E-TourismNicos Rodosthenous PhD

11/04/20139

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1. Introduction The purpose of this chapter is to explore the

strategic implications of ICTs for airlines that will determine their competitiveness in the future.

2. From Computer Reservations Systems (CRSs) to Global Distribution Systems (GDSs).

In 1950s reservations were made manually by using the OAG, Official Airline Guide and the World Airways Guide , ABC.

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In 1962 American Airlines AA, introduced its SABRE computer reservations system.

CRSs on the hand aimed at organizing airlines internally, managing their inventory and on the other hand to allow distributors and partners to access information about availability and prices.

As prices, schedules and routes were liberalized, CRSs enabled airlines to compete and to improve their productivity and efficiency.

Airlines used the CRSs for remote printing of travel documents such as tickets and

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boarding passes, itineraries and invoices, FFP. Each airline still runs an internal CRS managing its

inventory and supports its needs. CRSs use intranets to make the system widely

available internally and to maximize efficiency. Through extranets and the Internet they offer

eCommerce opportunities as well as interaction with partners.

In 1980s CRSs developed into more comprehensive global distribution systems (GDSs)

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offering a wide range of tourism products and better communication between airlines and travel agents.

American SABRE holds 45 million fares in a database with up to 40 million changes entered every month.

500,000 passenger name records are created every day while the system handles 2000 messages per second.

GDSs are the heart of scheduled airlines and

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have become travel supermarkets by offering information, reservation capabilities for all travel products such as hotel accommodation, car rentals, airlines schedules, seats and prices

Four major GDSs, Amadeus, SABRE, Worldspan and Galileo.

2.1 Amadeus : Founded in 1987 by Air France, Iberia, Lufthansa, and SAS, Amadeus is the youngest of the four GDS companies.

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• Amadeus is a leading global distribution system and technology provider serving the marketing, sales, and distribution needs of the world’s travel and tourism industries. Its comprehensive data network and database, among the largest of their kind in Europe, serve more than 57,000 travel agency locations and more than 10,500 airline sales offices in some 200 markets worldwide.

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2.2. Galileo International, was founded in 1993 by 11 major North American and European airlines: Aer Lingus, Air Canada, Alitalia, Austrian Airlines, British Airways, KLM Royal Dutch Airlines, Olympic Airlines, Swissair, TAP Air Portugal, United Airlines, and US Airways. It is a major player in the GDS business throughout the world: North America, Europe, the Middle East, Africa, and the Asia/Pacific region.

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2.3 Sabre: More than 40 years, Sabre has been developing innovations and transforming the business of travel. From the original Sabre computer reservations system CRS in 1962, to the advanced airline yield management systems in the 1980s and to the leading travel web sites today.

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2.4. Worldspan: Founded in 1990 and originally owned Delta Air Lines, Northwest Airlines, and Trans World Airlines. Currently owned by Delta Air Lines, (40%), Northwest Airlines (34%), and American Airlines, (26%). Since its 1995 advance into the world of Internet technology for the travel industry, Worldspan has successfully developed the strategies, solutions, and services to ensure the company’s long-term success in the new web-based world of travel distribution.

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3. Airline types and ICT utilization There are several kinds of airlines, characterized

by type, ownership and routes. They use ICTs differently and have different

emphasis on their on-line presence: 1) Scheduled carriers: such as Air France and

United Airlines, offer a full service to their clientele through regional, national, international services.

Scheduled airlines are the flag carriers, belonging

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to their national government and are mainly used by business travellers.

They were the first to invest heavily in ICTs developing the CRSs and GDSs.

Airlines like Air France and BA developed interfaces with consumers through Internet and support a wide range of alternative distribution.

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2) No-frills or low-cost carriers: such as easyJet and Ryanair emerged in the 1990s and provide a fairly limited service on-board and passengers have to pay any in-flight catering.

They offer lower prices, more flexible ticket regulations and fly national and short-haul routes with high % of the leisure and business.

At 2001 more than 90% of easyJet’s seats were booked on-line on the Internet.

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3. Charter airlines: such as Britannia Airways provide a major service to holiday makers and leisure traffic in Europe.

Owned by tour operators they offer a full service to package holiday makers mainly within Europe.

Most of their inventory is sold as part of a package through tour operators and they are not connected to GDSs.

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4. Strategic and tactical roles of ICTs for airlines Airlines depend on ICTs for their strategic and

operational management. Airlines use ICTs to manage revenue analysis and

forecasting, perform yield management, monitor competition, maintain historical data and predict demand.

ICTs enable airlines for developing partnerships and alliances with other airlines and to monitor competitors.

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ICTs enable several operational management requirements such as check-in procedures, allocation of seats, reports such as flight plans, weather forecasts, load sheets, manifests for airports and in-flight catering.

5. Internal systems and intranets Airlines use a wide range of internal systems and

intranets to coordinate their activities such as: Accounting, financial management, human

resources, flight schedule management systems.

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Crew management systems, operations control systems, station control systems, baggage handling and monitoring systems.

6. Interconnecting partner systems and extranets All airlines need airport infrastructure for their

operations, i.e. air traffic control Airlines interact with a number of organizations

that provide handling services for aircraft and airlines at airports.

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Such services include maintenance, refuelling, security, baggage handling, catering.

eProcurement is also a major force for extranets in the airline business, for ordering general supplies like computer hard-ware.

Cooperation between two or more airlines include code-sharing agreements, alliances and other business arrangements.

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7. Connecting with all stakeholders through the Internet

The development of the World Wide Web- WWW- in 1990s was the most challenging opportunity for airlines.

By 1998 most airlines offered websites enabled the interactivity with consumers and build up relationship-marketing strategies.

BA’s internet site currently achieves 1,5 million visits per month and the average growth of on-line bookings was 11% per month.

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easyJet was advertised as the web’s favorite airline achieving more than 90% bookings on-line.

eTicketing reduced distribution, commission and labor costs and increase efficiency of airlines. i.e. CO Airlines reduced its costs by $20 million.

8. ICT-empowered strategic alliances for airlines Distribution is one of the most important

elements of airline marketing strategy and competitiveness for the future and covers:

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The ability of airlines to access consumers directly Air fares (price), commission costs and reservation

fees Promotional campaigns undertaken by airlines. Global alliances such as OneWorld, Star Alliance Outsourcing covers 85% of the airlines IT services They develop links through alliances and industry

bodies such as IATA and SITA to develop common platforms for eCommerce, eProcurement and facilitating all their business and operational functions.

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9. Critical issues for the future success of airlines Most airlines are outsourcing their operational

systems to trusted partners and ASPs , Application Service Providers.

eAirlines futures will be determined by their ability to use ICT strategically for achieving their vision and mission.

ICTs provide several tools to help airlines to address safety, security and tracing material.

eTicketing, self-service check-in will improve customer service and satisfaction and reduced costs.

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