American Airlnes Sabre System

American Airlines:

SABRE Reservation System in Europe

INTRODUCTION :

* Presentation of the company

American Airline inc. is a US-based airline and also the largest airline in the world in terms of total passengers-miles transported and passenger fleet size, and the second-largest airline company in the world (behind Air France-KLM) in terms of total operating revenues,. A wholly owned subsidiary of the AMR Corporation, the airline is headquartered in Fort Worth, Texas, adjacent to the Dallas-Fort Worth International Airport. American operates scheduled flights throughout the United States, as well as flights to Canada, Latin America, the Caribbean, Western Europe, Japan, China, and India. The Chairman, President, and CEO of AA is Gerard Arpey. In 2005, the airline flew more than 138 billion revenue passenger miles (RPM).

American Airlines was developed from a conglomeration of about 82 small airlines through a series of corporate acquisitions and reorganizations: initially, the name American Airways was used as a common brand by a number of independent air carriers. These included Southern Air Transport in Texas, Southern Air Fast Express (SAFE) in the western US, Universal Aviation in the Midwest (which operated a transcontinental air/rail route in 1929), and Colonial Air Transport in the Northeast. Today it has become a huge transnational company that flies across the world.

* SABRE Reservation system

Sabre stands for Semi-Automated Business Research Environment. Sabre was first introduced in 19-й and expanded two years later. It is a computer reservations system that functions on a global distribution system used mostly by airlines, but also by railways, hotels, travel agents and other travel companies. SABRE GDS is a unit of SABRE Holdings' SABRE Travel Network division. Current North American hosted carriers include Alaska Airlines, American Airlines, Cape Air Nantucket Airlines, Frontier Airlines, Hawaiian Airlines, Mesa Airlines, and Midwest Airlines. The SABRE datacenter is in Tulsa, Oklahoma-US and was subject to the Computer Assisted Passenger Prescreening System II and is intended to be part of the successor Secure Flight program for the selection of passengers with a risk profile, sometime in 2008-10.

1. SITUATION ANALYSIS

A. Nature of demand

The demand started in the United States of America. After the act of deregulation ct of 1978 many new carriers were able to introduce the airline market. By 1981, 119 new carriers had entered the industry. All those new companies were in the need to obtain a registration system to simplify reservations on their flights. Facing a enormous competition enabled by the deregulation act, all these companies had to be performing and competitive. What better than the best of technology to promote a company and to create a feeling of trust from the costumers towards the airline carriers? The companies did not have the choice against this new airline economy based on registration systems such as Sabre. The use of this registration system was to improve the efficiency in reservations. By improving this efficiency, companies would logically be better prepared to face competition and at the same time increase their profit. Profit is the main concern of any business. The principle nature of the demand for Sabre is a desire of companies to improve their reservation system, so they compete with other airline companies and be the most efficient on the market. By using this kind of registration system to reach the top of technology and become a important airline on the market, companies assure themselves to be used first by costumers because of the speed and the simplicity of the reservation system, but also because of the trust people build for the company. If the company posses a high technology then costumers belive it is worthy of their trust. The demand of the good is not for a personal use but for a global use. It is not a single costumer that can afford such software. The main demand comes from travel agencies and airline companies that will use it at a large scale. They will need to follow o formation to adapt to the registration system. The nature of demand is thus purely professional, with the objective of increasing productivity.

B. Extent of demand

The extent of the demand takes in account the actual size of the market and the current market shares of the company. The actual size of the overall airline market is measured on a global scale. It takes in account companies from all over the world and is worth billions of dollars. It includes air charter services but also regular airline companies. For example, the air charter service industry includes about 2,500 companies with combined annual revenue of $8 billion. Major companies include NetJets, Flex Jet, Flight Options, and Evergreen Aviation.

The US airline industry consists of about 3,000 companies, with combined annual revenue of $120 billion. Major airlines include American, United, and Delta, and the air operations of cargo and courier companies, such as FedEx. The airline industry is a growing industry and keeps on improving technologically. Each of the companies hold a big part of the market shares. American Airline had in 1985 the largest market share. American possessed 13.1% of the market share.

Market shares in revenue passenger miles

American 13.1%

United 12.4%

Eastern 9.9%

TWA 9.5%

Delta 9.0%

Pan American 8.1%

Other airlines 38%

For Sabre the percentage of market shares possessed by American Airline proved their dominance on the market of registration systems.

MARKET SHARES OF THE FIVE MAJOR CRSs

MAJOR CRSs PERCENTAGE OF MARKET SHARES

DATAS II 10%

PARS 12%

SODA 18%

APPOLLO 25%

SABRE 35%

The market is today an international market, gathering companies and their registration systems from all over the world, such as American Airline and the Sabre registration system. American Airlines has faced many problems, due to the differences

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