The Impact of E-Commerce Technology on the Air Travel Industry

EXECUTIVE SUMMARY This case study examines the impact of online reservation systems and e-commerce on the travel industry. Two questions are examined: 1. How can competitive advantage be obtained from the exploitation of new information technologies—in particular, e-commerce technologies? 2. How has the role of travel agents changed because of the new information technologies being used to achieve competitive advantage in the air travel industry? Initial discussion concerns the impact of the American Airlines SABRE system, as this has often been touted as giving American Airlines first-mover advantage in the industry. The wider impact of remote-access, computerized reservation systems, or Global Distribution Systems, and e-commerce access to online reservations in the travel industry is analyzed, using Porter’s five-force model of industry competitive forces, to understand how the travel industry has shaped and has been shaped by information systems. The case study concludes with a comparison of the impact of information technologies between the U.S. and European travel industries. It concludes that technology alone does not affect the roles of industry players, but the development of winning technologies exploits structural factors in the environment. Constant evolution of strategic information systems is critical to producing competitive advantage, but opportunism also plays a strong role.