The travel industry Essay Example

The travel industry Essay The travel industry has exploded manifold in size over the past fifty years or so. Since the first commercial flights took off, the airline industry on the whole has been trying to find ways for servicing their customers in a better way. Where time is crucial and managing passengers all over the world in a safe and timely fashion is the key, the task becomes even harder especially with hundred of routes and airplanes traveling the skies at the same time. Scheduling is even tougher with the time differences between locations and customer preferences make it an even more arduous task. Hence over the years, major airlines came up with computerized systems to help them run things a bit more smoothly. A global distribution system (also known as a computer reservation system) is a computerized system specifically used to conduct transactions related to the travel industry. This system is capable of storing and retrieving information and based on this, booking flights for customers via trav el agents. Main users of such systems are therefore travel agencies, airlines etc. Hence a GDS essentially takes data from airlines in terms of routes, schedules, capacity etc and routes it to travel agents accessing it from various points around the world. Every travel agent then books a seat for each passenger and this data is updated on the system they are using. The travel marketplace is a very complex one. It has a global scope where millions of buyers (travel agents and the public) and sellers (hotels, airlines, car rental companies, etc.) interact to exchange travel, leisure, tourism services. These services are not limited to these but include everything related to travel from car rentals down to taxi pick ups. The places, in which buyers search for these services are these global distribution systems, which have become electronic supermarkets that link buyers to sellers and allow deals to be made quickly and easily. The four major global distribution systems so far have enj oyed an oligopoly sustained by the high entry costs required to build the IT booking systems to link airlines, hotels and car rental operators with travel agents and consumers. In the present times however, they are operating in a fast-changing market typified by evolving patterns of consumer behavior, the emergence of new online sales channels, and a low-cost air model. The current airline industry all over the world is based more or less on four major systems namely: 1.  Ã‚  Ã‚  Ã‚     Amadeus 2.  Ã‚  Ã‚  Ã‚     Galileo We will write a custom essay sample on The travel industry specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The travel industry specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The travel industry specifically for you FOR ONLY $16.38 $13.9/page Hire Writer 3.  Ã‚  Ã‚  Ã‚     Sabre 4.  Ã‚  Ã‚  Ã‚     Worldspan According to statistics, Amadeus is the current leader with a total share of 31% followed by SABRE with 30.8%. Galileo falls in third with 26.4% and Worldspan fourth with 15.1%. These statistics are measured keeping in mind the reach of these systems being the number of ‘points’ they are accessed through and along with the number of airlines they cater to. Each point is a point of access through which travel agencies all over the world log onto the system to book flights. In addition to these major four, there also exist smaller or regional GDSs, including Tapas (Korea), SITA’s Sahara, Axess (Japan), Infini (Japan), Fantasia (South Pacific), and Abacus (Asia/Pacific). These systems however serve particular interests or specific regions or countries. The airline industry created the first GDS (SABRE by American Airlines) in the 1960s as a way to keep track of flight schedules, availability, and prices. Although they make use of legacy system technology, the GDSs were actually among the first e-commerce systems in the world to facilitate B-2-B (Business to Business) electronic commerce as early as the mid 1970s. The work was essentially started by SABRE (owned by American Airline) and Apollo (United) by installing propriety internal reservations systems in travel agencies (self owned links to their system at travel agencies). Prior to this, travel agents made reservations in the traditional way; manually entering reservations into books. The airlines realized that by automating the reservation process for travel agents, they could make the travel agents more productive and essentially turn them into an extension of their sales force; an automated sales force akin to what UPS and Fedex do now through wireless technology. It is thes e original, legacy GDSs that today provide the backbone to the Internet travel distribution system.  It is no wonder that these systems were revolutionary in their own accord. Currently, travel is the most widely sold consumer product in the world. The Internet has proven to be the perfect medium for selling travel as it joins a vast network of suppliers (without the need of propriety systems to use log onto the GDS) and a widely dispersed consumer market together into a centralized market place. Almost 37 million of the 162-million active Internet users in the U.S. purchased travel online. Online travel bookings exceeded $23 billion in 2001, and are with expectations running high, are predicted to reach $63 billion by 2005 (Das, S., 2002).An internet distribution system is a computerized system which uses the internet to distribute information among its users. Unlike traditional approaches of having dedicated line and links to a system, these systems use the internet as the medium through which users log into a system and access data. Almost all GDSs are evolving towards Internet Distribution Systems and in the near future will be operational only through the internet. Sabre stands for Semi-Automated Business Research Environment. It is a computer reservations system (a global distribution system GDS) used by airlines, railways, hotels, travel agents and other travel companies. Sabre is thus not only sued for reserving airline tickets but also for reservations of any kind related to the travel industry; form hotel reservations to car rentals, train reservations, pickups drops etc. In short, Saber is capable of planning a customer’s travel right from the point of departure down to the point of arrival, stay and tourism as well. Sabre GDS is a unit of Sabre Holdings Sabre Travel Network division. Sabre caters to many airlines all over the world including Alaska Airlines, American Airlines, Cape Air Nantucket Airlines, Frontier Airlines, Hawaiian Airlines, Mesa Airlines, Midwest Airlines, USAirways, Dragonair, EVA Airways, Garuda Indonesia, Malaysia Airlines, Pakistan International Airlines, Philippine Airlines, Royal Brunei Airlines, Silkair, Southwest Airlines, Travelocity, American Trans Air (ATA), Midwest Airlines, Hawaiian Airlines, Alaska Airlines, Air Malta, Frontier, Airlines, Aeroflot, GoGoBudget, Cape Air, Mesa Airlines (Including go! and Air Midwest). Sabre and Amadeus alone own the largest civilian data-processing centres in the US and Europe respectively. The volume of global transactions through the GDS has risen 4% year-on-year to 343 million. Worldwide, the GDS reaches some 230,000 points of sale. In July of 1996, Sabre became a separate legal entity of AMR (parent company of American Airlines), followed by a successful initial public offering in October in which AMR released approximately 18% of its shares to be publicly traded. Sabre, represented in 45 countries, is a leading provider of technology for the travel industry and provides innovative products that enable travel commerce and services, and enhance airline/supplier operations.   It connects more than 60,000 travel agency locations around the world, providing content from approximately 400 airlines, 55,000 hotel properties, 52 car rental companies, 9 cruise lines, 33 railroads, and 229 tour operators. In addition to being one of the leading GDS companies, Sabre also provides a broad range of products and services that enhance travel agency operations and their ability to serve the traveler. Sabre-connected travel agencies use Sabre web- based technologies and low-fare finding solutions to create new sales opportunities, drive operational efficiencies, and improve customer service. Among the company’s recent innovations is Sabre Virtually There, a personalized web site service that automatically gives travelers up-to-the-minute details about itineraries, while also providing a wealth of information about their destinations.   Sabre owns Travelocity.com, the industry’s leading online consumer travel web site. In 2001, Travelocity.com’s 32 million members used the site, generating more than $300 million in revenues. Travelocity.com offers innovative technologies that help consumers find the best air, car, hotel, and vacation reservations. Sabre also owns Get There, a provider of web-based corporate travel procurement, including the purchase of air, hotel, car, and meeting planning services. Customers include more than 800 leading corporations. Sabre’s competitive strengths include market position, global reach, stable product line, diversification of revenue streams, and intellectual capital. The Sabre business model is a strong one, and continues to make significant progress in advancing both its electronic travel distribution and its information technology solutions businesses.   Revenues have been growing steadily, and the company has embarked on a strategy that fully embraces diversification of its customer base and revenue streams. Sabre is considered to be one of the most significant and competitive GDSs due to the fact that it anticipates and takes advantage of the changes in the information economy and develops innovative practices, leveraging both human resources and technology systems. The system was developed in order to help American Airlines, who were facing a serious problem by the 1950s. Their system for booking flights was entirely manual Reserving a seat and writing a ticket took up to 90 minutes on an average. The system also had limited room for growth. Meanwhile, IBM had been working with the US Air Force on their Semi Automatic Ground Environment (SAGE) project that used a series of large computers to coordinate the message flow from radar sites to interceptors, dramatically reducing the time needed to direct an attack on an incoming bomber. The system used teletype machines located all around the world to feed information into the system, which then sent orders back out to teletypes located at the fighter bases. This was arguably one of the first online systems. Such a system was well suited for Amercian Airlines needs and thus in collaboration with IBM, SABRE was developed and it turned out to be a success. It cost a sum of $40 million to develop and install (about $350 million in 2000 dollars). The system took over all booking functions in 1964, at which point the name had changed to the more familiar SABRE. In 1972 the system was moved to IBM System/360 systems in a new underground location in Tulsa, Oklahoma. Originally used only by AA, the system was expanded to travel agents in 1976. It is currently used by a large number of companies, including Eurostar, SNCF, and US Airways. Sabre separated from American Airlines on March 15, 2000. The system is now a publicly traded corporation owned bye Sabre Holdings. The Travelocity website is owned by this company and serves as a consumer interface to the system. Sabre currently uses Web Services to link all its customers and dealers together. In the past, customers gained access to the Sabre GDS and those of other travel providers in a variety of ways using various forms of connectivity. Now Sabre Web Services (making use of leading-edge XML and SOAP technologies) streamlines that process, offering developers a single standards-based access to the GDS. This essentialy eliminates the need for agents and Web developers to understand proprietary codes and programming languages to connect their systems to the disparate data sources needed to create bookable Web-based travel offerings. Sabre connects over 60,000 travel agency locations worldwide and divides its customers according to the following categories: Airline Sabre Travel Networks key service is its airline reservation system. It provides pacesetting products and services that help improve performance and increase revenue opportunities. Car Rental Company Provides reservation capabilities for car rentals with a range of connectivity options to link inventory systems with the travel buying audience and is similar to the airline and cruise services. CONSOLIDATOR This services helps vendors maximize fare distribution and productivity and operate more efficiently thus decreasing costs and provide additional value to customers. Cruise Line A reservations program for cruise lines, it helps manage air/sea operations and receive information from Sabre ConnectedSM travel agency locations around the globe.. Hotel Individual hotels and large, multi-national hotel chains can benefit from this service. It provides them with an opportunity to market themselves on Sabre systems. Tour Operator A range of products providing reservation capabilities, as well as the ability to offer products to a vast buying audience across the globe, it also offers sales and marketing tools to communicate to new buyers and capture new revenue opportunities to meet sales goals. Sabre more or less combines its prduct categories to provide a one stop solution for most of its customers traveling needs. Examples are given below: Travelocity: The Travelocity is responsible for marketing and distributing travel-related products and services directly to individuals who include leisure and business travelers. This is done via Travelocity-owned websites and contact centers, and indirectly through partner websites and contact centers owned by its suppliers, travel agencies and distribution partners. Travelocity offers data like offerings, pricing and information about airlines, hotels, car rental companies, cruise lines, vacation and last-minute travel packages along with other travel-related services such as show tickets and tours. Travelocity has Businessservice for its business travelers and provides an integrated corporate travel through the GetThere product. Travelocity thus facilitates transactions between travel suppliers and consumers for the booking of, and payment for, travel accommodations. Sabre Travel Network: The Sabre Travel Network segment markets and distributes travel-related products and services through the travel agency and corporate channels. It also provides travel agency office automation tools, enables travel agencies to provide services via the Internet and provide reservation management, distribution and technology services to hotel properties. Other products include its key Airline Resevation system, GeThere, etc. In 2006, approximately 36.2% of Sabre’s revenue was generated from Travelocity, 54.4% from Sabre Travel Network and 9.4% from Sabre Airline Solutions based on segment results that included inter segment revenues. Compared with the previous, this was an increase of 30.5% for Travelocity, 1.3% for Sabre Travel Network and 8.3% for Sabre Airline Solutions (Yahoo biz, 2007).