Thirteen of the world`s major airlines today
announced the creation of the airline industry`s largest business-to-business
e-commerce exchange. The exchange, to be officially launched in the next few
months as Aeroxchange, will offer the most comprehensive selection of aircraft
technical parts and services as well as general business supplies to airlines
on the web. The group of airlines has selected and is in negotiation of a
definitive agreement with Oracle Corp. of Redwood Shores, California, to
become the exchange`s technology provider.
First announced in April 2000, the multi-airline venture has grown
rapidly to count ten of the world`s largest airlines as founding members, each
with one representative on Aeroxchange`s Board of Directors. The ten are: Air
Canada, All Nippon Airways (ANA), America West Airlines, Cathay Pacific
Airways, FedEx Express, Japan Airlines, Lufthansa German Airlines, Northwest
Airlines, Scandinavian Airlines System (SAS) and Singapore Airlines. Other
confirmed participating airlines with equity participation include Air New
Zealand, Austrian Airlines and KLM Royal Dutch Airlines.
With founding member airlines in Asia-Pacific, North America and Europe
representing passenger and cargo operations, the new exchange is global in
scope. It is estimated the exchange will handle more than USD $45 billion
annually of the current 13 airlines` purchases of goods and services,
excluding aircraft and fuel.
Air Canada has taken the initiative in establishing Aeroxchange,
recruiting the founding member airlines and concluding the relevant
arrangements with Oracle as the technology provider. ``The creation of
Aeroxchange, in collaboration with many of the world`s major airlines,
underscores Air Canada`s e-commerce commitment and ability to develop
opportunities in the new economy, where the first mover advantage translates
into increased shareholder value,`` said Calin Rovinescu, Executive Vice
President, Corporate Development & Strategy of Air Canada.
``E-procurement is a key ingredient of our on-going business plan as our
aggregate purchasing of goods and services, including fuel, exceeds CAD $2
billion annually following our acquisition of Canadian Airlines. We expect
e-procurement to transform our entire supply base and cost structure, and we
have a very high expectation of our return on investment from our
participation in the Internet exchange.``
``We look forward to realizing substantial cost savings at Air Canada
through lower transaction, processing and inventory costs. We expect to save
CAD $15 million annually on purchases as varied as engine parts to catering
contracts,`` concluded Rovinescu.
Initial development will focus on Internet procurement capabilities
resulting in streamlined and enhanced processes for greater efficiency,
providing both airlines and suppliers with the benefits associated with lower
transaction, processing and inventory costs. Lowering the total cost of
ownership throughout the supply chain will create significant value for all
participants. Later development stages will include supply chain management
features such as improved inventory control and production planning.
Examples of items that will be traded through Aeroxchange include
airframe, avionics and engine components and maintenance services as well as a
wide range of airline specific goods and services. In addition to the
founding members, all airlines, other industry related companies and their
suppliers will be invited to use the services of the exchange.