2. HISTORY
PRIOR TO COMPUTER RESERVATION SYSTEM
Delegates used to visit, call, or send the message through teletypewriter for a booking request
in the airport or ticketing office. Reservations were processed manually. Moreover, a team of
operators was required to make a reservation. Operators sat around a circular table with cards.
each card corresponded to a trip between specific city-pairs, they were ticked manually by the
operator against a booking. Cards were then organized according to departure dates and
stored in tubs that were rotated among various reservation agents as necessary. This whole
reservation process took approximately 2 hours. As the process was unwieldy it led to errors;
booking of two passengers on one seat or under booking which caused distress and
inconvenience.
3. EMERGING NEEDS OF THE INTERNAL RESERVATION SYSTEM
After the 1950s the airlines started experiencing an increase in
demand for flight booking. And the strenuous ticket booking process
was a challenge to cater to amplifying demand. To make the process
efficacious the airline had to rework on the internal reservation
system. But to develop and operate the automated systems was quite
expensive.
American Airlines saw this coming and developed a semi-automated
computer booking system. The system showed the flight schedules,
details, and seat availability. But the reservations were still a manual
process, needing an agent to call the ticketing office and talk to the
operator and put the paper in a device with necessary details.
4. INTRODUCTION OF THE FIRST COMPUTER RESERVATION SYSTEM :
SABRE
Computer Reservation System Definition: A Reservation System that gives travel agents access to
information about flight schedules, fares, and seat availability. It also enables them to make reservations
and issue tickets automatically.
Considering the mushrooming demand the airline still needed amendments in the airline reservation
system. The idea of creating the first computer reservation system was born after the meeting of the
president of American Airlines and a salesperson of IBM on an American flight. After learning lessons
from a similar project SAGE (Semi-Automatic Ground Environment) air defense computer system, IBM
moved forward with the American Airlines project.
American Airlines named the project SABRE (Semi-Automated Business Research Environment). In the
mid-1960s the development of SABRE was completed and at the initial stage, only two IBM 7090
computer systems were installed in New York. The company gained a first-mover advantage after
introducing it. American’s SABRE revolutionized the airline industry by handling 84000 transactions per
day. But till now the operators of American’s only used to make the reservation after receiving the
requirements from agents.
5. DEVELOPMENT OF PARS
SABRE created a monopoly of American in airline automation, which forced
other airlines to also have their own computer reservation system. The success of
SABRE nudged IBM to have its own system to market to other airlines. IBM
developed PARS (Programmed Airline Reservation System).
After American United, Delta, Transworld, and Eastern followed with their own
system. Airlines approached IBM, as the basic reservation process was the
same, airlines adopted PARS with some customization. In 1964 IBM built
PANAMAC for Pan American, which offered flight and hotel reservations. Next
year, in 1965, Eastern Airlines launched System One, then Delta Airlines
launched DATAS II in 1968. United Airlines built the Apollo reservation system
and Trans World Airlines came up with PARS customization in 1971.
American and United, however, dominate the CRS industry; in 1986, they
accounted for 41 percent and 33 percent, respectively, of the flight segments
booked through computer reservation systems.
6. OFFERING OF COMPUTER RESERVATION SYSTEM TO THE TRAVEL
AGENTS
As the agents were not having any access to the airline CRS the process
was still manual. The agent had to call for reservations and operators had to
keep manual entry, provide flight information and seat availability details.
Now, the airlines want to give direct access to their inventory so that agents
can book by themselves to increase productivity. In 1976 American and
United started selling their CRS to the travel agents on a long term contract
with monthly subscription fees.
The agent had to pay for CRS and didn’t get options to choose from. This
was a disadvantage of the computer reservation system to the travel agents.
7. AIRLINE’S CRS INFLUENCING AGENTS’ BEHAVIOUR IN FAVOUR
The airlines started offering the computer
reservation system to the travel agents. The
agents would get a commission on each booking
made. And as the agent generally purchased
access to one airline reservation system, the
agent would recommend his client to opt for that
particular airline. Generating profit and destroying
the competition of other airlines on agents’
recommendations to their clients were
advantages of the central reservation system to
the particular airline.
8. CO-HOST PROGRAMS
In 1978 American felt it was losing market share to United due to the greater
breadth of United’s route structure. American’s response was to co-host the
program with other airlines of those destinations, where American flights weren’t
available. The carriers paid a fee but the motive was to increase the presence of
SABRE in the markets where American wasn’t serving. United also introduced
its co-host program to hold the agents. Co-hosting was advantageous for airlines
not having their automated reservation system. Delta made a deal with United
APOLLO to protect the market from SABRE.
9. AIRLINE DEREGULATION ACT 1978
In 1978 when the U.S. government lifted restrictions on fares, route coverage, and
market entry. Undoubtedly, new opportunities and threats entered for airlines after
the deregulation act. No approval required of the Civil Aeronautics Board to enter
and exit new city routes. The airlines could enter or exit with 90 days’ notice. The
airlines started adding new city pairs having high traffic and dropping with less
traffic.
Without regulatory price controls now the airlines started changing the fare
frequently. Now the customer started inquiring about the best fare instead of seat
availability.
By the late 1970s, other carriers recognized the power of the reservation system.
Some airlines were afraid that if SABRE or APOLLO installed travel agencies on
their market it could eat their market.
American and United intensified the distribution and features of their reservation
system, it made travel agencies to increase business and productivity.
10. ANTITRUST ACTION AGAINST AIRLINES
Creating own computer reservation system was an expensive process for airlines, so other airlines enrolled
in the popular computer reservation system. Registration of rival airlines raised the competition for CRS
owners. The CRSs owners started practicing the anticompetitive practices such as screen bias, hiding the
facilities provided by rival companies, and unjustly charging from rival airlines to increase the sales.
As a result, Airlines alleged the CRSs owner for practicing anti-competitive actions. The justice department
began to investigate and found enough proof to state that the computer reservation system providers are
practicing anti-competitive practices.
Civil Aeronautics Board deduced CRSs giving preference to host airline on first screen irrespective of
relevancy, hiding the services of rival airlines to divert booking in favor of computer reservation system
owners.
In 1984 Civil Aeronautics Board set rules to eliminate display bias and prohibit the unjust charges
demanded from other airlines. CAB ordered to have uniform booking fees.
11. EMERGENCE OF GDS
The largest carrier didn’t sit idle awaiting the result of antitrust actions results. Because the
market was changing frequently so they had to prepare for the future or else watch their
airlines shutting down.
European airlines worked on their own CRSs. Since the beginning of the 60s, there were two
CRSs: CORDA by Dutch KLM and SASCO by Scandinavian that operated across Europe.
Amadeus, another European GDS emerged in 1987, founded by Lufthansa, Iberia, SAS, and
Air France. Amadeus originated from Amadeus Germany, a company that provided IT
solutions for the airline industry.
In 1987, nine leading European carriers including British Airways, KLM Royal Dutch Airlines,
and Aer Lingus formed Galileo GDS. It became one of the largest European GDSs, absorbing
the following year Travicom GDS, to form Galileo UK. In 1992, Galileo merged with US-based
Apollo systems, emerging as Galileo International.
12.
13. DOT REGULATION
In 1992, the DOT (Department Of Telecommunication) addressed gaps in the
Civil Aeronautics Board 1984 rules’. The DOT compelled competing and non-
competing airlines to participate in CRSs. Five years later DOT added a parity
clause. The airline must share the same inventory with all the CRSs.
14. THE INTERNET, ALTERNATIVE DISTRIBUTION CHANNEL
After the emergence of the internet, The GDS started
offering online access to computer reservation systems.
GDS also helped travel agents to build their own travel
websites.
The concept of E-ticketing and Online Travel Agency
(OTA) emerged as a by-product of the Internet. Sabre
launched Travelocity in 1996, and Worldspan also provided
content for Microsoft’s Expedia startup that same year.
