3 Airlines Plan Reservations System Merger
Northwest Airlines, Delta Air Lines and Trans World Airlines said Thursday that they have reached preliminary agreement to combine their computer reservation systems.
By some calculations the new entity could become the nation’s second-largest computer reservations operation. The consolidation will decrease to four the number of such systems operating in the United States, all of them large and competitively powerful. There are also several overseas competitors.
The relative size of the computer reservations systems is measured by several barometers.
According to a recent study by Travel Weekly, a travel agents’ trade newspaper, American Airlines’ Sabre system has a 31.6% market share in terms of travel agent locations served. Apollo, half-owned by United Airlines, has a 24.6% market share and System One, owned by Texas Air Corp., parent of Eastern Airlines and Continental Airlines, serves 17% of travel agent locations.
New-York based TWA and Northwest, headquartered in Eagan, Minn., jointly own the PARS system, which has an 18.1% market share, according to Travel Weekly, and plan to merge it with Delta’s DATAS II, the smallest of the nation’s computer reservations systems with 8.7% of the market. By that calculation, the newly combined CRS would have 26.8% of the market and would edge out Apollo as No. 2. In terms of revenue, however, it would be third.
Delta, based in Atlanta, will own 40% of the newly merged system, Northwest 33.3% and TWA 26.7% of the new company, shares that reflect the relative size of the three carriers in the airline industry. TWA and Northwest will give their PARS reservation system to the new company while Delta will contribute DATAS II and pay $48 million to TWA.
The three airlines said no one of them will have control of the new company and that any important issues will require the consent of all three. The three had said Sept. 18 that they were discussing a possible merger of DATAS II and PARS.
The company will be headquartered in Atlanta and will be headed by Cal Rader, who is now vice president of marketing automation at Delta.
The PARS system has been jointly owned by TWA and Northwest since 1986.
The computer systems are significant moneymakers for the airlines. The airlines install the terminals in the agencies who then use the systems to make airline, hotel and car rental reservations. The computers also perform many other functions for the travel agencies.
Most travel agents have computers for only one of the competing systems in their establishments and pay a fee for its installation. The CRS firms make their money from fees collected from the companies for which tickets are sold. The typical fee is $1.85 per transaction.
