Trains , planes and computers : From high-speed trains to computerised reservation systems at French Railways

A link is made between the problematic introduction of a new computerised reservation system (CRS) at French Railways in 1993 and the high-speed train technological innovation, the TGV (Train à Grande Vitesse) successfully introduced in 1981. Both are about modernising railways and one interesting factor is that French Railways chose to purchase a computer system from American Airlines in 1989. The strategic role CRS played in the US airline industry in the 70s and 80s partly explains this choice. But emulating the competitive advantage American Airlines gained with the same computer system through yield management and electronic control of distribution channels proved more difficult in the French context due to differences between rail and air transport modes, US air and European rail market structures and regulation regimes. The new computer system is closely related to the high-speed trains through differentiated pricing and yield management. Some price differentiation, together with compulsory reservation, was first introduced in French Railways on the TGVs in 1981. Yield management and quota management, heavily used in airlines, was made possible through the new CRS implemented in 1993 but proved problematic. Revisiting the TGV project helps understand the CRS implementation difficulties by recognising the French notion of rail transport as a public service and its associated social, cultural and political dimensions; how this led French Railways to conceive of TGV technology as a way to prevent rail transport decline; how the existence of the TGV shifted the focus from road/rail to air/rail competition; and how the subsequent link between the TGV and the new airline computer system, in particular through yield management, had detrimental effects. It was interpreted as imposing commercial principles on the whole French rail network and as an attack on French Railways’ public service mission. The import of new tools such as CRS and yield management did not lead to a direct adoption but an adaptation of these management models to a specific national context. The introduction of a new computerised reservation system at SNCF The controversial launch of the computer system in 1993 at SNCF (Société Nationale des Chemins de Fer Français) is first outlined, before exploring the American origins of the system. The experience of the deregulated US airline industry in using computers for competitive advantage in the 70s and 80s, which SNCF was hoping to emulate, is examined next. Transferring air transport expertise also relates to the development of the French TGV, which is then considered. Pricing differentiation was first introduced in French rail transport through the TGV and Socrate can be seen as a continuation of this commercial objective. It is argued that the TGV innovation, intended to prevent rail transport decline, also made SNCF seek solutions such as CRS developed in the airline industry, which became questionable in a national rail transport company. Fieldwork at SNCF for this case study was conducted in 1994-95 after the problematic introduction of Socrate. SNCF introduced Socrate (Système Offrant à la Clientèle des Réservations d'Affaires et de Tourisme en Europe), a computerised reservation system in April 1993. SNCF bought Sabre from American Airlines in 1989 in order to build Socrate. One of its aims was to transform its commercial activities through a technological investment importing techniques used in the airline industry. However, Socrate provoked nation-wide strikes when it was introduced and attracted considerable negative media coverage. For such an ambitious project, and perhaps because of it, there were a number of problems in its design, development and implementation. SNCF started the Socrate project in 1989. One of its aims was to reposition French Railways in the competitive European environment and gain more traffic. Socrate would support the diversification of pricing, ticketing and reservation services. A policy that would maximise revenue was also important, since SNCF had been a semi-public as opposed to a nationalised utility since 1982. One of SNCF most important objectives was to instigate a new marketing philosophy based on yield management techniques. To do this SNCF bought Sabre (initially Saber for Semi-Automatic Business Environment Research), the American Airlines computerised reservation system and a classic example of a computer system which had provided competitive advantage to one of the largest and most successful airlines. Several years were spent adapting this software developed by a private air company to the context of the rail industry and of a national semi-public sector institution. When it was first implemented however, both SNCF staff and their customers rejected Socrate and its underlying ticketing, pricing and selling philosophy. These teething difficulties were widely reported in the French press and investigated by SNCF itself. They also drew the attention of trade unions, business consultants, passengers’ associations, and the French government which commissioned a public inquiry into the system. Technical malfunctions, political pressure, poor management, uncooperative unions and passenger resistance combined to cause a chaotic launch. The project management team neglected databases and input sets. Staff training was inadequate and did not prepare sales clerks for tariff inconsistencies that they had to deal with. The user-computer screen interface was designed using airline logic, which was difficult to understand for staff and customers. The new ticket format was too complex and difficult to understand for passengers. Public relations failed to prepare the public for the change. Database problems on timetable and routes, inaccurate tariff information, and unavailability of ticket exchange capabilities caused problems for the SNCF sales force and customers. Incorrect tariffs and train connections led to large queues of customers in main stations and to a major public outcry. Online reservations available through the Minitel public network failed, tickets were booked for non-existent trains while other trains ran empty, the railway trade unions went on strike and passengers' associations sued SNCF. This system contributed to complex changes in French rail, which had kept relatively unchanged regarding the services on offer and passengers’ practices. The new ticketing and pricing policies introduced through Socrate radically changed railway users’ and rail workers’ practices, which were grounded in important cultural dimensions of French society. Socrate began to indicate a new phase of forced global innovation in an enterprise facing strategic imperatives and organisational changes. The competitive environment became that of European integration, which opened the area of transport to deregulatory moves and to the growth of competition across transport modes (rail, air, and road), to which the TGV had already contributed.