Campbell: Has ITA "de-emphasized" the distribution side of reservations technology in favor of the airline internal reservations side?

Wertheimer: That's interpretation. The fact is, we have been working on an airline res system for a long time. There is a lot of shared code between an airline res system and global distribution system. All the code to create bookings and tickets, and do refunds and exchanges--all that technology is completely shared between an airline res system and a GDS. So, we have been building this core for a number of years. What's in an airline host system is what's in a GDS plus a couple pieces: upstream, you have the inventory system module which decides what you're offering (the schedule) and tells the GDS or the internal res system; downstream are all the airport systems typically called departure control systems. Those systems are used for check in, bag tags, gate processing, wait lists, re-accommodation. We're working on all three systems: shopping, distribution and an airline host system. [Regarding the article], you can take "de-emphasize" in two ways; you can take it in absolute terms or in relative terms. More people are working on the airline host system than on the distribution system, but there still are people working on the distribution system. We have something like 20 or 25 working just on 1U, and then some of the 75 who are working on the airline res system also are working on shared projects with 1U.

Campbell: So, the main product remains the QPX pricing and shopping product?

Wertheimer: QPX is certainly the biggest piece of the business.

Campbell: And is airline hosting number two?

Wertheimer: In terms of personnel, it is. We're not getting revenue from it at the moment. So, on the business side, it's not number two--but it is expected to be.

Campbell: Back in September 2004, The Beat published a story about ITA Software getting into competition with the GDSs, a month after G2 SwitchWorks made itself public for basically the same initiative. We quoted ITA as saying it would have an alternative GDS ready by the end of that year.

Wertheimer: Which we did ... there was the meeting at United in January of 2005, and we were showing off the system then.

Campbell: I think a lot of people in the marketplace are thinking it's still not ready. Why is that?

Wertheimer: I guess the question is, "What's ready?" I think it was in August of '04 when a bunch of airlines asked us about the host system we were building, and whether we could take the part that overlaps with the GDS ahead of finishing the whole host system. We said, "Sure, and it would probably be six months." I think we made that deadline. Now, there's a lot of [difference in] functionality between a basic system and ... a complicated, fully functional system with car, hotel and cruise, etc. Our view was always that it would take a couple years to build all that functionality. So, what we have been doing over the last 18 months is continuing to add functionality, to handle, for example, partial exchanges, back-office integration, PCI [Payment Card Industry data standard] compliance. We have been doing releases all along the way, adding functionality. We've been working with a small but dedicated set of travel agencies.

Campbell: Part of what seems to have happened was that ITA was dragged into the public discussion. You mentioned United, and it seems like Derek Lewitton [then with United, now with ITA] was part of that pressure to announce your [GDS] intentions because the airlines were approaching their GDS negotiations, so it was helpful to them to show an alternative. 

Wertheimer: No question.

Campbell: So, this question from the marketplace about "Where is it?" is because it was over-hyped?

Wertheimer: That's correct, and the extent to which I was out there, say back in January of last year with United ... Sundar Narasimhan from ITA, who is running engineering efforts for us, and I were both trying to be very cautious: "Yep, here are the first steps, and we'll build over time, and in a couple years there will be a system that does everything your old one does and more." It's kind of hard when a bunch of folks are out there for a bunch of reasons saying, "That's it, Sabre is dead tomorrow." We were kind of like, "Well, there are a lot of buttons on the Sabre set ..." We're very patient. Shopping took ten years, and res will take five years from start to getting a system out. It will be next year before it all is running. We were able to get the initial pieces of it out within six months, but it now has a a lot more functionality and it will have more in 12 months. From an engineering perspective, we don't expect to deploy a big system overnight. We always set up the company to take on big projects, which is why we did a big funding this year, to take on more of them. We have hired over 100 people this year.

Campbell: We heard there was a lot of internal debate at ITA about whether to get into the GDS business, how and whether to announce it, etc. Is everyone on the same page now?

Wertheimer: Yeah, I think everyone has been on the same page for a while. I don't think anyone disagrees that it's worth building out these systems. The knobs you have are the rate at which you apply resource. No one is advocating we should put 100 people on it; no one is saying we should put nobody on it. That 75 number was much smaller even 6 months ago, so we've been ramping up quickly. Now it's pretty close to the right number--maybe we will go to 100--so that allows us to apply more resources to the other projects.

Campbell: So the airline hosting development had started before the GDS development?

Wertheimer: We started building the core system in, I guess, 2003, pretty much right after we finished international shopping. For the reservation part, more than 90 percent of the code is overlap.

Campbell: How close are you to implementing or converting Air Canada's res system, and what are they using now?

Wertheimer: We're basically looking at deployments over 2007. They have an internal system that IBM runs.