Corporate Finance

SUMMARY

Arkia Airlines Ltd commonly referred to as Arkia, is an Israeli airline. During the 1950s, the airline continued to grow, operating two flights a day on the Tel Aviv-Eilat route. This allowed Arkia to have annual passenger figures of over 70,000.Entry into new markets and withdrawal from others as well as schedule and fare changes began occurring almost overnight. Airlines previously used simple and inexpensive internal reservation system which could not keep pace with the current traffic flow of passengers, which also was a competitive disadvantage. The system discussed here represents departure from the old system to the new system called AMSYS.

The old system had manual reservation. Information of names of the reservation for the particular leg was obtained from a carousel contained chart for each leg of the flight. When a call came in requesting information or a reservation for a specific flight, the clerk would look for the correct chart which at times another clerk would be using and record the name on the chart. Each of the various geographically dispersed reservation offices was assigned a certain no. of seats for each flight .This process could not provide the true status of the flights because each office was allotted only part of the available seating. In many cases an office finished selling its allocation and rejected potential passengers, while other offices still had seats to sell. As a result of these problems and the inability to cope with the increased number of passengers, there was no alternative but to develop a computerized information system.

The idea of the new system AMSYS (Airline Management System) was to provide information on reservations, control facilities, management information system and commercial facilities also. They also had other options to tie into a system hosted by another carrier or to acquire a system from other airlines or vendors. But instead they opted to develop a system in-house which was budgeted to $400...