CRS, Aviation’s New Marketing Battleground

Since then much has happened ( a day is now a long time in the airline world!) and British Airways (which was not the carrier referred to above) has already tied the knot with once arch rival, British Caledonian. When a giant like BA gets cold feet then it’s time to start asking questions.

The primary weapon in the coming battle will of course be the CRS, linked with what the Americans anticipate will be their massive surplus capacity that they can throw at any market to overwhelm the regional competition. Australia represents a classic example of this philosophy where our own Qantas is fighting in the trenches against Continental and United armed only with a 40 year old bilateral drawn up when the Pacific was very much an American lake.

So how does the CRS system fall into the scheme of this battle? CRS is the means by which an airline can harness your reservation, whether it be for an airline ticket, a hire car booking, hotel reservation or even a restaurant booking at a far off destination. And as most major airlines own or either have co-operative working agreements with major hotel and car rental firms then the flow-on effect is also an added bonus to the airline’s balance sheet. The two biggest, most powerful and advanced CRS system in the world are American Airline’s Sabre and United’s Apollo. In the USA, around 95% of travel agents are linked into these systems and as you can expect they naturally tend to show bias to their own host carrier despite the fact that essentially they are multi-access systems.

Multi-access effectively means that they contain all the schedules for all the carriers within the one system. This way a travel agent in Atlantic City can book you on a United flight from there to Denver, from Denver to Lake Tahoe and onwards to Phoenix on another carrier and so on. Obviously, the host carriers, and those that have marketing agreements with it, will generally feature on what is termed the first page. Travel agents are busy people, as •are their customers and so they don’t realistically have the time to spend rolling through all the pages that are in the computer’s electronic library. Therefore, the vast majority of reservations are made directly off the first screen; if you are not on the first screen, you might as well go home, unless of course an experienced traveller specifically requests a combination of sectors and preferred airlines.

Several landmark court decisions against system bias have in the past year eliminated much of this initial bias, though naturally, the system will always tend to favour its host, meaning that America and United are number one due in no small part to the overwhelming success of their highly developed CRS systems.

The other windfall for these carriers is that each time a US travel agent makes a reservation, irrespective of carrier used, the system owner receives a fee of US$1. 75. With both systems logging tens of thousands of reservations each hour then it is not hard to see that Apollo, for instance, makes a lot more bananas for the ‘9001b Gorilla’ than does his fleet of Boeings!

And so to Europe. Both Sabre and Apollo (which are really separate multi-billion dollar companies in their own right) eyed this market during the early eighties with the sole aim of taking this vast travel market into its own camp. The effect this would have on the European carriers is obvious and hence the nervousness that has in recent weeks led to the formation of two large counter CRS systems by some of Europe’s finest. During July, British Airways/BCal, KLM and Swissair announced that they had in fact teamed up with Apollo (then called Govia but now renamed Apollo following continuing corporate bloodletting at UAL headquarters) to form their own combined IBM-based system that would employ 370 people and cater for over 75 million European travel arrangements by 1990.

Meanwhile, Air France, Iberia, Lufthansa and SAS (which is looking to merge with Belgium’s Sabena) also grouped together to invest several hundred million dollars in their own IBM-based system code-named Amadeus. Amadeus effectively will help keep the Sabre and Apollo wolves from these airlines’ doors long enough for them to regroup against the long-term American onslaught.

Closer to home, we are pleased to say that Australia has one of the most effective systems yet devised. The Australian Travel Industries Automated System (TIAS) is a true multi-access system hosting some 30 carriers without bias. Additionally, you can book accommodation, car hire and other requirements on it at will. Almost three quarters of Australian air tickets are booked via TIAS and it looks to be capable of keeping the US systems at bay, particularly as Apollo itself is active in the TIAS airline inventory.

Airlines are now spending vast sums to upgrade their CRS systems, in fact almost as much as they are in buying new aircraft. The reasons are obvious – he who rules the reservations war will get the passenger and internationally that is one gigantic market asset.