The Structural Impact of Information Techology on the Air Travel Distribution Industry

Abstract

Rapid advances in technology profoundly affect the way businesses are conducted and the way industry structures evolved. The air travel distribution industry experienced two major technology waves in its evolution, the Computer Reservations System (CRS) and electronic commerce. This paper considers various frameworks used to explain structural features of the US air travel distribution industry and the competitive forces within it. We then describe the historical context within which the structural changes occurred as a result of IT innovations. The current and relative strengths of the industry forces are examined to explain an IT-induced power shift in the industry. We then consider the impact of IT on the air travel distribution industry in the Asia-Pacific region. Based on a comparison with the US experience, we forecast that variances in geography, culture and psychology will limit the extent to which IT can be used to manipulate the balance of power in the industry in the short- to medium-term. We expect, however, that a uniform industry structure will prevail in the long-run.