Orbitz 2013 Annual Report Download - page 85

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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
85
Master License Agreement
We entered into a Master License Agreement with Travelport at the time of the IPO. Pursuant to this agreement,
Travelport licenses certain of our intellectual property and pays us fees for related maintenance and support services. The
licenses include our supplier link technology; portions of ebookers' booking, search and vacation package technologies; certain
of our products and online booking tools for corporate travel; portions of our private label vacation package technology; and
our extranet supplier connectivity functionality.
The Master License Agreement granted us the right to use a corporate online booking product developed by Travelport.
We have entered into a value added reseller license with Travelport for this product.
GDS Service Agreement
In connection with the IPO, we entered into the Travelport GDS Service Agreement, which was scheduled to expire on
December 31, 2014. The Travelport GDS Service Agreement is structured such that we earn incentive revenue for each air, car
and hotel segment that is processed through the Travelport GDSs. This agreement required that we process a certain minimum
number of segments for our domestic brands through the Travelport GDSs each year. Our domestic brands were required to
process a total of 27.8 million, 31.4 million and 32.8 million segments through the Travelport GDSs during the years ended
December 31, 2013, 2012 and 2011, respectively. Of the required number of segments, 16.0 million segments were required to
be processed each year through Worldspan, and 11.8 million, 15.4 million and 16.8 million segments were required to be
processed through Galileo during the years ended December 31, 2013, 2012 and 2011, respectively. We are not subject to these
minimum volume thresholds to the extent that we process all eligible segments through the Travelport GDS. No payments were
made to Travelport related to the minimum segment requirement for our domestic brands for the years ended December 31,
2013, 2012 and 2011.
The Travelport GDS Service Agreement also required that ebookers use the Travelport GDSs exclusively in certain
countries for segments processed through GDSs in Europe. Our failure to process at least 95% of these segments through the
Travelport GDSs would result in a shortfall payment of $1.25 per segment for each segment processed through an alternative
GDS provider. We failed to meet this minimum segment requirement during the year ended December 31, 2011, and as a result,
we were required to make a shortfall payment of $0.4 million to Travelport related to that year. There was not a shortfall for
either of the years ended December 31, 2013 or 2012.
In February 2014, the Company announced that it has entered into an agreement with Travelport for the provision of
GDS services, which terminates and replaces our prior Travelport GDS service agreement. Under the New Travelport GDS
Service Agreement, Orbitz is obligated in 2014 to use only Travelport GDSs for all air and car segments booked on its domestic
agencies and is subject to certain other exclusivity obligations for its segments booked in Europe and other markets as defined
in the New Travelport GDS Service Agreement. The Company is required to pay a fee for each segment that is not booked
through Travelport GDSs in 2014 subject to exclusivity obligations discussed above. However beginning January 1, 2015, the
Company will no longer be subject to exclusivity obligations. Under the GDS Agreement beginning in 2015, we are obligated
to provide certain levels of volume over the contract period and may be subject to pay shortfall payments in certain cases if we
fail to meet volume commitments. The agreement terminates on December 31, 2018.
Corporate Travel Agreement
We provide corporate travel management services to Travelport and its subsidiaries.
Letter Agreement
In February 2011, we entered into a Letter Agreement with Travelport, which was amended in March 2011 (the “Letter
Agreement”). The Letter Agreement amended and clarified certain terms set forth in agreements that we had previously entered
into with Travelport and provided certain benefits to us so long as certain conditions were met.
The Letter Agreement contained a provision relating to the absence of ticketing authority on AA. Under this agreement,
our segment incentives payable from Travelport under the parties’ Travelport GDS Service Agreement were increased effective
December 22, 2010 until the earliest of August 31, 2011, the reinstatement of ticketing authority by AA for our Orbitz.com
website, the consummation of a direct connect relationship with AA, or the determination by our Audit Committee of the Board