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Airline reservation system
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- 2. HISTORY PRIOR TO COMPUTERRESERVATION 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 OFTHE 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 THEFIRST 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 SABREcreated 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 COMPUTERRESERVATION 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 INFLUENCINGAGENTS’ 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 1978American 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 ACT1978 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 AGAINSTAIRLINES 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 Thelargest 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.
- 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, ALTERNATIVEDISTRIBUTION 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.