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“Airline network planning and scheduling represents an estimated $400 million market potential for technology providers. This acquisition enhances Amadeus’s portfolio by making the Sky Suite a permanent part of our Airline Offer Suite, bringing development and expertise closer to Amadeus’s Airline R&D and Offer Management teams, among others, and will ensure more integration with our wider portfolio. Plus, this is a set of solutions that have standalone capabilities and are PSS-agnostic,” says Renzo Vaccari, former SVP Airline Solutions at Optym and now the head of the Amadeus Sky Suite group.
Amadeus has acquired network planning software from its platform partner Optym to better position itself on airline scheduling intelligence.
On-time performance is an area of increasingly intense competition among airlines seeking to differentiate themselves in the eyes of travelers. At the same time, the costs associated with flight delays have become a critical issue that airlines are assiduously attempting to control.
According to Amadeus’ stats, flight delays in the U.S. have cost airlines $28 billion in 2018, while in the Europe the 2018 costs of delays were estimated at €17.6 billion. This situation is expected to escalate as the number of airline passengers continues to rise.
“Airline scheduling is highly complex, with billions of data points and ever-changing external conditions to take into consideration,” an Amadeus representative noted. “For those airlines able to successfully optimize their schedules, the result can mean improved customer satisfaction and an estimated capture of 1-to-3 percent of annual revenue – billions of dollars across the whole industry.”
Amadeus’ Unveils New Product Group
For Amadeus, the ability to compete with Sabre Airlines Solutions’ AirVision suite is key. And that’s part of the impetus behind Amadeus’ decision to acquire Optym’s Sky Suite network planning software.
Financial details of Amadeus’ purchase were not disclosed.
As Amadeus competes more directly in the arena of network planning, the Madrid-based company has created a dedicated unit, the Sky Suite group, to provide a strategic set of services. Optym’s Renzo Vaccari will move over from his post as SVP Airline Solutions to Amadeus to head up the new 90-person unit.
“We are excited to join Amadeus to reinvent the future of airline network planning and scheduling. We believe airlines of all sizes and types, in all regions, can optimize their schedules and increase network profitability with our breakthrough technology,” Vaccari said in a statement.
Vaccari was at Optym for six years. Before that, he worked in several management posts at Sabre Airline Solutions, from 1996 to 2012.
The Sky Suite group will be housed within Amadeus’ Airlines R&D unit, which is run by Christophe Bousquet, the unit’s SVP. Under that umbrella, Amadeus Sky Suite is part of Amadeus’ Airlines Offer Suite of solutions.
A $400M Market Opportunity
Amadeus and Optym began partnering three years ago. As collaborators, Optym’s network provided network planning optimization software to Amadeus for Southwest, easyJet, and LATAM airlines. Optym will continue to operate as a separate entity focused on other areas of business.
“Amadeus and Optym have been partners in network planning and scheduling for three years, and as a result of the success of that partnership, this was a natural strategic next step for both companies,” Vaccari told Kambr Media, when asked about the rationale for an acquisition rather than a continued collaboration between the two companies. “The airline industry is highly competitive with airlines seeking many strategies to improve profitability, and we believe that network planning and optimization is a game-changing opportunity for them.”
In looking at the size and cost of airlines' problem in managing flight delays, Vaccari said there is a significant opportunity for tech companies like Amadeus to capture.
“Airline network planning and scheduling represents an estimated $400 million market potential for technology providers,” Vaccari added. “This acquisition enhances Amadeus’s portfolio by making the Sky Suite a permanent part of our Airline Offer Suite, bringing development and expertise closer to Amadeus’s Airline R&D and Offer Management teams, among others, and will ensure more integration with our wider portfolio. Plus, this is a set of solutions that have standalone capabilities and are PSS-agnostic.”
The acquisition of Optym’s software is one of Amadeus’ most notable purchases since it paid $830 million for Navitaire, a provider of airline and high-speed rail technology solutions that was owned by Accenture, in Jan. 2016. Elsewhere, Amadeus Ventures, the company’s investment arm, has invested in a series of tech properties, such as Flyr, which provides airline revenue management and the promotion of dynamic pricing, and Volantio, a startup focused on helping airlines manage overbooking.
In a wider sense, Amadeus’ acquisition and investment activity reflect the findings of Phocuswright's 10th annual State of Startups Report, which pointed to a 55 percent rise ($5.7 billion) in financings in the space from. 2018 to 2019.
That $5.7 billion number comprises roughly a third of the $19.7 billion that has been raised by travel tech brands over the last decade, the Phocuswright report stated.
The drive behind all this investment is simple: air travel is expanding globally; legacy airline legacy systems are racing to enhance their existing platforms by either acquiring or striking lucrative alliances with travel tech startups; the more valued data and analytics models these startups provide are easily scalable.
What specifically draws Amadeus’ multifaceted investments together is a timely emphasis on better predictive modeling for commercial aviation.
“We believe that better airline network planning presents significant opportunity for airlines to drive more profit and reliability. Today’s systems only scratch the surface of what is possible,” Bousquet said in a statement. “This acquisition accelerates our vision of offering a modern, next-generation airline network planning system. We are focused on more fully integrating this solution in the airline ecosystem and operating it at scale, building on the momentum of Amadeus and Optym’s strong, multi-year partnership.”
