Marketplaces under merger pressure

13 December 2001
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13 December 2001 | David Arminas

The two major airline online marketplaces could come under pressure to merge after e-procurement heads from nine major carriers agreed on the need for a single software standard for Internet trading.

The possibility emerged at a private meeting in Amsterdam involving airlines from three continents belonging to both marketplaces.

The meeting, arranged by Dutch carrier KLM, was the first time e-procurement leaders from the airlines had sat down to exchange experiences of online trading. KLM and four other of the nine airlines - Cathay Pacific, Scandinavian, Lufthansa and Northwest Airlines - are members of the Dallas-based online marketplace Aeroxchange, set up last October.

The other four airlines - Iberia, Air France, Delta and British Airways - belong to Cordiem, set up in July.

Speaking exclusively to SM, Jim Abery, vice-president business-to-business supply chain at consultancy Cap Gemini Ernst & Young, one of the meeting's sponsors along with PricewaterhouseCoopers, Compendium, Healy Hudson and MyFactory.com, said: "There are two possible outcomes. The first is that one exchange will become more successful and shareholders in its rival will abandon their operation to work with them.

"The second possibility is that all shareholders in both exchanges will decide they would be better off putting their money into one exchange."

Angelica Jarnaker, e-sourcing manager at KLM, told SM that many airlines believed their suppliers were more willing to do business online than a year ago, but many were worried about the cost of buying several software systems to be able to do business with each airline.

"I don't think a merger is impossible," she said. "In the near future, we could be discussing joint ventures or something along those lines.

"Suppliers are confused and are asking if all the airlines are finally going for the Aeroxchange marketplace and will use the Oracle platform for content management. Or maybe it be the Cordiem marketplace, or possibly it could be a fushion of the two."

KLM, which is already a member of Aeroxchange, is also investing in its own bespoke e-auction platform.

The meeting covered the methodology and strategies of e-procurement, but not supplier prices.

SMdec2001

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