Accelya, an airline services tech company, has agreed to buy Farelogix, an airline technology vendor.
The companies didn’t reveal deal terms, or the price that asset manager Sandler Capital Management accepted for selling its ownership stake.
Accelya, based in Barcelona, booked about $200 million in revenue last year, mostly for services to airlines. It provides financial, commercial, and analytics tools to more than 200 carriers. Farelogix, which helps about 25 airlines including American Airlines and Lufthansa sell and distribute plane tickets and related products, made $42 million in revenue in 2018, the last year it revealed a figure.
Travel technology company Sabre had attempted to buy Farelogix for $360 million but the UK Competition and Markets Authority blocked the deal in April, alleging antitrust issues. Sabre gave up its pursuit later that month, as the transaction became one of several deals fallen victim to the pandemic’s hit to travel sector revenues.
VISTA’S LONG-TERM BET ON AIRLINE TECH
Vista, a private equity firm, bought Accelya in November 2019. It is also financing the Farelogix deal.
“Vista has made a super-long investment in Accelya, and now in Farelogix’s tech,” said CEO of Accelya John Johnston. “We have a sizable war chest.”
“Vista’s primary objective is to grow over the long-term,” said Farelogix CEO Jim Davidson. “That’s a very different prospect from what’s true with other [private equity] funds. I think that’s going to resonate extremely well with our customers and the industry at large.”
LONG-TERM VISION
Accelya has a revenue management system that helps airlines decide what fares to charge by the seat according to supply and demand signals. It competes in that market with solutions from PROS (Pricing and Revenue Optimization Solutions), a cloud software company, and from the in-house tech that airlines have built.
Accelya wants to use Farelogix’s tech to reinvent its revenue management system. The revamped system would encompass the dynamic pricing and bundling of ancillaries, such as packaging a seat upgrade and free checked luggage with a ticket.
One of Accelya’s most-used services focuses on financial billing, reconciliation, and settlement of transactions.
“If you start doing dynamic bundling and pricing of products, those products may all be paid for at the booking, but they’ll be consumed at different points in the journey and different tax jurisdictions,” Johnston said. “So it opens up a nightmare from an accounting perspective, and solving that is the bread-and-butter of Accelya.”
The company now wants to build “an order accounting module” that simplifies the complexity of tax reconciliation for individual products and services.
Accelya also wants to build and release more sophisticated refund management tools using Farelogix’s tech though those tools may not appear until next year.
QUICK DEAL
Accelya began talks to get Farelogix five weeks ago, shortly after Sabre gave up its pursuit. It believes it can close its transaction within the next few months.
Most of Accelya’s and Farelogix’s services work with passenger service systems offered by Amadeus, Sabre, and TravelSky.
If the transaction closes at a timely pace, Accelya expects to have its systems integrated with Farelogix’s by year-end.
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