Travel Technology

When the Internet started to establish itself in the corporate world, some observers foresaw a diminishing role for, if not the end to, many intermediary functions. Consequently it has been argued that suppliers will need to use the Internet and related technologies to cut costs and establish closer links with consumers by bypassing organizations that currently play an intermediary role in the traditional transaction system. The objective of this case study is to enhance the understanding of the process of transition from a traditional business model to an e-commerce model. It focuses on a very small business that has successfully navigated the transition to e-commerce.

"Once again a new year brings another round of what passes for industry research. Although notoriously over-surveyed, the travel industry remains awash in bad data, ill-conceived and poorly executed research projects, and self-serving studies that are relevant more to the next round of funding or the next newsletter sale than to developing a real understanding of markets and trends.

Eventually the industry may get better at labeling useless research for what it is (the trend is not positive, however), but for now the very few good studies routinely drown amidst the hyperbole of research that can’t connect with real insight—or those that connect all too well because the result was fairly evident before the process began."

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 requests 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

The development of computer reservation systems has been one of the most dramatic events in the US a1rline industry over the last ten years. Spurred by deregulation, which outlawed fare fixing and standard agency ticket distribution systems, the carriers have used CRS as a vital tool for spearheading sales control in the travel agencies. These dealerships have provided some mutual advantages to agency and earner but, increasingly, the agency is locked into restrictive agreements and excessive dependence on the CRS vendor, a type of "golden handcuff". New forms of direct selling, bypassing the agent, and including direct agency ownership by carriers, will pose increasing threats to agencies in the medium term.

Experts routinely describe new travel agent technology in the context of electronic travel commerce. There are few other technology topics with similar market potential or emotional appeal—to the extent that new business start-ups, product announcements, and seminar programs are dominated by predictions of the potential of e-commerce.

This is usually described as an exceedingly simple business proposition: either the demise of travel agents is imminent as vendors adopt new strategies to bypass them or else vast new frontiers are opening to anyone with the most modest travel credentials provided only that they are able to operate a World Wide Web site on The Internet. The idea that reality might be less certain and that traditional and non-traditional channels may both flourish in the future appears to have been lost.

The true effects of electronic commerce are complex and intertwined with emerging business strategies affecting more of society than just travel. The opportunities opened to all segments of the industry, vendors and agents alike are substantial. So is the task of sorting fact from fancy. The businesses able to prosper through electronic commerce in coming years will those able to find sustainable strategies and develop business models that deliver what their customers truly want to buy. Unfortunately, there is often little relationship between sound business practices and the “Internet Hysteria” that has swept the travel industry for several years.

This report discusses electronic selling as contrasted with traditional travel sales and describes what the travel industry may realistically expect from electronic commerce. It describes the overall state of the electronic travel sales scene in the U.S., predicts what characteristics successful competitors will likely possess over time, and attempts to put the current euphoria in proper context.