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Worldspan’s purse tightens

February 20, 2004 |

Worldspan planned a new, $100 million headquarters building. Hard times in the travel industry made such a project a bit too extravagant.

Travel agencies — once the prime customers of Worldspan and its rivals — are shrinking in number and retooling in the wake of airline moves to wipe out commissions.

Competition from Internet fares, meanwhile, has given airlines more power in negotiating fees, because customers now can bypass travel agencies, said Jake Fuller, a stock analyst who covers Worldspan competitor Sabre Holdings for Thomas Weisel Partners in New York.

“The airlines are using that leverage to drive [processing fees] down. All of the airlines have signed long-term contracts at discount rates,” he said.

Worldspan has adjusted by emphasizing work for online travel sites. The company says it handled 60 percent of online travel agency bookings in 2002. Last fall it was in danger of losing Orbitz.com, but the two companies patched up what was described as a service dispute.

Despite growth online, total bookings and revenue growth have flattened, though the company has remained profitable, according to a regulatory filing related to the buyout.

Get the full story at ajc.com

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