Air Transport World

CRS controversy grows as systems become more powerful. (computer reservations system)

CRS controversy grows as systems become more powerful Nothing has polarized the airline industry during its free-market learning curve like the marketing of tickets by computer. The shorthand for the issue is CRS, computer reservations system.

The two biggest of the six U.S. CRS systems, American Airlines' Sabre and United Airlines' Apollo, are the most controversial. The controversy is based not on what CRS used to be--a relatively simple and inexpensive internal reservation system--but what it has become: a key to market power and competitive success.

The dominance of the system has produced clashes among airlines reminiscent of prior economic regulation. CRS has replaced rates and routes as the competitive battleground for airline lawyers and lobbyists as well as marketers.

The reasons for the controversy are obvious: the rewards. And no rewards have been greater than for AMR's American Airlines: First, as a vendor of computer reservations services and, second, as a carrier that has used its computer power better than any other to maximize sales, yields and market share.

Sabre complaints

More than 90% of travel agents' airline revenue was booked on automated reservations systems. (Five are airline-owned and a subsidiary of McDonnell Douglas Corp. owns the other.) The Air Transport Association reports that a similar percentage of members' tickets were produced automatically. More than one-third of the automated agents are Sabre users, while United's Apollo accounts for almost 25%, Eastern Airlines' Soda almost 17%, TWA's Pars a little more than than 13% and Delta Air Lines' Datas 11%. According to AMR Chairman Robert Crandall, 46% of industry revenue and 40% of the automated bookings go through Sabre.

Complaints about Sabre's $1.75 booking fee aside, American's competitors apparently can't afford not to sell through Sabre. Crandall has them coming and going, even when they manage to sell a ticket in competition with American. And every airline that adds yet another flight to yet another hub adds still more to Sabre earnings, since the fees are segment-, not revenue-based.

According to Crandall, Sabre in 1985 "produced a handsome operating margin." That is high praise from the AMR chairman. While only 6-7% of AMR's gross 1985 volume of $6.1 billion, information systems activities, most of it Sabre-related, produced one-third of its $346 million in net earnings. …

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