Mar 16, 2023
Computing has totally changed how people buy and experience
travel. That process seemed to start with sites that made it easy
to book travel, but as with most things we experience in our modern
lives, it actually began far sooner and moved down-market as
generations of computing led to more consumer options for desktops,
the internet, and the convergence of these technologies. Systems
like SABRE did the original work to re-think travel - to take logic
and rules out of the heads of booking and travel agents and put
them into a digital medium. In so doing, they paved the way for
future generations of technology and to this day retain a valuation
of over $2 billion.
SABRE is short for Semi-Automated Business Research Environment. It’s used to manage over a third of global travel, to the tune of over a quarter trillion US dollars a year. It’s used by travel agencies and travel services to reserve car rentals, flights, hotel rooms, and tours. Since Sabre was released services like Amadeus and Travelport were created to give the world a Global Distribution System, or GDS.
Passenger air travel began when airlines ferrying passengers cropped up in 1914 but the big companies began in the 1920s, with KLM in 1919, Finnair in 1923, Delta in 1925, American Airlines and Ryan Air in 1926, Pan American in 1927, and the list goes on. They grew quickly and by 1926 the Air Commerce Act led to a new department in the government called Air Commerce, which evolved into the FAA, or Federal Aviation Administration in the US. And each country, given the possible dangers these aircraft posed as they got bigger and loaded with more and more fuel, also had their own such departments. The aviation industry blossomed in the roaring 20s as people traveled and found romance and vacation. At the time, most airlines were somewhat regional and people found travel agents to help them along their journey to book travel, lodgings, and often food. The travel agent naturally took over air travel much as they’d handled sea travel before.
But there were dangers in traveling in those years between the two World Wars. Nazis rising to power in Germany, Mussolini in Italy, communist cleansings in Russia and China. Yet, a trip to the Great Pyramid of Giza could now be a week instead of months. Following World War II, there was a fracture in the world between Eastern and Western powers, or those who aligned with the former British empire and those who aligned with the former Russian empire, now known as the Soviet Union. Travel within the West exploded as those areas were usually safe and often happy to accept the US dollar. Commercial air travel boomed not just for the wealthy, but for all. People had their own phones now, and could look up a phone number in a phone book and call a travel agent.
The travel agents then spent hours trying to build the right travel package. That meant time on the phone with hotels and time on the phone with airlines. Airlines like American head. To hire larger and larger call centers of humans to help find flights. We didn’t just read about Paris, we wanted to go. Wars had connected the world and now people wanted to visit the places they’d previously just seen in art books or read about in history books. But those call centers grew. A company like American Airlines couldn’t handle all of its ticketing needs and the story goes that the CEO was sitting beside a seller from IBM when they came up with the idea of a computerized reservation system.
And so SABRE was born in the 1950s, when American Airlines agreed to develop a real-time computing platform. Here, we see people calling in and pressing buttons to run commands on computers. The tones weren’t that different than a punch card, really. The system worked well enough for American that they decided to sell access to other firms. The computers used were based loosely after the IBM mainframes used in the SAGE missile air defense system. Here we see the commercial impacts of the AN/FSQ-7 the US government hired IBM to build as IBM added the transistorized options to the IBM 704 mainframe in 1955. That gave IBM the interactive computing technology that evolved into the 7000 series mainframes.
Now that IBM had the interactive technology, and a thorough study had been done to evaluate the costs and impacts of a new reservation system, American and IBM signed a contract to build the system in 1957. They went live to test reservation booking shortly thereafter. But it turns out there was a much bigger opportunity here. See, American and other airlines had paper processes to track how many people were on a flight and quickly find open seats for passengers, but it could take an hour or three to book tickets. This was fairly common before software ate the world. Everything from standing in line at the bank, booking dinner at a restaurant, reserving a rental car, booking hotel rooms, and the list goes on.
There were a lot of manual processes in the world - people weren’t just going to punch holes in a card to program their own flight and wait for some drum storage to tell them if there was an available seat. That was the plan American initially had in 1952 with the Magnetronic Reservisor. That never worked out. American had grown to one of the largest airlines and knew the perils and costs of developing software and hardware like this. Their system cost $40 million in 1950s money to build with IBM. They also knew that as other airlines grew to accommodate more people flying around the world, that the more flights, the longer that hour or three took. So they should of course sell the solution they built to other airlines.
Thus, parlaying the SAGE name, famous as a Cold War shield against the nuclear winter, Sabre Corporation began. It was fairly simple at first, with a pair of IBM 7090 mainframes that could take over 80,000 calls a day in 1960. Some travel agents weren’t fans of the new system, but those who embraced it found they could get more done in less time. Sabre sold reservation systems to airlines and soon expanded to become the largest data-processor in the world. Far better than the Reservisor would have been and now able to help bring the whole world into the age of jet airplane travel.
That exploded to thousands of flights an hour in the 1960s and even turned over all booking to the computer. The system got busy and over the years IBM upgraded the computers to the S/360. They also began to lease systems to travel agencies in the 1970s after Max Hopper joined the company and began the plan to open up the platform as TWA had done with their PARS system. Then they went international, opened service bureaus in other cities (given that we once had to pay for a toll charge to call a number). And by the 1980s Sabre was how the travel agents booked flights. The 1980s brought easysabjre, so people could use their own computers to book flights and by then - and through to the modern era, a little over a third of all reservations are made on Sabre.
By the mid-1980s, United had their own system called Apollo, Delta had one called Datas, and other airlines had their own as well. But SABRE could be made to be airline neutral. IBM had been involved with many American competitors, developing Deltamatic for Delta, PANAMAC for Pan Am, and other systems. But SABRE could be hooked to thee new online services for a whole new way to connect systems. One of these was CompuServe in 1980, then Prodigy’s GEnie and AOL as we turned the corner into the 1990s. Then they started a site called Travelocity in 1996 which was later sold to Expedia.
In the meantime, they got serious competition, which eventually led to a slew of acquisitions to remain compeititve. The competition included Amadeus, Galileo International, and Worldspan on provider in the Travelport GDS. The first of them originated from United Airlines, and by 1987 was joined by Aer Lingus, Air Portugal, Alitalia, British Airways, KLM, Olympic, Sabena, and Swissair to create Galileo, which was then merged with the Apollo reservation system. The technology was acquired through a company called Videcom International, which initially started developing reservation software in 1972, shortly after the Apollo and Datas services went online. They focused on travel agents and branched out into reservation systems of all sorts in the 1980s. As other systems arose they provided an aggregation to them by connecting to Amadeus, Galileo, and Worldspan.
Amadeus was created in 1987 to be a neutral GDS after the issues with Sabre directing reservations to American Airlines. That was through a consortium of Air France, Iberia, Lufthansa, and SAS. They acquired the assets of the bankrupt System One and they eventually added other travel options including hotels, cars rentals, travel insurance, and other amenities. They went public in 1999 just before Sabre did and then were also taken private just before Sabre was.
Worldspan was created in 1990 and the result of merging or interconnecting the systems of Delta, Northwest Airlines, and TWA, which was then acquired by Travelport in 2007. By then, SABRE had their own programming languages. While the original Sabre languages were written in assembly, they wrote their own language on top of C and C++ called SabreTalk and later transitioned to standard REST endpoints. They also weren’t a part of American any longer. There were too many problems with manipulating how flights were displayed to benefit American Airlines and they had to make a clean cut. Especially after Congress got involved in the 1980s and outlawed that type of bias for screen placement.
Now that they were a standalone company, Sabre went public then was taken private by private equity firms in 2007, and relisted on NASDAQ in 2014. Meanwhile, travel aggregators had figured out they could hook into the GDS systems and sell discount airfare without a percentage going to travel agents. Now that the GDS systems weren’t a part of the airlines, they were able to put downward pressure on prices. Hotwire, which used Sabre and a couple of other systems, and TripAdvisor, which booked travel through Sabre and Amadeus, were created in 2000 and Microsoft launched Expedia in 1996, which had done well enough to get spun off into its own public company by 2000. Travelocity operated inside Sabre until sold, and so the airlines put together a site of their own that they called Orbitz, which in 2001 was the biggest e-commerce site to have ever launched. And out of the bursting of the dot com bubble came online travel bookings. Kayak came in 2004
Sabre later sold Travelocity to Expedia, which uses Sabre to book travel. That allowed Sabre to focus on providing the back end travel technology. They now do over $4 billion in revenue in their industry. American Express had handled travel for decades but also added flights and hotels to their site, integrating with Sabre and Amadeus as well.
Here, we see a classic paradigm in play. First the airlines moved their travel bookings from paper filing systems to isolated computer systems - what we’d call mainframes today. The airlines then rethink the paradigm and aggregate other information into a single system, or a system intermixed with other data. In short, they enriched the data. Then we expose those as APIs to further remove human labor and put systems on assembly lines. Sites hook into those and the GDS systems, as with many aggregators, get spun off into their own companies. The aggregated information then benefits consumers (in this case travelers) with more options and cheaper fares. This helps counteract the centralization of the market where airlines acquire other airlines but in some way also cheapen the experience. Gone are the days when a travel agent guides us through our budgets and helps us build a killer itinerary. But in a way that just makes travel much more adventurous.