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A Story Worth Telling, by Max Hopper
Business histories are vitally important because they relate how an individual or groups of individuals had an idea and used technology to make that idea come to life.
Having lived the past forty years of technological development in the airline industry, I have the unique perspective of understanding the evolution of the first automated reservations systems from simple inventory management tools to the enormous databases and sophisticated systems that have driven tremendous change in the distribution of global travel services. It’s a story well worth telling.
Central reservations systems, which evolved into today’s Global Distribution Systems (GDS), were among the first industries founded on the premise that technology itself has great value.
Technology is the entire basis for Global Distribution Systems. GDS provided a vision of a technology-based company that could drive an industry into the future by dealing with the totality of the industry they served. For the first time in the airline industry, all of the product of an entire industry could be centralized in a single source.
This development changed the way a whole industry did business, competed and made its products available to a global audience. Now, the day a new airline begins flying, it can display its fares and schedules on a global basis and compete head-to-head with other airlines. The quality of information available to consumers, travel agents and the airline industry on a global basis is unmatched by any other industry. With the rapid growth of the Internet, information and booking services are available to every level of business, including consumers themselves.
The travel industry has benefited greatly from Global Distribution Systems. They are reliable, effectively marketed and are culturally accepted by end users and consumers who access them through travel agents or directly via the Internet. They represent a remarkable achievement, but like all innovations in business, were not achieved without experimentation, success, failure and in some cases, controversy.
Global Distribution Systems have had a major impact on how travel product is sold. A significant change occurred when airlines realized the potential of reservations systems as profit centers rather than cost centers. SABRE and other competitive systems developed by other airlines were first considered to be competitive weapons, but they soon entered a new era where the accessibility of product information, rather than the vehicle that delivered it, became the driver of travel industry growth. In the process, a major transformation took place in the marketing and distribution of airline services from the airlines themselves to travel agents. In 1970, before the first SABRE terminal was installed in a travel agency (1976), travel agents accounted for less than 40% of passenger tickets sold. By 1990, with full access to total airline product through GDS, travel agents sold more than 80% of all passenger tickets.
Now, in the late 1990s, another transformation is beginning as Internet booking sites, backed up by Global Distribution Systems, are creating a vehicle where consumers themselves can access flight and fares information and electronically book their own travel. The impact of this direct accessibility to global travel supplier information will be interesting to watch.
Today’s Global Distribution Systems are truly electronic travel supermarkets. Serving as computerized middlemen, they deliver the latest information on the suppliers of travel and related services to travel agent retailers, corporate travel departments and consumers. But, as far as Global Distribution Systems have come, there is great potential for further development, including advancing the ease with which humans interact with travel information, incorporating the visual experience of travel into new visual databases, and other exciting developments. In the not too distant future, the technology that drives this reservations activity will recede into the strategic background. Eventually, information systems will be thought of more like electricity or the telephone network than as a decisive source of organizational advantage.
Global Distribution Systems serve a vital need in the growing travel market, but they will never be the device that binds a customer to a specific travel product. The real purpose of such technology should be to provide customers a service that makes their lives easier and richer. Only the airlines, hotels, rail and rental car companies can fulfill the promise of that service by running their businesses effectively and delivering high quality customer services at the lowest cost possible.
As interesting as participating in the first four decades of travel reservations systems development has been, given the potential of the future, I sometimes wish that my career was just beginning. Riding the wave of technological development in the travel industry has been an exciting journey, but I believe that the best is yet to come.
Max Hopper, the father of airline computer reservations systems retired in 1995 as Chairman of The Sabre Group, the American Airlines’ information technology unit. He has been acknowledged as the driving visionary force behind the development of airline reservations into centralized information systems for the travel industry.