Last Updated: 12 Oct, 2020

History Of Flight Booking: CRSs, GDS Distribution, Travel Agencies And Online Reservations

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Airline reservation systems were first introduced in the late 1950s as relatively simple standalone systems to control flight inventory, maintain flight schedules, seat assignments and aircraft loading.

The history of airline reservations systems began in the late 1950s when American Airlines required a system that would allow real-time access to flight details in all of its offices, and the integration and automation of its booking and ticketing processes. 

As a result, the Semi-Automated Business Research Environment was developed and launched in 1964 and the real breakthrough was its ability to keep inventory correct in real time, accessible to agents around the world. Prior to this, manual systems required centralized reservation centres’, groups of people in a room with the physical cards that represented inventory, in this case, seats on airplanes.

The deregulation of the airline industry, in the Airline Deregulation Act, meant that airlines, which had previously operated under government-set fares ensuring airlines at least broke even, now needed to improve efficiency to compete in a free market. 

In this deregulated environment the Airline Reservation System and its descendants became vital to the travel industry. The modern airline reservation system is comprehensive suite of products to provide a system that assists with a variety of airline management tasks and service customer needs from the time of initial reservation through completion of the flight.

1957-1976: The era of Computer Reservation Systems

 

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Computer Reservation Systems (CRSs): Airlines have found computer reservation systems to be extremely helpful in influencing travel agents' recommendations. By monitoring the behaviour of individual agents, airlines can design commissions that will have the optimum impact on their flight recommendations. Developing and operating these systems is quite expensive, however, and only the largest car-riders have been able to market them. At present, the seven largest carriers all own at least a share of a CRS.

In the 1970s, airlines began modifying and enhancing their internal reservation systems to make the sale of air-line tickets through travel agents more efficient. The CRS gave travel agents access to information about flight schedules, fares, and seat availability. It also enabled them to make reservations and issue tickets automatically. Although the computer reservation systems are owned and operated by particular airlines, an agent can use one to get information and make reservations on virtually any scheduled carrier. Since the systems make both airlines and travel agents more productive, CRS owners charge both of them for the use of their systems. 

Travel agents rent the equipment, while airlines pay a booking fee for each flight reservation. American Airlines introduced the first computer reservation system; United, Trans World, Eastern, and Delta each followed with systems of their own. American and United, how-ever, dominate the CRS industry; in 1986, they accounted for 41 percent and 33 percent, respectively, of the flight segments booked through computer reservation systems. The influence of computer reservation systems on bookings can be seen in two facts. 

First, a relatively large proportion of the travel agents in a city where a carrier operates a hub use that carrier's CRS. If the systems did not influence the behaviour of travel agents, there would be little reason for carriers to market them most aggressively in cities where they center their operations. Moreover, at present all the computer reservation systems are owned and operated by airlines. While the airlines have found the systems to be profitable, the one sys-tem that was not owned by an airline has ceased operating.

1957-1964: SABRE is the first booking automation system

Sabre was fully operational in 1964, a year before any other airline had an installed reservations automation system, and demonstrated to the industry that real-time processing was a feasible and realistic solution to the passenger reservations problem. The first Sabre system was installed on two IBM 7090 computers, located in a specially designed computer center in Briarcliff Manor, NY. The initial research, development and installation investment in this system took 400 man-years of effort at a development cost of almost US $40 million. The state-of-the-art mainframe system processed 84,000 telephone transactions per day.

The success of Sabre prompted IBM to build its own system to market to airlines, named PARS – Programmed Airline Reservations System. This brought the realization among the major carriers that their operations also required a similar system, triggering a wave of airline automation that would last through the decade, and truly transform the airline industry, as electronic reservations systems provided important new efficiencies in the distribution of airlines’ product. 

Eventually, a new category developed within the travel industry – the Customer Reservations System (CRS). Later CRS technology was leveraged into Global Distribution Systems (GDS). Sabre has retained its position as an industry leader and innovator in both the airline hosting and global distribution markets.

1964-1971: Emergence of PARS-based reservation systems

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. 

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.

1974: Airline Tariff Publishing Company starts providing flight information

The Air Traffic Conference of America, a body within the Air Transport Association of America (ATA), was founded in 1945 to publish assenger tariffs (fares). In 1958 it assumed publication of freight tariffs, formerly produced by Air Cargo, Inc., and in 1965 the group divested from ATA as an independent company, Airline Tariff Publishers, Inc. It was reorganized and took its current name in 1975. In the 1980s and 1990s, ATPCO digitized the information filed on paper tariffs, automating manual processes and enabling electronic connectivity for airfares in the industry. In later decades, ATPCO has continued to automate more types of pricing and related data, such as baggage allowance and charges.

ATPCO expanded its industry presence in October 2017 by launching the start-up platform Bridge Labs, which connects ATPCO’s vast data to emerging and established companies. In February 2018, ATPCO acquired Routehappy. The acquisition increases ATPCO’s erchandising capabilities combining its flagship pricing data with Routehappy rich content. A few months later, ATPCO was awarded a patent for its cache less airline ticket pricing technology, which allows the calculation of all possible airline ticket prices, regardless of availability. 

1976: Travel agencies got access to CRSs

By the early 1970s, all the major carriers experimented with bringing the CRS to travel agencies. At the time, travel agents manually checked their books for flight schedules and fare information, then called airline ticket agents to inquire about seat availability and reservations. Airlines, platform providers and the American Society of Travel Agents put forth a major effort to create a unified CRS dubbed the Joint Industry Computerized Reservation System, but it fractured as the group established commercial terms for participating airlines. United, the largest airline and thus the carrier that would have shouldered the most financial burden under the JICRS, announced in 1976 its intent to sell agency access to its own CRS. American adopted similar plans and installed its first terminals in 130 travel agency offices the same year. TWA and Eastern jumped in the mix soon after.

CRS providers & commercial terms. Under an exclusive, long-term contract, a CRS provider would equip the agency with hardware, installation, software and training. They charged a monthly subscription fee based on usage. To lower the monthly fee, the agency had to make more bookings on the system. Travel agencies, however, wanted access to broad airline content, not just one airline's. CRS providers saw the opportunity to open their content platforms to other carriers. For noncompeting airlines, CRSs established co-host agreements, which allowed the cohort airline to pay the CRS for favourable placement in content displays. Along with biasing fees, the CRSs also charged co hosts a booking fee for each reservation made on the system. CRSs did not offer co-host agreements for competing airlines. Rather, they charged competitors higher booking fees, without advantages.

1978-1992: Airline deregulation and GDS emergence

 

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The 1978 Airline Deregulation Act partially shifted control over air travel from the political to the market sphere. The Civil Aeronautics Board (CAB), which had previously controlled entry, exit, and the pricing of airline services, as well as inter carrier agreements, mergers, and consumer issues, was phased out under the CAB Sunset Act and expired officially on December 31, 1984. The economic liberalization of air travel was part of a series of “deregulation” moves based on the growing realization that a politically controlled economy served no continuing public interest. U.S. deregulation has been part of a greater global airline liberalization trend, especially in Asia, Latin America, and the EUROPEAN UNION.

In the tourism and hospitality industries, GDS (Global Distribution System) refers to a network system connecting multiple vendors of services with end consumers or travel agents and allow them for direct booking. The service vendors include airlines, hotel rooms, car rentals, cruises, events, and activities. During the 1960s, hotels and airlines started to build Central Reservation Systems (CRS) to handle reservations for their individual business or inventory. 

In the 1980s, the need to conveniently access reservations for all aspects of the travel prompted different airlines and hotel chains to connect their inventory together and sell them directly to travel agents. GDS was established as a spin-off service that would link the different CRS's of multiple companies. Companies in the same type of industry were connected, as well as different industries, such as airline, hotel chains, and car rentals. 

Since the late 1990s, along with the development of the Internet, GDS's have emerged as a business in their own right, specializing in travel distribution for many different types of services (Buhalis and Licata 2002). Sabre, Galileo, Amadeus, and Worldspan have emerged as the GDS's with the largest market shares (Buhalis 2003). Sabre was developed in 1960s by American Airlines along with IBM Inc. on a mainframe computer. Sabre and American Airline separated in 2000.

1987: major European GDSs, Galileo and Amadeus, are created by airlines

The airline industry created the first GDS in the 1960s as a way to keep track of flight schedules, availability, and prices. Although accused of being dinosaurs due to their use of legacy system technology, the GDSs were actually among the first e-commerce companies in the world facilitating B-2-B electronic commerce as early as the mid 1970s, when SABRE (owned by American Airline) and Apollo (United) began installing their propriety internal reservations systems in travel agencies. 

Prior to this, travel agents spent an inordinate amount of time manually entering reservations. The airlines realized that by automating the reservation process for travel agents, they could make the travel agents more productive and essentially turn into an extension of the airlines sales force. It is these original, legacy GDSs that today provide the backbone to the Internet travel distribution system.  

There are currently four major GDS systems:  

  1. Amadeus 
  2. Galileo 
  3. Sabre 
  4. Worldspan 

Amadeus 

Founded in 1987 by Air France, Iberia, Lufthansa, and SAS, Amadeus is the youngest of the four GDS companies. Amadeus is a leading global distribution system and technology provider serving the marketing, sales, and distribution needs of the worlds travel and tourism industries. Its comprehensive data network and database, among the largest of their kind in Europe, serve more than 57,000 travel agency locations and more than 10,500 airline sales offices in some 200 markets worldwide. The system can also provide access to approximately 58,000 hotels and 50 car rental companies serving some 24,000 locations, as well as other provider groups, including ferry, rail, cruise, insurance, and tour operators.  

Upon its inception, Air France, Iberia, Lufthansa and SAS held equal shares of Amadeus Global Travel Distribution S.A.  Shortly after the formation of the company, however, SAS sold its shares to Amadeus Data Processing. The three founder airline shareholders currently hold 59.92% of the company: Air France (23.36%), Iberia (18.28%), and Lufthansa (18.28%). Remaining shares are held publicly.  

Galileo International 

Galileo International was founded in 1993 by 11 major North American and European airlines: Aer Lingus, Air Canada, Alitalia, Austrian Airlines, British Airways, KLM Royal Dutch Airlines, Olympic Airlines, Swissair, TAP Air Portugal, United Airlines, and US Airways. It is a major player in the GDS business throughout the world: North America, Europe, the Middle East, Africa, and the Asia/Pacific region.  Galileo International is a diversified, global technology leader. Its core business is providing electronic global distribution services for the travel industry through its computerized reservation systems, leading-edge products and innovative Internet-based solutions.  Galileo is a value-added distributor of travel inventory dedicated to supporting its travel agency and corporate customers and, through them, expanding traveller choice.  

In 1997, Galileo International became a publicly traded company, listed on the New York and Chicago Stock Exchanges. In October of 2001, Cendant Corporation acquired Galileo International for approximately $1.8 billion in common stock and cash. Currently, the company is represented in 116 countries, and serves travel agencies at approximately 45,000 locations. Other travel suppliers include 500 airlines, 227 hotel companies, 33 car rental companies, and 368 tour operators. 

Sabre 

For more than 40 years, Sabre has been developing innovations and transforming the business of travel. From the original Sabre computer reservations system in the 1960s, to advanced airline yield management systems in the 1980s, to leading travel web sites today, Sabre technology has travelled through time, around the world, and has touched all points of the travel industry. 

In July of 1996, Sabre became a separate legal entity of AMR (parent company of American Airlines), followed by a successful initial public offering in October in which AMR released approximately 18% of its shares to be publicly traded. Sabre, represented in 45 countries, is a leading provider of technology for the travel industry and provides innovative products that enable travel commerce and services, and enhance airline/supplier operations.  

Headquartered in Southlake, Texas, Sabre connects more than 60,000 travel agency locations around the world, providing content from approximately 400 airlines, 55,000 hotel properties, 52 car rental companies, 9 cruise lines, 33 railroads, and 229 tour operators. In addition to being one of the leading GDS companies, Sabre also provides a broad range of products and services that enhance travel agency operations and their ability to serve the traveler.  

Sabre-connected travel agencies use Sabre web- based technologies and low-fare finding solutions to create new sales opportunities, drive operational efficiencies, and improve customer service. Among the company recent innovations is Sabre Virtually There, a personalized web site service that automatically gives travellers up-to-the-minute details about itineraries, while also providing a wealth of information about their destinations.  

Sabre owns Travelocity.com, the industry’s leading online consumer travel web site. In 2001, Travelocity.com 32 million members used the site, generating more than $300 million in revenues. Travelocity.com offers innovative technologies that help consumers find the best air, car, hotel, and vacation reservations. Sabre also owns Get There, a provider of web-based corporate travel procurement, including the purchase of air, hotel, car, and meeting planning services. Customers include more than 800 leading corporations. 

1990: Worldspan forms from earlier American CRSs

Worldspan GDS offers worldwide electronic distribution of travel inventory, internet products, and connectivity, and e-commerce capabilities for travel agencies, travel service providers and corporations. Worldspan global distribution system(GDS) API integrated used by travel agents and travel-related websites to book airline tickets, hotel rooms, rental cars, tour packages, and associated products.

1994-2006: Emergence of the Internet and formation of Travelport GDS

 

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During the 90s, the internet became available for mass users. New opportunities meant that airlines, travel agents, and GDS providers had to go online. Consequently, a new phenomenon appeared. Traditional travel agencies were supported by airlines, which prompted a fast transition to new technology standards with some of the travel agents becoming Online Travel Agencies (OTAs). So, for the customers, the emergence of OTAs made it possible to book a flight right from their computers for the first time.

With the digitalization of the whole booking process, new systems were also appearing. The first known online booking tool was created at the beginning of the 90s, by SABRE and CIS technology provider. A tool named EAASY SABRE was available for CIS subscribers as a closed platform. It was operating with a command-line interface to make bookings via the Internet. But the platform didn’t see any further development and closed in a few years.

1996: Creation of the first online travel agency – Travelocity

Travelocity.com was launched in March 1996 as a joint venture of two travel companies, Sabre Interactive and Worldview Systems Corp. Sabre Interactive was a unit of AMR Corp., the parent company of American Airlines, while Worldview was a partnership formed by publisher Random House and Ameritech, a regional Bell operating company (RBOC). Sabre was the leading travel reservation system used by travel agents. Its principal business was to develop and install travel agents' computer reservation systems. Sabre booked Travelocity.com's airline reservations, while Worldview provided travel-related content for the site. 

At first Travelocity's strategy was to offer compelling content and sell airline tickets. Destination information provided at the site included hotel recommendations, restaurant reviews, entertainment listings, weather reports, video clips, photos, maps, news, chat forums, and other information about specific destinations. Travelocity provided this information on its Web site directly from Worldview's databases. After Sabre Interactive bought out Worldview's interest in Travelocity in February 1997, Worldview remained the featured content provider for the Travelocity Web site. 

1996: Microsoft launches Expedia

Expedia, Inc. began offering online travel services on the Microsoft Network toward the end of 1996. Microsoft Corporation nurtured its start-up company, investing heavily in technology to provide advanced search capabilities and other features. Microsoft spun the company off in 1999 while retaining a controlling interest. In 2001 it agreed to sell its interest in Expedia to media conglomerate USA Networks, Inc., a deal that was finalized in 2002 after USA Networks divested its entertainment properties and subsequently became USA Interactive, Inc. 

Over its short history Expedia has expanded in many ways. It has grown from primarily selling airline tickets and reaping the commissions, to offering a wide range of travel products such as discounted hotel rooms and packaged travel plans. It also has entered the corporate travel market and expanded internationally, opening sites in Canada, the United Kingdom, and other European countries. It has developed cutting-edge technology solutions to make it easier for consumers to plan and purchase online travel. As a result, the company has weathered downturns in the market and outperformed numerous other online travel ventures to become the industry leader in online travel. 

2000: Priceline is founded offering discount flights

Former Internet high-flyer Priceline.com Incorporated has surprised the sceptics by surviving the collapse of the tech stock market at the beginning of the 2000s. Priceline.com has pioneered a patented Internet-based "demand collection" pricing system that connects purchasers with sellers under the company's registered "Name Your Own Price" slogan. 

Priceline.com applies that pricing system to sales of airline tickets, hotel rooms, and car rentals, and vacation and cruise packages. The company also offers home financing services, including mortgages, mortgage refinancing, and home equity loans. In addition to its main U.S.-oriented priceline.com e-commerce web site, the company operates priceline.co.uk for the U.K. market, and licenses the Priceline system and brand to Hutchison Whampoa-backed Priceline Asia in Hong Kong. The company also offers more traditional discount travel services through Lowestfare.com. 

Priceline has proven that demand for its pricing system exists--revenues topped $1 billion in 2002, despite the difficult travel market. Profits, however, have proven more elusive; its share price, which peaked very early on at $165, has dropped to as low as $1.10. Richard Braddock is the company's non-executive chairman, and Jeffrey Boyd is Priceline's CEO.

2000: Major American carriers launch Hotwire

Hotwire was founded in 2000 by American, Northwest, Delta, United, Continental Airlines, and a group of tech providers. Soon it became a travel website offering airline tickets, hotel bookings, and rental cars for discount prices. In 2005, founders of Expedia, Inc. merged it with several travel websites, including Hotwire.com, TripAdvisor.com, and Hotels.com.

2001-2004: Orbitz and KAYAK foundation

Part of the Priceline Group since 2012,Kayak was founded in 2004 and is best known as the number one flights and travel search engine for those who would like to book flights. Kayak was cofounded by Steve Hafner and Paul English; Hafner had previously helped to found Orbitz in 1999.

Kayak has been recognized as one of the best apps for business travelers, and as one of the best overall apps for websites and travelers by Travel + Leisure in 2013. It has also been awarded with the World’s Leading Flight Comparison Award in 2013 and the World’s Leading Travel Search Website award in 2011 by the World Travel Awards.

2004: Emergence of Skyscanner, one of the biggest travel meta-search engines

Founded in 2003, Skyscanner has grown and expanded to become one of the most reputable players in the fast-growing online travel market. The Edinburgh-based company is included in The Ten Best: Travel Sites and 101 Really Useful Websites. As Skyscanner expanded globally, they found they were rapidly outgrowing their existing monitoring solutions and were looking for tooling that enabled them to both scale effectively and monitor availability on a global scale. 

The challenges of maintaining availability across a high-traffic website were further extended due to an increase of smaller services and the resulting volume of simultaneous deployments. Due to the high level of complexity required to run a website processing more 42,000 events per second between hundreds of services, the Skyscanner team needed a scalable solution to efficiently detect and alert on outages. This is when Skyscanner started to investigate potential solutions.

2006: Travelport, a third giant GDS, appears and soon buys Worldspan

Travelport traces its origins back to 1971, but its most immediate predecessor, Travel Distribution Services (TDS), was founded in 2001 through the acquisition of Galileo International by TDS’s parent, Cendant Corporation. Travelport was formed in August 2006, when Cendant sold Orbitz and Galileo to The Blackstone Group in a deal valued at $4.3 billion.

In April 2006, shortly before Travelport was sold, Cendant hired Jeff Clarke as president and CEO of Travel Distribution Services to lead the sale of the division. He is currently a member of the board of directors of Travelport and chairman of the board of Orbitz Worldwide, Inc. Gordon Wilson was appointed President and CEO of the company and a member of the board of directors of Travelport in June 2011.

Shortly after the Blackstone-led buyout, in December 2006, Travelport struck a deal to buy one of its rivals, Worldspan, for $1.4 billion.

In May 2007 the company filed a registration statement with the U.S. Securities and Exchange Commission to sell a portion of Orbitz Worldwide in an initial public offering (IPO). The IPO was priced on July 20, 2007, opening at $15.00 per share, and closed on July 25, 2007. A month later, Travelport completed the Worldspan deal, integrating Worldspan with Galileo.

2009-2019: Mobile booking, Expedia, Inc. acquisitions, and social networks

 

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Online booking became a reliable alternative to phone sales for nearly all the airlines and travel agencies in the early 2000s. Technology providers, GDSs, and airlines started to create the first travel APIs in the second part of the 2000s. These were used to source flights and any kind of travel data. One of the first travel APIs traces back to 2006, the XML API by AirKiosk.

Meanwhile, mobile technologies became more advanced with the emergence of smartphones and 3G internet connection. Furthermore, mobile websites and applications became capable of connecting with APIs to source and update data. For that reason, travel technology providers focused on developing ways to book flights right from mobile phones.

2011: Google launches its own flight booking platform – Google Flights

Google planted the flag of its flight ambitions with the acquisition of ITA software back in 2010, the backbone of what would become Google Flights.

Since then, a slow but steady stream of product enhancements, combined with increasing search result visibility and a gradual integration into the rest of Google’s ecosystem (Gmail, Google Assistant etc.), has allowed the it to become a powerhouse in the airline distribution industry.  

2015: Expedia Inc. acquires Travelocity and Orbitz; Priceline, a travel website with the highest revenue, becomes a part of Priceline Group (Booking Holdings today)

Expedia, Inc. began offering online travel services on the Microsoft Network toward the end of 1996. Microsoft Corporation nurtured its start-up company, investing heavily in technology to provide advanced search capabilities and other features. Microsoft spun the company off in 1999 while retaining a controlling interest. In 2001 it agreed to sell its interest in Expedia to media conglomerate USA Networks, Inc., a deal that was finalized in 2002 after USA Networks divested its entertainment properties and subsequently became USA Interactive, Inc.

Over its short history Expedia has expanded in many ways. It has grown from primarily selling airline tickets and reaping the commissions, to offering a wide range of travel products such as discounted hotel rooms and packaged travel plans. It also has entered the corporate travel market and expanded internationally, opening sites in Canada, the United Kingdom, and other European countries. 

It has developed cutting-edge technology solutions to make it easier for consumers to plan and purchase online travel. As a result, the company has weathered downturns in the market and outperformed numerous other online travel ventures to become the industry leader in online travel.

2019: The recent state of online booking

 

history-of-flight-booking-crss-gds-distribution-travel-agencies-and-online-reservations

 

For 2019 online booking experienced several minor enhancements, generally connected with overall technical progress. Online payment systems became much more secure, providing fast processing, or even transactions with crypto currencies. A common mobile application now allows a leisure customer to plan a week-long trip in minutes, book flights, hotel rooms, and rent cars in just a few taps.

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