Time To Fly

How American Airlines plans to get its Net effort off the ground

John Samuel has a confession to make. Although its Samuels job to make sure that American Airlines Web site, AA.com, is the best in the business, he says "Ill be the first to admit I like Northwest Airlines homepage better than any other homepage out there."

Northwests site is easier to use and the layout is better than AA.com, says Samuel, Americans vice president of e-business. And while his candor is refreshing, its also indicative of the challenges that Samuel and his cohorts at American are now facing. Over the next three years, the U.S.s second largest airline will spend $2 billion bringing its computer systems into the Internet Age. Its the largest investment in computer technology the airline has made in 40 years.

Updating the Web site is one of a jumbo jet-load of technology upgrades now taxiing toward takeoff at the Fort Worth, Texas, headquarters of the air carrier. American has begun integrating a pair of business-to-business (B2B) portals that will shift much of its $5 billion annual purchasing budget onto the Web. It is replacing its companywide data network — portions of which now run at speeds of just 9.6 kilobits per second — with an Internet Protocol (IP) backbone. Other projects include a new data center for Americans Web operations, new hardware and software systems for the carriers airport agents and a companywide computer-integration effort to allow greater sharing of information throughout the organization.

Upgrading computer systems is never easy. But as it spends the cost-equivalent of 11 brand-new Boeing 747s on software, hardware and services, American is also dealing with some extraordinary circumstances. For instance, the airline has purchased Trans World Airlines and must integrate its planes, employees and computer systems. Monte Ford, the chief information officer, has only been at American since January. Then theres the not-so-small matter of keeping aloft the two airlines operated by Americans parent, AMR. Between them, American Airlines and regional carrier American Eagle have 117,000 employees and 985 planes, and make 4,100 flights per day to 237 airports around the globe.

Given the thin profit margins and keen competition in the airline business, American cannot afford to miss even one flight due to technology problems. Ever since American plugged in a pair of IBM mainframe computers four decades ago to create the worlds first automated reservation service, Sabre, the carrier has had a reputation as a technology innovator. American used Sabres data-crunching capability to launch the first frequent- flyer program. Today, that program, AAdvantage, has 43 million members. In May 1995, American was among the first airlines to put up a Web site, and it later became the first carrier to offer Web-only discounts on airfares.

Some observers believe those achievements and Americans technology-centric culture may be helpful as it launches these new initiatives. Americans employees "are far more amenable to looking at ways of employing technology than other companies that havent had that culture," said Max Hopper, who spent 10 years at American, two of them as chairman of Sabre.

Others arent so sanguine. Henry Harteveldt, a senior analyst at Forrester Research, said other airlines are "beating American to the punch" when it comes to utilizing the power of the Internet. "American has fallen way behind companies like Continental, Northwest and Alaska Air," Harteveldt said. "Theyve got to make decisions and start implementing changes as quickly as they can."