Information Management Systems: Making the Airline Industry Competitive - Essay Example

Information Management Systems: Making the Airline Industry Competitive The airline industry is continuously going through innovations and transformations, and the capacity to respond and adapt quickly is crucial. The amount of amassed and stored information is quickly enlarging and information management capacities become not just a means toward success but also continued existence. Reliable airline’s information management systems and advanced optimization features are major tools for success in a highly competitive environment (Vanhove 86). Numerous developing and established airlines are discovering the significance of information management system, which is shown in the current investment in this domain in spite of, or perhaps due to the financial challenges today. Managing the voluminous amount of information is the solution to inaccurate analytics and inefficient information redundancies, particularly in industries like airlines that have several programs relying on the same data (Pease & Rowe 52). For that reason, information management is progressing from dispersed databases toward integrated information storerooms and recently toward consolidated industry information management programs. Information Management in Airline Industry The airline industry regards information as their greatest tool to prevail over competition. The former CEO and Chairman of American Airlines, Robert Crandall, declared in the past that his SABRE information system was a major breakthrough in travel (Khosrow-Pour 267). Although certainly filled with the same self-assurance that drove him to revolutionize the airline industry, the remark is absolutely true: the SABRE system worked as the information management tool that enabled customer loyalty programs, affordable flights, and innovative hub-and-spoke service systems that changed the notion of yield management into improved service and cheaper fares (Khosrow-Pour 267). The development of the information domain of the airline industry has a vital significance to designers of infrastructure system—customers are now equipped to handle its transportation activities. However, just as the SABRE system has to be primed before the advantages of yield management could be achieved the task for surface transportation experts is to develop prompt, valuable, dependable, and decipherable information systems that the customers can use to inform their travel choices (Vanhove 38). Airlines are pioneers in the application of information management systems, with the creation of decision support systems and information warehouses for a broad array of applications. The emergence of computer booking systems is regarded, as a setting for the remarkable transformations in airline distribution that have taken place in recent years—a transformation toward online ticketing and booking (Pease & Rowe 55). American Airlines established the SABRE program for booking flights. The program displays flights of American Airlines on the computer when agencies look for available flights. The agencies are afterward more likely to book customers on the flights of American Airline. This provides American Airlines a stronger competitive status in airline bookings. A further advantage to American Airlines is reported to have been the profits which it acquired from commission fees for the application of the SABRE program (Khosrow-Pour 267). This profit was reportedly higher than that which they generated from trading airline seats. Over the recent years, the U.S. Intelligent Transportation System (ITS) has established itself as the information system provider for users of surface transportation program. As a result, transportation service providers, engineers, legislators, and planners related to ITS have to take into consideration how these programs can most appropriately meet the demands and needs of different customers of the travel industry (Vanhove 106). Within the broad range of technological programs that make up the ITS, the major issue here is how transportation customers acquire and apply “advanced traveler information services” (Khosrow-Pour 267) like real-time travel information. One of the major forces that have fuelled the globalization of the travel sector is the growth in information technology. As claimed by Sheldon (1995), “Information is the lifeblood of the travel industry” (as cited in Vanhove 99). It facilitates communication between tourism industry providers, travel agencies, tour operators, and tourists. Information, according to Poon (1993 as cited in Vanhove 99), is the glue that binds the various providers within the tourism industry—specifically car rentals, travel agencies, tour operators, hotels, airlines, and numerous other providers. It is important to note that the connections among and between tourism providers are facilitated not by products, but by a stream of information. These streams of information contain charges, services, and data. Customers receive information in the form of bookings, promotion, and a complementary information transaction transmission from customers to providers (Vanhove 99). Information technology is important for the prompt and effective processing and transmission of all important information. The outcome of demand patterns within the airline industry is an enlarging need for booking systems to provide more travel information and more efficient processing. Poon (1993) argues (Poon 153): The applications of technology to the travel and tourism industry allow producers to supply new and flexible services that are cost-competitive with mass, standardized and rigidly packed options. Technology gives suppliers the flexibility to move with the market and the capacity to diagonally integrate with other suppliers to provide new combinations of services and improve cost effectiveness. Almost all airlines have information reporting capacities that can secure analysis of virtually all planning decisions. Since the 1950s, when the airline industry became widely popular, airlines have had to manage huge volumes of information. The massive growth in the number of airline passengers in the 1950s and 1960s created operational and management issues within the airline industry (Poon 155). Specifically, the difficulty of every passenger-based process grew rapidly. According to Sheldon (1997), “it is a daunting task to keep track of thousands of flight fares, seat inventories, crew, passengers, cargo and baggage without automation” (Pease & Rowe 79). Thus it is not unexpected that from the beginning the airline sector has been one of the vastly technology-based industries in the tourism arena. The necessity to establish the exchange of booking data resulted in the development of computerized reservation systems (CRS). A forerunner of these systems was an automatic program known as Reservisor utilized by American Airlines (Pease & Rowe 79). The huge technological prerequisites for the application of computerized booking programs ranged from simultaneous and real time transaction system to an airline-based information cipher for sending out data. Furthermore, the program had to be tailored for permanent functioning with great efficiency. This need led to the development of new technological models like ‘hardware redundancy, backup generators and uninterrupted power supplies’ (Pease & Rowe 79). SABER was introduced by IBM and American Airlines in the 1960s, made up of ‘two IBM 7080 mainframes for real time and batch processing, an online storage of six magnetic drums and terminal connections at 2,400 baud’ (Pease & Rowe 79) and satisfied the difficult prerequisites. Information technology is a broad concept. Indeed there is a network of information technologies. The biggest and most essential information systems in the travel industry are related to booking, or computer reservation systems (CRS). CRS is defined by the U.S. Department of Transportation as “a periodically updated central data base that is accessed by subscribers through computer terminals” (Vanhove 99). They have become the most popular and critical technology in the airline industry. Booking systems, like the CRS, were created by the airline industry. They are mainly instruments utilized by airlines to perform inventory management of their seat availabilities. They have served a major function in the management of growing rates of travel in recent years. A major transformation is now taking place toward global distribution systems (GDS) and heightened competition within the airline industry (Vanhove 99-100) attempting to widen and secure their product distribution by means of global and local booking systems. Conclusions The application of information management programs and booking systems in the airline industry is brought about by predicted transformations in the needs, demands, and patters of the travel sector. Moreover, enterprises are shifting toward global operations and thus the need for global booking systems. Works Cited Khosrow-Pour, Mehdi. Issues and trends of information technology management in contemporary organizations. UK: Idea Group Inc (IGI), 2002. Print. Pease, Wayne & Michelle Rowe. Information and Communication Technologies in Support of the Tourism Industry. UK: Idea Group Inc (IGI), 2007. Print. Poon, Auliana. Tourism, technology and competitive strategies. Minnesota: C.A.B. International, 1993. Print. Vanhove, Norbert. Economics of Tourism Destinations. New York: Routledge, 2012. Print. Read More