can make the process of selling airline tickets cheaper and easier. But while executives across the industry say big changes on the distribution landscape are overdue, they're not ready to write off the global distribution systems that have served them well for decades.

"We will not move to any new model because there's a benefit just to the supplier," says Michael Qualantone, VP of global distribution for American Express Business Travel. "We can't have a cost transference where the airlines save money at the expense of agencies and customers."

Qualantone declined to say whether American Express participated in the United meeting, but he did say he's not convinced that the technologies United is pushing from companies like Farelogix, G2 SwitchWorks, and ITA Software are ready to satisfy American Express' needs. All the new technologies are Web-based booking engines, whereas the global distribution systems still depend heavily on less-flexible mainframe technology. But until they can match the content offered by Sabre Travel Network and Cendant Corp.'s Galileo, which each carry fares for 500 carriers, American Express isn't about to make a change.

Change may come sooner rather than later. Earlier this month, both Farelogix and G2 said they received significant rounds of funding that should provide them with the cash to continue expanding their distribution footprints. Farelogix received $6 million in funding from Sandler Capital Management, while G2 garnered undisclosed investments from IT venture firm Norwest Venture Partners and travel-industry investor Texas Pacific Group.

American Airlines isn't holding any meetings with business and agency clients to plug the upstart distributors, but CIO Monte Ford says the world's biggest carrier is looking into ways that Farelogix, G2, and ITA can help it get distribution costs under control. Likewise, American is having similar conversations with the global distribution systems. "They seem to be as engaged as we are in figuring how to distribute our product better and to lower our costs," Ford says. American's goal isn't to switch one distribution channel for another, but rather to get costs sufficiently under control so it can add channels such as options from the up-and-comers.

United says its efforts to get agencies and businesses to look at alternatives to the global distribution systems isn't about leaving the latter behind. "If their future role includes ways that can help United lower our distribution costs, we're here to listen," Derek Lewitton, United's director of distribution strategy, says in an E-mail. "Regardless of what type of industry you're in, to not explore the savings that comes with next-generation technology over legacy technology is completely irresponsible."

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