Farelogix remains once again at the forefront of the travel scene. On May 1, 2020, the UK regulators blocked Sabre’s purchase of the Florida-based airline technology vendor on grounds it was anticompetitive. The UK’s Competition and Markets Authority (CMA) questioned Sabre’s rationale for acquiring a smaller competitor, which involved targeting similar clients. The merger deal, initiated in 2018 and which valued Farelogix at around $360 million, would have possibly enabled the Texas-based travel technology firm, established as a major global distribution system (GDS), to accelerate its New Distribution Capability (NDC) projects, and potentially increase competition with its main rivals, while excluding a key disruptive player in the airline industry.
Less than two months after the cancellation of the Farelogix-Sabre merger deal, Accelya, the airline IT specialist, grabbed the opportunity and unexpectedly announced it has entered into a definitive agreement to acquire the Farelogix business, which enables airlines to connect directly to travel agent, control and enhance their product offerings. A private equity-backed company, Accelya is a leading provider of Revenue Accounting and payments solutions in the travel space.
With the acquisition of the airline content aggregator, also well-known for its NDC-enabled airline distribution system, Accelya expects to “accelerate its vision to provide a next-generation, end-to-end platform for its existing and new airline customers”. With its 2,800 employees, the Spanish firm serves more than 350 airlines globally including British Airways, Lufthansa and EasyJet, and manages 5 billion financial transactions annually. It offers financial (with an end to end portfolio of payment solutions, from processing to reconciliation and chargeback management), commercial, industry and air cargo tools. In 2017, Warburg Pincus, a private equity owner, bought Accelya from Chequers Capital to merge it with Mercator, a Dubai-based provider of software and technology solutions to the aviation industry. At the time, Warburg Pincus’ move could have paved the way for Mercator/Accelya to become a key player in the GDS sector.
At the end of 2019, Accelya was acquired, this time by Vista Equity Partners Perennial, an investment firm focusing on enterprise software, data and technology-enabled businesses. Since the ownership change, Accelya’s aim has been to expand its services to airlines at a fast pace, for instance by increasing its role as a payment gateway and by partnering with MasterCard Payment Gateway Services. By contrast, Farelogix has 300 employees and provides services primarily to 25 airlines, such as American Airlines, Hawaiian Airlines, Air Canada and Lufthansa. The firm is globally perceived as a pioneer in the development of both an NDC API for airline connectivity - which is actually the foundation of the NDC schema, in development since 2012 by the International Air Transport Association (IATA) - and the merchandising and pricing engine, controlled by airlines.
The synergies between Accelya’s robust back-office and Farelogix’ advanced ‘NDC-proof’ technology capabilities, might enable the new firm to offer innovative solutions. Farelogix could manage to bring its technology for NDC improved dynamic and personalised offer and order management, while Accelya would facilitate the transaction settlement and accounting aspects. Accelya´s financial systems would also allow for traditional transactions to ‘co-exist’ with NDC One Order compliant transactions, meaning that airlines would be able to roll out new retailing capabilities at their own pace, with little disruption. Together, the two companies could allow merchants such as airlines to increase their revenues and decrease their costs by differentiating their products and services and presenting their products to travellers in an attractive manner through Travel Agents. In addition, they could lower their distribution costs while simplifying their revenue management system, with limited overlap and a GDS agnostic solution. Given Accelya’s larger footprint, this merger might also allow Farelogix to offer services to an increasing number of airlines.
Some airlines planning to grow their NDC volumes rapidly have joined a group led by IATA and set the goal to have at least 20% of their sales powered by an NDC API by 2020. Direct sales via NDC were expected to experiment a robust progression and approach maturity during 2020 prior to COVID-19. However, will this crisis push airlines to accelerate the development of their NDC strategy? EDC believes that they would possibly explore alternative distribution and payment models and therefore NDC could be a significant part of that approach. They might consider the Accelya/Farelogix offerings, amongst others, to help support their recovery. In addition, it will be relevant for all industry stakeholders to ensure that their payment processes work efficiently for NDC transactions via cards and Alternative Forms of Payments (AFOPs), to promote widespread adoption.
In the meantime, the acquisition is still pending regulatory approval but is expected to be concluded before the end of this summer.
Sources: EDC knowledge, Accelya, Farelogix, IATA
 Vista’s Perennial Fund is the firm’s permanent capital investment fund. The Perennial strategy is differentiated by its permanent capital structure, which allows it to engage in value creation opportunities and provide capital and expertise to accelerate company success over decades, rather than years
 In 2016, IATA and EDC fleshed out the “payment” piece of NDC and jointly envisioned a future state for NDC payments; you can access the documents in the public domain by clicking on this link: https://bit.ly/31niqCl
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