In the late 1950s, IBM teamed with American Airlines to devise a teleprocessing solution — SABRE. When fully implemented, SABRE established a dominant design for reservations processing that was copied throughout the airline industry. Functional enhancements transformed SABRE from a reservations system into a passenger services system that supported many additional aspects of airline operations. This led to being co-opted by other airlines, and it became the de-facto reservation system in the U.S. for decades.
Widespread access to SABRE for travel agents coincided with regulatory reform that was redefining competition in the industry. SABRE was later transformed again into a sales distribution system. American Airlines’ management exploited SABRE’s latent economies of scale and scope to survive, and ultimately thrive, in a deregulated environment.