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- The Company That Controls Air Travel 🛩️
The Company That Controls Air Travel 🛩️
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Finlay Williams
October 08, 2024
2 minute wacky businesses, you can tell your buddies about 🧠
So, I was digging into the airline industry, expecting to find cool stuff like cutting-edge jets or futuristic airports. But instead, I stumbled across a sleepy giant called SABRE. They’re not flashy, but they quietly control a dominant portion of the online airline industry.
Industry Control and Dynamic Pricing 🧐
If you’ve ever booked a flight online, that’s probably SABRE. Whether you’re hopping on Expedia or booking straight through an airline, they’re the invisible system behind it all. You don’t see their logo plastered anywhere, but their software is humming away in the background, processing more airline tickets than you’d ever guess. They’ve been doing this since the 1960s, which in tech years is basically ancient. Yet somehow, they’ve stayed relevant, and not in an old-school “we were first” way. They’ve adapted by slowly absorbing relevant competitors left right and centre.
While airlines got caught up in the shiny stuff, new planes, luxury lounges, SABRE quietly worked behind the scenes, building tech that made it all possible. They built the system that allows airlines to operate more efficiently and make more money without passengers even knowing they exist. It’s brilliant. SABRE is the definition of selling shovels outside the goldmine.
What are the nuggets? 💎
🌮 Origin Story: SABRE was born out of sheer necessity in the 1960s, IBM and American Airlines decided to go digital, back when "digital" meant a computer the size of a room. The key moment came when the President of American Airlines sat next to an IBM salesman. By the time the flight landed, they had the idea for the first electronic reservation system.
🌮 From Mainframes to Millions: In the early days, SABRE ran on IBM 7090 mainframes and handled 7,500 passenger reservations per hour. Eventually SABRE became big enough to need its own business, in 2000 SABRE was spun off from American Airlines. Since then, they’ve expanded far beyond their origins, working with 420 airlines, 750,000 hotel properties, and 425,000 travel agents worldwide. Processing over 1.1 trillion system messages and managing $260 billion in travel spend annually.
🌮 Acquisitions Galore: SABRE hasn’t been shy about gobbling up companies. They've been on a quiet spree over the last few decades, slowly acquiring everyone in their path. Take their acquisition of Abacus International in 2015 for $411 million, giving them dominance in the Asia-Pacific market. Or when they snapped up Radixx in 2019, a cloud-based airline retailing software, expanding their portfolio into low-cost carriers. They also bought Farelogix, though that one ran into regulatory issues. Acquisitions are a major strategy for SABRE, by absorbing relevant companies, they’re expanding the business and entrenchment of the business.
🌮 Partnerships and Tech Leverage: SABRE’s not just buying companies, they’re teaming up with tech giants like Google to upgrade their systems with AI and machine learning. They’re using this tech to predict delays, optimise flight schedules, and even preemptively suggest alternative routes for airlines. It’s like having a crystal ball for the entire airline industry. Making it an incredibly sticky product that would cost millions to replace.
🌮 Further expansion: SABRE is obsessed with expansion. They release new features or products every 60 days, including cutting-edge prototypes like Escape, an app that lets travellers explore potential trips based on budget, and Beaconator, which uses proximity sensors to analyse how guests move through hotels. Further expanding their entrenchment into the travel industry.
🌮 Funding: They went public in 2014 and now sit pretty with a market cap hovering around $4 billion. They’ve raised their cash quietly and keep reinvesting in their tech.
Recommendation 🌟
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