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From build to buy: American Airlines changes modernization course midflight

Robert L. Mitchell and Johanna Ambrosio | Jan. 3, 2013
American Airlines was well into a simultaneous revamp of its Passenger Services System (PSS) and Flight Operating System (FOS), its two most mission-critical families of applications, when the airline changed course last January.

While American says that the projects are about cost savings and faster time to market, more is at stake here, says Henry Harteveldt, an airline and travel analyst with Atmosphere Research Group. "It's about how these new systems can help American generate more money," by creating new revenue-generating opportunities.

For her part, Leibman declined to go into specifics about the revenue-generation aspect.

The new systems interconnect applications using Web services and enterprise service buses (ESBs) that are part of the airline's service-oriented architecture (SOA). This will allow American to do things like share data in real time between applications, whether those run on or off the mainframe. A Horizon application might need to know, for instance, that a specific plane has been delayed, or that weather is threatening one city, or that a particular series of jets needs FAA-ordered maintenance.

One ESB, Flight Hub, can pull data from the FOS on the mainframe, or directly from other applications designed to run in the new, distributed computing environment.

Like other major U.S. airlines, American has found itself falling behind foreign carriers in moving to a modern -- and flexible - architecture for its POS and FOS systems. A modern software and hardware infrastructure will allow American to move much more quickly in a world where a substantial percentage of business comes in through, the airline's website, as well as from travel partners around the Web.

To adapt, American has over the years bolted new features and functions onto the mainframe through the use of application front ends. But that still limits flexibility when it comes to distributing and bundling new fare offerings or creating different privilege options for customers, such as lower change fees or refundable tickets. Today's airlines need to be nimble, respond quickly to market changes, and be free to sell they way they need to sell. "You see very few 47-year-old cars on the road these days. But with the airlines, some of their most important decisions are tied back to Mad Men-era technologies," says Harteveldt.

Former CIO Monte Ford initiated and managed the projects until 2011. Ford departed after 11 years as American's CIO for reasons that were not made public, and the airline tapped Leibman, the former president of American's AAdvantage Loyalty program, to fill the role in December 2011. That was a month after the airline filed for Chapter 11 bankruptcy protection.

It was Leibman who reversed the initial build versus buy strategy last January -- a move that Harteveldt calls "gutsy."

"It takes a lot for a CIO to go to management and say, 'I think we need to rethink this decision,' " he says. American IT execs won't comment on how far they had gotten, or how much they had spent. But the airline hadn't started coding to replace the Jetstream/PSS yet - that project was still in the business process evaluation stage. On the FOS side, work had already been completed on many programs.


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