ChinaTravelNews, Nicole Sy - It isn’t often that two companies are on the same page when it comes to mergers and acquisitions, especially when the success rate of those in the industry isn’t so great. Their very merger is the topic of the CEO talk featuring Kieron Branagan, CEO of OpenJaw Technologies and Larry Liang, General Manager of Airline Business Department, TravelSky, at high noon on the first day of the TravelDaily Airline Distribution Conference.
From left to right: Karen Zhang, Vice President, China OAG; Larry Liang, General Manager of Airline Business Department, TravelSky; Kieron Branagan, CEO of OpenJaw Technologies
OpenJaw Technologies was acquired by TravelSky early this year, as their first big expansion outside China, though General Manager, Larry Liang is hesitant to call it that. “I have to correct the wording,” he begins. “Before we acquired OpenJaw, we already worked with them since 2012. In 2015 OpenJaw was sold to a Canadian company who had intentions to sell it, so we were forced to participate in the deal. We were lucky to be in a successful position in having our way, but I have to say we didn’t make a proactive move to purchase OpenJaw.”
CEO of OpenJaw Technologies, Kieron Branagan agrees with how the acquisition was not as one-sided as it may seem. “We spent three years partnering with TravelSky and spent a lot of time and effort optimizing platform for Chinese market. I think the value (of the acquisition) is transformative for OpenJaw, as it adds a lot of scale to our operations,” he says. “We’ve leaned towards Asia, China in particular, and it’s a very good partnership, complementary, and has synergy we can both build on in the coming years.”
They explain that the two companies, while both under TravelSky, will have their independent strategies and development paths separate from each other. “We maintain our independent branding and operation for this company. Development in China will be spearheaded by Kieron himself,” says Liang.
Branagan continues, “An important point Larry said was regarding the preservation of own independence. TravelSky is supportive in OpenJaw maintaining a unique identity. We will work closely in terms of China and TravelSky to integrate a retail platform in many airlines in the next few years,” he says. “The strategy of both organizations is really aligned. What we’re doing is overall complementary to our relationship.”
Industry analysts expected them to integrate immediately, but Liang says they are doing so slowly and cautiously. “With most overseas Chinese acquisitions, 70% of the time it ends in failure. So that’s why we want to avoid making the same mistakes as others,” says the TravelSky GM. It took a lot of work to acquire OpenJaw, with both companies needing to comply with four legal systems, according to Liang. TravelSky, while being a Chinese company had to purchase OpenJaw through Singapore, while OpenJaw, while Irish, was owned then by a Canadian company.
The largest Chinese company with a presence in Ireland today, TravelSky employs 180 people through OpenJaw, according to Liang. “We are a rare case in the industry to acquire the people and technology,” he says. Upon consultation with the Chinese ambassador in Ireland, they were advised to pay close attention to the people in the business, advice TravelSky took to heart. “We took a lot of time learning about the people and balancing cultures. Till now, we don’t fully appreciate what's going on, we are still testing it out,” he says. “We have been through a lot of learning curves, hopefully will provide example for Chinese companies in the future.”
For their part, OpenJaw specializes in the retailing aspect of airline distribution. Though headquartered in Ireland, they have a Chinese team on site, and five locations globally. Their strategy remains to continue expanding globally. “I think the international market will continue to be a very important market for us. Over the course of many years we built more than 30 systems in Asia, Europe, North America, South America,” says Branagan. “A lot of those insights can be applied to the Chinese context over many years. International markets are important, but China is equally important for us.”
In this case, the success of OpenJaw independently is also the success of TravelSky. “For the IT system of airlines, TravelSky traditionally has a fundamental system for GDS and a departure system for airline companies. But companies cannot rely on just one system to operate all roles,” says Liang. “OpenJaw has strong tech and is focusing on new technology targeting new solutions. We are digging into the depths of service vertically. Meanwhile, they aren’t just servicing airlines but also hotels, they are expanding horizontally.”
While it may seem like the acquisition was a match made in heaven, both Liang and Branagan fully acknowledge it took a lot of communication and trust to achieve their level of success together. “I think successful acquisition is built around communication. We have a clear line of communication, and have had an open channel with our partnership initially,” says Branagan. “We continuously talk about our future and our plans, so the communication part is very strong. There’s also trust between the two companies that has come about since our partnership in the past few years. Communication and trust are really the keys.”