Big Eagles and Sitting Ducks

Of all the competitive weapons in the major airlines' arsenals, perhaps the most powerful is one that never leaves the ground: the computerized reservation system. More potent than frequent-flyer programs or discount fares, these systems have become vital to an airline's ability to compete and survive. Says Julius Maldutis, who follows the industry for the Salomon Brothers investment firm: "Automated reservation systems are dividing the industry into the haves and have-nots. Those with them are becoming the big eagles. Those without, sitting ducks."

Automated reservation systems are vast computer networks that the major carriers, notably American and United, use to dish...

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