Virgin Blue settles with Navitaire

Beverley Head
Tuesday, 05 April 2011 11:15

Business IT - Technology

Virgin Blue has reached a financial settlement with its IT service provider Navitaire, following the devastating computer system failure the airline endured in September, which left thousands of passengers delayed or stranded and battered the airline's reputation.

In a terse statement issued to the Australian Stock Exchange, Virgin Blue noted that a 'mutually satisfactory agreement regarding the reservation system outages which occurred in 2010' had been reached. Terms of the deal were not disclosed although there has been speculation that Navitaire paid the airline as much as $20 million.

Certainly the airline's lawyers would have been crawling all over its service level agreement with Navitaire as it sought to offset the steep bill from the debacle.

Not only were the airline's normal operations effectively stalled for days by the systems failure, it was forced to make ex gratia payments to inconvenienced passengers.

Passengers delayed more than four hours were informed they were eligible to claim 'reasonable expenses' of up to $220 per night for accommodation and transport. Passengers delayed by more than four hours were also offered a credit for another free flight to use at sometime in the future to compensate them for their delays.

It suffered a further failure in February.

Navitaire, which is an Accenture owned business, won the Virgin Blue gig in 2009, when the airline signed up for its New Skies system, which includes the departure control function. Supplied as a hosted service, New Skies runs out of three global data centres owned by Accenture.

According to Virgin Blue's statement although the terms of the arrangement are confidential 'the forecast financial impact of this settlement was taken into account for the guidance issued to the ASX' in late March.

That guidance saw the company warning of a challenging second half of the financial year, with the airline impacted both by a flurry of natural disasters impacting people's travelling plans and the rising cost of aviation fuel. It nevertheless predicted full year profits in the range $30 million-$80 million.