Case Study 2: SABRE
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Case Study SABRE In a dogsled race, unless you are the lead dog, the view never changes! (Bob Crandal Chairman and President of AMR) A chance meeting between two Mr Smiths on an American Airlines flight from Los Angeles to New York in 1953 resulted in the development of an innovative computer system that was to change the future of travel distribution. The outcome of the conversation between C.R. Smith, President of American Airlines and R. Blair Smith, a senior sales rep for IBM, was a project called semi-automated business environment research (SABER), which was the first step in the development of today‘s mighty GDS. Once SABER was operational, the two companies went their separate ways. IBM used their expertise to create PARS, which formed the base technology for the reservations systems of many of American‘s competitors, while SABER was further developed by American and was re-christened SABRE to distinguish it from the original system. Prior to the introduction of automation, airline reservations were processed and recorded manually. A system of ticks recorded on coloured index cards was used to control availability on individual flights. These cards were arranged on a ‘lazy Susan‘, and reservation clerks could see the number of seats available an a particular flight by locating its card and counting the ticks. Passenger details were recorded separately as hand-written records, and the entire process was complicated, labour-intensive and unwieldy. For example, a round trip booking from New York City to Buffalo required 12 different people to perform more than a dozen separate steps over a 3 hour period - longer than the flight itself took! However, the introduction of computerized systems helped to change all of this and greatly improve efficiency and effectiveness. Throughout its history, SABRE went through several separate stages of development. SABRE originally took shape in response to American‘s inability to monitor its inventory of available seats manually and to attach passenger names to booked seats. Thus SABRE began as a relatively simple inventory management tool, although by the standards of the early 1960s, it was an innovative technological achievement. In 1963, the first year it was fully operational, it daily processed data relating to 85,000 phone calls, 40,000 confirmed reservations and 20,000 ticket sales. Over the years, the system‘s reach and functionality was greatly expanded. Its technology provided the base for generating flight plans for American‘s aircraft, tracking spare parts and scheduling crews, as it became much more than an inventory control system. But, at the end of the day, this phase of SABRE was still purely internally focused, helping American Airlines to improve the efficiency of its operations. The scope of the system changed significantly with the installation of the first SABRE terminal with direct reservations capability in a travel agency in May 1976. Prior to this, American, along with the other major carriers, had been involved in an industry- wide consortium which was trying to develop a shared CRS for use by travel agents. While the proposed system was deemed economically practical, one of American‘s main competitors, United Airlines, withdrew from the project and announced its intention to place terminals connected to its own reservation system into agencies. Since this would have schedule displays and flight connections biased in favour of United, it represented a competitive threat to the other airlines if it became accepted by the lucrative travel agent sector. As a result, American followed United‘s example and gave travel agents direct access to their system. Over the decade that followed, SABRE increased the attractiveness of their system for travel agents by adding new services such as hotel, car and rail reservations, incorporating powerful new features to help agents offer better service, and created a comprehensive training and support infrastructure. In terms of airline flights, preference was given to American‘s services, thus leading to increased booking volumes. SABRE had become a competitive tool, helping to promote American‘s flights and services over those of its competitors. The final stage of development is still in progress today. SABRE has changed from being a single-access system, solely distributing the flights of its parent airline, to being an unbiased multi-access system offering a broad range of travel and travel-related products. American‘s flights are not treated any differently to those of the other 700 airlines whose schedules and fares are in the System. American Airlines pays SABRE the same booking fees as other airlines, and effectively any benefit which accrues from owning the system has been eliminated. SABRE has become an electronic travel supermarket, acting as a middleman between suppliers of travel services on the one hand and travel retailers, and even the end consumer, on the other. While, traditionally, its strength lay in servicing the business travel market, it has expanded its horizons to the leisure sector in a bid to capture more market share. The company has invested tens of millions of dollars in developing and enhancing its leisure programs, giving users better access to tour operators, cruise lines, ferries, ground transport and railroads, as well as more and more car hire and hotel properties that market primarily to the leisure traveller. Ancillary travel services such as theatre tickets, travel insurance and destination information have also been added, making SABRE more attractive as an all- round tool for travel reservations. SABRE Today Although originally developed by American Airlines, AMR, the parent company of American, separated the SABRE Group from American Airlines, setting it up as a separate subsidiary, on an equal footing with the airline. In 1996, AMR converted SABRE into a public company by offering an IP0 (initial public offering) of SABRE Group stock on the New York Stock Exchange. Approximately 18% of the company was sold to public investors. Overall, SABRE is highly profitable, with earnings of $200 million on sales of $1.8 billion in 1997. SABRE itself is organized into three operating divisions: SABRE Computer Services is the data-processing arm of AMR that developed and now maintains SABRE and its related communications networks; SABRE Development Services is responsible for the development of new products and services to better serve the company‘s customers; while SABRE Travel Information Network is the marketing arm of the company, which is responsible for selling the System to both travel agents and travel suppliers. The SABRE core system runs on a very large mainframe located in Tulsa, Oklahoma. This underground facility is designed to withstand virtually anything — earthquakes, storms, floods, even terrorist attack - to ensure that SABRE 5 kept up and running to provide continuous service to its customers. It processes over 4500 messages and over 65,000 data accesses per second and has data storage capacity in excess of 1800 Gigabytes. It has computer terminals in over 33,000 agencies in 184 countries on six continents, and, in addition to information and reservation services for 750 airlines, it provides services to over 31,000 hotel properties, representing approximately 200 hotel chains, plus rate, booking and availability for over 50 cars hire firms. At peak periods, the mainframe system processes approximately 150 million travel requests per day. The group also operates an X.25 network in 76 countries with over 20,000 parts, and this, together with its connections to the numerous travel supplier CRSs, make SABRE the largest private computer system in the world. SABRE can be accessed in a number of ways by different types of users: Travel agents are SABRE‘s core customers and access the system using Professional SABRE. This runs on a wide variety of hardware (from dumb terminals to Windows personal computers (PCs) to minicomputers) and allows agents to check real- time availability and flight information, to reserve travel products and to print tickets. Although most agencies are directly connected to the SABRE system over a computer network, a dial-up version is also available for smaller agencies that cannot justify the cost of a permanent connection. Corporate travel departments can use Commercial SABRE to access a limited subset of the system‘s functions. The software is run on a PC and accesses the SABRE core system over CompuServe. Users can check availability and select a seat on a flight that they would like to book. This booking is then routed to their nominated travel agent, who checks the booking, and looks after ticketing and payment issues. In same cases, it is even possible for the ticket to be printed in the corporate customer‘s own offices using a satellite printed under the control of the travel agency. SABRE also helps companies to better manage their corporate travel budget using its ‘Business Travel Solutions product. This offers reservations capability, as well as expense report processing and post-travel analysis to help a company see, at an individual or consolidated level, just who is travelling, how much is being spent and gauge adherence to corporate travel policies. Consumers can use services such as EasySABRE on CompuServe or AOL to access the SABRE system. This uses a simple ‘fill in the blanks‘ screen to specify the travel requirements, and the reservation is then transferred to a local travel agency for ticketing and follow—up action. Although EasySABRE‘s capabilities have now been expanded from solely flights to the full range of travel products available an the full system, its user interface is still quite basic and it has been, to a large extent, replaced by Travelocity. Innovation at SABRE From the very beginning, SABRE has been at the forefront of the race to apply technology to travel distribution. As well as being the first computerized airline reservation system, they were among the first to install terminals in travel agencies (experimentally in 1967, fully in 1976) and the first to introduce a frequent flyer programme.