Airline Tries Its Hand at Telephone Marketing
Travelers know American Airlines as one of the nation’s most familiar carriers. Few know its parent company also is engrossed in a telephone-marketing operation that does everything from taking hotel reservations to answering questions about foreclosed S&L; property for sale.
AMR Information Services Inc., formed four years ago by AMR Corp., is seen by the parent company as a way to tap the experience, investment and success of its computer-reservations system, SABRE, the largest in the airline industry.
The subsidiary’s president, Russell J. Harrison, also said it’s aimed partly at cushioning the ups, downs and uncertainties of running an airline.
“An awful lot of what affects the airline industry is out of control of the airline business,” Harrison said. For example, he said, the sharp rise in fuel costs this winter turned a record year for AMR into disappointment.
“With their powerful computer and telecommunications and reservations resources, it’s a natural opportunity or extension to do some incremental business,” said Mark Daugherty, who follows AMR for the Dean Witter Reynolds Inc. investment firm.
The subsidiary does not yet provide much of a cushion, although Harrison said it has been profitable since 1987 and has grown about 50% a year.
The idea for it was spawned from an effort to make use of the time when reservations agents weren’t selling airplane tickets.
What started as a time-filler now has its own computer system, separate from SABRE, and last year brought in $100 million in revenues. It is projected to reach $130 million this year.
AMR, by comparison, had overall operating revenues last year of $10.48 billion.
Harrison said he wanted to recreate the same type of freewheeling business that helped enrich one of his former employers, Electronic Data Systems Inc. billionaire H. Ross Perot.
“It’s OK to have fun,” Harrison said. “It’s OK to laugh and celebrate.”
Harrison said employees are encouraged to ask, “What do you think we could do if we didn’t know we couldn’t?”
The subsidiary’s only corporate directive comes from AMR Chairman Robert L. Crandall, who “has said, ‘Go build me a business,’ ” Harrison said. “I’m just kind of manufacturing businesses.”
It is comprised of eight divisions and accounts for about 4,000 of AMR’s 77,000 employees. While some of the businesses are tied to the airline industry--such as meeting planning and travel agent training--others are not.
“The linkage between all these businesses is that they tend to be transactions over long distances,” Harrison said during an interview at his office near the parent’s Fort Worth headquarters.
The largest division is American Airlines Direct Marketing Corp., which answers the telephone and makes sales calls for a range of customers.
Most of those customers are confidential, Harrison said, because “they want you to think you’re talking to one of their employees,” when you call for hotel reservations and such. In reality, the phones are answered by 880 people in a building at AMR’s Centreport office complex south of Dallas-Fort Worth International Airport.
However, the division recently landed a high-profile contract: taking calls for the Resolution Trust Corp., the federal agency created to bail out the thrift industry. People who called a toll-free number to order the list of foreclosed properties offered for sale got an AMR telemarketing agent.
The subsidiary isn’t shy about saying what kind of calls it doesn’t take--those generated by television ads. “We do not sell Ginzu knives or Zamfir records,” Harrison said.
Another significant component of the subsidiary is Caribbean Data Services, located in Barbados and Santo Domingo, where employees turn written information into computer data.
About half the work involves culling information from American Airlines’ tickets; the rest is from other companies such as insurance concern Equicorp, which uses the company to type in health claims information.
The paperwork is flown to the Caribbean on American Airlines jets, the information typed in, and then either fed directly to a computer or put on computer disks and sent back to the customer.
Other divisions sell SABRE to other airlines, provide automated freight-tracking systems, operate a hotel-reservations system similar to SABRE or provide computer services for other airlines.
Another division--what Harrison calls his “R&D; shop”--provides non-airline computer services and information management.
Harrison realizes that his subsidiary would be a likely candidate for the auction block should AMR be acquired. The parent company was a target last year of billionaire developer Donald Trump, whose $7.5-billion proposal collapsed in the aftermath of a stock market plunge in October.
“I love being a part of AMR,” Harrison said, “but I could run the company outside.”
