Airlines of world waging war over screen bias

Press, 12 July 1988, Page 29

Airlines of world waging war over screen bias

By

GARETH POWELL

There is a secret and silent war between the airlines of the world. It concerns computer screen bias. Recently, two of the combatants — British Airways and American Airlines — came to an uneasy truce but elsewhere the battle continues.

Airline reservation computer screen bias is a problem that can and has driven several airlines and other businesses into bankruptcy or made them vulnerable to takeovers. Screen bias works like this.

A customer enters a travel agent’s and asks to be flown from, say, Sydney to Hawaii to San Francisco to Minneapolis St Paul to Boston to New York to London to Hong Kong to Bangkok to Sydney. (I have chosen this example because I have just, indeed, followed such a flight plan, bought such a ticket, made such a booking). The possibilities in constructing such a travel plan are almost infinite. Using only major carriers and reasonably direct routings, there are 10,143,000 possible permutations, although the practical figure falls some way short of this.

Plainly some arbitrary decisions must be made and, in theory, these should be made by the travel agent to the advantage of the customer. The problem is that the booking computer system installed in most travel agencies in the world — and all travel agencies in the United States — is nearly always controlled by an airline. And that airline will, understandably, always try to ease the passenger towards using its own service where practicable and possible (and sometimes where it is extremely impracticable, as in an airline which flew me to Sydney via Los Angeles — which is where I wanted to go — via Toronto twice — which is where I did not want to go). One of the major airline reservation systems in the world is Sabre, which is run by American Airlines. In the United States it controls one in three of all terminals installed in travel agencies. Sabre caters for all airlines, on all routes, around the world and makes more money for American Airlines in

rent and royalties for the use of the system than through passengers and freights actually using the aircraft of American Airlines.

British Airways considered that the Sabre booking system showed undue bias towards American Airlines thus damaging the potential sales of British Airways flight tickets — especially in the United States.

In retaliation, British Airways refused to allow British Airways tickets to be sold via the Sabre system in Britain.

This was perceived by American Airlines as being unfair and the airline filed complaints with the European Commission and the U.S. Department of Transportation, and proceeded to sue British Airways in the British High Courts.

British Airways offered the defence that the Sabre system discriminated in favour of American Airlines over British Airways. The Sabre system, said BA, would always give preference to routing a passenger via American Airlines even when British Airways offered the more convenient flights. As a result, British Airways decided that travellers in Britain would be able to book only through its own Travicom system. American Airlines claimed that this was unfair restraint of trade.

Now the dispute has been settled out of court and from the middle of this month the American Airlines reservation system, Sabre, will be allowed to sell British Airways tickets. In return, the Sabre computer system has been adjusted to remove any bias pro-American Airlines, anti-British Airways.

Meanwhile, British Airways is getting involved with a European consortium of airlines creating a new reservation system which will also include the other major American system, Apollo, which is owned by United Airlines — the major rival of American Airlines. Indeed, British Airlines is about to buy an 11 per cent stake in the United Airlines Apollo system.

This news has not been greeted by American Airlines with unalloyed delight. However, the settlement has been

made and the basis of the agreement is, not coincidentally, similar to the principles governing the operating of computer reservation systems agreed two weeks ago by the European Civil Aviation conference. Which means that American Airlines with Sabre and United Airlines with Apollo will now almost certainly do similar deals with other European airlines. In Japan, United Airlines has filed a complaint against Japan Air Lines under the International Transport Fair Competitive Practices Act, charging that Japan Air Lines is not letting it sell its Apollo reservations system to Japanese travel agents, and that it is refusing to let Apollo write Japanese Air Line tickets in Japan. Again, the response is that this is in retaliation to the exercise of screen bias by United Airlines. Why are the airlines making such a fuss about this?

Simply because overt computer screen bias can, and will, send airlines to the wall. Twenty years ago there were 47 major carriers operating from the United States. Now, depending on how you count them, there are fewer than 10. This has partly been caused by deregulation, partly by changes in passenger travel patterns, and partly by airline mismanagement.

But many observers believe that the underlying cause has been screen bias. It is believed by many that the major airlines have used their control of the reservations screens in travel agents to drive smaller airlines out of business.

A few years ago 12 of the smaller airlines, led by Frontier Airlines, brought a suit in the United States to stop any airline controlling a reservation system.' They argued that no matter what rules were brought against screen bias, centralised reservations controlled by a few major airlines, would kill competition. In this they were probably right as the suit fizzled out as the airlines participating disappeared one by one through either Chapter 11 bankruptcy proceedings or through take-over. Even when overt screen bias is removed there are still problems for airlines which do not control or own a substantial part of an international airline reservation system.

If you enter a travel agency in the United States to book a flight, in theory the screen will suggest a number of choices which will start with the most convenient routing — independent of which airline is involved. But with some airlines you can have your tickets printed, your seat allocated and your boarding pass issued on the spot.