Tourism

The Role of Global Computer Reservation Functionality of Global CRSs Using the global CRSs, travel agencies can Systems in the Travel Industry Today and in the make reservations directly from their ter- Future minal with any and on all conti- nents without having to go through a co- One of the few examples for the global realization of electronic market coordination are ordination process or contract negotia- the Computer Reservation System (CRS) or Global Distribution Systems (GDS) used in the tions. All global CRSs provide the basic functions for the reservation process such travel industry. Because of the ever increasing competition, new technologies and as product presentation, reservation, fare changed distribution channels, a discussion has started about the role of CRSs. quote & ticketing and additional services.

by Dr. Axel Schulz, Lufthansa Systems GmbH ♦ Product Presentation: For a CRS, the most important source Before going into detail about current criti- changes in the marketplace, the best of information is the presentation of cism and the systems´ future role, we will known global CRSs are AMADEUS, GALI- the products and services offered by briefly describe what CRSs are all about: LEO, SABRE, and WORLDSPAN with providers in all areas related to the AMADEUS being the only one which is travel industry. Each group of service Ideally, CRSs are systems for purely (in- largely owned by European . To- providers has individual screen catego- formation transfer) logistical functions. gether with GALILEO, it is the leading ries the contents of which particularly They store current information about all system in the European market. GALILEO, represent the complexity of their of- available service providers and have the however, also has a strong position in the ferings and specific features of their necessary infrastructure to transfer such US market after it merged with an Ameri- serivces. The product “flight” for ex- data. This means that the systems also can system. SABRE and WORLDSPAN ample does not require complex de- perform additional tasks related to serv- have been developed in the US. So far, scriptions since it is sufficient for a neu- ice distribution, which in the area of goods SABRE is the only CRS which is wholly tral product presentation to state the are typically carried out by freight for- owned by one single airline. departure and arrival times, the route, warders. They support the transport of goods (or the right to a service) by elimi- AMADEUS GALILEO SABRE WORLDSPAN nating the physical distance between the producer and the sales mediator or the USA/ Mexico/ U:7.839 U: 13.347 U:17.496 U: 9.200 consumer respectively. Therefore, CRSs can Canada T: 29.313 T: 59.980 T: 82.441 be characterized as supporting distribu- T: 41.106 tion process since the current systems do Europe/ Russia U: 21.729 U: 12.561 U: 4.028 in no way support negotiations between U: 5.474 T: 59.804 T: 39.487 T: 11.477 T: 10.208 the producer and the consumer. CRSs are a combination of infrastructure measures Latin America/ U: 4.631 U: 1.100 U: 1.985 offered to interested providers in the tour- U: 53 Caribbean T: 8.247 T: 1.918 T: 6.328 ist industry. Similar to an empty super- T: 268 market, the system provides a sales area Far East/ Australia U: 920 U: 3.686 U: 4.113 U: 0 in the form of memory and communica- T: 2.034 T: 12.871 T: 14.246 T: 0 tions media. The providers can then fill the empty shelves by providing their data Africa/ Middle U: 374 U: 1.632 U: 490 to the CRS. U: 600 East T: 768 T: 5.144 T: 1.452 T: 1.368 Today’s Competing CRSs Total: U: 35.493 U: 32.326 U: 28.112 U: 15.327 The development of such systems was al- T:100.166 T:119.400 T:117.914 ready started at the beginning of the six- T: 47.950 ties, the objective being at the time to Figure 1 automate seat reservations procedures of Comparison between the number of airlines. Today, the largest civil data users (U) and the number centers and the most powerful commu- of terminals (T) of global systems (as at the beginning of 1996) nications networks are being used exclu- sively for this purpose. After several

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Travel Agencies received from the respective service provider. Typically, the print-out of any additional information material is not supported by most systems as it is not always necessary, like for example a print-out of a hotel or rental car reser- Product- presentation Airline-Systems vation.

♦ Reservation Additional Services: Because of the increasing competition Network Network in the market, system operators were Additional Services forced to offer not only the three es- sential components of an information Airline-Systems Fare Quote and and booking system but also additional Ticketing services. Today, the user has direct ac- cess to essential travel information and can find further information in all CRSs about trade shows, visa regulations, particular events etc. Furthermore, pro- grams and interfaces have been devel- Hotel- or Car-Systems oped which facilitate the internal ad-

Figure 2 ministration for each travel agent. Also Principel structure of CRSs invoicing, accounting, customer and quota management increasingly de- availability of particular reservation ers who thus have the latest informa- pend on the respective CRS. User categories and possibly the fare. It may, tion about availability at any point in prompting has significantly improved however, be difficult to describe the time and can use it as a basis for a new so that even inexperienced users can products of other service providers ap- offer. In addition, the system can also easily learn how to work with the reser- propriately with only a limited amount store customer related information such vation procedure. Since more and more of information. Hotels, for example, as e.g. all services provided to a cer- PCs are being used in this area modern have so far only been able to provide tain customer, type of payment, serv- user interfaces have been introduced. information about the price, the size ice information etc. of the bed and its approximate loca- The Information Infrastructure tion which alone is not a meaningful ♦ Fare Quote & Ticketing: Apart from the four core functionalities, description for potential customers. For Just like the product presentation, the a high speed network is the second basis this reason, it is intended to link the fare quote, ticketing and voucher gen- of a CRS. It connects the system with the particular offers to visual multimedia erating process depend on the type and service providers on the one hand and technology to be able to provide more the complexity of the services offered. the travel agents on the other. In Europe, detailed information to the customer. For flights, multiple fares are being of- travel agents are mainly linked via inter- fered which differ according to the res- faces to the cooperating national systems ♦ Reservation: ervation category, the date of the jour- in which case the local network infra- The core function of reservation sys- ney, the day when the reservation was structure is being used. Travel agents us- tems and the main reason for develop- made, the route and the length of the ing the CRS AMADEUS are linked via ing them is the reservation of offered stay. That means that practically each various networks. In most cases, they are services in the travel industry. To this fare needs to be calculated individu- integrated in the national START network. end, a so called Passenger Name Record ally. In addition, fare quotes can change In other countries, they are linked either (PNR) or Guest Name Record (GNR) is daily. The prices of other service pro- via the SITA network or via Datex-P X.25. created for each passenger or each viders, however, are relatively fixed so The city and airport offices of airlines are group of passengers. These records con- that in most cases, they stay an un- mostly integrated in their respective in- tain all services-related customer in- changed part of the offer. For the ternal network. formation. At the same time, this in- ticketing, travel agencies receive a fixed formation is transferred to the internal number of ticket forms which may only The network of the global CRS AMADEUS inventory system of all service provid- be used after confirmation has been has additional 14 network nodes distrib-

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uted throughout the whole world. They Another weak point in the CRSs have al- need for streamlining their organization are connected to each other by 13 lines ways been additional functions since such in order to stay competitive. In many sub- with 1.92 Mbyte/s and 11 lines with a functions would not increase the number areas, some optimization and efficiency lower transmission rate. These lines are of sold flight tickets. Only now modern measures have already been taken. Now utilized 60% at most. By automatically graphical user interfaces are being devel- the only costs which can still be changed establishing alternative links, an avail- oped in the various systems for the front and reduced are personnel and fuel costs ability of 99.7% is achieved since, in case office. Sufficient back office functions as well as costs for sales. Generally, sales of necessity, any message can be trans- have been offered only very rarely. costs within this industry amount to 20 - ferred via other nodes. 25% of the total revenue which is per- Apart from the criticism about the inter- ceived as far too high. So it is the com- Criticism About CRSs nal capacities of the systems, one further mission for travel agents and reservation Recently, there have been controversial point of discontent have been high distri- fees paid to the CRSs which are now be- discussions about CRSs. They have been bution costs. Airlines have an enormous ing checked and reviewed very closely. called inflexible dinosaurs not being able to fulfill current or future market needs. Reducing Distribution Costs Criticism mainly relates to the insufficient References There are two approaches which can help scope of services offered and the high dis- to reduce distribution costs. On the one Berninger , H., Opas Carrier ist tot, tribution costs. hand, the on-line services provide addi- in: Touristik REPORT , 6(1996), tional possibilities of cost-effective direct pp. 6 - 8 With most airlines it is possible today to distribution to the end customer. Many book a flight easily and without problems Caldwell, B ., Tick eting is up in the air , airlines now offer access to their internal merely by pressing the respective keys on in: InformationW eek, 23.5.1994, service provider systems via on-line serv- the computer keyboard. However, there are pp. 80 - 82 ices and in particular via Internet. This also still numerous needs for services which helps reducing costs incurred by travel Feldman, J., Biting the hands that fees the current CRSs cannot yet fulfill suffi- agents and fees to the CRSs. One of the them, in: Air Transport W orld, 6(1996), ciently. With regard to product presenta- industry leaders in this area is Lufthansa: pp. 14 1 - 146 tion, the offers are almost exclusively lim- Its interesting concept “Info Flyway” will ited to the category of airlines. Other serv- Humphreys, B ., New Developments in provide statistical information on CD-Rom ice providers (such as hotels, rental cars, CRSs, P aris 1995 and will make it possible to make direct tour operators, charter airlines etc.) only reservations via an on-line interface. Jegminat, G., Die Reisebüros müssen für have a very limited reservation rate or are Moreover, some airlines now offer last sich selbst sorgen, Fremden- not displayed at all. In Europe, such tasks minute tickets at particularly good prices verk ehrswirtschaft International, are mainly performed by national distri- in auctions via Internet. 15.3.1996, pp. 24 - 25 bution systems. However, even today it is still easier to book a flight to a far off Maglitta, J., Lean, mean flying ma- By using on-line services it will be possi- holiday resort than simply reserve a room chines, in: Computerworld, 28(1994)28, ble to reduce costs for travel agent com- in a small hotel nearby. pp. 8 1 - 84 missions and CRS fees and increase the load factor at the same time. However, this Schmid, B ., Elektronische Märkte, While the functionality “reservation” is will only attract a small part of the over- in: Wirtschaftsinformatik, 35(1993)5, working without problems on the basis of all clientele since in Europe for example pp. 465 - 480 modern access technology “fare quoting” only 3% of the population at most have is still a complicated, incomprehensible, Schulz, A., Frank, K. und Seitz E., access to on-line services. and confusing process. Price transparency Tourismus und ED V, or even price negotiations are not sup- München 1996 The so called “no frill carriers”, one of them ported by the systems. Therefore, it always being Southwest Airlines, have taken this Schulz, A., Sind CRS überflüssig?, requires a lot of time to find the best fare. one step further. In all areas, they avoid veröffentliches Manuskript, ITB One of the reasons for these shortcomings unnecessary costs (service, change of Medientag, Berlin 1996 is that the CRSs are owned by airlines who bookings, meals, etc.) and merely offer are not interested in making their prod- Schulz, A., V ertriebsk oordination und basic services, i.e. to transport a passen- ucts comparable. Most recently however, Angebotsoptimierung in elektronischen ger from A to B at the best possible price. travel agents have increasingly demanded Märkten am Beispiel computergestützter They also do not use or offer via the CRSs “Best Buy”-functionalities and informa- Reisevertriebssysteme, Dissertation, any of the normal distribution channels tion about negotiated fares. Nürnberg 1995. but process all incoming bookings with

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the help of powerful internal Client/Server play their services directly in the travel economic and technological level and systems. As in the past, customers now go agents´ internal systems. This could suffi- travel agents would hardly be able to do back to calling the airline directly and pay ciently substitute the scope of services their work without these tools. On the other there and then with their credit card. This provided by CRSs and the cost of com- hand, however, because of the high costs aggressive procedure has forced many munication between the service provider incurred many providers avoid using this other airlines to also make direct reserva- and the travel agent can be reduced. How- consistent concept with its complicated tions and by-pass the CRSs. Some carri- ever, this would increasingly counteract functional requirements and worldwide ers, such as , have come to an the idea of creating a global electronic networks. Therefore, the CRSs are now at agreement with major travel agent chains market. a turning point. Either the systems adapt which then can make their reservations to the new market conditions or they will directly in the system of the respective Conclusion become an early example for the destruc- airline. Some of the major travel agents In short, it can be stated that on the one tion of the worldwide electronic markets. like American Express offer the possibil- hand the global computer reservation sys- ity to various airlines and hotels to dis- tems have reached a significantly high

Fact File: and START in Germany, which were pre- dominantly controlled and (partly) owned The Four Global Distribution Systems in by the original four partner airlines, re- the Travel and Tourism Industry spectively, as well as integrating a number of other national systems of further air- by Karsten Kärcher – University of Strathclyde, Glasgow lines. Amadeus operated on its own net- work Amanet, on various national net- Background information on key electronic however, SAS sold its share to the other works and on the global SITA network, market systems (EMSs) in the global travel three due to financial difficulties follow- and, in 1994, claimed to have Europe’s and tourism industry is presented in this ing the Gulf War, leaving Amadeus equally largest civilian database. Since Amadeus’ fact file. The major travel and tourism owned by the other three airlines. The foundation, the operation and marketing EMSs portrayed are the four global distri- Amadeus Central System was based on the of the national Amadeus sub-systems have bution systems (GDSs) Amadeus, Galileo software of the reservation system Sys- been conducted mainly by > 30 national International, SABRE and Worldspan. The tem One and located in Erding near marketing companies (NMCs) such as historical (or evolutionary) development München in Germany. The system became START Amadeus Vertrieb GmbH in Ger- of the technologies of the four GDSs is operational in 1991, integrating the four many, and Amadeus Austria Marketing shown in Figure 1, indicating how the national reservation systems Esterel in Ges.mbH in Austria, with SAS having also technology of one GDS was based on an- France, Savia in Spain, Smart in Sweden remained a national partner. other. The Société Internationale de Télé- communications Aéronautiques (SITA) is ○○○○○○○○○○○○○○ also outlined, which supplied telecommu- Figure 1 Evolutionary Development Amadeus nication services to several of the GDSs of GDS Technology (1987)/1991 System One and other travel and tourism organisations. 1982 1994/95

Amadeus Global Travel Gallileo (1987)/1989 Distribution S.A. Madrid, Spain Apollo Gallileo 1971 International 1993 Amadeus DATAS II ○○○○○○○○○○○○ (Amadeus Central System 1982 PARS Worldspan and Amanet) 1964/(1976) 1990

Amadeus Global Travel Distribution was SABRE SABRE formed in 1987, with each of the four (1953)/1963 1964 European airlines , Iberia, Present Lufthansa and SAS Scandinavian Airlines System owning equal shares. In 1991, 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 Years

EM – Electronic Markets 20