Aviation giants take flight in B2B formation

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Meta Group says although the aircraft business-to-business exchange has a better chance for success than most, online marketplaces face numerous hurdles on the road to prosperity. see commentary

Goliaths in the aviation industry, including British Airways, United Airlines and Honeywell International, Thursday said they will combine their online trading exchanges to form a single venture designed to cut purchasing costs for participating buyers and sellers.

The new venture brings together MyAircraft.com, an existing site led by aerospace manufacturers Honeywell, United Technologies, BFGoodrich and software maker i2 Technologies, with an as-yet-unnamed, airline-led exchange announced in April.

The other exchange, founded by United, American Airlines, Air France, British Airways, Continental Airlines and Delta Air Lines, now also includes Iberia Airlines, SAirGroup and United Parcel Service.

The combined venture will be independently managed, the companies said in a joint statement. Ownership will be shared among the 13 members of the airline-backed exchange and MyAircraft.

The exchange--or online, business-to-business marketplace--will build upon the efforts of both sites with the goal of giving participants a neutral exchange that serves the entire aviation industry. It will sell everything from fuel services, engine components and airframes to maintenance and catering services.

Meanwhile, another large aviation marketplace, launched earlier this year, unites Boeing, Lockheed Martin, Raytheon and British Aerospace (now known as BAE Systems). It has the potential to become a dominating force in the sector based on the sheer size of its founders.

Aviation players are matching steps taken by companies in other industries, from automotive to construction to retail, which have adopted similar strategies to trim the costs of purchasing supplies by moving the process to the Web.

Trading exchanges have become popular among businesses eyeing the possibility of lowering the costs and reducing the paperwork typically involved in purchasing goods.

Software companies such as i2, Ariba, Commerce One, Oracle and SAP have been aggressive in the sector, providing the software that automates procurement and connects companies with their suppliers, partners and customers via the Web.

Ariba and i2 will be the technology providers for the newly combined aviation exchange. Dallas-based i2 initially worked on the MyAircraft site, while Mountain View, Calif.-based Ariba was the software provider for the airline-backed exchange.

The new venture, to be named later this year, will be based in the Washington, D.C., area and will begin to offer services during the first quarter of 2001. It will provide buyers and sellers with online catalogs, reverse and forward auctions, inventory and supply-chain management tools, and transaction support features.

The deal is subject to the completion of definitive agreements. Additional terms are not being disclosed.