About the SABRE Reservation System
The following was taken from the SEC filing.
General
SABRE is the largest global distribution system for electronic travel in the United
States. SABRE was first developed in the 1960's and was one of the world's first
electronic airline reservation systems. SABRE evolved from American Airlines' internal
reservation system into a global distribution system when SABRE's content was
expanded to include additional airlines and other travel providers. Computer
reservation terminals were placed in travel agencies beginning in 1976, and consumer
direct access to SABRE became available through computer on-line services in 1985
and on the Internet in 1996. Other global distribution systems include Amadeus/System
One, Covia and Worldspan. Amadeus/System One is owned by Air France,
Continental Airlines, Iberia and Lufthansa. Covia, formerly known as Galileo/Apollo, is
owned by United Airlines, British Airways, Swissair, KLM Royal Dutch and USAir,
among others, and the Canadian affiliate of Galileo/Apollo is owned by Air Canada.
Worldspan is owned
by Delta, Northwest and TWA and is affiliated with ABACUS, an Asian global
distribution system. Each offers similar products and services.
The SABRE system is able to perform high-volume, high-reliability,
real-time transactions processing 24 hours a day, 365 days a year, thus enabling the
creation of an efficient electronic marketplace for the sale and purchase of travel. The
SABRE system maintains approximately 45 airfares (updated throughout the day),
processes an average of 93 million requests for information per day. Such frequent
updates of airfares are essential for the Company to be able to strive to provide its
customers with the lowest-priced airfares. Through SABRE, reservations may be
booked on all major U.S. and international airlines, but generally not on charter
companies or certain small airlines or on air travel offered for resale by consolidators.
Consolidators purchase large numbers of tickets directly from air carriers for resale to
the public. In certain cases, however, the tickets they sell may be booked through
SABRE. See "Operations -- Agreements with Consolidators." In addition to providing
information to subscribers about airlines and other travel providers and their products
and services, SABRE also allows travel agency subscribers to print airline tickets,
boarding passes and itineraries and purchase travel insurance or book theater tickets
or limousines. Additionally,
SABRE provides subscribers with travel information on matters such as currency,
health and visa requirements, weather and sightseeing.
Through SABRE, subscribers -- principally travel agencies but also business travel
departments and individual consumers -- can access information on, and book
reservations with, airlines and other providers ("associates") of travel and travel-related
products and services. In 1995, more than 600 associates displayed information about
their travel and travel-related products and services through SABRE, and American
Airlines has estimated that $40 billion in
travel and travel-related products and services were reserved through SABRE in
1995. SABRE subscribers are able to book reservations with more than 350 airlines
and to make reservations with more than 55 car rental companies and more than 190
hotel companies covering approximately 30,000 hotel properties worldwide. During
1995, more airline bookings in the United States were made through SABRE than
through any other global distribution system. American Airlines has estimated that in
1995 over 40% of all airline bookings made through travel agencies in the United
States were made through SABRE.
Turbo SABRE
Because travel agencies have differing needs, based on, among other things, volume
and location, the SABRE interface has been modified to meet the specific needs of
different categories of travel agents. Travel agents can choose SABRE interfaces that
range from simple text-based systems to feature-laden graphical interfaces. The
Company has taken advantage of these options by choosing the Turbo SABRE
system, an advanced point-of-sale interface that allows for screen
customization and reservations/sales process structuring and eliminates
SABRE-specific commands, thereby reducing keystrokes and training requirements for
high-volume travel companies that need high levels of functionality. Turbo SABRE also
provides data other than SABRE, such as back office hosts and local area network
(LAN) databases.
The Company has added a number of programs written and developed
exclusively for the Company to its Turbo SABRE system. They include programs that
generate "pop-up" windows to supply frequently requested or used information, as well
as programs to alert reservation agents, supervisors and customer service agents using
the system to errors frequently made by system operators. The Company believes that
these customized features enhance the speed and efficiency of its operations and give it
a competitive advantage over its competitors.
SABRE Agreements
In April 1996, the Company renewed the agreement pursuant to which it
subscribes to the SABRE system at its Tampa headquarters for a five-year term. In
November 1996, the Company also executed a five-year subscriber agreement
pursuant to which it subscribes to the SABRE system at its San Diego reservation
center. Under these agreements, SABRE provides the Company with the hardware,
software, technical support and other services the Company needs to access SABRE
in return for leasing fees. These fees are reduced by the "segment incentives" that the
Company is credited with for each flight segment it books (at both its Tampa and San
Diego facilities) through the SABRE system. To the extent that the segment incentives
earned by the Company exceed the fees payable by it to American during each
quarter, the Company receives such excess in cash.
In 1997, SABRE also provided the Company with a lump sum cash promotional
support, and has agreed to pay the Company additional productivity cash advances
during each year of the agreement, subject to the Company booking a minimum
number of flight segments and the exact amount of which will depend upon the number
of such flight segments. SABRE also extended to the Company lines of credit toward
the payment of charges incurred in connection with the lease of
the Turbo SABRE system. |
