Henry Harteveldt [Posted by Henry Harteveldt]

In October
1959, American Airlines (AA) and IBM created the precursor to eCommerce with an
electronically based inventory and reservations system. This system grew into
what we now know as Sabre, the first airline computerized reservation system.
Once owned by American Airlines, AMR (AA’s parent) spun off Sabre in 2000. Sabre
Holdings is not only the one of the largest travel technology firms, but one of
the largest private-sector transaction processing systems in the world,
regardless of industry

AMR and
Sabre are so intertwined that it’s hard to imagine one
without the other — kind of like "Cher" and "farewell tour.". And yet on August 26, 2009, AMR called off the central part of its Sabre relationship, announcing it would sign a letter of intent with


(HP) to
develop a new, “next-generation” Passenger Services System (PSS) called Jetstream. Jetstream will take over many of the functions that AMR currently runs on Sabre.

As outlined
by Monte
, American’s CIO, Jetstream will allow AMR to “meet the customer where
the customer wants to be met." Among the applications that Jetstream will run, for
both American and its regional airline affiliate American Eagle, are:

  • Reservations
  • Airport departure control
    system (DCS)
  • Baggage service
  • Scheduling
  • Pricing/faring
  • Revenue management

benefits include

  • Being based on “open source”
    applications. Jetstream will make use of service oriented architecture (SOA) and,
    as feasible, cloud computing. This means lower development costs and
    faster time to market.
  • Jetstream will be developed in
    a modular manner. This "building block" approach will enable faster implementation, give AMR the ability to
    sunset legacy systems or applications as new Jetstream modules are
    introduced (helps AMR reduce operating costs), and allow AMR to pace its
    capital expenditures – a not-insignificant factor, considering that
    Jetstream will probably cost AMR several hundred million dollars to
    develop. A modular product benefits HP, too, since it can offer the whole
    system or just components to other airline clients.
  • Providing AMR with a more “customer centric” perspective, rather than the traditional airline/travel industry
    approach, which is based on individual passenger name records (PNRs). This
    will provide AMR with what Mr. Ford called a “single view of the truth” for
    planning, marketing, and operational decision-making, from front-line employees
    up to corporate execs. Jetstream will provide AMR with a single, consolidated gateway to the operational, business, and archival data it needs to make well-informed decisions. AMR, already a sophisticated data user, will have the ability to be better at what it does. Currently, most airlines have to pull data from multiple systems and databases. Consolidating and aligning the data will provide greater clarity and consistency of the information.
  • The ability to interface across the AA enterprise,
    including all of its channels: Call centers, Web sites, kiosks – even the new handheld
    AA employees are testing at Boston Logan International Airport.

Jetstream makes HP a major airline
IT player

HP is no
stranger to travel technology systems. Its NonStop servers power airline
systems including, perhaps ironically, Sabre’s fare shopping engine. HP and AMR
are no strangers to one another, either – the two have been working together
for 10 years.

there’s no question that what helped HP clinch this deal was its May 2008
of EDS (which closed August 26, 2008). Why? EDS owns an airline
reservations system, SHARES, and has been developing the framework of a new PSS – no
doubt the foundation for what will become Jetstream. EDS also has a strong coterie
of airline industry technology professionals in its ranks. All of this clearly added to
HP’s strengths by providing useful domain expertise and additional insight into
the complex nature of airline reservations, sales, and service technology systems.
Jetstream catapults HP to the forefront of travel technology providers,
providing a formidable new competitor to the traditional travel IT leaders,
including Accenture (which owns the Navitaire reservations system), Amadeus,
IBM, ITA Software, SITA, Travelport GDS and, of course, Sabre.

By the way,
Sabre’s not totally out of the AMR technology picture. Mr. Ford stated in his August 26, 2009
press call that AMR would continue to work with Sabre for flight operations and similar other types of applications.
However, because EDS/HP manages aspects of Sabre data centers, you know there’s
some awkwardness there. Also, what’s not yet been decided – or at least publicly
disclosed – is the fate of AMR’s Tulsa data center.

Forrester’s take

What AMR and HP are about to commence upon is the technology equivalent to a team of doctors simultaneously
doing a brain transplant, heart transplant, and extensive corrective surgery.
The systems that AMR will move to Jetstream literally represent the brains and
heart of the airline. This is not an undertaking for the weak and squeamish.
It’s a gutsy, but smart move for AMR to make. Mind you, that's not a reflection of Sabre. Sabre, HP, and Amadeus, which was another contender for the contract are each excellent technology providers. We commend AMR for recognizing it has to make the
investment in this new technology solution to be a smarter, better, more agile competitor.
Given that all airlines fly the same aircraft, tend to serve the same markets,
offer fairly similar products and charge about the same, technology is an
increasingly important competitive tool

the Jetstream announcement includes a nice piece of airline geek trivia:
“Jetstream” was the name TWA applied to its Lockheed
L-1649A Starliners
(one of the last versions of the elegant Lockheed
Constellation). TWA’s assets, of course, were acquired by AMR in 2001. What
goes around…

So what do you think of AMR's decision? Did it come as a surprise? And did you expect HP to be the winning partner? I'd enjoy learning your thoughts

As always, thanks for your time.