first or in a preferential manner) before

showing those of competitors.

• Havingtravel agencies sign contracts

that make it difficult for them to switch

to a competitor s system.

• Chargingfees for airlines that want to

havetheir flights listed in the reserva-

tion system.

• Offeringinformation processing and of-

fice automation services for free or for

a nominal fee) for travel agents choos-

ing to hook into the sy tem.

• Offering free microcomputer work-

station terminals to travel agencies.

These terminals can also be used for

local processing tasks when not

needed for booking airline tickets.

• Expanding the services offered through

the reservation systems so that travel

agents can easily reserve rental cars,

hotel rooms, and so on for travelers.

The major airlines have spun off their

reservation systems into separate sub-

sidiaries that are expected to be prof-

itable in their own right. These sub-

sidiaries often sell computer services and

excess computing resources both to

smaller airlines and to com anies in other

industries.

Competition among the airlines shows

no signs of slowing down during the

1990s. Fare wars, special packages for

frequent flyers, and new travel services

continue to make the airlines industry dy-

namic and volatile. Some companies,

such as Eastern and Pan Am, have folded

as the result of the competitive pres-

sures. With each bankruptcy the remain-

ing competitors practically trip over one

another to obtain gates and lucrative

routes at ma or airports. Information tech-

nology has already played a critical role in

shaping how the major airlines compete

with one another and will undoubtedly con-

tinue to do so in the years ahead.

Adapted from Hopper  1990), Copeland  1991), Winkler 1990), Betts 1992), and Lawrence  1992).

D S USS ON

  Discuss how airline reservation systems help the airline operate more efficiently and

assist them n providing good levels of customer service.

  How have airline reservation systems altered the manner in which the major airlines

compete against one another? How have these systems made it more difficult for

newer, smaller airlines to compete against the major carriers?

 

How are the airline reservation systems used to lock-in travel agents and lock-out

competitors?

4 How do you think the airline reservation systems should be changed to provide new

levels of customer service and efficiency? What additional services do you think they

should offer? Why do you think airline passengers would be interested in these?

CHAPTER INTRODUCTIONTO MANAGEMENT INFORMATIONSYSTEMS  5