History The system was developed in order to help American Airlines, who were facing a serious problem by the 1950s. Their system for booking flights was entirely manual, having developed from the techniques originally developed at their Little Rock, Arkansas reservations center in the 1920s. Their system used a rotating file with cards for every flight, which a team of eight operators would sort through. If a seat was booked they would place a mark on the side of the card, and knew visually whether it was full. This part of the process was not all that slow, at least when there weren't that many planes, but the entire end-to-end task of looking for a flight, reserving a seat and then writing up the ticket could take up to three hours in some cases, and 90 minutes on average. The system also had limited room for growth. It was limited to about eight operators because that was the maximum that could fit around the file, so in order to handle more queries the only solution was to add more layers of hierarchy to filter down requests into batches. AA had already attacked the problem to some degree, and was in the process of introducing their new Magnetronic Reservisor in 1952 to replace the card files. This consisted of a single magnetic drum, each memory location holding the number of seats left on a particular flight. Using this system a large number of operators could look up information at the same time so the ticket agents could be told over the phone whether a seat was available. On the downside a staff member was still needed at each end of the phone line, and actually handling the ticket still took considerable effort and filing. Something much more highly automated was needed if AA was going to enter the jet age, booking many times more seats. It was during the testing phase of the Reservisor that a high-ranking IBM salesman, Blair Smith, was flying on an American Airlines flight from Los Angeles back to IBM in New York in 1953. He found himself sitting next to AA president C. R. Smith. Noting that they shared a family name, they began talking. Just prior to this chance meeting, IBM had been working with the US Air Force on their Semi Automatic Ground Environment (SAGE) project. SAGE used a series of large computers to coordinate the message flow from radar sites to interceptors, dramatically reducing the time needed to direct an attack on an incoming bomber. The system used teletype machines located all around the world to feed information into the system, which then send orders back out to teletypes located at the fighter bases. It was one of the first online systems. It was not lost on either that the basic idea of the SAGE system was perfectly suited to AA's booking needs. Teletypes would be placed at AA's ticketing offices to send in requests and receive responses directly, without the need for anyone on the other end of the phone. The number of available seats on the aircraft could be tracked automatically, and if a seat was available the ticket agent could be notified instantly. Booking simply took one more command, updating the availabilty and even printing out the ticket for them. Only 30 days later IBM sent a research proposal to AA, suggesting that they really study the problem and see if an "electronic brain" could actually help. They set up a team consisting of IBM engineers and a large number of AA's staff, taken from booking, reservations and ticket sales, calling the effort the Semi-Automated Business Research Environment, or SABRE. A formal development arrangement was signed in 1957, and the first experimental system went online in 1960, based on two IBM 7090 mainframes in a new data center located in Briarcliff Manor, New York. The system was a success. Up until this point it had cost the astonishing sum of $40 million to develop and install (about $350 million in 2000 dollars). The system took over all booking functions in 1964, at which point the name had changed to the more familiar SABRE. In 1972 the system was moved to IBM System/360 systems in a new underground location in Tulsa, Oklahoma. Originally used only by AA, the system was expanded to travel agents in 1976. It is currently used by a large number of companies, including Eurostar, SNCF, and US Airways. Today the system connects more than 30,000 travel agents and 3 million consumers with more than 400 airlines, 50 car-rental companies, 35,000 hotels and dozens of railways, tour companies, ferries and cruise lines. With SABRE up and running, IBM offered its expertise to other airlines, and soon developed Deltamatic for Delta Air Lines on the IBM 7074, and PANAMAC for Pan American World Airways using an IBM 7080. In 1968 they generalized their work into the PARS system , which ran on any member of the IBM System/360 family and thus could support any sized airline. This evolved into ACP (Airlines Control Program), and later to TPF (Transaction Processing Facility). American spun off Sabre on March 15, 2000. The system is now a publicly traded corporation, Sabre Holdings, stock symbol TSG on the NYSE. The corporation introduced the new logo (pictured above) and changed from the all-caps acronym "SABRE" to the upper and lower case "Sabre" when the new corporation was formed. The Travelocity website is owned by this company and serves as a consumer interface to the system. Controversy In 1981 a study[1] by American Airlines found that travel agents selected the flight appearing on the first line more than half the time. 92 percent of the time, the selected flight was on the first screen. This provided a huge incentive for American to manipulate their ranking formula, or even corrupt the search algorithm outright, to favor American flights. American eventually did just that under the name "screen science." At first this was limited to juggling the relative importance of factors such as the length of the flight, how close the actual departure time was to the desired time, and whether the flight had a connection. But with each success American became bolder. In late 1981, New York Air added a flight from La Guardia to Detroit, challenging American in an important market. Before long the new flights suddenly started appearing at the bottom of the screen.[2] Its reservations dried up, and it was forced to cut back from eight Detroit flights a day to none. On one occasion, Sabre deliberately withheld Continental's discount fares on 49 routes where American competed.[3] A Sabre staffer had been directed to work on a program that would automatically suppress any discount fares loaded into computer system. Congress investigated these practices and in 1983 Bob Crandall, president of American, was the most vocal supporter of the systems. "The preferential display of our flights, and the corresponding increase in our market share, is the competitive raison d'être for having created the system in the first place," he told them. Unimpressed, in 1984 the United States government outlawed screen bias. Even after biases were eliminated, travel agents using the system leased and serviced by American were significantly more likely to choose American over other airlines. The same was true of United and its Apollo system.[citation needed] The airlines referred to this phenomenon as the "halo" effect. ASSIGNMENT QUESTIONS SABRE systems produced by American Airlines. This systems demonstrates how BIS can be used to gain strategic advantage. Provide an analysis of this system. Your response should include discussion of the following areas: 1- Describe how the overall approach adopted by American Airlines incorporated the basic competitive strategies of cost leadership, innovation and product differentiation. (10 Marks) 2- In what ways did SABRE provide American Airlines with a competitive advantage? Your analysis should refer to concepts related to the strategic use of information systems, for example entry barriers. (15 Marks) 3- Although SABRE was undoubtedly successful, American Airlines was not able to maintain its competitive advantage beyond the late 1980s. What factors played a part in the erosion of the company's lead over its competitors and how did the company react? (15 Marks)