The day after Sabre announced their purchase of the PRISM-Group, fund manager and author, @JamesGRickards tweeted, “Difference in traders& economists is traders are not in a ceteris paribus world.” That’s true for Sabre too. Scott Gillespie shared his views in the Beat earlier this week, so I’ll take a different direction.
Sabre will add PRISM to their product suite as part of Sabre’s Airline Solutions portfolio. This makes sense since PRISM is the de facto standard in airline sales reporting and Sabre’s current offerings include many go-to products for airlines and airports. The combination creates two challenges that didn’t exist before so it will be interesting to watch how Sabre reacts to these.
First, PRISM offers a unique, stand-alone software tool that drives premium ‘value’ pricing from airline customers. The tool is still fantastic and incredibly powerful, but there’s a risk their premium will be sprayed across a product buffet as PRISM is absorbed by Sabre’s Airline Solutions group. Many acquisitions have generated this kind of problem, so I trust it’s well-traveled ground Sabre has a solid plan for – and frankly, PRISM gives Sabre more power when it comes to GDS negotiations.
The second issue might be more surprising. As an independent company, PRISM’s data relies on free reports from corporations’ Travel Agencies. PRISM’s customers, Airlines, require their corporate customers’ Agencies of Record to provide reporting to PRISM. Data management and reporting is integral to Travel Management Companies (TMC’s) daily activities and is a necessary component of their client offerings. However, PRISM reports feed airline systems, not TMC’s client reports and PRISM has driven costs up for the TMC’s. Since there wasn’t a good way to push the reporting cost back to the corporate customer it has just been an accepted cost of doing business. Until now. Many travel agencies are also Sabre customers, and PRISM, and specifically the recurring costs associated with preparing PRISM reports, will now be part of the conversation.
This is a great match between two solid companies – it will be interesting to track the side-effects.
Paul Laherty is passionate about Travel Management. Paul has led the Americas Air and Hotel consulting teams at Advito, BCD’s travel management consulting company. Prior to Advito he managed teams in Sales, Marketing and Finance at American Airlines. Paul’s work at AA included supervising the global corporate contract team, working closely with large customers in Global Sales, and he managed the Los Angeles sales team where he met some very well-known customers. He also has extensive experience in loyalty marketing, both business-to-business, and consumer. Paul managed American’s business loyalty program and he launched a loyalty credit card with American Express. He enjoys applying original research (he calls it Phynancial Fisics) to solve problems. Paul lives in Southlake, Texas with his wife and two daughters and flies a Cherokee 140 as often as time allows. He is active on Linkedin where you can view his detailed profile here: http://www.linkedin.com/in/paullaherty, follow him on twitter @Paul_Laherty or send questions to firstname.lastname@example.org.