We live in a world where air transportation can take us anywhere. From the initial ticketing to the airport counter, then through the gates and onto the plane, do we really think about how we got from one place to another? For many of us, this is just a matter of routine. For those in the travel and airline industry, this is a matter of checks and balances, and it factors into the cost of business. Most airlines use computer reservation systems and global travel distribution software to track our travel arrangements from ticket-purchase to landing.
Essentially, computer reservation systems and global travel distribution systems are partially or completely owned and hosted by a few large airlines. Smaller airlines who use these facilities are essentially storing their information on the hosted system of a competitor who charges significant user fees while accumulating proprietary and confidential information about the guest airline and its clientele. This means that the entire database of a guest airline’s routes, schedules, statistics and other sensitive data are completely available to the competing host airline. There are approximately ten large airlines with their own systems, which host the other 990 regional mid-size and small airlines. However companies like Ultitek are hoping to change that, and believe that they have a product which will provide these small-to-medium-sized airlines with a state-of-the-art system that is efficient, less costly, and allows them to retain their proprietary information.
Ultitek operates an independent airline reservation software, known as the ULTITEK System, which consists of the following components: the Computer Reservations System, which is the module primarily designed to maintain seat inventory for airlines and assist travel agencies in booking seats and other travel; the Global Distribution System, which is designed to disseminate flight schedules, seating availability, and pricing information electronically to customers; the Airline Operations System, which allows a subscriber airline to manage every aspect of the airline’s operations; and the Departure Control System, which controls passenger registration and identification, boarding passes and seating assignments.
The Ultitek System is based on multi-tier client server technology, which is far ahead of the mainframe-based technology of its competitors and can handle more passengers than any other airline information system. Customers have the option of acquiring and operating their own system, or having their system hosted by Ultitek at three globally distributed data centers. The company will also provide hot back up and disaster recovery services for customers who operate their own data centers. The Ultitek System is currently accredited by the International Air Transport Association and initially will be available in English and Russian. Future modules will include French, German, Spanish, and other languages.
The company generates revenue through the licensing of its Ultitek System to subscriber airlines, and through its support facilities, maintenance fees, and consulting agreements for hosted systems. The company currently has approximately 24 licensing agreements with reservation centers throughout the former Soviet Union, servicing 62 airlines and over 5,000 travel agents. Ultitek also licenses its software directly to three airlines in the former Soviet Union, and these agreements include providing support services to licensed users on a time and material basis.
Ultitek operates in a highly competitive market. Waves of code-sharing agreements (which allow carriers to book each other’s seats), and powerful scheduling and marketing pacts between top airlines have led to a wide open market for Computerized Reservation Systems and Global Distribution Systems. Some of the industry’s major participants, who wield tremendous control in the airline and travel industry, include Sabre Holdings – formerly owned by American Airlines Holdings and spun off as a separate company.
Sabre holds a major share of the travel reservations industry and handles more than 400 million bookings each year. Travel agencies and corporate travel departments use Sabre to book airline tickets and make rental car as well as hotel reservations. Individual consumers can use Sabre’s Travelocity web site to make similar arrangements. Other competitors include Galileo, which operates one of the world’s largest computerized travel reservations systems, and Amadeus, one of the largest Global Distribution System companies in the world. A final competitor is Worldspan, owned by affiliates of Delta Air Lines, Inc. (NYSE:DAL).
Ultitek plans to capitalize on the need for independently owned reservations systems by providing the smaller and medium size airlines with a complete turnkey solution. This solution will encompass the Computerized Reservation System, Global Distribution System, Airline Operations System and Departure Control System requirements of airlines. This will give airlines without the resources the ability to fund their own information technology, an alternative to competitor hosting of their proprietary information, and free them from the need to subscribe to agencies like Sabre, Galileo, and Worldspan as well.
Because the travel business is so fiercely competitive, Ultitek Ltd. has a huge task in front of it. If the Company can demonstrate that its product resolves the critical logistics issues faced by small and mid-sized airlines, Ultitek may rise to a position of prominence in the industry. It is certainly a company, and stock, worth watching.
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