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AIRLINE

RESERVATION
SYSTEMS

By:
David J. Wardell
July, 1991
NOTICE
This document is proprietary and confidential. It may not be copied or reproduced either
photographically, photomechanically, or electronically. It may also not be quoted or
referenced in other documents, presentations, studies, papers, or symposia without
express, prior, written consent.

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AIRLINE RESERVATION SYSTEMS
A REPORT & OVERVIEW
BY:

DAVID J. WARDELL

Airline computerized reservation systems (CRS) are the primary form of travel agency
computerization in the world. These systems manage the millions of reservation requests
and cancellations, fare, and reservation pricing requests1 that are initiated by travel
agencies using these systems—not to mention the thousands of database changes that
occur daily. The CRS function as extremely powerful and valuable distribution and
marketing tools for their airline owners. Today's travel agency competitive environment
is largely defined and controlled by airline CRS.
This report describes:
 Airline reservation and distribution systems
 CRS processing and communication concepts
 Relationships between CRS and other industry components
 CRS and airline competitive strategies, as these pertain to reservation technology
 Non-reservation systems that interconnect with airline CRS
 Profiles of the major international airline CRS

1
Pricing in this sense refers to the application of fares, as contained in a fare database and as
specified by a rule database to specific itineraries as reserved by a traveler. Thus a travel agent will
make a reservation and price the itinerary—yielding a total fare, or price, for all segments within
the passenger's itinerary, when considered as a whole.
This is significant as airline reservations are frequently flight or itinerary-specific. For example,
fares between destinations A and B maybe lower if the passenger travels round-trip, if a certain
flight is used that the airlines desires to promote, or if flights with intermediate stops (as opposed
to non-stop flights) are used.
Fare databases are used to quote rates based upon passenger inquiries, but only a complete
itinerary price is used to issue a ticket and is guaranteed to the traveler.

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Airline distribution has been greatly shaped by deregulation and the rise of travel
agency computerization. Critical to understanding how travel distribution is managed
is an appreciation of the influence computerization exerts over travel agency
reservation and purchasing practices.
The role of automation in this area must not be underrated, as automation provides the
vehicle for airlines to effectively enfranchise dealerships among the travel agency
community2.
These dealerships play an important role in broader carrier distribution strategies.
Computers are routinely cited as representing significant competitive barriers to domestic
U.S. and international carriers operating within the U.S. (as well as in other areas), when
in reality market leverage is gained through much more subtle and effective means.
The marketing relationships described here are supported by automation within the travel
agency community, based upon the conditions existing in the U.S. market. Although not
directly applicable to many areas of the world, these U.S. experiences are indicative of
what other markets may expect as regulation is relaxed and competition increases. As
U.S. carriers expand beyond their national boundaries, both as to routes and agency
distribution, other countries make expect U.S. style distribution practices to be introduced
and competition to become more aggressive.

A HISTORY OF TRAVEL AUTOMATION


The fundamentals of airline reservation handling have not changed substantively for
decades. From the first basic, no-frills scheduled air service between Amsterdam and
London, inaugurated May 17, 1920 by KLM - Royal Dutch Airlines3 using a leased De­
Havilland DH164, passengers have required reservations and reservation record
management of some type.
Objectives of a Reservation Process
The systemization of commercial air travel in the 1920s and 1930s introduced the same
basic trip components that are used today:

2
Dealerships as understood herein are distributors that re pr ese nt t he pr im ar y inte rests of a
s in g le pr inc ip a l o r sma ll group of principals (vendors) to the overall detriment of
other vendors. The dealership may or may not effectively meet the needs of its
customers, depending upon the precise nature of its business practices.
Dealerships are typically thought of as automobile distributors or appliance stores.
Travel dealerships are looser and are rarely, if ever, identified as such publicly. The
airline vendor's relationship with its dealers allows significant benefits to accrue to the
enfranchising principal, regardless of how the relationship is described.
3
KLM is the world's oldest airline still operating under its own name, and the Amsterdam - London
route is the world's oldest air route.
4
Aviation “firsts” are always subjects of considerable discussion. While some airlines put their
beginnings prior to 1920, they carried mail, and not passengers. May 17, 1920 is used by most
sources as the beginning of scheduled, passenger transportation.

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 Scheduled services that potentially navigate a number of intermediate stops,
where a passenger may desire to travel only a portion of the aircraft's complete
route.
 Fares5 that apply to each portion of the passenger routing.
 Documentation, in the form of tickets which certify payment has been made and a
traveler has a right to transportation on a specific flight schedule between a
specific origin and destination.
 The necessity of managing reservations and cancellations, so that passengers may
rely upon the airline’s ability to accommodate them on their desired flights.
Commercial aviation and retail travel services revolve around the public’s desire for
certainty of accommodation on airline flights, and therefore, the necessity of pre-
reserving and pre­issuing airline tickets6. Some air services, such as no reservation air
shuttles, eliminate the need for pre-planning (all travelers are accommodated) and the
need for complex ticketing (a single or very simple fare structure is used). In general,
however, the role of airline tickets are ticket issuance has not changed in 70 years.
Early Reservation Management
Prior to the electronic age, reservations were managed manually using record books and
manifests, reservation cards, and other printed media. Many simple reservation
requirements are still (1990) met in this way7.

5
Fares are charges that apply for passengers between a specific origin and destination point, using
a specific class of service and a particular routing, as determined by the carrier.
In earlier times, fares were tied to distances traveled more closely than they are today. Now,
promotional and yield management considerations make it very difficult to project or establish
fares based upon distance alone. Outside the U.S., airlines often operate in regulated
environments, where prices are fixed by international agreements or government decision, rather
than by competition.
This occasionally results in considerable consternation on the part of travelers and consumer
groups, as these fare and pricing inequities are difficult to justify when examined outside the
larger airline pricing context.
Two of the world’s busiest air routes - London to Paris, and New York to Washington, DC- are both
around 220 miles. An unrestricted London-Paris ticket as of this writing (Fall, 1990) is £88 ($172),
whether the customer flies British Airways or Air France, whereas the price of a New York­
Washington shuttle ticket is $129 (The Economist, 1989).
6
Some travel agencies perform a financial function, in that they organize payments on behalf of
business travel purchasers and issue consolidated statements and invoices for tickets purchased.
This can also be a credit or cash management function, if the travel agency does not require either
payment on delivery or payment through a charge card with ticket issuance.
In either case, this is a minor part of any value-added by the travel agency to its business travel
customers.
7
Although “hard-copy” reservations management is more common in the hotel industry, many
substantive airline operations, operate in a primarily manual mode. These often use CRS inventory
displays for communicating sales made to a central facility, where the actual database resides in

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After the Second World War, air travel and airlines expanded rapidly. The “jet age”
arrived in 19588, and with it more passengers and larger aircraft, as air travel quickly
replaced train and bus as the main form of mass public conveyance. As airline schedule
planning became increasingly complex, reservation management systems reached
unwieldy proportions.
Reservations were typically recorded on cards, each card corresponding to a trip between
specific city-pairs. Cards were then organized by departure date and stored in tubs that
were rotated among various reservation agents as necessary. Reservation requests from
outlying offices were either telephoned to a central facility or transmitted via
teletypewriter9 and processed manually upon receipt. Reservations could only be made
30 days in advance of flight departure.
In the early 1950s, when the idea of electronic reservation systems first became practical,
it took approximately 2 hours to completely process an average reservation transaction10.
By the early 1960s, this time had been shortened to 45 minutes—still in a mostly manual
mode.
Early Computerization
During these same years, electronic, digital, computers were entering what is termed the
“second generation” of modern computational devices. Whereas the “first generation”
relied upon vacuum tubes and a number of competing mass storage systems,11 “second
generation” devices used the much more flexible and reliable transistor and magnetic
core memory almost exclusively.

manual form. This is one illustration of the absolute necessity of CRS as distribution tools, if not
inventory management tools.
8
BOAC (later consolidated with British Airways) began transatlantic service from New York to
London October 4, 1958. National Airlines (later purchased by Pan American World Airways)
began domestic U.S. service from New York to Miami December 10, 1958.
9
Telegraphy has a long history in the travel industry and is still an integral part of data
communications for many suppliers (as discussed later in this chapter). The term telegraphy
describes a telecommunication system whereby graphic symbols (using a small character set of
letters, numerals, and a few special control characters) are transmitted using a signal code that
describes each character so transmitted individually.
Frequently the 5-bit Baudot encoding system (from which the term “baud” is derived) is used,
particularly in print-based teletypewriter machines. Data processing (non-print media) telegraphy
can use any number of encoding systems, the essential quality being representation of discrete
characters by specific codes without intermediate states or gradation.
Teletype is the trademark of the Teletype Corporation for their teletypewriter devices.
10
(Software Magazine, 1989)
11
These included electrostatic storage, which was insufficiently reliable for most applications;
mercury delay line storage, a very slow (on the order of 500ms, or about 50 times greater than
1990-era storage media) system used only by UNIVAC; magnetic drum storage, widely used but
also slow; and magnetic core, the most successful process for both commercial and scientific
applications.

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In the early 1960s, work commenced on “third generation” digital computers. This era,
usually described as lasting between 1964 and 1975, is characterized by the introduction
of integrated circuits12 13, but which also produced operating systems, machine
instructions, and methods of data and memory management that were sophisticated
enough to form the basis for many of the large-scale commercial computers used today.
Thus, it is not uncommon to find large, important programs and systems that are rooted
in this era.
Development of “PARS”
This is the period when commercial data processing technology matured to a point where
large-scale airline reservation systems were practical. The early airline reservation system
projects were managed by IBM14 and UNIVAC15, with the most successful projects
developed in connection with IBM. There were several initial development projects
pursued by competing airlines, including United Airlines, Eastern Airlines, Trans World
Airlines and SABRE,16 developed in conjunction with American Airlines.
American invested what was, for the time, the tremendous sum of $40 million which
“would have bought the airline four Boeing 707s at a time when the entire fleet consisted
of fewer than 25 aircraft”.17
SABRE development began in 1958 and required four years of planning and two years of
programming. The system was introduced in 1964, using a modified IBM 7094, a second-
generation system. The essential SABRE operating system was proprietary to American
at this time.
In 1964 IBM also introduced the System 360, which represented an almost complete
departure from many machine design concepts employed by IBM prior to that time.
System 360 architecture was the most successful computer design up to that time, and
among the most successful of any to date. Although the 360 did not use integrated
circuits in many of the key areas usually associated with third-generation systems, its
design has much more in common with third than second-generation devices.
Understanding the basic premises of the 360, which was supplanted by System 370 in the
early 1970s, is important to appreciating many of the strengths and limitations of PARS-

12
During these years, LSI or Large-Scale Integration devices were produced. These are similar to
the VLSI or Very Large-Scale Integration devices (broadly defined as a device containing more than
10,000 transistors on a single circuit) used in today’s circuits, but on a less sophisticated level.
13
It is interesting to note that integrated circuitry, although pioneered in the late 1950s and
commercially available as early as 1961, was helped immeasurably on the road to wide acceptance
and practicality by the early U.S. space program.
14
International Business Machines, then, as today, manufacturers of the most successful, highly
reliable, commercial data processing devices and operating systems.
15
Now merged with Burroughs to form Unisys.
16
Semi-Automated Business Research Environment
17
(Software Magazine, op. cit.)

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type CRS. System 370 architecture is still (1990) central to IBM’s mainframe commercial
processor line.
American faced serious implementation
Key Aspects of System 360 Architecture problems with the early SABRE system, among
them capacity limitations. Shortly after the
 Large, complex instruction set intended to build
many capabilities into the basic design of the introduction of System 360, American
machine, thereby limiting, to a degree, the need for implemented a machine that provided supportive
many complicated programming steps. processing functions to SABRE, but did not
 Employed instructions embedded in migrate to the newer and much more powerful
microprogramming, stored in ROM components,
and efficient System 360 environment.
allowing application portability across a number of
machines using the 360 instruction set but In 1968 American reached an agreement with
employing a range of circuit designs and speeds. Eastern Airlines that allowed American to modify
 First large-scale commercial use of emulation,
whereby applications not directly employing the
and implement Eastern’s Programmed Airline
System 360 instruction set could be run by Reservation System (PARS) on its System 360.
simulating conditions on the hardware for which PARS18 was another IBM project, working along
they were designed. different lines from American’s SABRE effort, and
 Introduction of memory cache to aid overall machine built on behalf of Eastern. Other airlines had
speed. Successful introduction of large-scale virtual
memory operating systems and applications, launched similar, but unsuccessful, reservation
permitting time-sharing among a very large group of system development projects19. These
simultaneous sessions. eventually adopted the basic PARS system, and
modified it to meet their own needs.
PARS concepts, designs, and features still form the primitive foundation of most airline
reservation processing and management systems today. An international variant of the
PARS system, IPARS, followed the initial PARS project.
PARS was designed to run on IBM’s latest 1960s vintage commercial processors, System
360, and used a variety of existing and proprietary tools and software systems. Since its
introduction, IBM has assumed a leadership role in developing, enhancing, and
upgrading airline systems, supportive programs, protocols, and the hardware on which
they run.
System 360/370 architecture assured PARS’ usable life in the 1990s. As IBM upgraded its
commercial mainframe processor line, newer, faster, more powerful machines replaced
older systems in existing PARS installations. This was made practical because upward
compatibility was an important feature of the System 360 concept. Even though many
essentials of the PARS environment remained fundamentally unchanged over the years,

18
Eastern PARS is distinct from the proprietary airline CRS developed and market by TWA, and
which is now part of Worldspan, in partnership with Northwest Airlines and Delta Airlines.
Although the platform used by TWA developed from IBM/Eastern PARS, the CRS is a distinct
product with its own pedigree.
19
Trans World Airlines (TWA) has a similar development project with Burroughs, and United
Airlines worked with Univac (both Burroughs and Univac are now part of Unisys). Although
Univac did finally implement a somewhat successful reservation system, which was used into the
1980s by airlines such as Northwest Orient, the initial United Airlines effort was abandoned.

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hardware advances have allowed PARS to continue meeting the needs of ever expanding
CRS networks.
What Is PARS?
Rather than a monolithic program set or product, PARS is the essential foundation and
conceptual basis for airline systems. Because these concepts were replicated in later
modifications and revisions of the original PARS, there is great similarity among all PARS
systems, particularly the major U.S. CRS. This applies to operational practices, operator
formats, system capabilities and limitations, and ongoing enhancements. There has been
significant cross-sharing of PARS functionality because of IBM’s role as developer and
maintainer of the software tools that comprise much of the PARS environment.
Although this text speaks of “PARS and IPARS systems”, it does so in a generic sense, as
frequently there is little or no real difference in the software of one PARS-based system as
opposed to another. Where there are functional or architectural distinctions, these are
clearly identified. In reality, however, all major U.S. CRS have operated as independent
systems since the late 1960s.
Inventory vs. Passenger Systems
The initial airline automation efforts, including PARS, were inventory systems, and not
passenger systems. Based upon the management priorities defined in the late 1950s,
gaining centralized inventory control was the most important priority. These early
transaction systems processed reservation requests against declining inventory
allotments, but lacked even the relatively simple passenger record, service request and
file access capabilities of later PARS-type systems. The extensive schedule information
for offline (non-host) airlines was also lacking.
More extensive databases were partially visualized, but were only incorporated into later
PARS software releases after the initial inventory systems had been operative for some
time. These were also implemented in varying degree of sophistication, depending upon
the airline and system in question. There is more commonality between the schedule,
reservation, and booking modules of various PARS-type systems than there is in other
databases and functions.
Communication Limitations
Early airline systems lacked the sophisticated communications capabilities that are taken
for granted today. Large public data networks, sophisticated data transfer protocols, and
standardized interfaces were unknown. System planners operated in an environment
where even long distance telephone calls were relatively rare and expensive.20

20
The era where long distance telephone communication was routine really did not arrive until the
1970s. Although nationwide direct dial service had existed for many years previously, line
conditions were poor and rates high by today’s standards. The public generally limited long
distance telephone conversations to unusual circumstances. Although reliance upon the telephone
was more common in business, written correspondence still played a more prominent role in the
conduct of long distance business than is true today.
The extensive commoditization of telephone communications was brought about by the gradual
deregulation of long distance services, and subsequent lowering of rates, beginning in the early

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This necessitated low-cost, reliable, easily implementable and maintainable
communications methods to support information exchange between airline host systems.
Because of their role as product distribution tools, not just inventory systems, airline
computers in particular rely upon data communications to exchange information rapidly
and effectively. This is because interline21 reservations and ticketing have been
fundamental to world travel for many years. An airline’s biggest “customers” are other
airlines’ internal reservation centers and computers, who make reservations for
passengers as both as a pure convenience to their customers and as a source of
passengers that may transfer or “connect” from these airlines.
Communication between airline systems is necessary because the operator of one
system needs the ability to update the inventory and create reservations in another
system that operates independently of the one the operator is using. The system
functions as a computerized work environment and productivity tool for the operator. If
inventory sales and updates in “offline” systems can be accomplished electronically the
reservation process is much faster. The alternative is for the CRS operator to use the
te1ephone, which always increases the time required to make a passenger’s reservation
many times.22
The passenger also wants reliable schedule, availability, and reservation information as
quickly as possible. Particularly in the U.S., travelers are accustomed to “instant” results
and are dissatisfied if lengthy delays are introduced. Electronic messaging, together with
airline database practices, makes virtually instant reservation confirmations practical.
Early airline communications used teletypewriter-based messages that could operate
reliably at low transmission speeds, using existing, inexpensive, communication circuits.
These communications operated in a network-based mode, thus eliminating the need for

1980s, and the introduction of more advanced telecommunication technology, such as facsimile
machines (FAX) in the mid 1980s.
21
Interline refers to tickets (or ticket-related transactions such as reservations) issued by one
airline on beha1f of another. This is done because airline schedules often require coordination with
other carriers in order to fulfill customer needs. Thus, a traveler flying from Portland, Oregon to
London, UK must change planes at some intermediate city because there is no direct service.
The traveler’s itinerary might involve United Airlines between Portland and Seattle, Washington,
then British Airways from Seattle, non-stop to London. Only a single airline ticket would be issued
that would contain two valid flight coupons—one for the United flight and another for British
Airways. The traveler would also probably pay a single price, which would be divided between the
two airlines based upon formulas agreed to by the airlines involved. The passenger’s reservation
and ticket could be issued by either United Airlines or British Airways, because of the interline
agreements in place between them.
The overall effect is to simplify the transaction for the traveler and any travel agent that would
issue the ticket on behalf of the airlines involved.
22
Telephoning is very common in the travel industry, as some airlines do not make reliable
inventory information available to “offline” systems; others are not automated at all. Telephone
calls for reservations routinely take several minutes at best, and can take much longer, if the
reservation center called is busy or telephone communications are unreliable. This contrasts with
electronic inventory sale messages which the operator completes in a few seconds.

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dedicated circuits between each reservation system. Airline messaging systems are
described later in this report under the heading Connectivity.
These basic communication formats and practices are another legacy from the early days
of airline computerization and still serve much of the industry today, albeit in an
enhanced and upgraded form23. While the original interline communication methods are
practical, they are neither flexible nor particularly efficient and have been extensively
replaced by modern communication technology.
It is interesting to note that considerable work had been done on developing more
efficient data communication methods during the same years airline systems were
developing, particularly to support military projects24. For various reasons this technology
was not incorporated into the early airline system projects25.
Software Development in the 1960s
It is difficult for many people, regardless of their familiarity with computers and
programming, to appreciate many of the constraints large-scale developers operated
under in the 1960s. Today, most commercial programmers are avid PC enthusiasts and
are accustomed to working “online” both at home and professionally. Using a CRT that
directly accesses a computer workspace, they write program “code” or instructions
electronically in a disk file, “compile” their programs (produce a set of machine
commands ready for execution by a computer based upon the “source code” or
instructions created by the programmer) online, and test them as each portion of the
program is completed.
Sometimes emulation programs are available that permit PCs or other small systems to
behave like large commercial mainframes, so that programmers can experiment in an
environment much like that where their final work will reside26. Modern programming has

23
These are detailed in the publication: Reservations Interline Message Procedures -- Passenger
(ARIMP), current edition, Montreal: International Air Transport Association.
24
Univac played a large role in this development.
25
Partly this was doubtless because a comparatively “low-tech” approach to meeting the
communications needs of the embryonic worldwide airline systems industry, where all phases of
communications technology were underdeveloped and not completely reliable, was deemed more
appropriate.
It is also partly true that the right applications and designs were simply not made available to the
right airline system designers at the right time.
26
There are numerous other programmer tools that make the production of machine instructions
easier and more reliable. Most rely upon close interaction with a processor of some type, so that
the programmer gains real experience as the work progresses.
An illustration is Microsoft’s excellent PC-based Quick-BASIC programming environment. Here
programmers use an online screen editor to create their code, assisted by online help files and
self-editing features that identify potential errors as they are made. Programs, parts of programs,
or even individual steps can be tested at will through an emulation feature that avoids the
“compile” step and demonstrates what the final product will actually do on the host computer.

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come to depend upon interaction with a processor and “debugging” or error-correction
almost at will.
It was not uncommon for programmers in the 1960s to never actually see the computer
they worked on--indeed, programmers working exclusively on software of similar vintage
are sometimes similarly disadvantaged. Instructions were written on pre-printed forms
and transferred to punch cards by clerks specially trained for that task. Those cards were
then “loaded” into the computer in batches and the program was run. Debugging was
always necessary, but the programmer could not depend upon constant interaction with
the processor, because the input, load, and run functions were much more complicated
and time-consuming.
Hardware in the 1960s was limited and expensive. Computer time was valuable and also
expensive, so much so that skilled programmers often spent considerable time trying to
reduce the number of steps their programs required. Modern programmers have much
greater and less expensive machine resources available to them, which eliminates the
need for such precision27.
Computer Languages
Computer languages are sets of symbols, instructions, and statements used by
programmers to control the operation of a computer and its peripheral devices. In its
basest sense, computers “understand” only binary code - series of Os and 1s, or “on”
and “off” conditions. While it would be possible to construct programs using binary code,
it is so difficult that it is almost never done. Other “languages” are used that can then be
translated or “compiled” into instructions that the computer can execute.
Assembly Language is a term loosely used to describe symbolic instructions that a
programmer uses to direct specific, predetermined responses from the computer. The
programmer does not work directly with binary code, using instead alphabetical or other
symbols that equate directly to binary instructions28. Since assembly language directly
controls individual actions or series of actions that the computer performs, it is specific to
each machine where it is used. In other words, an IBM System 370 uses a different
variation of assembly language than does an IBM PS/2. Many early programs were
written using forms of assembly language, and this form of programming is still used
where programmers must optimize the responses of the machine for which the program
is developed.
Most airline system and application programmers use a form of assembly language,
which accounts for much of their development and maintenance. IBM is introducing
enhancements to the programs used by airlines that, once implemented, will allow more
flexible development tools to be used.

27
To illustrate, the first computer the author, used was an IBM 360/20 that had 48k of magnetic
core memory and very few peripheral devices. Contrast this with today’s PC which is routinely
equipped with at least 640k of semiconductor memory, a CRT, and numerous peripherals.
28
Sometimes, depending upon the type of assembly language used, a program called an
assembler is used to translate certain parts of the program into a form suitable for the computer.

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So-called “higher-level languages” approximate human communication and are
compiled into object programs that can be executed by computers. Whereas an assembly
language programmer exercises significant control over each action the machine
performs, a high­ level language programmer focuses on the result desired and relies
upon the compiler to control individual machine instructions. While this obviously results
in greatly increased programmer productivity, a given program can and often does result
in very inefficient object code that does not optimize machine resources or capabilities.
Transaction Processing
At the time PARS was developed there were several successful “high-level”
programming languages in use29. Online transaction processing systems, similar to those
required by airlines, had also been built or planned by this time. The architects of PARS
were able to build on this body of experience, while tailoring a system to meet the
specific needs of the airline planners that also participated in the project.
IBM’s Airline Control Program (ACP)was the first transaction processing tool applied
PARS-type airline systems, beginning in1965. The Transaction Processing Facility (TPF)
was part of ACP, but developed more specialized applications and was used more
independently as time progresses.
In 1984 IBM positioned TPF as a strategic product that would serve a different specific
market segments together with MVS and VM, IBM’s state-of-the-art operating systems.
IBM modified TPF by introducing numerous extensions that dramatically increased its
power and attractiveness to users30. TPF now runs in native mode31 on IBM 3090
machines, the system used by the majority of current generation airline systems,
meaning that a host operating system is no longer required.
An early problem with TPF, indicative of the era when it was developed, was that only a
uniprocessor32 could be used.
This was corrected with releases subsequent to the 1984 announcement. An equally
important enhancement was TPF support for compiled source code, whereas previous1y
TPF programmers used assembly language.

29
Fortran (1958), Cobol (1960), and Algol (1960) are examples of several that are still used (with
ongoing revisions and refinements) today.
30
This, in part, accounts for American’s decision to migrate to a “pure” TPF environment—a
project undertaken with significant expense and risk. SABRE’s access to product enhancements
and IBM support is thereby significantly enhanced. Further, the programming upgrades introduced
into TPF promise to make it a much more productive environment. These advantages were not
available to hybrid systems.
31
Native Mode usually refers to a computer operating environment that is specific to a particular
type of machine, within which applications can be run without the need for interpreters or
specialized operating environments that are foreign to the machine in question.
32
Uniprocessing means that instructions are executed by the processor sequentially, as opposed
to multiprocessing, where several processors function in parallel, executing coordinated
instructions.

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Although TPF enhancements were successfully embraced by many airlines, some
airlines, including American, continued to use a highly optimized form of ACP for years.
American converted to TPF from a hybrid ACP/TPF environment completely in 1991. This
is very significant, as it allowed American to operate directly on hardware and software
that are part of IBM’s product mainstream, thereby reducing American’s long-term
software maintenance expense and giving it a much more direct path to the latest
technology33.
Current Airline Automation
Some idea of the complexity that current airline reservation systems have achieved can
be gleaned from the accompanying description of TWA’s PARS system34.

TWA PARS Snapshot

 TWA’s system has about 50,000 communication terminals in the field worldwide. The size of the database is about 850 gb (two to
the thirtieth power; significant storage for its day) and is stored on 340 of 3380s DADS. It is fully duplicated for performance and
availability reasons. About 8% of 850 gb are occupied by passenger records.
 A typical daily workload is about 20 million transactions. The peak performance rate is about 800 TPS.
 The average rate is 552 TPS with a response time of 1.5 second.
 Reliability of these systems is also an important parameter. A partial database recovery (recovery from transaction or system
program failure) takes about two minutes. A cold start (total failure or starting system from scratch)takes about eight hours. In
1972, TWA lost about $2 million and in 1976 about $250,000 due to system unavailability. However, the airline has improved its
software reliability and did not have a major system outage for the last two years.
 Initially, it had a 9083 CPR that ran on a 3083 uniprocessors. Since then, it has gone to multiprocessors (3390), four of which are
dedicated to on-line processing. TWA can accommodate up to eight processors that might give it adequate power to reach 1,000
TPS

By comparison, SABRE, the largest system in used by travel agents today, currently
operates its Passenger Service System, one of five major divisions of SABRE, on 6 IBM
3090/200 series machines and 224 IBM 380 disk drives. Each drive has approximately
1,320 mb, giving the system a total storage capacity of 296 gb per volume. Current
memory is 726 gb.
SABRE has announced figures of over 1,800 transactions processed per second during
exceptional peak periods, and anticipates 2,200 or more in the future.

33
Although American’s implementation of mainstream technology is a significant and correct
strategic step, it is debatable whether the new environment provides as much high-volume
transaction processing flexibility and capability as did American’s hybrid ACP/TPF system
While a detailed discussion of this question is beyond the scope of this text, it is well to remember
that American’s decision was a strategic move, undertaken for reasons apart from pure transaction
processing capability.
34
Per Vijay Kumar (Kumar, 1990). Vijay Kumar is an assistant professor of computer science at the
University of Missouri—Kansas City. His research areas are distributed systems, object oriented
and expert database systems. Copyright Association for Systems Management 1990, used by
permission. This material is based upon (Gilford & Spector, 1984) and (Buckley, 1989).

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Airline systems share the same goals as other high-performance transaction processing
environments:
1. Reliability. As illustrated, downtime can significantly affect revenue and costs.
2. Responsiveness. User productivity degrades rapidly with decreasing response
times. In the highly competitive CRS area, small variances can result in a lasting
competitive disadvantage.
3. Price/Performance. An optimal environment must be in p1ace at an acceptab1e
cost, both to the CRS and the user. This is a major challenge as CRS continue to
develop and user appetites for new and more extensive applications increase.
4. Enhancements. The CRS environment must be sufficiently adaptable to allow
creation of the functionality users require. This has been difficult using old-style
ACP/TPF systems, but will change as more standardizes and sophisticated
operating environments are created.
5. Process and System Integration. The most effective development path for the CRS
will be to effectively integrate local, distributed systems and microcomputer­
based workstations into the CRS environment. This is an extraordinarily difficult
task to do effectively, given pricing limitations35 and the restrictive nature of CRS
communications, architecture, and databases.
Transaction Processing Fundamentals
Today all airline systems operate as online transaction processing systems36. A
transaction system allows operators to initiate queries and requests for specific
applications, view the results of these applications in real-time, act upon the results of
this process, initiate follow-on transactions that are determined by the results, and update
files or records based upon information resident with the user rather than within the
system. These events are driven by a series of independent interactions between the user
and the system, known as transactions.
Transaction-based systems differ from other conventional computer applications (here
applied specifically to airline systems which are among the largest and most complex
transaction systems):
 Transactions Discrete and Independent. While the information contained within
one transaction may affect other transactions (perhaps because they use a
common database where updates initiated by one transaction may be passed to a
subsequent transaction), one transaction is usually not dependent upon another,
nor connected with another as to time.

35
Most CRS highly subsidize user (travel agency in the main) hardware and software. Rea1 CRS
revenue is obtained through transaction fees charged to vendors. There is a complex relationship
management challenge facing not only the CRS but others who would use the CRS as a value-
added network. This is a fundamental premise that is usually overlooked by would-be CRS
application developers.
36
By far the majority of transaction-based systems produced today, regardless, of application, are
online systems.

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Batch-oriented systems, by contrast, manipulate data elements as a group. There
may be extensive data dependencies in such systems, and omissions of some
elements would require the entire application to be rerun.
 Databases Updated and Queried as Needed. The transaction system works using
information stored in a database and the results of online data entry are usually
recorded in a database.
 Geographic Separation. Transaction systems function without regard to where
their users are located (as long as the requisite communication services are in
place) Users working on the same system may be separated by thousands of
miles.
 Concurrent Sessions. Because transaction systems usually must support many
(sometimes thousands) of users, they emphasize performance and throughput37.
Since many system users may require access to the same databases
simultaneously, transaction systems must support user sessions38 running
concurrently, while maintaining performance and the integrity of individual data
elements.
 Queries and Requests for Applications Responded to Real-time39. Thus the
timeliness of data supporting an online system become critical, as old data cannot
be used to make reliable decisions. Data must also be synchronized within the
system, so that databases are consistent for all users and transactions initiated or
updated by one user available to other users and do not conflict with updates
made by other users.
 Limited Functionality. Airline CRS attach functions to the database query and
update portions of the online system. These functions act upon data retrieved
online from the CRS, or input online at the user’s site, and produce specific
responses, such as calculated prices for traveler itineraries, printed itineraries, or
tickets. Online transaction systems offer few functions to their users, as compared
to the range of functions that could be designed for the system, and these have
limited, specific purposes.
 Data Accessibility. Most required CRS data are available continuously while the
system is operating40 and can be accessed at random. This contrasts with batch­

37
Essentially meaning the time a transaction takes from its initiation to completion—including
manual and computerized steps and processes.
38
In this sense, an individual user’s interaction with the system in order to accomplish a specific
purpose (such as make a reservation for a passenger) is termed a session. A session might include
dozens of transactions and database queries, all of which would come together in the completed
passenger’s reservation.
39
A real-time application delivers a response during the time that the application is physically
running on the computer, so that the process can receive interaction from the user and be directed
accordingly. In airline reservation applications, for instance, requesting flight availability is an
interactive, real­ time application because the user determines specific parameters and modifiers
that are used to deliver “correct” flights, making the decisions as to what modifiers to use while
interacting with the system.
40
There are CRS databases that are used for internal MIS or other purposes not essential to system
operation. These may not have continuous availability.

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oriented systems where data necessary for one application may not be available
unless that application is running, and where offline storage (such as on magnetic
tape),and sequential data access is required.
 Event-Driven. Transaction systems must undergo regular maintenance, as must all
complex systems. CRS also have scheduled database updates, as for schedule
changes among other purposes. The CRS will also schedule certain applications
affecting many transactions to be executed at specific times. This helps shift
system load to “off­ hours”41.
Most transaction-related processing, however, begins when users initiate
transactions by entering or retrieving data and not based upon any particular
schedule. It is impossible to predict when specific transaction-based functions will
be required or from where on the network they will originate. This necessitates
complex capacity planning and continuous availability of basic system functions at
all times when the system is operative.
 Point-of-Entry Editing. Online transaction systems reject incorrectly formatted
instructions or data blocks as these data are entered and return an error message
to the users real-time, so that a correction can be made and the entry reattempted.
This must be done because interaction with the user is essential to the online
transaction system’s successful operation, and only “good” data can be used for
this purpose.
 Transaction Size. Most batch or single application computer systems take several
minutes to execute all but the simplest applications. Many larger programs can
take hours or days to complete. The real-time, event-driven nature of the
transaction system requires responses within seconds42. This means that systems
must be designed and programmed for optimal speed43 and transactions are kept
small to achieve the best responsiveness. CRS reservations, for example, are
compilations of many individual transactions, each executed individually but
which, together, complete the traveler’s desired reservation.
 Data Integrity. Each part of the CRS database, particularly passenger reservation
records, must be current at all times and reflect the best possible condition of the
data44; no delayed updates are acceptable. This is necessary because the random
nature of transaction systems makes it impossible to assume that any available

41
A good example is the electronic filing of passenger reservations that have been coded to be
ticketed on a certain date. This typically occurs overnight, when system usage is at a minimum.
42
1.5 seconds is the standard for most responses using SABRE. In other words, a user receives a
response to any entry made within this time. The sole exception is the complex “best fare” pricing
program, designed to locate the lowest air fare for a particular itinerary, which can take
approximately 5 seconds.
Users are very conscious of system responsiveness and routinely complain if even a few seconds
are added to familiar response times.
43
This is part of the reason assembly language programming, which is intrinsically faster than
many (not all) high-level compiled object programs, is used extensively in airline CRS.
44
This means that there may be inaccuracies in the database, but these must not be planned or
intentional. The system cannot assume that some inaccuracy or old data is tolerable.

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record or data element will not be the next required by some user on the system.45
This applies only to CRS data that are used for transaction processing.
Understanding TPF
TPF is a proprietary development and processing environment specifically designed to
facilitate entry and processing of a large number of simultaneous transactions from
multiple network terminals, where extensive database queries must be managed against
large quantities of data and where overall responsiveness is a critical factor. A transaction
is defined as a single entry, or a series of entries that are assembled in an electronic work
area and completed at one time and that, in turn, initiate other actions within the system.
Industry experts define airline transaction systems as high-performance, in that they
typically process in excess of 500 transactions per second, with an efficiency rate of one
second response time over approximately 95% of transactions processed.
TPF is based upon a variant of assembly language. The entire work environment is so
unique that programmers skilled in its application and management are called “TPF
Programmers” and are among the highest paid professionals in that aspect of the data
processing industry.
Online transaction systems are becoming more common ways to access and update
databases. As these applications grow in size and complexity, more powerful and fully-
featured development environments and tools, such as TPF, become important. TPF
development is very expensive and demanding, causing many potential users (who are
not already committed to installations partly dependent upon TPF, as are the major CRS,
or who simply cannot use a less powerful transaction processing facility) to explore more
affordable alternatives.
It is important to define TPF’s role as a transaction management, rather than a database
system. TPF controls terminal­based queries and responses, and disk access, while other
programs are developed or purchased and integrated to handle true database functions.
1960s era software development defined database management as strings of commands
directed at multiple files (as opposed to the hierarchical or relationship-based structures).
These older techniques are decidedly less flexible than is today’s database technology,
but are efficient to access and store in an online environment while requiring relatively
little (per transaction) machine overhead.
Because TPF, and the airline systems that use it, are reflections of this environment, they
are not especially powerful, based upon today’s standards, as transaction processing
tools. Effective airline systems rely upon other applications, independent of TPF, to
support the database functions required of online systems.46

45
CRS do contain “non-essential” data that do not fit this definition. For instance, there are text-
based reference pages in every PARS-type CRS that contain general information of definite value
to system users but not essential to, or directly involved with, transaction creation or update.
46
“The Bank of America plans to use TPF as the basis for a high-volume transaction processor
front-end using IMS as the back-end system, and is also planning to enhance the power and
capability of TPF.”

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Role of PARS Today
All this contributes to the characteristics that still shape PARS-based systems. The legacy
and limitations of PARS-type systems have been very frustrating to CRS suppliers and
users. Agents appreciate the basic commonality
PARS Characteristics between PARS-type environments, that makes it
fairly easy to learn a new system once one has
 Careful, intricate design, where many programs been mastered, but do not appreciate the cryptic
and applications work in concert to produce formats it uses (characteristic of 1960s-era
desired results. systems). Suppliers like the high-reliability that has
 Relatively inflexible structure that must
incorporate modernized versions of very old
been achieved through constant refinement and
programs with new applications to meet today’s diligent maintenance of their PARS environments,
business needs. but, with agents, are dismayed at the difficulty (and
 An ACP/TPF basis that is intrinsically expensive expense) of introducing modern functionality.
and difficult to maintain, and very challenging to
update­ and that does not always have the latest Many people believe that PARS systems are
technology tools available to it. nothing more than antiquated 1960s technology
 Non-standard communication protocols and and must ultimately be replaced by current
interfaces that are unique to the airline industry,
are character rather than data-oriented, and are
technology. Several years ago this was a common
not efficient when used to support modern theme particularly among misinformed government
applications. regulators who criticized airline software
development and management practices as not
being in the public interest.
“… a good example would be the April 6, 1982 issue of The Travel Agent, which
reported then CAB47 Chairman Marvin Cohen as having ‘scored one point with
travel agents’ by telling a Washington, D.C. ARTA48 meeting that airline computer
reservation systems should be criticized for being unable to track complex fare
changes under deregulation.

(Kumar, 1990). Note: IMS or Information Management System is an IBM database support
product.)
In this same article, the author expresses the opinion, “In its present form, however, it (TPF) does
not offer a solution to transaction processing problems.” It is correct that TPF does not offer a
comprehensive solution to the range of difficulties associated with transaction processing, and its
longevity (at least in present forms) may be questioned, but the large, high-volume, successful TPF
operations in place today are sufficient testimony of its value as a transaction processing tool.
47
The Civil Aeronautics Board, a U.S. federal governmental airline regulatory body dissolved as
part of the Airline Deregulation Act of 1978. Many of its functions are now assumed by the
Department of Transportation; others by the Justice Department.
48
The Association of Retail Travel Agents, an industry group that limits its membership to
businesses actively involved with the sale of travel to the public at a retail level.

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“Mr. Cohen expressed numerous errors of fact. One was:
‘If an agent seeks one display of the lowest prices of all airlines (flying)
between Washington and New York, he or she will fail’, which drew light
applause.
“In reality, I believe all major systems did an acceptable job of providing this
information …”
“His remarks also included a statement that the software used by United and
American is 20 or more years old and that it would take as long as two years to
“reprogram the computers”49.
“The technology to place remote computer terminals in almost every travel
agency location did not exist 20 or even 10 years ago50.
“No major airline today uses operating systems from 1961. Some of the basic
formats and functions have been in use for a long time, but they are continually
revised and updated. This is the nature of any complex data processing system.
Programs for the major systems will not be re-written now or over the next two
years. The systems will update and modify their current procedures, but will not
start over.”51
All airline CRS use the most modern communications, storage, processor, and related
technology available. PARS-based systems preserve the remnants of their beginnings,
but each CRS has developed along different lines and operates and is maintained
independently. Today’s CRS often struggle with significant expense and effort to free
themselves of their inbred limitations, but each works with programs that are
comparatively modern and bear the mark of their own unique development histories.

HISTORY OF TRAVEL AGENCY AUTOMATION


In the mid 1970s, prior to initial travel agency automation, ticket preparation and
distribution were usually performed more cost-effectively by travel agencies than by
carriers directly. Estimated average airline ticket office reservation processing costs were

49
In the same talk, Cohen stated:
“The technical capabilities of today’s computerized systems reflects the old regulated
industry and they (the airlines/CRS) must adjust to the new, competitive regime.”
What, at the time, was mistaken for technological limitations was really an unavoidable
consequence of deregulation. This is so because the most challenging CRS consequence of
deregulation is database maintenance, which is hampered by significant, non­technological,
limitations. There have been significant pricing and fare-search tools developed for the major CRS,
but the fundamental database problem remains and has not changed significantly, although the
trave1 agent’s and the public’s ability to deal with the problem have improved greatly.
50
This is because the transaction load experienced by today’s CRS, based upon their broad travel
agency user bases, could not be accommodated by systems of that vintage.
51
Excerpted from a four-part series, The Right Decision for the Right Reason (Wardell, 1982),
published in The Travel Agent. Copyright 1982 by David J. Wardell. All rights reserved.

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approximately 16.2%, whereas agency commissions were only 7%. Overall distribution
costs could be reduced if a carrier’s agency volume increased, particularly regarding
largely point-to-point business air tickets.52
Agency commissions during the regulated years were set by industry agreement,
whereas today carriers determine compensation levels independently. General practice,
with some exceptions, has held base commissions to 10% of net air ticket value (the total
price less the 8% federal transportation tax), for an effective commission cost of 9.2% to
the carrier53. At a 7% commission level, when the 8% tax was also in effect, the effective
rate was 6.44%.
Airlines regarded travel agency distribution as cost-effective, without any fixed overhead
costs, and, because travel agencies are found everywhere, a more efficient method of
ticket distribution than was opening their own ticket sales offices.
Other strong incentives were present to direct more sales to agencies, among them the
need to control steadily increasing costs which a regulated environment did not permit to
be fully borne by the traveler. Distribution (or agency) costs can be influenced directly,
unlike fuel, as an example, where costs increased dramatically during these years and
over which a carrier has little direct control. The airline industry also expanded greatly
during these years and needed a broad, relatively economical distribution system.
CRS as Travel Agent Productivity Tools
As manual processing methods do not permit great expansion of most agency
transaction volumes, automation was made available as a tool to raise booking and
document preparation productivity. The almost concurrent development of CRS and so-
called “back room” (agency accounting systems)automation made large regional
agencies and nationa1 chains a reality. A1though large agency networks existed before,
mega-agencies with sales counted in the 10s and 100s of millions are impossible without
automation, specifically CRS.
Value of Tools to the Agency
The primary reason the CRS suppliers are also interested in travel agency accounting
automation relates to the overall effect such automation has upon agency operation and
competitiveness. Because tools are so critical, particularly concerning large agencies, the
vendors perceive significant opportunities to control agent loyalty through access to
these tools. Where the vendor can provide comprehensive automation to the agency,
front and back room, the value chain is strengthened regarding total services provided by
the carrier as is the agency’s overall commitment.

52
This is costs refers specifically to airline City Ticket Offices (CTOs), which are storefront
1ocations handling ticket sales much as a retail travel agency does. Airport processing costs were
somewhat less. Ticket-by-mail programs, never universally adopted by airlines, have consistently
represented the most cost-effective distribution mechanism, but cannot meet the needs of high-
volume business accounts and are also unattractive as some risk must be assumed where tickets
are sent through the mail.
53
The federal transportation tax is currently 10%, making the airline’s effective commission rate
9%.

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Sophisticated tools are very expensive for a large agency, making conversions from one
CRS to another much more difficult because of outright costs and retraining expense,
were a conversion attempted. The vendor assumes that agencies receiving full
automation support from a single source (accounting and CRS) are more committed,
financially and practically, to the vendor than is an agency with partial recourse to an
independent supplier.
This has caused most of the CRS suppliers to experiment (some less successfully than
others) with supplying agency accounting system products. The aggressiveness with
which the CRS vendors have pursued backroom agency automation as part of overall
distribution strategies has largely decimated certain segments of the independent
accounting system market.
Teleticketing
As early as 1960, some major airlines began installing teleticketing machines in select
travel agencies. This service was based upon standards implemented by the ATC54. Any
airline could transmit tickets electronically to any travel teleticket machine by adhering to
these standards. Many, but not all, airlines offered the service.
The machines were modified teletypewriters that were accessed by the airline’s
reservation center using normal telephone circuits. Once accessed, the machine could
print a ticket, using special stock, in between one and three minutes. The most common
(and for many years the only) supplier of teleticketing machines was RCA55. Agents
purchased the machines and provided the telephone circuit necessary to operate it.
Agencies received teleticket machines under the sponsorship of a major airline, which
took responsibility for ordering and installation of the machine, periodic maintenance56,
and informing other airlines of the telephone number necessary to access the agency’s
machine57. Agencies were initially offered the machines based upon their sales volume,
but the practice later became so popular that the smallest agencies used teleticketing.
Travel agencies paid small fees, of between 50¢ and $1.00 (there were several fee
adjustments over the years) for each ticket issued.
The travel agency benefitted because laboriously writing tickets by hand (with not
infrequent errors) could be reduced and because the airline issuing the ticket computed
the price and assumed responsibility for its accuracy. The airline benefitted because

54
Air Traffic Conference of America. An airline industry cartel that set standards (both commercial
and technological) for relationships between airlines and travel agencies, and policed these
relationships.
55
Radio Corporation of America, a pioneer in the electronics industry; merged with General
Electric in 1986.
56
Which was minimal because the teletypewriter machines used by RCA were extremely rugged
and reliable; later machines from other suppliers had more problems.
57
Airlines sponsoring teleticket machines varied based upon the carriers represented in various
markets. Where one airline was stronger than others it usually took responsibility for installing the
machines in select agencies.

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agency ticketing errors were reduced and productivity improved, which was important for
reasons just explained.
Teleticketing enjoyed widespread usage until well into the 1980s (past the beginning of
the CRS era). Widespread agency computerization eventually rendered the machines
obsolete, but many were still in place as late as 1985, although new installations had
ceased.
Teleticketing was popular because it was the only semi­automated productivity tool
available to most travel agencies. It was not without problems:
1. Ticket issuance was not instantaneous. The earliest teletickets were composed
using teletypewriter terminals designed for the purpose and transmitted once all
relevant data had been input. Agents usually tried to give an airline 24 hours to
complete this process, as even a “rush” same-day request could take hours.
2. The more technologically sophisticated airlines eventually began transmitting
teletickets directly from their computers but, as pricing software in particular was
not fully developed, manual composition was still frequently necessary.
3. As travel agency ticketing volumes increased, the burden of issuing tickets
centrally became unacceptable for the airlines.
4. While, overall, the teleticketing process was very reliable technologically, there
were frequent mechanical problems, sometimes caused by using 9-part forms
(necessary because airline tickets require this many copies) in the teletypewriter
machines, resulting in misalignments and retransmissions.
5. Not all airlines offered teleticketing services. This was particularly inconvenient
where foreign airlines and frequently complex pricing and itineraries, were
involved.
Airline Reservations in the Travel Agency
It was clear to agents and airlines that substantive agency productivity gains could only
be achieved by making the same general type of automation used by airlines for
reservations available to travel agencies. Initial projects were launched to explore
technological and commercial options through industry trade groups. All these failed
because of government regulatory difficulties, impractical business propositions, or poor
technological vision.
Many airlines made reservation systems available to select agencies, chosen either
because of their value and importance to the airline or simply as test sites, with the first
systems installed by American Airlines in 1968. Trans World Airlines and United Airlines
installed their own systems beginning in 197258. These early systems were very limited
functionally, as they displayed availability only for the host airline and were more airline
reservation systems than travel agency CRS.
What is a CRS?
Several large airlines have created CRS entities that make reservation and related
function systems available to travel agents. These are specialized online transaction

58
The Trans World Airlines and United Airlines reservation system experiments were discontinued
in 1973, while American Airlines continued to maintain equipment in some large agencies.

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processing systems and databases that are specially designed to meet the needs of travel
agents. A CRS provides:
 Airline and AMTRAK (rail) schedules59.
 Availability for transportation carriers that have agreed to pay booking fees (the
CRS’ primary revenue source) for reservations made through the CRS.
 Fares for services (air and rail) maintained in the CRS Storage of user and
customer-specific databases.
 Communication facilities necessary to support interline reservations and special
service messages (such as seating and meal requests) that users may initiate on
behalf of travelers whose reservations are made through the CRS.
 Storage of traveler reservation files (PNRs) Applications, such as ticketing and
itinerary issuance, that produce printed documentation based upon reservation
files and other CRS data.
These services are adapted for travel agency needs. While the airline’s own reservation
and ticket office operations require similar functions, they are not the same. For instance,
there are very strict rules (federally mandated) specifying how the CRS may display flight
availability, in order to give all airlines participating in the CRS equal access to potential
customers, based upon the merits of their flights (departure, arrival, and elapsed time,
stopovers, and origin and destination airports). An airline is under no such limitations for
its own reservation system and will display availability and schedules for its own flights
to the exclusion of competing services.
Thus the airline’s own reservation system is a different application, even if it shares
computer resources with a travel agency CRS. The early attempts at travel agency
automation preceded the development of the CRS60 and were simply terminals for the
airline’s system.
The First Travel Agency CRS
By 1975 the last of the “industry” system projects, this time an effort called MAARS61, a
switching system that would allow agency users to be connected directly to it and
conduct sessions in individual airline reservation systems, as desired by the operator,

59
AMTRAK schedules, availability, reservations, and ticketing are offered by the major U.S. CRS.
There are projects underway to make similar services available for European rail services and
ferries, but none has thus far been finalized.
According to John Desmond (Desmond, 1989), Writing in Software Magazine and quoting Max
Hopper, Senior Vice President for information systems at American Airlines:
“The effort to include the trains and ferries of Europe into the reservation systems is a
massive, continuing project. But it is essential to compete in Europe, because so much
travel in that market uses multiple modes. He (Hopper) indicated the situation is analogous
to the 1960s in the U.S., when airline transfers prolonged the minimum two hours
necessary to make a reservation.”
60
Indeed, the concept of a travel agency CRS was not well-defined at that time.
61
Multi-Access Airline Reservation System. Multi-access is discussed in more detail in the
connectivity section of this chapter.

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was over unsuccessfully. A multi-access system called MARS62 was eventually brought to
market by ITT, with significant help from Eastern Airlines and a number of smaller
carriers. It was never operationally or commercially successful and eventually folded after
Eastern withdrew marketing support to pursue its own sales for its own CRS product,
SODA63, later SystemOne.

Figure 1: Relative CRS Market Share

American Airlines and United Airlines began aggressively marketing SABRE and Apollo,
their respective CRS, at this time. Their stated intentions were to invest in travel agency
automation to the extent necessary to establish automated distribution networks
nationally. Both corporations allocated millions of dollars to the project. TWA also
actively marketed PARS at this time, but more on a regional basis.
These three systems were sophisticated travel agency-oriented reservation tools, for the
time, and were free of many limitations that faced earlier efforts. A number of other
airlines, among them Western Airlines (now merged with Delta Airlines), Allegheny
Airlines (now US Air) and Alaska Airlines, offered reservation products to selected
agencies within their primary markets. These were far less sophisticated than SABRE,
Apollo, or PARS and were quickly eclipsed by the superior products.
Demand for CRS automation far outstripped the suppliers’ ability to install and support
the systems, so the largest agencies were selected to receive systems first. Smaller

62
Multi-Access Reservation System.
63
SystemOne Direct Access.

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agencies were frequently unable to automate for months after their larger competitors64.
Once in p1ace, however, the CRS allowed agencies of all sizes and descriptions to achieve
massive productivity gains and support sales volumes previously unreachable.
For example, using today’s CRS environment, good reservations agent productivity in a
commercial (as opposed to leisure) sales environment is $1 million in air sales annually.
Without a CRS, an agent would find it difficult to maintain commercial agent productivity
much in excess of $250,000 annual air sales.
Later CRS Developments
CRS quickly proved itself as a good business and, more importantly, a distribution tool of
unparalleled effectiveness in the travel industry. This motivated Eastern Airlines to market
SODA (SystemOne) beginning in 1981 and Delta Airlines to market Datas II in 1983. Both
vendors started late in the CRS game and found it difficult to build market share,
particularly among the larger business travel agencies that are the most valuable
distributors.
Eastern and Delta did create credible products and were able to protect their own primary
markets from competing CRS to a large degree (the importance of this is discussed later).
Delta merged its system with PARS in 1989, while SystemOne continued to be marketed
independently into the 1990s.

Figure 2: CRS Market Share Trends

64
It is interesting to note that some of the first CRS installed nationally were placed in commercial
accounts (corporations with large travel volumes and in-house travel arrangers), rather than in
travel agencies. This was also true for many of the first teleticket machines.

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Aggressive marketing and product sophistication allowed SABRE and Apollo, in that
order, to establish the largest market share of any U.S. CRS, followed by PARS as a
distant third. SystemOne and Datas II, when introduced, took market share from each of
the earlier three, with a slightly greater percentage coming from PARS. SystemOne
exceeded PARS in number of installed CRTs by 1987, although not in booking volume,
due to the somewhat larger average size of PARS agencies. PARS installed base
recovered rapidly, due to ongoing operational and business problems at SystemOne.
CRS Bias
After travel agency automation became an accepted business tool, the CRS recognized
that manipulating screen displays results in incremental bookings, for one carrier at the
expense of another, depending upon how the screen display is influenced. Between 70%
and 90% of airline flights booked by a travel agent are reserved from the first CRS
availability screen displayed, assuming the agent’s initial availability request was
accurate, with 50% of flights being booked from the first line of the first screen. In a
competitive industry, where product differentiation is often tenuous, some CRS e1ected
to actively influence agent flight selection based solely upon screen management.
So-called screen bias in the Apollo and SABRE was well-documented, while PARS and
SODA were less overt and DATAS II used its unbiased nature as a point of competitive
differentiation.
Extensive user and consumer pressure eventually lead to the introduction of federa1 CRS
standards that eliminated the most overt forms of screen bias. Some experts believe that
displays can still be manipulated,65 but certainly to a much lesser degree than in the past.
Bias is discussed in greater detail on page 40 of this report.

BASIC CRS OPERATION


The following sections illustrate basic CRS operation by following a typical transaction
from beginning to end. The SABRE system was chosen for these illustrations; however
the similarities between PARS-type systems will make the examples applicable to most
other CRS. The examples also assume that a travel agency, and not a corporate travel
manager or airline reservation center, is using the system, and that the most current
hardware and software releases are available.
Sign-On
Most travel agencies do not “power-down” their CRS equipment overnight. Restarting
the LAN, once an installation is completely shut down, can be difficult and requires some
expertise. Most suppliers also believe that normal hardware “wear and tear” is reduced if
restarts are minimized66. No CRS start-up procedure is usually needed.

65
One way this is said to be done is through manipulation of display algorithms and flight times.
66
This fact is clearly demonstrable in medium and larger­sized computer installations. A complete
power-down for many large computer centers would create problems of near disaster proportions.
The effect is far less clear with small systems. In the authors opinion, regular power-downs of
small computers is not harmful and probably prolongs equipment life for two main reasons: (1)

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The agent’s first step is to LOGON to the system. This is a two-step process which
involves a unique operator identification code and a password. While this is the most
obvious level of security, there are others.
Each CRS user location is assigned a unique identification code, termed a pseudo-city
(PCC) because it is not a true “city” code, as far as an airline is concerned. A CRS city
code is a unique identifier that is assigned to each airport location the carrier serves. A
pseudo-city, therefore, identified a physical location that is not an airport.
A PCC is a 4-character alpha-numeric string67. Normally only a single PCC would be
assigned to each agency location, but some installations requiring special services, such
as multiple communication circuits, may have several. The PCC allows the CRS to route
reservations (PNRs) to electronic files, known as queues that belong to the location. The
PCC also identifies reservations made by agents working at the location so that agents
from other PCCs cannot access the same PNRs, unless that access has specifically been
authorized by the agencies involved and the CRS.
This process is known as cross-access or bridging, depending upon the CRS. There is
normally a monthly charge for each cross­access privilege open.
Each reservation created or modified by an agent is marked by the PCC of that office. If a
reservation was created by one agency and later transferred to another, as customers
occasionally request, the “ownership” of the PNR follows the last agency to modify the
reservation.
Security
Travel agencies are concerned about security. They believe that their PNRs should not be
accessible to agents they do not authorize. There is considerable evidence to support the
claim that even non-malicious “snooping” can create financial or perhaps worse,
customer relations problems for an agency. An unscrupulous competitor might try to
solicit new customers based upon information gained from examining PNRs, for
example. While CRS security is a real travel agency problem, its actual effects are
probably overstated.
The CRS have developed security procedures, such as those outlined above, which are
sufficient to prevent most forms of unauthorized access. Similar measures are in place at
the sophisticated CRS, although these vary considerably in their composition and
effectiveness. In most CRS travel agents cannot view:

Small computer mechanical devices, such as hard disk drives in particular, are far less robust than
those designed for larger systems and suffer due to extended wear; (2) Office (and home) power
conditions are not nearly as well conditioned as are large data centers, which makes office
systems much more vulnerable to power surges and other anomalies if they are left running
unattended for long periods.
67
SABRE uses 4-character PCCs; other CRS use three.

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 Reservations created by another travel agency using the same CRS, where no
cross-access is authorized.
 Reservations created by another travel agency using another CRS
 Reservations created by the host airline’s own general reservations center-
although some CRS do allow agents to access these reservations.
For obvious reasons, airline reservation centers, ticket offices, and CRS support staffs can
access any reservation created by any travel agency.
Transaction Synchronization
Once initial SIGN-ON is complete, the agent is working in what is known as an AAA68 or
Agent Assembly Area. “Agent” in this sense refers to any CRS operator as an “agent”.
The AAA is a short-term electronic file where the elements of the PNR, the passenger’s
actual reservation, will be “assembled.” This is a key concept in CRS operation. Each
agent, when signed-on to the CRS properly, has several AAAs available for use. The
agent can toggle between them at will, and have reservations in various stages of
completion in each -all functioning totally independently. The agent cannot move
reservations or information between the available AAAs.
All work that a CRS “agent” does in a session is completed only in the AAA until a
specific CRS “event” is invoked. This means that the agent can reserve flights, seats,
special meals, and enter all other required parts of the PNR prior to permanently
modifying the CRS’ major databases. In other words, the work the agent does is
temporary—it exists only within the AAA until it is made permanent.
The agent does this by ending the transaction, that is, closing the AAA and updating the
databases that will be affected by work previously done in the AAA. Each CRS has an End
Transact (ET) button or command string (as in SABRE) for this purpose. Nothing done in
the AAA is permanent until the “ET” event takes place.
This CRS process is both a valuable feature and a significant inconvenience. In fact,
however, the CRS could not operate effectively without it. One ongoing challenge for all
online transaction systems is transaction synchronization. The temporary nature of CRS
work helps to address this challenge.
Reservations that the agent desires to modify must be retrieved into the AAA. As with
new reservations, no change made to the reservation is permanent until ET. If another
agent, perhaps from the airline or from another authorized travel agency location,
displays the same reservation and begins to modify it, a conflict must result- which one is
working with the “real” reservation? This conflict can also be programmatic from within
the CRS. If an agent is modifying a reservation while an SSR message is sent from an off-
line carrier or while a schedule change comes through, that agent is no longer working
with the latest version of the reservation—any changes made might be irrelevant, based
upon the new information.
The CRS resolves this conflict by saying that the first agent (or internal CRS process) to
remove a PNR where potential conflicts exist by ET has created the latest version of the
reservation.

68
Termed “The Triple A.”

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Other agents working with the same reservation can continue to make changes in their
AAA, but the CRS inhibits ET by sending the “simultaneous changes” response.
SIMULT CHANGES TO PNR69
Once this condition is created, nothing agents can do will allow the system to accept their
changes, because these were made on a version of the PNR other than the “latest.” If a
great deal of work has been done, this can be a frustrating experience. The agent must
invoke another CRS command, “Ignore” (I). This clears the AAA and allows the agent to
retrieve the reservation and begin the process over again.
All changes or reservations made in the AAA when “I” is invoked are “ignored”.
Reservations and seats return to inventory, and nothing is stored from that session in any
CRS database. This applies only to host seats and inventory. When working in the AAA
on the host carrier’s flights, desired inventory is pulled on a provisional basis. The host’s
availability listings are reduced by the number and nature of services reserved in the
agent’s AAA. Thus, if there was 1 seat left on AA flight 1 for a certain date, 0 seats would
be shown as available once a reservation for 1 person had been started in an agent’s
AAA. If a reservation in progress is “ignored”, 1 seat is returned to inventory.
If an agent is forced to “ignore” prior to completing the transaction, there is a possibility
that the same services (flights or perhaps individual seat assignments) may not be
available when, the process is attempted again. This does not apply to “offline” inventory
and seat assignments, as the CRS does not send sell messages to other systems until ET-
unless certain forms of direct access are used (explained later).
On the other hand, “ignore” can be valuable. If a traveler requests cancellation of a flight
so that alternate reservations may be made, the exact services desired frequently are not
available and the traveler decides to “stick with what they have”. Since all AAA changes
are provisional, the agents only has to “ignore the transaction” to return the PNR to its
last state.
Manipulating the AAA
The AAA may be displayed by the agent at will. In SABRE this is done by using the *A
command, where * is the “display” character and “A” the delimiter for “all”, meaning all
data in the AAA. If the command is invoked without a reservation in progress occupying
the AAA, the response “NO PNR IN AAA” is generated. Agents may also display parts of
the data in the AAA, such as “name,” “itinerary,” “passenger data," and so on, by using
the appropriate code. These commands are used because lengthy itineraries may be too
large to display on one CRS screen, and the ability to segment parts of the AAA for
display as necessary makes the transaction easier to manage.
Other parts of the PNR are not normally displayed and must be specifically requested.
Once a PNR is changed after its initial creation, a “history” file is added that contains a
complete listing of all changes made to the reservation, in descending chronological

69
“Simultaneous changes to PNR.”

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order. The agent uses “history” where there are questions as to why a reservation was
modified or who authorized the modification70 by invoking *H.
Once the AAA is occupied by a reservation in progress, that reservation must be ended
by ET or I if it is a new reservation or if changes of any type are made to an existing
reservation. If the agent tries to display another existing reservation before this is done
the response “FINISH OR IGN PNR” is generated. If no changes have been made to an
existing reservation, that PNR is automatically “ignored” when a subsequent request to
display an existing PNR is initiated.
Text Reference
Once logon is complete, SABRE displays one or more brief informational messages that
may be of use to agents. These are usually changed daily, but may be changed at will.
Their purpose is to bring information to the operator’s immediate attention that might
otherwise be overlooked, such as a major air traffic system or weather delay, a labor
dispute that will disrupt air service, or particularly in the age of deregulation, the
bankruptcy or cessation of operation of an air carrier.
These specialized text messages are related to the CRS’ general or Direct Reference
System (DRS), which may be invoked by the agent at will, even while transactions are in
progress in the AAA. The DRS is a very simple text-based file system, which is used to
store information that is supportive of CRS operation but that does not require frequent
updates, such as availability or flight information (scheduled arrivals), which changes
constantly. Some typical DRS examples include:
 Marketing messages from airlines, hotels, car rental companies, and others that
participate in the CRS and pay a fee for the privilege of including information on
selling their products through the CRS. Information about the products may also
be included.
 Immigration and visa information.
 Ground transportation from major airports to the cities they serve.
 Local weather conditions71.
 Information on shows found on Broadway, in London, Atlantic City, Las Vegas, or
Reno.
 Information on the correct operation of the CRS itself.
DRS “pages” are displayed by referencing their location within the filing system by
means of a unique character string. The CRS then copies text from that “page” to the
screen originating the request. Data in the AAA are not affected. This is done so that
agents may break their work flows to answer customer questions or obtain information

70
Passengers may be unhappy if reservations during peak periods of demand are canceled, for
instance. A complete “history” file makes it possible for the agent to inform the passenger of the
date, time, and individual who authorized the change, thus relieving the airline or other CRS user
from responsibility for unsatisfactory reservation changes.
71
These displays are updated frequently—usually several times daily. Some CRS have weather
information systems that operate independently from DRS.

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required to complete a transaction in progress, then return to that transaction without
losing continuity with whatever work was underway.
Help System
DRS is not the only way a modern, sophisticated CRS, such as SABRE, has to make
information on its correct operation available to users. A text-based “help system” is
often available for operator reference.
FOX, SABRE’s help system, is illustrative. FOX is not context-sensitive, in that it cannot
reference work in progress in the AAA and suggest commands or procedures based upon
the transaction presently before the operator. Individual FOX text “pages” must be
referenced directly by the agent.
FOX differs from ordinary DRS in that more complex commands, employing keywords,
are used to locate desired pages. The agent builds strings of related words so that
searching for the desired page is greatly reduced. Once an initial FOX page is retrieved,
the agent is directed to additional references containing more detail.
Reservation Process Flow
The CRS agent begins work on a transaction by requesting availability of flights, based
upon the traveler’s particular needs. Usually air availability is requested prior to cars and
hotels, with the air itinerary forming a shell around which added services may be
deve1oped, a1though a PNR need not necessarily contain air reservations.
Cars and hotels are the other large availability systems within the CRS. They operate
separately from the air availability system, although many of the same principles are
employed.
In any major CRS, the ratio of car reservations to air reservations is very low, and the
ratio of hotel to air reservations still lower. This is partly because the availability and
reservation environments offered by the CRS for hotels and cars are very limited and
imperfect, but it is too simplistic to ascribe limited CRS use in these areas to functionality
alone. The simple fact is that travel agents, the primary users of CRS, do not routinely
make (or even offer) hotel reservations to their customers- CRS-based or otherwise. This
is a selling deficiency and predates the introduction of CRS in travel agencies.
The basic SABRE availability screen is displayed by forming a command string beginning
with the 1 delimiter, followed by the date of travel, cities for which availability is
requested and a desired departure time:
120JANJFKLAX7A
The CRS responds with an availability screen that is organized based upon algorithms
and display criteria unique to that CRS, and that are designed to display schedules that
will be more desirable to the passenger first. Thus non-stop flights are shown before
flights with stops, and direct flights (non-stop or otherwise) before connections where
p1ane changes are involved. Schedules with the least (scheduled) elapsed travel time are
also shown first. The availability display also indicates what type of aircraft is used for
each flight and a numeric grading, based upon U.S. Federal Department of Transportation
data on flight timeliness. The number of stops made by individual flights, if any, is also
shown.

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In the accompanying illustration, American Airlines flights (the “host”) show 9 seats as
available for each class of service offered on the flight. If less than 9 seats are shown,
then that number represents the exact number of seats allotted by the airline to that class
on a specific flight. Offline flights show either 4 seats (the maximum number that can be
sold under the “sell/no-sell” conventions used by the CRS)72, or 0 seats, if availability has
been closed for that flight and date by the airline in question.
If no flights meeting the traveler’s requirements are displayed on the first availability
screen, the agent may request numerous subsequent screens until the optimal flight is
located, based upon the CRS’ internal availability logic, these screens are offered in
generally descending order of flight desirability.
The several classes of service are indicated by letters accompanying the number of seats
available in that class. An individual airline determines what classes will be displayed for
each flight. These “classes” are mostly for inventory control purposes, in order that the
airline may allocate a given number of seats for discount or promotional fares. There are
usually only two physical classes of service on an aircraft - first class and coach class;73 all
other discounts sit in the coach cabin. Some flights add a third “business class” to
specific flights, which represents a differentiated physical service on the flight and
normally is not open to discounts or promotions74.
Agents access inventory in what we have described generally as an online, real-time
environment. Under such conditions, when seats are reserved, inventory is decremented
and the same space cannot be sold to another system user unless a cancellation ensues.
Airline inventory is defined as seats available to be sold on any particular flight segment,
as determined by the actual number of seats on-board the aircraft together with inventory
management adjustments - upward or downward—that compensate for anticipated
conditions such as necessary overbookings due to no-show experience on the route.
When reservations are requested for the CRS supplier or user host, inventory is
instantaneously decreased by the required number of seats.
Off-line carriers, those with their own inventory systems that are not part of the CRS host,
operate in a sell/no-sell environment. The CRS user may “sell” typically up to four offline
seats in any one transaction. The “sale” is recorded in the agent’s AAA until an ET is
initiated. A sell message is then transmitted to the computer system where the inventory

72
More than 4 seats could be “requested.” This means that the agent could initiate the transaction
and wait for a teletype­ writer message from the airline in question to verify that the number of
seats required had been reserved. In such cases, reservation confirmation is not automatic.
73
Outside the U.S., coach class is referred to as economy class.
74
Business Class is a compromise between first class and coach or economy class. It lacks the full
set of in-flight amenities found in first class, but is still a grade above coach. It is intended to
appear to business travelers where budgets may not tolerate first class fares, but where a
comparatively modest fare differential for business class may be acceptable.
Business class seating is very popular on international flights, where long distances make the extra
amenities attractive.

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is managed, and appears in that system in the same way as do reservations made directly
in it. When a mathematically predetermined point, (which differs between flights and time
periods) is reached, a no-sell condition is created and inventory is closed in the offline
CRS system—no further sell messages are accepted from offline systems.
The airline manages no-sell messages to other carriers so as to permit as many bookings
as possible, but not so many that the inventory management parameters for that flight
are violated- in other words, to limit the possibility that the time lag between the instant a
CRS generated sell message is created and the instant that message enters the
reservation system where inventory for that flight is stored might cause too many seats
to be sold.
Because inventory is usually closed to further sales from other systems prior to the point
where all available seats are actually sold, there are some variances between CRS. In
other words, SABRE might show space available in economy class on a British Airways
flight from London to Stockholm, whereas British Airways’ own BABS CRS (where the
airline actually maintains and manages its inventory) shows no space available on the
same flight.
In practice, when a discrepancy of this type is identified, BABS would automatically send
a message to SABRE instructing that inventory be closed to further economy class sales;
given the huge number of airline flights daily, such discrepancies are fairly rare.
The agent reserves flights based upon conversations with the passenger, then enters data
necessary to identify the traveler in the AAA:
 Name
 Telephone contact
 Person making the reservation
 Ticketing arrangements (date the traveler will pick-up the ticket)
This is the required information for any basic PNR. Other information, such as traveler or
travel agency addresses may also be entered, as necessary. In SABRE, the agent can
enter two addresses: one that will be electronically transmitted to car and hotel
companies whose services form part of the PNR, and another that would be used for
accounting purposes, if the CRS is interfaced to an external travel agency accounting
system. Typically the travel agency enters its own address in the transmitted field and the
passenger’s address in the accounting address field.
The agent can also request seating and special meals for travelers. These can be
confirmed real-time for the host carrier, but require that electronic messages (usually
teletypewriter) be dispatched for off-line carriers. The agent can also display actual seat
maps for the host and certain off-line carriers where the required connectivity has been
achieved (discussed under Direct Access, page 39).
Normally, however, off-line seating would be requested by general location (aisle or
window; smoking or non-smoking), rather than by specific seat.
All U.S. CRS have special fields for recording frequent traveler identification numbers.
These are marketing programs, sponsored by the major U.S. airlines, which regard
participants based upon the number of flights they take. The number must be part of the
traveler’s PNR in order for credit to accrue. If an offline carrier is involved, the agent

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enters the appropriate number which is then transmitted to the reservation system of the
airline providing service75.
The larger U.S. airlines offer their frequent travelers benefits that increase by levels based
upon the number of flights taken. This affects the CRS reservation process because some
CRS functions are made available only to the most frequent travelers, as identified by
their frequent traveler numbers.
United Airline’s Mileage Plus frequent traveler program is the best example. United
rewards its most frequent travelers with Premier status within the program. A premier
member’s number is identified as such when entered into United’s Apollo CRS. Premier
status entitles members to preferred check-in at the airport and special seating on some
flights. The CRS recognizes a premier traveler when the number is entered and makes
these seats avail­ able. They are usually located in the front of the coach cabin. Thus aisle
seating in the forward part of the cabin may be available to United’s best customers—
Premiere Mileage Plus members—when that seating is not offered to the public generally.
Car and Hotel Reservations
The agent may also access car and hotel availability systems and make these services
available. In SABRE, a car availability screen is requested for the city where a car is
desired. It is maintained much as is flight availability—in the sell/no sell environment -
unless special connectivity (explained under Direct Access, page 39) is in place. Each car-
type offered is represented by a unique coded identifier. The availability display, as
shown in the accompanying illustration, is organized to offer a large number of cars from
several vendors simultaneously76.
The car transaction identifies the type of car and length of
Car Preferred Customer Programs
time required. Information is included to identify the
Hertz Number One
agency making the reservation, so that the car company
Avis Wizard may remit commissions after the rental is complete77.
National Emerald Aisle Other optional information that can be included with the
Budget Budget Express reservation identifies the traveler for any enhanced
services the car company may offer.

75
This process is fairly imperfect at present and, even where properly formatted and entered,
frequent traveler number transmission is notoriously flawed.
76
This reflects the commodity nature of the car rental product, as perceived by the CRS. In other
words, one car is pretty much like another, there is little substantive information that can be
passed by the CRS to the user about specific car-types, so the important information becomes type
and availability only.
77
Agencies issue airline tickets and deduct their commissions when tickets are issued. Car rentals
are not generally pre­ paid, hence this system is impractical and commissions must be remitted
once final charges have been established.
Commission payments are a major source of travel frustration, as many vendors are extremely
careless about and accurate commission payment, while others simply ignore agency
commissions due entirely.

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The major U.S.-based car rental companies have developed preferred customer
databases that reduce customer processing times when renting cars.
When the traveler includes a unique identification number with a reservation, all relevant
data pertaining to a car rental is automatically made available to the station where the car
is to be rented. This includes driver’s license number, credit card number, car preference,
and type of optional insurance desired. The information can be pre-printed on the
customer’s rental contract, thereby greatly reducing the amount of information that a
rental agent must request from the traveler upon arrival.
This number is entered into a CRS-based car rental reservation, along with numbers
identifying the traveler as eligible for any discounts that may be offered.
Since so many potential rate combinations are possible, based upon corporate,
organization, or individual discount programs78, optional insurance, taxes, as well as car
type and date, it is extremely difficult to accurately quote car rental rates using a CRS—in
advance of a final statement received from the vendor after the rental is complete. While
all major CRS contain car rates, these are useful only as illustrations and not as definitive
charges the customer will actually pay.
Hotels reservations follow the same basic process, except that there is considerably more
differentiation in hotel products, less commonality of rates and room-types, and therefore
more descriptive information required. All CRS-based hotel availability and reservation
processes use the sell/no-sell methodology no enhanced connectivity has been achieved
between any hotel vendor and CRS.
The agent must be careful to include a credit card number or other information (as
specified by the hotel in question) to guarantee a reservation, if required under the hotel’s
policy. Usually travelers arriving after 6:00pm are required to guarantee their
reservations. In the event the traveler does not honor the reservation, a credit card charge
for a one night stay would be processed. Reservations may also be guaranteed to an
address (agency or business) in some cases, or by advance deposit. This information is
accommodated by the CRS and transmitted to the hotel’s reservation system along with
the sale message.
Changes
Most CRS reservation changes are simply cancel and rebook processes - a reservation
segment is canceled and a substitute replaces it. There are no true changes or
modifications to reservations already existing without canceling them in PARS-type
systems.
The sole exception is when reservations containing multiple passengers require
modifications that do not affect all members of the party. In this case a divide function is
provided that separates one or more individuals from a reservation so that their file can
be changed.

78
These programs are quite pervasive in the industry, to the effect that most car rental business is
covered by a discount program of some sort.

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The agent initiates the divide function by specifying the individuals that require changes.
A new file, showing only these names, is created in the AAA. Cancel and rebook is then
performed on this reservation, as appropriate. Once this is complete, the agent uses a file
command (F), which places the reservation in temporary suspense. The original
reservation, less the individuals that were separated out, is then displayed. CRS
procedures indicate that the agent cross-reference the two reservations using OSI
messages, indicating that passengers previously traveling on a single reservation were
now separated. Changes affecting only this group of travelers can also be initiated on the
reservation, as appropriate.
Once both reservations are complete the ET command is invoked, which completes both
files. Messages are then sent to offline airlines that may be involved in the reservation,
indicating that the PNR should be divided and changes made. This is an obviously
complex process that is somewhat unreliable because all airline reservation systems do
not accept the complicated stream of messages necessary to properly divide reservations
equally well. For this reason, many CRS users routinely create separate reservations for
all passengers, regardless of whether they are traveling together or not, in order to avoid
the potential necessity of dividing reservations later.
Training
All major CRS have online training environments that allow simulated reservations to be
made. Accessing this environment requires using a specialized sign-on code. Agents
using the CRS that have logged-on under this code can access most functions of the
system, but any reservations they make cannot be ended by ET - they are automatically
“ignored” once completed79.
The CRS also have online scripted lessons that are used as basic educational tools for the
system. Again, specialized sign-in codes are used. Once in the lesson system the agent
cannot create individual reservations but can access pre-scripted files that demonstrate
the operation of the system and provide commentary on its correct use. The 1essons
must be accesses sequentially and correct responses given before the trainee can move
on to following pages80.
CRS Connectivity
Communication between CRS is critical to the interchange of availability updates and sale
messages. This communication must be reliable and quick, and must also support
communications between varieties of reservation systems that vary considerably in their
sophistication. While by far the majority of airline reservation communications are
handles electronically, some smaller local carriers still rely upon voice or paper
communications.
The most basic form of electronic CRS communications involves telegraphy. Here,
character-based messages are formatted using accepted delimiters and character

79
The main limitation of the training environment for travel agents is that tickets cannot be printed
unless a completed PNR is on file. Reservations created by the training environment cannot be
used to simulate ticketing because they never leave the AAA.
80
U.S. airline CRS were among the first extensive users of online simulation and training systems.

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schemes agreed to by the majority of international airlines. Several types of messages
are used depending upon whether reservation, availability, schedule, or other data are
involved.
These messages may be transmitted between reservation systems using direct
telegraphy circuits that connect two systems to each other or shared telegraphy circuits.
There are several shared systems in common use, including ESS, SITA, and ARINC.
These are essentially networks that facilitate connectivity between participating airlines.
Messages may be addressed to any participant that is connected to the system. This
eliminates the need for direct or dedicated circuits, but does not give equivalent
performance.
Because shared system messages are slower and somewhat less reliable than are direct
circuits, many airlines bypass the common networks and use more advanced system-to-
system data communication channels. In recent years these have been built using
modern protocols instead of character-based telegraphy. IBM’s SNA81 and bisync82
protocols are in common usage, as is a variant of the X.25 protocol.
Another form of enhanced connectivity is so-called “direct access”, which bypasses data
messages entirely and uses actual sessions conducted in offline systems. In order to
understand how this works, we must first explain how CRS “sessions’’ are managed.
Concurrent Session Theory
All CRS workstations are connected to the host and have more or less equal access on its
resources as needed. They are not physically connected and exchanging data with the
host at all times, however. The thousands of terminals supported by a CRS would require
tremendous system resource to support if they were all active constantly. Instead, the
CRS use a system of virtual connectivity.
When a CRS session is opened in the agent’s AAA the CRS recognizes the “address” of
the terminal that is conducting the session. Whenever that terminal transmits data or
character-based commands to the CRS it is directed to the same AAA location within the
system’s memory. The AAA remains active (subject to an overriding, general time-out
limitation) until the transaction is ended. Although the agent’s terminal remains
physically connected to the CRS at all times, and although it is logged-in as active, the
CRS does not interact with it until the next data transmission or request is received.
Since most terminals are sitting idle on the system at any given moment (even when a
transaction is in progress, most of the time required to complete that transaction is idle
time- such as while a conversation is taking place with the customer), the CRS can
support thousands of terminals that are virtually connected, in that they appear to be
connected and active to the user, whereas in reality they are only connected when it is
necessary for them to be so.

81
Systems Network Architecture. The IBM data communication standard, widely implemented in
the computer industry, which describes the relationship between IBM’s virtual telecommunication
access method and the network control program.
82
Bisync or Bisynchronous transmission is a standard used for controlling synchronous data
transmissions. The Bisync standard specifies message format and line protocol.

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Direct Access
Direct access uses virtual connectivity to interrelate sessions between CRS. An agent
using direct access uses a specialized character string to invoke the process. The CRS
recognizes the commands coming from the agent’s
Major International CRS
terminal and translates them into a form
understandable to the system where direct access is
SABRE American Airlines
in place. It then opens a virtual session in the offline
Covia United Airlines system and processes the agent’s request. This can
British Airways be a request for availability, a sell message, a fare
Alitalia
KLM - Royal Dutch Airlines request, or a DRS request.
Swissair The offline system responds to the CRS and includes
USAir
Abacus Partnership the address of the agent terminal where the request
initiated. The response is then passed directly to the
Worldspan Delta Airlines
agent’s screen, where action is taken, as indicated.
Northwest Airlines
Trans World Airlines Thus the agent is able to gain the benefit of virtual
access into multiple CRS, without the need to learn a
SystemOne Continental Holdings
variety of commands as would be required if a
Gemini Canadian International multi-access system or gateway were used (whereby
Air Canada
the agent’s terminal actually became as if it were
Galileo British Airways connected to various CRS, as specified by the
Alitalia agent). Because the database of an individual
KLM
Swissair
carrier’s reservation system normally has better data
Austrian Air concerning that carrier, the agent can work from a
Aer Lingus more complete database and provide more accurate
Sabena information to travelers.
TAP
Amadeus Air France A variant of direct access is used by several CRS to
Lufthansa enhance their performance. Sometimes the CRS
Iberia programmatically opens direct access sessions in
SAS
Finnair
offline CRS, without specifically being commanded
JAT to do so by the agent, in order gain access to the
Adria Airways vendor’s complete availability.
Air Inter
This process is used by some CRS to enhance car
Braathens Safe
reservations also. Here a direct access session is
Emirates Airlines
Icelandair
opened in a car vendor’s system. When a sell
Linjeflyn
message is generated, the CRS takes traveler name,
Abacus Cathay Pacific
phone number, and address data directly from the
Singapore Air
agent’s AAA, without the need to end the
Malaysian Airways
transaction, and submits the sell message to the car
China Airlines
Philippine Airlines
vendor’s system83. A confirmation number is
Covia partners
received and returned real-time to the agent’s AAA,
so that a car can be confirmed and assured through a confirmation number immediately.

83
This process obviously requires that complete passenger name and other data be present in the
AAA before a car reservation is initiated. If these data are not present the direct access connection
fails and the system reverts to standard communication methods.

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CRS AS MARKETING TOOLS
The principal U.S. CRS vendors have individually invested hundreds of millions of dollars
to automate travel agencies. This was done for purely economic reasons, initially
unrelated to computer profits. Only recently have the CRS vendors viewed data
processing and automation as revenue centers independent of airline marketing benefits
accruing to the sponsoring carrier. All the U.S. CRS have created independent computer
subsidiaries not only to provide automation services to the airline but also to exploit data
processing opportunities within other industry segments as well as in unrelated fields.
Airline Economics and CRS
Incremental volume is critical to any discussion of airline distribution, as in any high
fixed-cost business. Airline fixed costs average between 80% and 85% of total costs.
This simple economic principle is important to understanding how drastically incremental
passengers affect overall carrier profitability, as this accounts for a range of activities
which, taken in isolation, may be perceived to be economically questionable.
The cost/revenue structure is such that relatively small negative passenger shifts result in
large losses, most of which cannot be compensated for through cost-cutting. Small
positive passenger shifts, so-called incremental passengers gained at the expense of a
competitor- produce substantial profits, so much that the carrier may be willing to make
significant investments in agency “loyalty” programs, tied to CRS or otherwise.
Screen Bias
Overt manipulation of CRS displays (termed screen “bias”) was practiced for several
years, to the benefit of the CRS vendor­ carrier (the “host”) and, to a lesser degree, other
carriers willing to pay fees in return for preferential displays (termed at the time “co-
hosts”). The existence of bias has been thoroughly documented and described by
governmental and independent private researchers. Although precise financial impact is
difficult to measure, it is generally accepted that the “have-not” carriers (those without
travel agency CRS) lost tens of millions of dollars in incremental passengers to the
“Hosts” and “co-hosts”.
The co-host issue was heavily debated during this period. It is generally understood that
co-host fees secured general parity in screen display but that overall benefits remained
greater for the Host. Each CRS vendor had unique co-host programs that changed from
year to year.
Many airlines objected strenuously to the degree of control the CRS vendors exercised
over the distribution system, as did some (but not all) travel agency groups.
These culminated in a 1984 U.S. Federal Government regulatory decision that overt CRS
bias should be eliminated and that certain standard practices guaranteeing “have-not”
airlines generally “free access” to the major CRS networks should be adopted.

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Table 1: Estimated Internal Rates of Return (IRR)
Earned by
Airline-Owned Computer Reservation Systems

Contribution to PARS/
End Year APOLLO SABRE Worldspan SystemOne
Airline Earnings
1984 106.6% 128.2% 63.9% 144.4%
BO% of bias & 1986 108.9% 129.5% 75.2% 137.2%
halo revenue (a)
1992 109.6% 129.7% 91.9% 145.0%

1984 43.6% 63.9% n/a n/a


40% of bias & 1986 53.4% 68.7% 19.8% 54.2%
halo revenue (a)
1992 58.1% 70.5% 42.1% 74.1%

1984 n/a 5.7% n/a n/a


Actual % of tkt
revenue (a)(b) 1986 13.3% 22.8% n/a 9.6%

1992 25.5% 31.5% 24.7% 37.8%

Computed from historical and projected cash flows and residual


Source
asset values reported by the entities in question.
n/a indicates that no positive cash flows were reported during
Note the period and thus no return was earned on the investment over
that period.
Including indicated percent of vendors’ estimates of CRS
contributions to host airline revenues (incremental revenues)
(a) from bias and halo effect through 1984, and from the halo
effect only after the CAB rules went into effect.
Including same percent of incremental revenues as the percent
of domestic passenger revenue actually passed through to
(b) airline operating profit during the period of commercial
operation for each CRS. These figures are 5.1% Apollo; 5.6%
SABRE; 0%/2.5% PARS/Worldspan; 3.2% SystemOne.

Although there continue to be complaints regarding CRS displays and timeliness of


system updates, the focus has largely shifted from overt screen favoritism to a more
subtle process of agency incentives, market support, and strategic affiliations, which are
tied to CRS practices only in part. The principal means of direct CRS involvement in
agency dealership maintenance is the so-called Halo Effect by which incremental
bookings accrue to the CRS sponsor.

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Understanding the Incremental CRS Halo Effect
A travel agent, using any CRS, has a natural tendency to book the flights of the carrier
providing the system. This behavior has been well-documented and is routinely accepted
as fact by CRS, although the precise mechanism causing incremental bookings to accrue
is complex and not dependent upon any single factor.
The travel agent has greatly increased confidence that the information available about the
CRS vendor’s services, fares, and availability are accurate, as opposed to those of off-line
carriers that may participate in the CRS. Since most agents can cite numerous instances
where inaccurate information has created customer dissatisfaction or otherwise adversely
affected business, the agent tends to favor a carrier where the best information is
available.
This is partly because the nature of airline computers does not encourage timely updates
or accurate information. Availability is usually not real-time, with “OK” or “Not OK to
sell” status being employed; true seat inventory is not maintained for off-line carriers.
Tariff updates are also inconsistent as most CRS use limited sources for these data, such
as ATPCO and OAG and not the off-line carrier itself, with changes often lagging severely
from the time they become effective until the updated information is available to a CRS
user.
Part of a successful CRS-based dealership
strategy involves consistent contact with
the agent, so that the confidence stemming
from information access and reliability is
reinforced. CRS gives the vendor a cost-
effective vehicle to maintain agent contact
both on a personal level and through
electronic or informational messages.
The computer’s functional range is
generally greater respecting the CRS vendor
because no computer-to-computer
communications are involved and no
nuance of interpretation between the
command structure of differing machines.
Figure 3: CRS Cash Contribution Customer requests such as special meal,
(Assuming 80% Halo Revenue) seating, or boarding passes are easier for
the agent to provide.
This is because airline computer communications, whether using ARINC, SITA (ALC or
SLC command structures) or through direct communications links (which may employ
industry-standard protocols or the same ALC/SLC technology) are typically primitive by
current communications standards and do not permit advanced queries or information
exchanges. There are several extensive modernization efforts underway, principally by
SABRE and Covia, that will enhance communications between airlines as well as between
other vendors (such as hotels) also using CRS.
For many reasons agents often feel a sense of loyalty to their computer supplier. This is
much like a club or an Alma Mater, a relationship encouraged by most CRS vendors. In

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essence, many agents believe a CRS vendor somehow deserves booking loyalty when
other more immediate factors, such as client preference or cost, do not interfere.
Successfully quantifying the Halo
Effect is limited due to the number of
factors that may influence agency
carrier selection and the inability to
isolate CRS placement from among
them. Research conducted by the
author, on behalf of several U.S. CRS,
shows approximately a 10%
incremental effect is typical (although
some estimates go much higher),
namely:
1. That the agency uses one CRS
as its principle reservations booking
tool. Incremental volume is far more
difficult to realize where bookings are
Figure 4: CRS Cash Contribution split between two or more systems.84
(Assuming 80% of Halo Revenue) 2. That the incremental effect is to
be realized by re placing one CRS with
another. Introducing CRS into an agency for the first time brings a wholly different
set of booking dynamics into play which may or may not benefit the CRS vendor.
3. That the CRS being placed in the agency enjoys general functional equivalency
with the one it is replacing. It is not necessary, contrary to popular belief, to
replace one CRS only with a functionally superior one. Precisely the opposite will
be acceptable to the agent, given the right circumstances and a sufficiently
lucrative support program apart from purely CRS considerations. Any system will
generate incremental bookings provided the basic elements necessary for the
agency to do business are present.
4. That the agency does not book trips exclusively or largely over routes the CRS
vendor does not fly. This does not necessarily limit productive CRS conversions to
agencies located in the CRS vendor’s on-line cities, as large commercial agencies
will do business over many routes.
There are other important benefits to a CRS vendor, apart from incremental passengers.
Under the CRS regulations, vendors are permitted to charge participating carriers for
reservations made through the systems. These fees are not dependent upon actual
passengers flown.
This creates a financial incentive for the vendor simply to place CRS terminals as widely
as possible, irrespective of the Halo Effect. Installing a CRS in a substantial agency in a

84
Some travel agencies elect to use two (sometimes more) CRS within their organizations in an
attempt to preserve optimal relationships with several airline marketing organizations. While the
commercial reasons for such a course can be appreciated, the agency suffers obvious lapses in
productivity and management control (which most can ill-afford), while the CRS receives far less
benefit from placing the system that would otherwise be the case.

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large market where the CRS vendor does not enjoy a large share of passenger traffic can
be more directly profitable (from a data processing perspective) than placing the same
system in one of the carrier’s own best agencies.
Booking fees in such a case could amount to hundreds of thousands of dollars annually
for the CRS (and indirectly for its owners), at the direct expense of competitors- general
estimates place the benefit of having a travel agent using a particular CRS at
approximately U.S. $35,000 per agent reservation terminal, in booking fees alone.

ENFRANCHISEMENT OF DEALERS IN THE AIRLINE INDUSTRY


The development of modern CRS and automation-related issues is important because
computers are the tangible representation of most carrier dealerships in the United
States, and are inseparably tied to the most successful agency management strategies
now employed. It would be a mistake to consider, as some carriers have done, that
computers define the full extent of the dealership. Automation is but one of several of
interdependencies that together create such a strong tie between carrier and agency that
the influence exerted over the distribution system greatly exceeds that possible when
CRS bias was practiced or under other strategies previously employed.
In manufacturing, the concept of “captive” distributors has been employed since the
beginning of industrialization. Airline dealerships are more subtle and, for the carrier,
more effective, as they are not exclusive distributors but rather remain representative
agents for a number of agents while enfranchised by one primary vendor. This gave
dealership-creating carriers the ability to effectively redirect passengers from their
competitors, by accessing the competitor’s own distribution network.
Automation serves as the first and most visible contact point between dealership-creating
carriers and agencies both by design and by perception. Often these ties are very
informal, such as the common travel agent perception that an agency using Apollo is a /
“United” agency. The more pervasive relationships are those wherein the CRS vendor
has supplemented this foundation with programs and commitments going far beyond
perception.
The two largest CRS collectively enfranchise roughly 75% of the market. This position is
one of general dominance, rather than numeric superiority only, as this comprises the
largest and most important agencies in the United States. The other major systems are
almost exclusively comprised of “secondary” agencies.
While not lessening the general value of maintaining a CRS network, the composition of
that network greatly enhances both the incremental revenue available through dealership
creation and the amount of gross booking fees available. This is evidenced by the intense
competition for system “conversions” particularly between the major CRS.
Understanding Agency Segmentation
Agencies may be grouped into several broad categories, almost exclusively characterized
by size but where this is not necessarily the only index of business efficiency. Size is
somewhat reflective overall sophistication, as larger agencies are assumed to be better
managed (although there are frequent and notable exceptions), and also comprise the

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general parameters within which airlines define the agency’s relative importance to a
dealership strategy.
These segmentations may be drawn using U.S. Dollar ranges as illustrated in the figure
below. The actual number of locations within each segmentation, based upon 1985 ARC
data, is shown below. These data indicate numbers of true ownership entities, as distinct
from locations; thus one national agency system with hundreds of outlets would appear
only once in the tabulation. This methodology is based upon the premise that common
ownership denotes common intent and management, which are key considerations for a
dealership program.
Table 2: ARC Travel Agency Statistics

Volume Entity % Entity Average Volume % Total


($ MM) Count Count Size ($ M) ($ M) Volume
0 – 5 20,427 96.50 927 18,945,198 62.31
5 – 15 587 2.77 7,918 4,647,731 15.29
15 – 40 111 0.52 22,295 2,474,778 8.14
40+ 42 0.20 103,247 4,336,354 14.26

Source: 1985 Airline Reporting Corporation (ARC) Data Tabulations


Note: 1985 is the latest year data are available for this publication.
Later years would show some concentration in the 40+ MM range, fewer
entities in the 15-40 MM range, and more entities in the lower two
ranges, especially the 0 – 5 MM. Otherwise, the chart continues to
illustrate the principles discussed, which remain applicable.

Airline dealership and distribution strategies are greatly complicated by the fact that
standard motivational and control methods do not apply. Not only do agency dynamics
not lend themselves to most traditional structures, but, as the figure illustrates, no
80%/20% seller-volume ratio, common to so many industries, applies.
By far the majority of agencies (96.50%) generate the bulk of agency-based ticket sales in
the U.S. (62.31%).
The development of CRS has signified a developmental condition far more significant
than computer technology alone. Although technology is the focal point, and there are
certain rationale for maintaining access and domination over as large a block of data as
possible for planning and intelligence-gathering purposes, major carrier marketing
strategies are definitively stratified in their approach to agency marketing.
This permits the carrier to dominate and reap incremental benefits not only from the
broad mass of smaller agencies through the “halo” effects associated with CRS, but also
to exercise tighter and more specific control over key distributors in major markets.
A critical part of this strategy is the overall marketing and competitive profile of the CRS
vendor. Dealership strategies, particularly those focusing upon incremental benefits that
accrue from many agencies, are successful because the five CRS vendors individually
constitute the largest carriers in the United States as well as the most aggressive

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marketers. They are impossible to avoid, should an agency want to sell away from them,
represent major presences in most markets, even those where they are not dominant.
It is strategically acceptable for an agency to align itself with a any of these major vendors
(although some are preferable to others under given circumstances), because of their size
and economic power, whereas smaller carriers could not offer similar benefits in any
case. This would be true irrespective of technology in any form. The financial and market-
support programs available through association with these major airlines are too great to
be disregarded.
Major market presence is not the only ingredient to a successful dealership program.
Successfully motivating and controlling critical agencies or groups of agencies within the
market is far more significant. The extent to which this control may be exercised is limited
only by individual market conditions and is often extensive in scope.
The task is also not as difficult as would initially appear. Since agency behavior can be
categorized for marketing purposes within general size ranges, and the small number of
exceptions dealt with individually, programs may be structured that are attractive to
many agencies and are also financially effective for the carrier as well as strategically
efficient to administer and control.
Current Agency Dealership Programs
By targeting major agencies (those positioned to advance significant numbers of
incremental passengers) the dealership­creating carrier is able to motivate vendor
preference and success of other program elements to a surprising degree. The vendor’s
objective is to extend as much control as is possible over the “accepted” distribution
process, thereby gaining preferential treatment at the expense of competitors.
This provides point-of-sale leverage without the risk of direct distribution channel
ownership and associated expense. Assuming the agency’s commitment is sufficient,
ownership becomes irrelevant while all the benefits of a “captive” distributor are realized.
The agency’s general sales stream may therefore be tapped without inviting overt
retaliation by competitors who might refuse to deal with a vendor-exclusive distribution
system.85
Even so, dealerships, as they now exist, are a phase of an evolutionary process that will
see distribution control migrate fully from an agency to a vendor-centered focus.
Although precise timing varies with individual carriers, with “have-not” airlines lagging
significantly behind the more technologically sophisticated CRS vendors, dealerships in
their present form are not long-term phenomena.
Understanding Travel Agency Economics
Many travel agencies are financially precarious at best. Inflexibility in adapting to the
needs of a deregulated environment, where price instability and rising costs coexist, has
seriously weakened many and brought some to the point of bankruptcy. A well-financed
carrier, where air sales will account for 60% or more of the agency’s total volume, can
offer a dealership relationship that is both pervasive and irresistible.

85
No agency could operate in the United States without the ability to represent all carriers.

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Through front and backroom automation, the carrier can create dependency in all ways
and reinforce this position wherever possible. Long-term CRS and other automation
contracts, now usually specifying minimum usage levels, lock agencies in for years, often
with large “liquidated damage” clauses that impose penalties if a systems conversion
were undertaken, to the degree revenue would be lost by the vendor. Dependency is also
fostered through financial measures tied to bookings or other incentives. Instability in
some large agencies and rapid growth in others often creates a cash crisis which the
agency is unable to correct.
Although the entrepreneurial nature of most travel agencies permits reasonable
adaptation to some growth, many are overextended by debt incurred through
acquisitions and unnecessary operational inefficiencies. Others have lost business to
increased competition and consolidation of their major accounts with larger national
agencies.
Business contraction is contrary to the entrepreneurial tendency of most small businesses
and requires specific skills most lack if it is to be done effectively. The agency is therefore
greatly receptive to financial propositions that will relieve its economic difficulties, if only
temporarily. Many dealership initiatives capitalize on this agency “cash crisis” and create
such a financial dependency that the agency may have no choice but to support its
sponsor (many, if not most, large agencies have costs in excess of their basic per-ticket
revenue (less overrides or “incentive” commissions) and are therefore unprofitable
without some vendor support apart from normal commissions.
Financial support is provided in two direct and many indirect manners, each fulfilling
specific needs. Dealers receive override commissions which, although not unknown to all
agencies, are far more liberal for the dealer.
While these can be nothing more than percentage payments on gross sales volume, the
more sophisticated dealership-creators structure complex reward matrixes wherein
compensation is tied to exceeding a minimum production target that is driven by the
carrier’s overall share of market as well as the respective shares of market represented by
all dealers in the market.
This makes extraordinary commitment sometimes necessary in order for the agency to
realize any substantive payment. Agencies are often sufficiently dependent upon their
sponsor that they will redirect passengers using whatever means are necessary in order
to achieve their revenue targets. Sometimes this includes representing that a competing
carrier’s flights are sold out or more expensive when they really are not.
Good market intelligence and planning, sometimes evident in dealership creation,
permits a high degree of dependency to be built without sufficient support being offered
so that the strength of the carrier relationship could be lessened. This is especially true
when considering outright agency cash payments, usually associated with CRS contracts,
which infuse large sums into the business but do nothing to improve its overall position.
Frequently a CRS sponsor will pay a large agency hundreds of thousands of dollars to
change system affiliation and sign a restrictive long-term contract. While occasionally
these payments accompany a long-term dealership commitments and sales support
programs, often the carrier has no long-term interest in the success of the agency, as a
competing agency will fulfill the same purpose once the initial payment is recovered.

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Agencies assume “golden handcuffs” provided by their sponsors to a degree not
experienced in most industries. If financial and market support is forthcoming, which
often results in the vendor making one agency more successful at the direct expense of
competing agencies in the same market (which are also “agents” for the carrier), the
agent may enter into the restrictive CRS contracts previously described, undertake
various other covenants regarding how the business will be operated and how business
will be conducted, and forego relationships with other vendors on even the most casual
of terms. Most agencies fail to recognize or accept the implications of airline-type
dealerships by continuing to assert their independence and customer orientation while
accepting the most restrictive of business environments.
Role of CRS In Dealership Maintenance
CRS permits the dealership-creator to implicitly encourage redirection of agency
bookings from dealers both formal and informal. Essentially any agency using the system
will be partly influenced by the “halo effect” and can be relied upon to produce
passengers disproportionate to the carrier’s “true” share of the agency’s business,
because of CRS. Other elements of dealership strategies serve to strengthen and
accentuate this phenomenon.
Overt screen manipulation, although alleged still to exist by many, need not be a
fundamental part of the incremental booking process. With the opportunity to affect
agency carrier selection in so many powerful ways, and with computer services profitable
ventures overall in their own right, improper display tactics make little sense for a
sophisticated vendor.
The most successful agency distribution programs, contrary to the great body of
academic speculation, are not currently technology-driven. Technology is the cohesive
element that ties the relationship between carrier and agency together and creates the
“halo effect” by its existence, but CRS could not, in isolation, create the dominant market
positions enjoyed by the most successful vendors. Only a combination of well-designed
programs, together with an airline that is naturally dominant by virtue of its structure, can
occupy the preeminent positions enjoyed by the CRS vendors in the U.S.
Internationally, where most of the CRS vendors have strategic expansion objects, this
presents both a challenge and an opportunity for competing carriers:
 Technology creates an effective competitive barrier because it is time-consuming,
difficult, and expensive to replicate.
Given sufficient resources, however, technological advantage will be insufficient to
unseat many European or Asian carriers from the preeminent market positions they
enjoy, if effective steps are taken in the near-term to compete directly in a dealership
environment.
As the foregoing ARC statistical illustrations show, dealership maintenance in the United
States must be accomplished on two levels:
 The largest portion of the market may be influenced indirectly, using the “halo
effect,” and through CRS as a principal contact point between carrier and agency.

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The size of these agencies (and therefore their overall sophistication) precludes the carrier
from an economic strong dealership program, while limiting their ability to affect carrier
market share positively or negatively in any dramatic fashion. The best and most cost-
effective programs for these agencies are probably those informal preference strategies
based upon CRS placement.
 Segmentation of the market permits the vendor to effectively address the larger
and more sophisticated agencies with more advanced programs.
As only a few businesses are involved, which collectively produce significant volume,
these can be approached and managed individually, with CRS serving as one tool among
many.
Dealership-creators also approach agencies within this group differently, often offering
better programs to regionally-dominant agencies with a significant but finite market
presence rather than to so-called nationals, which cannot concentrate their sales or
management efforts in specific areas to materially impact the vendor’s business.
Strong Dealership Agency Type Classifications
National Agency Systems are businesses wherein a common owner­ ship and
management structure controls outlets in numerous (sometimes hundreds) of locations.
These well-known companies collectively process significant portions of a vendor’s
business, but usually (with some exceptions) do not dominate specific city markets. This
creates booking fragmentation within the national, its principal point of weakness, which,
together with often unfocused and inconsistent management, renders it unable to
significantly impact most vendors positively or negatively.
Further, because the national has interests in a number of markets, one overall vendor
preference strategy or dealership alignment may be impractical. In order to grant support
in areas vital to the agency, the vendor may insist upon concessions in other areas where
the agency may enjoy leverage contrary to the vendor’s best interests. When considering
a large-scale strategic alignment, the agency’s negotiating position if often weakened
beyond repair due specifically to size and coverage, not strengthened by it as many
believe.
Regional Dominant Agencies control a large market share within a geographic area,
usually to the extent that they represent the most significant booking source and
distribution vehicle within the area and can materially influence the thin margin of
profitability realized by any vendor for the market. They are often among the better
managed agencies (a characteristic arising partly as a result of their regional focus and
partly responsible for their success in implementing a strategy based upon that focus),
and enjoy far more leverage with any single vendor (CRS or otherwise) than any other
agencies.
Large Local Agencies have grown usually through business development (a large-scale
acquisitions strategy is usually implemented regionally), and are typically aggressive
entrepreneurs. They build business by competing successfully within a small geographic
market and by capturing accounts from national and other local competitors wherever
possible. Among the most attractive of acquisition candidates, they cannot command
enough market leverage to influence carrier margins and are employed opportunistically

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by dealership-creating carriers because they comprise blocks of volume that can be
influenced through general dealership management techniques
Future of Airline Dealerships
Under regulation, competition within the distribution system was circumscribed by legal
mandate, which guaranteed market orderliness irrespective of specific carrier
intervention. Deregulation permitted some vendors to create CRS which were difficult for
others to emulate, and seize control from uncertainty. Many carriers still have not
grasped the implications of their reliance upon a distribution system dominated by a few
principal carriers - irrespective of the role CRS plays in the process. Agencies have
formed alignments with carriers from competitive necessity, as others in their markets
would otherwise receive benefits they would not enjoy, and also because of financial
imperatives, many of which were created because of deregulation.
Dealership-creating carriers will continue to strengthen their dominance over agencies
accepting dealership status through the means previously described. On an opportunistic
basis, agency ownership will be explored, over a period of years. In general, however,
dealerships render ownership meaningless for vendors able to support a dealership
strategy.
As systems become available, carriers will begin to actively circumvent the agency
channel. With implied agency retaliation minimized through domination of the
distribution channel, and with the support of complex computer systems, vehicles such
as automated ticket machines, cooperation with other electronic vendors, and so-called
videotext services (in a form greatly expanded from that known today in the U.S. and
modified technologically to support airline-specific needs), agency services will become
less cost­ effective for certain types of tickets.
With reference to commercial or business travel, the agency serves few purposes apart
from order-taker and document-preparer. A large carrier reservation center can process
orders for only a few dollars each, far less than agency commissions. Technology will
provide more opportunities to distribute documents (among the most effectively
automated of functions and already highly automated within the travel industry) directly
to the customer, thus avoiding the agency as an intermediary. Future developments may
render tickets per se, and therefore the ticket-issuer, unnecessary - a concept a1 ready
tried experimentally by some carriers.
Although agency services of some type will always be desirable, for certain transactions
agency processing is already superfluous. The essence of dealership creation, that being
control of the distribution channel by a vendor, provides the carrier with significant
opportunities to eliminate the dealer where appropriate- something the agency can do
little to mitigate.
Non-dealership carriers will find dependence upon the dealership- controlled distribution
increasingly unacceptable, driving them much more rapidly toward non-agency
distribution systems wherever possible.
While many of these will be technology-driven, “direct dealing” (discounting to major
purchasers) will be implemented widely within the airline industry first from within this
group. Dealership-creators prefer to use the dealership system to pass along customer

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discounts for a variety of strategic reasons, among them the desire to mask discounting
(and therefore minimize it) as much as possible. Without the dealership option, other
carriers will prefer to lock-in distribution using this method that the dealership-creators
will be reluctant to employ.
Non-U.S. airlines may choose to use their own market leverage to create dealerships they
are positioned to support and thus circumvent not only intrusion by aggressive U.S. CRS
vendors but also influences by other local or regional competitors.
The dea1ershi p strategy has been shown to be effective in achieving most carrier
marketing goals using systems currently in place and, in many cases, a distribution
system that is readily receptive to this type of support.
The significant point of this discussion is that CRS is neither the key to dealership activity
nor the insurmountable obstacle it is frequently portrayed to be. On the other hand, non-
U.S. airlines must avoid the Trojan Horse of relinquishing data control to successful U.S.
CRS vendors having internal agendas that have always included domination of
distribution, tied to computerization.
The evolutionary processes set in motion by deregulation in the U.S. have shown that
non-agency avenues must eventually be explored, and that systems do comprise the
lever that will make this practical. Dealerships are one phase of market control but cannot
be considered an end in themselves, just as CRS contributes to distribution options but
does not constitute their fullest extent. Distribution control can be managed, and
dependence upon the systems and programs of others avoided, but only if appropriate
pro-active steps are taken before an unbreakable wall of agency dependence is built.

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WORKS CITED
(1989, February 4). The Economist , p. 16.
(1989, February). Software Magazine , 9, p. 57.
Buckley, N. (1989). private communication. TWA .
Desmond, J. (1989, February). Max Hopper Knows Sabre's Guts. Software Magazine , p.
57.
Gilford, D., & Spector, A. (1984, July). The TWA Reservation System. CACM , 27.
Kumar, V. (1990, January). Current Trends in Transaction Processing Systems. Journal of
Systems Management , 41, p. 33.
Wardell, D. J. (1982, July 12). The Right Decision for the Right Reason. The Travel Agent ,
p. 70.

David J.
Digitally signed by David J.
Wardell
DN: cn=David J. Wardell,
o=Technical Reality, ou,

Wardell
email=david@wardell.org,
c=US
Date: 2011.05.27 16:25:58
-04'00'

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