SITA INC the global air transport IT company, celebrates the 10th anniversary of the launch of the world’s first airline booking engine which SITA developed for a British airline. The arrival of the booking engine made possible the low fares revolution which now saves airlines and passengers billions of dollars annually in ticket distribution fees.
Figures released by SITA estimate that up to 255.7 million people now travel each year thanks to direct online bookings with the world’s top twenty airlines. The company further estimates that the global total is in the region of 400 million passengers and that the move towards e-tickets by the world’s airlines is saving the industry as much as $2 billion annually.
For those travelling on the world’s busiest twenty airlines, the ability to book direct with them has resulted in some $895 million in savings as those airlines no longer have to pay the traditional GDS (Global Distribution Systems) fees for those flight reservations. Extrapolated across the airline industry, SITA estimates that at least $1.2 billion is being saved in GDS fees annually.
The world’s first airline booking engine was developed by SITA for bmi (then known as British Midland Airways) following SITA’s successful demonstration of a prototype at a technology conference in Washington in September 1995. SITA’s Senior Vice-President for Passenger and Travel Solutions, Richard Stokes, recalled how it came about.
“In October 1995 there was a meeting in a pub between our software development engineers and the IT people from bmi. About $50,000 earmarked for marketing was used to provide a budget and see what we could come up with in time for the Christmas market,” recalled Stokes.
“Development began immediately with the name ‘Cyberseat’ created for the web-site by the airline’s marketing team. The development time was remarkable given that this was still the early days of the internet. Organising domain names, deciding on and testing what browsers to support and obtaining even basic internet access were a painful process,” he said.
By the first week of December 1995, some seven weeks after the project had started, a system was available which allowed passengers not only to book online but to search for low fares across a date range, book two-for-one companion fares and to pay online, using a choice of credit cards protected by SSL (still the commonest form of data protection on the internet). Ten years ago only 16 million people had any experience of using the internet so useability and security were vital to ensure acceptance.
Testing was completed by the evening of December 10 and the system was cut-over ready to go live the following day. British Midland did a lot to encourage booking even painting their website address on their aircraft, and the first booking was made by a passenger travelling from Paris to London. Along with many others travelling that week, he received a bottle of champagne from the airline. The era of buying airline seats online had begun.
Since then SITA has continued to work with airlines around the world to help them develop their online services. Air New Zealand started using the SITA E-Commerce platform just two years ago and is now achieving 16,000 bookings per day equating to over NZ$3 million worth of daily business. Over half its domestic bookings are now made online and cost savings amounted to over 15% of the airline’s total profit for this year.
Non-airline customers have also come to rely on SITA for its E-Commerce platform such as Amtrak which recorded a new internet booking record in the run-up to Thanksgiving. Bookings reached 17,269 on November 21 last, the first time in the history of Amtrak.com that daily bookings exceeded the 17,000 mark. The website is now Amtrak’s most successful booking channel in terms of total passenger sales.
SITA Director, Ian Ryder, who oversaw the development team which put together the first Internet booking engine said that to date it has been a mixed blessing for the industry.
“The internet has helped to drive down airlines’ costs but it has also fuelled price competition, damaged yields and exposed the weakness in legacy computer systems in supporting pricing and increasingly diverse and complex distribution channels. This is particularly acute in the US market where the average revenue per seat mile in 2004 was 7.5% lower than a decade earlier,” Ryder said.
“Ten years on, the key challenge we are now addressing through our Horizon portfolio of IT applications is to enable an airline to understand how its prices compare to competitors and to make timely and accurate changes in order to maximize their revenue. No airline can really afford to be without this capability in order to survive in today’s online world.”
SITA has recently launched SITA Airfare, a comprehensive suite of applications and services that provides airlines IT solutions for managing, distributing, pricing and shopping for competitive airfares. It includes the innovative use of “robots” which constantly trawl the worldwide web to collect and analyse fare data.