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BEA inks frequent-flier pact with airlines

The Java server software company signs a deal with the airline consortium Star Alliance to give 15 companies volume discounts on software.

Java server software company BEA Systems on Tuesday announced that it has signed on a five-year deal with an airline consortium, the first multicompany volume licensing deal for BEA.

The arrangement with the Star Alliance--a partnership of 15 airlines, including United Airlines, Lufthansa and Singapore Airlines--will give members a discount on BEA's Java server software and development tools. The deal also calls for BEA's WebLogic application server and WebLogic Integration software to be the preferred Java server products for the member companies.

The arrangement is the latest volley between BEA and IBM, which are battling for the top spot in the multibillion-dollar market for Java-based software infrastructure. IBM and BEA dominate the Java application server market, collectively holding more than 65 percent of all revenue in 2002, according to research firm Gartner Dataquest.

"This is a market-share move for BEA," said Mark Carges, BEA's executive vice president of global accounts. "The Star Alliance is a huge market in and of itself."

BEA already has sales relationships with seven of the 15 member companies, which collectively have $70 billion in revenue. The deal provides an opening into the other Star Alliance companies and bolsters the company's position in the transportation industry, Carges said.

IBM is also sharpening its industry-specific sales focus. The company is undergoing a sales reorganization to train more than half its sales people in technical and industry expertise by the end of the year.

BEA and Star Alliance have structured the deal so that the more member companies purchase, the greater the discount. BEA is able to reduce software prices because the multicompany arrangement lowers the overall cost of selling to airlines, Carges said.

Participation in the volume purchasing arrangement is voluntary, but Carges expects that member companies will feel "peer pressure" to adopt BEA software because of the discounts and the benefits of simpler software integration among the member companies.

Star Alliance has already established joint-purchasing mechanisms in other areas, such as aircraft and fuel. In December, the group created a venture to buy fuel in bulk for member companies.