The Airline Industry-A Little History
                       The structure - simplified
        Airlines          Intermediarie         Customers
                          s
                          Travel agents
         – The 70s’ an era of deregulations
         – Airline set prices and schedules as per market demand
         – Price wars erupt
         – Airlines differentiate through the use of technology
            • Known as the Computer Reservation System (CRS)
            • Legacy systems
                                 
     The Airline Industry-A Little History
       Airlines         CRS           Intermediarie
                                      s
                                      Travel agents
     – Airlines equipped travel agents with CRS
        • Signed long-term contracts
        • Personnel had to be trained to understand display
        • Exclusively list CRS Airline’s flights
     – This produced favouritism “the halo effect”
        • Agencies favoured airlines with whom they had a CRS contract with
                           
    The Airline Industry-A Little History
       Airlines          CRS           Intermediarie
                                       s
    Government orders                  Travel agents
    to list other airlines - 
    at a fee of course
                           
     The Airline Industry-A Little History
      – Airline further controlled market through screen bias
     “the act of purposely positioning information on-screen to influence specific purchase behaviours 
     that are beneficial to the vendor, but unfair to other airline suppliers.”
      – 50% of all consumers selected the flight shown on the first line
      – 90% chose a flight from the first screen
      – Airlines must list other airlines but charge a fee
        • Fees are determined by airlines
        • Premium fee to be place in first pages
                           
     The Airline Industry-A Little History
       Airlines         CRS           Intermediarie
                                      s
                                      Travel agents
     – CRS become a critical asset
        • In 1983, 80% of tickets were sold by a travel agency via a CRS
        • In the 1990’s, the airlines expand their CRS globally
           – called Global Distribution System (GDS)
             » e.g. American Airlines’ GDS
     – Government intervenes again
        • This forces airlines to divest their GDS – some remain at arms length
           – e.g. American Airlines’ GDS into “Sabre”