Thursday, January 13, 2011

How farsighted are suits?

American Airlines has been making the newspapers about conflict with the computer ticket sellers, and back of the cheerful internet faces of Orbitz and Travelocity, the massive Sabre reservations system. American wants passengers to buy tickets off American's website so that American doesn't have to pay the Interneters their commission. Passengers want to buy tickets off the independent websites so as to see which airline offers lowest cost tickets, so American's scheme seems sorta counterproductive, but heh, what can you expect from suits?
The real internet player is Sabre. They own and run the heavy duty computer systems that keep track of every airline seat on the planet. Orbitz and Travelocity get their seat information and make their reservations thru Sabre. Sabre charges 3% to 5% commission for the service. In retaliation for American's attacks on their commissions, Sabre has reprogrammed their computers to display American's flights last, behind every other airline's flights.
The joke is, American used to own Sabre. Way back in the 1960's, American wanted computer assistance to sell tickets. They built Sabre to keep track of every seat on every American flight. ASR-33 teletypes at travel agents allowed inquiry (what seats are available) and sales (soon as a seat is sold it is no longer available), all in real time. This was heavy lifting for 1960's computers, like the IBM 360, linked together with 300 baud telephone modems. Somehow the computer programmers managed to do it, and the computer trade press would carry stories about how clever the Sabre programmers were and how powerful the Sabre hardware was. Everyone in the computer business back then had heard of Sabre, one of the wonders of the mainframe computer world.
Sabre was a great success for American, so good that other airlines began to pay American for the privilege of listing their flights too.
Then in 2000, the suits at American sold off Sabre, set it up as an independent company. I suppose American got some cash out of the deal. But they lost control of the backbone of their ticket sales.
And now in 2011, American is complaining about the commissions they have to pay the independent Sabre. Somehow I don't think the cash American raised for selling Sabre, matches the commissions they have been paying Sabre for the last ten years.
Most suit's idea of long range planning is 48 hours into the future.

No comments: