Sabre has sold operational tools to airlines for years, but the business unit became complacent. CEO Sean Menke has revved up the travel tech company's metabolism. But it will take at least a year for his turnaround to kickstart renewed revenue growth in this unit.
When he became CEO of Sabre two years ago, Sean Menke pledged to upgrade the company’s technology. After last summer’s reorganization, Menke’s changes materialized, as Sabre unified its systems and added tools.
But problems still persist.
Since last summer, Sabre has had some system failures. On April 29, its core reservation system, SabreSonic, briefly failed. The company apologized to customers, including American Airlines and JetBlue. That followed Sabre a month earlier having similar system outages that caused delays for carriers. More recently, on May 14, JetBlue reported that SabreSonic went down. Sabre blamed one of its connectivity suppliers, CenturyLink, for the hiccup.
Sabre said it strives for perfect operations, that no downtime is acceptable, and that it doesn’t expect further failures. It can’t afford them, with competition for airline business steep, even from the airlines themselves now.
Sabre’s glitches weren’t new. In November 2016, Southwest, JetBlue, and other customers blamed a Sabre snafu for causing scattered takeoff delays. In October 2016, a similar Sabre issue stopped travelers from booking with Southwest, JetBlue, and Virgin.
Some airlines had begun to worry that Sabre had neglected to clean up its software. This was feedback Menke moved quickly to address.
Linking and Upgrading
Sabre’s tech modernization, which has included the company’s first big overhaul of its flagship booking system in five years, aims to prevent these problems while also adding more useful tools.
The company has two main systems. SabreSonic takes reservations. AirVision helps airlines manage crew schedules, define route networks, and re-accommodate passengers when a storm disrupts flights.
In October, Sabre combined the systems, though it has more integration work to do.
“We’re breaking down the siloed databases, like inventory, booking, and check-in data,” said Rodrigo Celis, vice president of marketing and product management for Sabre Airline Solutions.
By talking with each other, Sabre’s systems give an airline a fuller picture of what’s happening. For example, revenue management systems that have set fares based on historical data can now also pull in real-time booking data from the previously separate passenger service system to fine-tune their forecasts.
“With our unified platform, we can now find data relevant to a particular passenger across all the data sets,” Celis said.
Sabre has been playing defense lately. Sluggish revenue underscores the fact.
In 2018, Sabre generated $822.7 million in revenue from its operational software services for airlines, in particular, up a mere 1 percent from the prior year.
For 2019, it forecasts airline solutions revenue to decline by 2 percent to 4 percent, year-over-year. Executives blame the drop on problems at Jet Airways, which suspended operations, and Ethiopian, which has faced turmoil due to the crash of a Boeing 737 Max plane. Sabre’s airline solutions revenue is mostly tied to travel suppliers’ transaction volumes, rather than fixed monthly fees.
Sabre’s airline solutions unit faces stiff competition. The three other largest providers of reservations systems are Amadeus and TravelSky. Other players include Avtra, Enoya-one’s AeroCRS, Radixx, and Hitit.
Another source of competition is airlines themselves. Exhibit A is Delta, which develops software applications for itself and other carriers.
“It can be a challenge if you’re an airline hosted on a passenger-service hosting system to justify a tech fix you want to make if you have to persuade the third-party tech provider, who also has other airline customers to think about,” said Amy Sexton, an airline consultant based in Denver. “If you’re an airline with your own PSS [passenger service system] you have total control about making software changes.”
Seamlessness matters for airlines. For example, Sean Durfy saw his term as CEO of the Canadian airline WestJet last only three years after he oversaw a problem-plagued installation of the SabreSonic computer reservation system in the fall of 2009. Participants dispute what happened, but many blamed the airline’s and Sabre’s systems not playing nicely with each other.
The Amazon Way
Sabre is also changing how it delivers its services. In other industries, most cutting-edge mobile apps and technology services use a new wave of application programming interfaces, or APIs for short, as methods for exchanging information. However, the airline sector has been slow to adopt the new model.
In the past year, Sabre has invested in micro-services hub to adopt these new APIs.
Sabre has been inspired by what Jeff Bezos did at Amazon around 2002 in requiring that every technology team at the retailer had to use something called a service interface, opening up data and the functions of every system to other parts of Amazon. Bezos banned all other linking or data sharing.
Similarly, Sabre intends to create a unified technology platform, replacing the array of pieces that don’t always work well together.
“You can’t predict what you might want to commercialize later, so you should build everything as something you could share to third parties,” said David Moore, Sabre’s senior vice president of travel solutions platform development. “This approach forces good habits on software developers, prompting them to build things in a way that makes them more pluggable, a bit like Legos.”
A Google-Like Approach
Sabre is also helping airlines get a picture of broad market trends with an enhanced shopping engine. A year ago, the company brought on board Sundar Narasimhan as senior vice president and president of Sabre Labs and product strategy. Narasimhan had been the chief technology officer of ITA Software by Google, which offers a widely used QPX Airline Pricing and Shopping product.
Narasimhan’s team has tuned up Sabre’s software algorithm. They’ve sped up the computing power that Sabre’s engine can deliver to airlines when fetching giant sets of fare data over many months.
Moving to the Cloud
To longtime observers, it can seem like Sabre has been saying it has been moving its computing systems off of mainframe computers for more than a decade.
Today about 11 percent of Sabre’s computing remains in its data centers. It will take Sabre until 2023 to be fully in the cloud and off of code first written decades ago.
However, Sabre claims progress. About half of its overall computing for customers runs in the cloud instead of in a data center. In the past six months, Sabre moved about 14 percentage points of its airline solutions computing to the cloud. In a test this spring, it ran one of its signature services, its fare shopping engine, entirely on Amazon Web Services for a while, said Moore.
“Once we’re fully off mainframes, the savings that will return to Sabre will be in the many tens of millions a year,” predicted Moore.
Sabre has added new tools, too. For example, it’s rolled out to airlines mobile-first software for their gate agents.
Other new tools bring in data on the fares customers are shopping for across several price-comparison websites, travel management companies, and other marketplaces. The data can help airlines better understand the demand for their products and fares.
The company has also debuted an in-flight solution that helps carriers like Vietnam Airline find savings in their catering budgets.
Sabre obviously hopes to boost revenue with the new products.
Airlines face a cost in moving to the new versions of Sabre’s software. Some may choose to remain on older systems for longer instead.
“It’s a value conversation,” said Celis. “If you’re trying to achieve revenue goals that are important for your airline, there will be a business case to upgrade to the latest version.”
In February, Sabre had a critical win, offering Menke and his team a sign that certain issues might be behind them.
JetBlue renewed its contract with Sabre and added some services. The tech vendor successfully addressed questions about system stability, modernization, and enhancements. This followed last May’s successful migration of LATAM Brazil from its legacy reservation system onto the parent airline group’s SabreSonic passenger services system.
This is the kind of news Menke hopes to hear more of, instead of those late-night calls about a customer having to delay or cancel flights due to a system outage.
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Photo credit: Sabre CEO Sean Menke spoke at Skift Tech Forum in June 2018. Menke has made a technological transformation a key plank in his plan for the company. Skift