City of London College
Module# Development of IT Strategy
Tutor# Ms. Nadine Gibson
Student ID# 000102567
Course# Bsc(Hons) Business Management Advanced Entry
Submission Date# 27/07/12
The American Airlines SABRE Reservation System
The aim of this essay is to provide an analysis of the SABRE reservation system produced by American Airlines, demonstrating how Business Information Systems (BIS) can be used to gain a strategic advantage. This will be achieved by describing the overall approach adopted by American Airlines and how SABRE provided them with a competitive advantage. The factors that led American Airlines losing their competitive advantage will also be discussed.
One of the key factors in providing customers with an optimal service is ensuring convenience, flow of information, saving time, and the efficient use of available customer service resources. On the other hand, in times of strict competition it is highly necessary for businesses to be able to provide such services at the lowest cost and in the most convenient manner possible (Linoff and Barry, 2011).
In order to help businesses with customer management, there are now customer management software programs which enable individuals and businesses to organise all their information and retain useful information quickly and efficiently. Such programs help perform functions such as revenue management, making optimal pricing decisions, managing customer loyalty programs, customer profiling, and bookings and reservations, amongst many other options (Linoff and Barry, 2011).
One such system, introduced by American Airlines in the 1960’s, is the SABRE reservation system. SABRE, which is an acronym for ‘Semi-Automated Business Research Environment,’ was the first information system of its kind and was the result of a joint venture between IBM and American Airlines. Initially, it was used as an electronic reservations system and replaced the old manual procedure of hand-written reservations. This enabled American Airlines to quickly and efficiently manage its reservations through a computer-based application (Duliba et al., 2001). The initial instalment of the system cost approximately $40 million (£25 million) and was nearly as advanced as the system held by the US government. This was a major advancement for American Airlines as one of the key areas of its business process was now automated, making other functions simpler.
In the following years, new applications were added to SABRE, which laid the framework for efficient procedures in revenue management, optimal pricing decisions, scheduling of flights, cargo and inventory management, crew rotation, and various other flight operations. More recently, e-commerce applications and a selection of hotels, car rental agencies, travel agencies, and other travel and entertainment businesses have been added to the system to enable access to wider areas of related industries with a simple click of a mouse (Varian, 2010).
As it became one of the largest data-processing facilities the in airline industry, the system was installed in various travel agencies around the US and Canada in the 1970’s and began to automate the travel industry. Over one million fares were recorded in the system, making operations at a travel agency more efficient and enabling American Airlines to easily inform travel agents about changes in fares and the available options. Applications such as BargainFinderSM, easySabre, Sabre Airline Solutions, Sabre Sonic, Sabre eVoya, and others were added to the system making it one of the biggest and most widespread business applications available (Central American Common Market, CACM, 2009). SABRE gave American Airlines a competitive edge and delivered many great benefits to the company. All processes became more efficient, information was dispersed widely, and American Airlines quickly gained sales and recognition amongst...