With an integration of recently acquired AirTran on the agenda, Southwest Airlines has decided to delay a decison on selecting a new reservation system provider.
This comes at an interesting time for the Dallas-based airline, but it's also an interesting period for the airline industry. At a time when there is a distribution battle going on for the allegiances of intermediary channels, having an advanced res system is essential.
However, is there a suitable legacy model and process for managing airline reservations? Perhaps the time has come to re-think this.
Southwest’s historic disdain for the global distribution sysstems is legendary, although its attitude has softened with participation in some GDSs. In that regard, the airline is also now getting an attractive proposition from Travelport to participate in its Universal API.
Officially, thereason for the delayed decision about a new res system is Southwest has too much on its plate, the Dallas Business Journal reports. The airline is running hard and fast to integrate AirTran flights into the core reservations process and this places a significant strain on the Southwest IT team's scarce resources.
So, it is a prudent move to delay a decision. However, since Southwest has known for some time that it would have to integrate AirTran, one can speculate that this may not be the only reason. The last time Southwest found itself tasked with airline integrations was when it acquired Salt Lake- based Morris Air in 1993 and the assets of Muse/Transtar airlines in the 19980s.
Given recent glitches in the overall IT infrastructure at Southwest, there may be a number of other issues at stake.
CEO Gary Kelly is on record as stating that a new Passenger Service System would provide Southwest with international capabilities, and the airline had reduced its short list to two players -- Amadeus and Sabre.
The selection process has been very laborious. That would be natural for “normal” airlines such as the network carriers. But Southwest has carved a different path and grown to be the largest (by passenger numbers) domestic US airline.
The reservations selection process has dragged on for more than a year. That is light years for a company whose agility and speed is legendary.
In the interim, Southwest will be going for a little more “Luv” from Sabre, which will be doing modest upgrades to Southwest's res system, including adding some international quick fixes for Mexico and other nearby international locations.
Sabre declined to comment about this work.
There are many major PSS players. Southwest uses a hybrid and customized system. Some of this stems from the old Braniff system (called COWBOY) which Sabre acquired after the collapse of the Dallas-based airline in the 1980s.
As noted earlier, Southwest is evaluating both Amadeus and Sabre’s PSS offerings.
Amadeus Altea was largely built from scratch over the last decade and is still incorporating major pieces of functionality. Amadeus of late has won a large share of the PSS RFPs in the market -- a situation that has prompted some calls for the company to separate its two businesses.
Amadeus has two sub versions of its PSS: one for low cost carriers, which Norwegian Air Shuttle is using, and a specialized Atltea version called the Common IT Platform, which was customized for the Star Alliance. Major Altea users in Europe include British Airways, Air France/KLM, and Lufthansa. In Asia/Pacific, the Altea airlines include Singapore Airlines, Cathay Pacific and Qantas. Some are in the process of implementation.
However, in North America, Amadeus' lone customer, United Airlines, cancelled the contract, leaving Madrid-based Amadeus looking for a North America customer.
Sabre's PSS is SabreSonic.It was upgraded in recent years and has won over several former low cost carriers migrating to a hybrid model. Recent wins for Sabre include Canada’s WestJet, Mexico’s Volaris and JetBlue in the USA. Sabre will be losing its largest customer, American Airlines, to HP, once American Airlines' new system, Jetstream, is ready.
Southwest Airlines confronts a dilemma that most airlines now face. Over the past 15 years, the Web has increased the complexity of airline passenger IT infrastructure. The common wisdom was to have a two-tier solution with the PSS handling most major infrastructure and core functionality, and Web-based systems tasked with being the passenger interface.
This two tier model has now morphed into a bus-like structure with common systems for planning and management, business intelligence data services, customer management/loyalty, check in systems and PSS functions sitting on servers inside the airline’s own environment or within that of their outsourced IT providers. The Web-based Internet booking engine is usually far more sophisticated than just being a front end to these systems.
Indeed it has become more in vogue to invest in these non-PSS systems rather than in the core monolithic PSS mainframe-based systems of old. There are many current demands on scarce IT resources inside airlines. The need for speed of deployment in a climate of rapid change -- mobile and social media -- have placed further constraints and demands on the IBM TPF (now zTPF)-based mainframes used to host most airline PSSs.
Southwest realizes that with its growth it will be a gut-wrenching process to move to a new res system despite its relatively simplistic model.
But perhaps the days of the monolithic PSS are over.
With distribution fragmenting and the importance of an actively managed multi-channel distribution strategy essential for all carriers, the possibility of transitioning to a more distributed cloud-based solution will probably cause Southwest to rethink its next foray.
One can clearly infer that there was no easy answer for Southwest or they would have made a decision by now. The demands of consumer-based airfare search, with its accompanying increases in traffic, are placing huge strains on every airlines’ IT infrastructure, and it will never diminish.
Other strains include demands for unbundled and ancillary services (yes, even Southwest has those), mobile and social, and all of these requirements should cause all airlines to rethink the old model of massive-scale solutions.
Instead they should be looking at agile environments and the cloud as ways to move to a more commercially sustainable set of IT solutions.
The days of 5-10 year PSS contracts must surely be threatened.
After all, who can say what the airline IT world will be like commercially in 2 years -- let alone five or 10.
Perhaps Southwest is making a good decision at the right time.