Worldspan to Enter China`s Closed Market in Deal With Online Travel Group

30th Mar 2001

Worldspan, the smallest of the four global computer-reservation systems, will get a jump on its bigger competitors in entering China`s closed market by linking up with a Chinese e-commerce business-travel company.
Guangzhou-based Holdings Ltd. is part-owned by China Southern Airlines (ZNH), the mainland`s biggest airline, and provides online travel services to about 200 companies, mostly in southern China.
Under an agreement to be announced Thursday, Worldspan will provide $10 million in capital and technology support to, according to a person familiar with the matter. The support will include providing the Worldspan Trip Manager application to`s clients on an exclusive basis for use in international bookings.`s clients include branches of Procter & Gamble Co., Siemens AG, Nokia Corp. and Hewlett-Packard Co. Monthly revenues have reached about 10 million yuan ($1.2 million), according to founder and chief executive Matthew Ng.
Computer reservation systems, or CRS, are used by travel agents to book flights and other travel services. China`s CRS market is already the third- largest in the world, behind the U.S. and Japan, according to David Brett, Asia- Pacific vice president of Worldspan rival Amadeus Global Travel Distribution SA. But Chinese regulations protect a homegrown CRS called TravelSky, allowing foreign CRS to be used primarily just for direct ticketing by foreign airlines.
and Texas-based Sabre
Holdings Corp. each bought 2.2% stakes in TravelSky
Technology Ltd. during its initial public offering last month in Hong Kong, receiving just a promise from TravelSky to discuss ways to cooperate on application development.
Worldspan, which is owned by Trans World Airlines (TWAIQ), Delta Air Lines ( DAL) and Northwest Airlines (NWAC), has been making up for its weak position in the traditional CRS market in the U.S. through tie-ups to provide support to Web sites such as Priceline, Expedia and Orbitz.
Paul J. Blackney, Worldspan`s president and chief executive, said those links mean that a majority of travel transactions over the Web are now made via Worldspan. Worldspan is also providing technology to, a travel site launched last year in Singapore and Hong Kong.
Worldspan is taking the same path in China. `This is the perfect strategy for attacking the Chinese market,` Mr. Blackney said, adding that the toehold will help position Worldspan to take advantage of any future market opening.
Worldspan has had little presence in Asia since a fallout in 1998 with Abacus International Pte Ltd., a CRS owned by 11 airlines in the region. Abacus had previously based its network on Worldspan`s system, but switched to Sabre`s. International arbitrators awarded Worldspan a judgment of more than $40 million against Abacus for breach of contract and misuse of proprietary information last year. Today just 175 travel agencies in the region have Worldspan terminals.
Hong Kong-based i-Cable Communications Ltd. also recently invested in Et-, according to Mr. Ng, the founder. He said a travel agency affiliate of i-Cable has been providing services in Hong Kong for transiting Chinese travelers.`s management holds a 70% stake in the company.


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