The air hose industry exemplifies the effectivity of e-commerce and the manner engineering can re-create the industrial construction. Today a traveller from New York can book a unit of ammunition trip from New York to London, lease a auto, and book a hotel room online. The same traveller upon making the airdrome can acquire his get oning base on balls, verification to his auto, and his hotel room figure from the machine-controlled ticket machine of the air hose. If the traveller is a non-smoker and prefers a room on the non-smoking floor, the system would hold his penchant saved and would book the room consequently. If any alterations have to be made in the travel path at any point in his journey, it can be seamlessly made by naming the several client service section. All this is possible, without any human interaction, through the development of information engineering and the Internet ( Doganis, 2006 ) . Research shows that concern travellers are about twice every bit likely to utilize internet travel bureaus to book their tickets as the conventional theoretical account because it is faster and more convenient ( Travel Weekly, 2005 ) . This forms merely a portion of the overall e-commerce theoretical account, which is non restricted entirely to doing reserves. It encompasses the whole procedure of making concern, interaction between the house and its providers, spouses, and clients.

The Internet and IT provide huge possibilities for growing for the air hoses, and a overplus of information for the purchasers so that they can catch the best available offers. The air hose reserve system is a sophisticated computerized system that can foretell and find the demand for tickets over clip and put the monetary value consequently ( Economist, 2001 ) . Therefore, e-commerce becomes the interface for making concern between all the service suppliers and receiving systems.

The air hoses industry was one of the early adoptive parents of IT and it has helped in altering the whole construction of the industry. Using IT they have successfully reduced their operating costs, selling and distribution cost. As estimated by the Economist, the direction information systems and the Internet together has saved the air hoses “ committees of up to 5 % on ticket gross revenues ” and “ cost of printing and directing out tickets and the fees ( around $ 11 per ticket ) for the computerized reserve services ” ( Economist, 2001, p. 20 ) . Companies like Southwest, Easy Jet, and Ryanair have reported that about 90 per centum of their tickets were sold online ( Economist, 2001 ) . There has been important growing in the e-booking industry in America and it is non merely limited to passenger e-bookings, but besides to cargo engagements. In 2005, 14 per centum lading transporting through air hoses was booked online ( McKenna, 2005 ) . The advantage of e-commerce is non restricted entirely to be decrease and provides chance towards bettering their operations and client services. This paper traces the history of integrating of IT and the Internet in the concern theoretical accounts of air hoses and surveies how this has changed the face of the industry. The paper will besides discourse the engineerings used by the air hoses soon, and the future tendency of the industry.


Today the air hose industry can be called one of the best adoptive parents of IT. An involvement, hence lingers to understand the manner in which the cyberspace and IT have changed the interface of the air hose industry. The beginnings of the invention and alteration in the air hoses industry to follow new engineering began in the fortiess with American and United Airlines seeking to follow an electronic reserve system to cut down clerical costs ( Copeland & A ; McKenney, 1988 ) . However, this shortly led to the demand to maintain a path of the client ticket Numberss and other personal inside informations of import to command operations, which in bend led to this information being utilized for place allotment, luggage, nutrient, and other operational and service issues. This in bend led to the use of the informations being collected for the air hose ‘s retail distribution channels for better selling. This subdivision will supply a brief history of the development of the air hose reserve system and development of e-commerce for air hoses industry.

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The initial old ages of the acceptance of the machine-controlled reserve call system were dubbed the “ experimental old ages ” ( Copeland & A ; McKenney, 1988 ) . The first mechanization was brought Forth in the fortiess with the most advanced electromechanical technology engineering available at that clip. During the manual epoch, all the flight reserve, place allotment, operations work, was done by reserve clerks who gathered client information manually. Huge resource handiness boards placed in all reserve counters that displayed the figure of seats available on peculiar flights which were used to do the engagement agreements. In 1950s, this was replaced by magnetic membranophone memories that captured the stock lists of seats available so that they could be displayed in reserve offices ( Copeland & A ; McKenney, 1988 ) . In order to cognize the figure of place available, reserve clerks inserted home bases at their desks for the needed flight which would so expose the figure of seats available. The cancelations or alteration in itinerary were done on the on the home bases as good. This system was good for stock list direction, but failed to capture rider place records. It was non until 1958, through a joint attempt of IBM and American Airlines, that an machine-controlled system was created that would tie in the rider name to her reserve ( Copeland & A ; McKenney, 1988 ) .

The initial phase of the undertaking was installed under the name SABER ( Semi-Automatic Business Environment Research ) in 1961. SABER comprised of two 7090 mainframe systems by IBM. One was provisioned for the intent of existent clip processing and the other for the intents of informations backup and low-priority batch occupations. For existent clip informations transportation capableness, IBM specifically designed the 7286 Real Time Channels that would let commanding, programming, and piecing of informations between the “ 7090 and the magnetic membranophones, disc files, and communicating lines ” ( Copeland & A ; McKenney, 1988, p. 355 ) . Though SABER had some alone capablenesss and was a revolutionizing technological invention in the 1960ss, IBM ‘s old experience in the country was non sufficient to implement a complex distributed data processing system for commercial intents ( Copeland & A ; McKenney, 1988 ) . It took IBM and American Airlines until 1965, when they completed installing of the SABER system to turn out that the nucleus jobs with rider reserves for the air hoses could be solved ( Copeland & A ; McKenney, 1988 ) . In bend, SABRE became the first planetary distribution system ( GDS ) available to the air hoses industry.


In 1964, IBM announced its System/360 that made their package compatible with any sort of hardware constellations. This alteration, along with its experience in the SABER undertaking, allowed IBM to develop the Programmed Airline Reservations System ( PARS ) . This allowed air hoses to use standardised System/360 ‘s for their reserve systems and helped the air hose operators to cut down their cost of developing customized reserve systems ( Copeland & A ; McKenney, 1988 ) . PARS was targeted to the mid-sized air hoses, and allowed them to hive away rider information along with reserve information, and a specialized operating system called ACP ( Airline Control Program ) . Copeland & A ; McKenney ( 1988, p. 356 ) states “ ACP was designed to manage a big volume of inputs that, although unpredictable, required limited computational maps and flexibleness. The package aim was to accomplish optimum terminal response, system handiness, dependability, and recoverability. ” This in bend allowed Eastern Airways, TWA, and American Airlines to come together to collaborate in testing the names and information of their riders for better apprehension of their client profiles. By the seventiess, all the air hoses were utilizing information systems to run their concerns. Information systems were non nevertheless a distinguishing factor in their concerns because the industry as a whole was regulated by the Federal authorities which made it impossible for them to offer discounted menus or vie on monetary value distinction. The Airline Deregulation Act of 1978 changed the landscape for the full industry, and every competitory advantage was all of a sudden really of import. The major air hoses besides started confronting competition from low cost air hoses which added another dimension to the competitory landscape.

Airlines started utilizing their information systems to make yield direction theoretical accounts in order to track scheduled reserves, and selectively adjust menus on single seats. Yield direction is the scientific discipline utilizing of operational research theoretical accounts to salvage seats for late engagements that yield higher gross from clients ( Belobaba, 1987 ) . Therefore, using information systems, air hoses could supply tickets at low costs early on, without increasing the hazard of predating higher gross closer to the clip of flight. This allowed the air hoses to aim both the monetary value sensitive clients with their low monetary value offerings every bit good as high-revenue concern clients who provided high gross to the air hoses. This output direction engineering adopted by the US air hoses allowed them to derive much higher gross than those who did non utilize them. Therefore, the low cost air hoses brought in a tendency of discounted tickets, which was shortly followed by bigger full-service air hoses like American Airlines in order to make full their otherwise empty seats through to a great extent discounted tickets. In 1974, an attempt was made to incorporate and automatize all the travel agents, which was called the Joint Industry Computer Reservation System ( JICRS ) . The joint attempt was aimed at doing a engagement system for all the travel agents who could book tickets utilizing a individual system for all the air hoses. This was the first attempt to set up an e-marketing system in the air hoses industry. However, the program was cancelled when United Airlines announced the launch of Apollo, its ain customized system, for the travel agents. Harmonizing to Copeland & A ; McKenney ( 1988 ) the ground for the dislodge was as follows – “ During the latter half of 1975, United concluded that the JICRS proposal was traveling to ensue in United paying in a heartfelt way for the industry solution, which would function merely to cut down their advantage by doing all air hoses equal in their reserves treating capacity ” ( p. 359 ) .

This caused all the other air hoses that have their ain systems to spread out their capablenesss and put in them at the offices of the travel agents. These customized systems allowed travel agents to supply flight information that was biased towards their peculiar air hose. Airline agents demanded entree to all the different systems from a individual console, which resulted in consolidation of the single systems and cross system entree utilizing a common distribution linguistic communication. Therefore, GDS was utilized to “ place possible paths, see agenda convenience ( propinquity to want going clip, figure of Michigans, elapsed clip ) every bit good as the bearer ( s ) supplying the service ” ( Smith, Gunther, Rao, & A ; Ratliff, 2001, p. 41 ) . The air hoses that had the GDS were listed higher up in order of the client ‘s itinerary ( Smith, Gunther, Rao, & A ; Ratliff, 2001 ) . The first list that appeared in the travel agent ‘s screen had an impact on the client ‘s determination. As cited by Smith et Al. ( 2001 ) , 70 per centum of the engagements done through travel agents were displayed on the first screen show of the agent. This show prejudice led to an addition in the gross of American Airlines by an estimated $ 100 million per twelvemonth ( cited in Smith et al. , 2001 ) .

Therefore, GDS became the interface between the travel agent and the air hose. It provided the agents with all possible information sing the scheduled flights and their menus for all the available air hoses. Initially the prejudice in the show system was used by many air hoses for their ain net income. However, it was regulated by the Department of Transportation in 1984 to take the prejudice in order to promote just competition.


Before the Internet arrived on the scene, air hoses, GDS, and clients interacted through a private web established for the travel agents. With the Internet, the web was unfastened to everyone, and already built out, which for the air hose industry which was extremely cost sensitive proved to be a win/win state of affairs because they no longer had to put in complex and expensive private webs. This resulted in the communicating between the travel agents, GDS, and the air hoses going simpler particularly because the air hoses already had extended experience with informations distribution via a common distribution linguistic communication. Initially the Internet engagements were restricted to tickets reserves and payment minutess. On completion of the engagement process, paper tickets were mailed to the client. This made the procedure composite, as the clients had to buy the tickets in progress if they wanted the tickets to make them on clip. Once electronic tickets were introduced, this job was solved, as paper tickets were wholly eliminated, thereby “ cut downing the lead clip and cost associated with online purchases ” ( Smith et al. , 2001, p. 41 ) . This led to a widespread growing of e-ticketing for engagements through the Internet. As cited in Smith et Al. ( 2001 ) a research conducted by Forester Research in 1999 demonstrated that 9 million families in the US booked their flight tickets through the Internet. In 2003, the figure increased to 64 million who used the Internet to garner information or book tickets. ( Werthner & A ; Ricci, 2004 ) .

The Internet has increased gross revenues volumes for the air hoses industry and has helped it in making their clients more expeditiously. The primary ground is an efficient distribution system, which is separately customized to run into each traveler ‘s demands. Three signifiers of distribution are employed by the air hoses – online travel agents ( Business to concern ) , direct entree to the clients ( concern to clients ) , and auction and rearward auction mercantile establishments ( Smith, Gunther, Rao, & A ; Ratliff, 2001 ) . The first theoretical account provides direct entree to GDS by the clients, wherein the travel agents are portals like Travelocity, Expedia, and Orbitz. The clients utilize the system to compare monetary values and air hoses available on their chosen path of travel.

As stated by Smith et Al. ( 2001 ) “ the Internet aˆ¦ has besides revived the air hose gross revenues agent in electronic signifier ” ( p. 42 ) . The Internet has allowed many air hoses to supply excess services and information to their clients and pull off client trueness plans. Further, it besides allows air hoses to supply combined holiday bundles to their clients. In this theoretical account the Internet is used as both a distribution every bit good as a selling tool. It is used to advance low menus, particular bundles, and other offers to possible travellers. Further air hoses frequently use their web sites or the on-line travel agent ‘s web site to advance their frequent flyer stat mis plans, promotional offers, etc. one such illustration is that of Delta air hoses which provides the “ more for your stat mi ” auctions through which the frequent flyer nine ‘s members can deliver their milage for holiday bundles ( Smith, Gunther, Rao, & A ; Ratliff, 2001 ) . Further, the air hose booking systems have extended their offerings beyond merely air hose ticket booking to auto lease, reserve for hotels, etc. therefore the Internet has been used to optimise the design of the GDS to foretell the nature of travel and other cross-selling chances to the clients ( Smith, Gunther, Rao, & A ; Ratliff, 2001 ) . In add-on, the air hose web site besides helps in capturing the client ‘s navigational way on the web in order to use this information to border promotional runs.

The Internet is besides used to cut down the distribution cost. For illustration, the Economist has reported that the mean decrease in the cost of tickets is around $ 11 per ticket due to the alteration in manner of distribution systems ( Economist, 2001 ) . Further online travel agents like Travelocity save 19 to 65 per centum in dealing costs ( Harris, 2010 ) . In 2001, 4 % of all air hose tickets were sold through the Internet. In 2009, about 70 per centum of the air ticket engagements are done online in the US ( Harris, 2010 ) .

The Internet has created new chances for air travel for clients and increased concern chances for the air hoses. Internet booking systems for the air hoses are non restricted to being ticket suppliers, but instead allow travellers to be after their full path from air travel to hotel stay. The corporate web sites besides provide chances for extra client services through alone client web activity tracking mechanisms that can be utilized for customized offerings based on single clients. Therefore, e-commerce has changed the manner air hoses do concern and created extra chances for growing.


Airlines have adopted new engineerings to better operations, lower costs, increase net incomes, and to supply better client service through systems integrating and improved informations excavation tools from all their points of interaction. “ Branding and communicating of rules are besides critical for air hoses at the strategic degree. Pull offing communications with all stakeholders, including investors, imperativeness, employees and clients, is of paramount importance. ICTs [ Integrated Communication Tools ] -enabled communications assist air hoses to interact with all their stakeholders and to update them with respects to their enterprises and developments. ” ( Buhalis, 2004, p. 812 ) Further, the ICT helps in air hose operations like check-in trailing, seat allotment, flight position, and besides bring forthing studies sing flight way, conditions, etc. In add-on, it will help in stock list planning, and reserve direction systems.


Presently a batch of money is being spent by the air hose industry in order to develop better information assemblage tools, particularly about their clients in order to custom-make their offerings and to supply trim information. In add-on client convenience is another country that is a major focal point for the air hoses. For this ground, air hoses have rolled out machine-controlled fining machines that allow clients to avoid long waiting lines and do their check-in formality utilizing remote-controlled booths at the airdromes ( Schrage, 2005 ) . These machines allow travelers to swipe their frequent flyer card or recognition card to draw up the client ‘s travel path and treat their cheque in petitions. Check-in can besides be done over the phone or the web prior to geting at the airdrome if the rider believes that they will be tardily for the flight. This system is besides being used to upsell riders for extra services as a portion of the cheque in procedure, every bit good as to roll up any necessary fees for luggage, etc.


As consumers become more technically savvy, extra engineerings are offered to them in order to supply a better client service experience. Consumers are besides going more demanding while going. They are looking for extra services at every point in their trip, including extra inside informations about every facet of their travel, such as travel clip, conditions information, flight position, on-line entree etc. The following coevals engineering in the air hose industry will take at better communications, non merely with the clients, but besides among the internal employees i.e. the land force, and the airborne crew. Therefore, tools such as the GPS ( Global Positioning System ) can go even more of import than it is today for both engineering and in communicating. In add-on, air hoses have programs to travel wholly radio in future ( Wilson, 2001 ) . Wireless and nomadic engineering is being integrated into every facet of air hose operations to better communicating every bit good as leting distant ticketing and luggage check-in through radio devices ( Wilson, 2001 ) .

The air hoses are seeking to increase their client focal point by cut downing the fusss faced by travelers at the airdrome and during air travel. Harmonizing to research conducted by IBM, most of the holds in air travel worldwide after flight holds in 2008 occurred due to baggage mishandling ( 49 per centum ) , failure to lade the baggage ( 16 per centum ) , and fining mistake or security ( 14 per centum ) , and other issues ( 21 per centum ) ( IBM, 2010 ) . Therefore, the air hoses have to concentrate on seeking to cut down these issues by using engineerings like RFID and SOA ( Service Oriented Architecture ) in order eliminate the causes associated with these jobs.

The air hose industry is seeking to spread out the e-ticketing construct to do the other mundane rider interactions easy. For case, US airports now let anyone with e-tickets to look into in without seeing a ticketing agent. They besides allow the traveller to look into in their luggage utilizing a similar procedure. The one major restricting factor is security, and one time the air hoses solve the issue of individuality, I am certain that other services will be offered on a self-help footing to the traveler who chooses to make it themselves.

The following large e-commerce chance for the air hoses is to work the possibility of nomadic e-commerce ( Wilson, 2001 ) . Others chances that are being explored include seeking to utilize Bluetooth or RF that allows transmission of informations for short distances to convey flight related information to the client in the waiting country ( Wilson, 2001 ) . They are besides seeking to understand how this engineering can be used to market to their confined clients who have small pick but to wait in the designated waiting countries in airdromes, and possibly even onboard the aircrafts.

In short, the usage of e-commerce has merely exposed a little tip of the overall air hose industry, and they have been on this journey for more than eight decennaries. It is nevertheless really clear that the future success of the industry is really much dependant on the successful deployment of extra e-commerce chances for their clients and spouses.


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