Amadeus

Clay Smolinksi, portfolio manager of the Platinum European Fund, takes a brief look at how Amadeus became the dominant air ticket global distribution system by investing in and developing advanced software systems.

Amadeus has a stellar history within its industry; founded in 1987 by Lufthansa, Air France and Iberia it has grown from being the smallest air-ticket global distribution system (GDS) to now being the world leader with dominant market share in every country outside of the US.

The most interesting part of its business is its Altea software suite which allows airlines to outsource their IT functions around ticketing, inventory control and departure management to Amadeus. The IT complexity driven by airline alliances and the unbundling of airline ticket prices to include ancillary fees  (checked bags etc), has stretched the capability of the airlines legacy in-house IT systems and fuelled the impetus to outsource.

Spotting this trend early, Amadeus has spent the last 15 years developing its Altea software, slowly building reference customers with British Airways, the first to convert in 1999, and Qantas following suit a few years later. The trickle of customers has now turned into a flood. Amadeus has signed up 110 airlines to implement Altea and the steady migration of customers onto the system over the next couple of years will ensure strong growth going forward.

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