Tough target

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By Jackie Thompson in Paris

IATA has set its member airlines a stiff challenge - eliminate all paper tickets by the end of 2007. But will they meet the deadline?

The timer on the home page of IATA’s website is relentlessly counting down. It shows the exact number of hours, minutes and seconds until the deadline for carriers to switch to 100% e-ticketing by the end of 2007 as part of the association’s Simplifying the Business (StB) initiative.

Moving to paperless ticketing is one of five StB strands, along with the introduction of common-use self-service kiosks, bar-coded boarding passes, radio frequency identification for baggage and e-freight. And IATA says the adoption of 100% e-ticketing alone would save the industry at least $3 billion a year.

eticketing logo 

According to this year’s Airline IT Trends Survey conducted by Airline Business and SITA, almost 60% of ticket sales are now in the form of e-tickets. This figure is slightly higher than IATA’s 53%, probably because the survey includes several low-cost players that do not tend to be IATA members.

IATA’s target is for 70% e-ticketing globally by the end of 2006 and so far only the USA has reached this goal, nearing 90% by the end of April, says IATA. “Progress is too slow to be confident of reaching the 70% target this year,” says Philippe Bruyère, IATA’s StB programme director. “A 3% increase a month in e-ticketing is needed to reach the target by the end of the year,” he warns.

Needless to say, progress on e-ticketing across member airlines – and geographical regions – varies widely, with the USA leading the way, followed by Europe and the rest of the Americas and the countries of the former Soviet Union bringing up the rear.

“The CIS is the biggest worry,” says Bruyère. “Only two Ukrainian carriers are currently issuing e-tickets.” Russian flag carrier Aeroflot upgraded its entire IT system on March 2005 before joining the SkyTeam alliance, but it is illegal for Russian carriers to issue e-tickets until the government amends legislation. IATA is in discussions with the Russian government and Bruyère expects movement before the end of the year. The Middle East and North Africa are also causing concern, with only six out of 23 carriers e-ticket capable today.

The news from north Asia, and particularly China, is much more encouraging. The fast-growing industry in this region is seeing a dramatic increase in e-ticketing – up from just 5% in May 2005 to more than 30% in March this year. “If we make the target north Asia will have played a big part,” says Bruyère.

Sub-Saharan Africa is in better shape than its North African neighbours, with not surprisingly South African Airways – now a Star Alliance member – and Kenya Airways leading the way. According to Kenya’s chief executive Titus Naikuni, just nine out of 28 IATA members in Africa have e-ticket capability so far. His carrier started the implementation process in May 2005, and now stands at 35%. Its target is 60% by the end of the year and Naikuni is confident it will be achieved. “We also operate a “buddy system”, he explains, “and we are passing on our experiences to Air Botswana and Cameroon Airlines.”

Scarce IT specialists

Key problems faced by African carriers, he adds, are the fact that many lack sophisticated IT systems, making e-ticketing expensive to implement in a short period. He also cites a lack of trained IT specialists in the region’s carriers and the fact that, once trained, they are often poached by other wealthier airlines in other areas. KLM is assisting Kenya in IT training.

Language difficulties among African carriers, low credit card penetration and a high fraud culture are other setbacks for e-ticket implementation in the region. Naikuni urges fellow carriers yet to move towards e-ticketing to “join the buddy system; appoint an IT champion to drive the project; train third parties such as airports, customs and immigration; and join other airlines for joint negotiations with systems vendors to lower costs”. Bruyère agrees that managing fraud will be a key element of e-ticketing, but insists that it will be a more secure environment in which to conduct business.

Roberto Kriete, TACA chief executive, says his carrier has reached 91% e-ticketing and he anticipates interline e-ticketing with five other carriers by the end of 2006. He warns carriers looking to implement interline e-ticketing agreements that the choice of their first partner is very important. There should be a strong relationship already in existence, with a revenue source important to both and a high volume of transactions.

According to IATA, 178 carriers in IATA’s billing and settlement plan so far have no e-ticketing capability and just half of the airlines that do issue e-tickets are moving fast enough at current speeds to reach the 100% target in time. “We are not driving out paper tickets fast enough,” warns IATA chairman and ACE Aviation Holdings chief executive Robert Milton.

However, of the 75% of carriers that had a commitment to e-ticketing, but no detailed plan by December 2005, just 16% remain at that status. Bruyère advises such carriers to ensure they have a detailed deployment strategy, with e-ticketing the default option; make sure they have an interlining strategy, learning from the experience of fellow carriers that are further down that road; and talk to vendors about “hub solutions” that can make the issue of interline e-tickets much more straightforward.

“E-ticketing has made a lot of headway and so far we have met our targets – now we are into the crunch period,” warns Milton. Interline e-ticketing is by far the most complicated aspect of the process and carriers will need to act now if the target of 80% interline e-ticketing by the end of 2007 is to be achieved.

While 220 (63%) of the airlines surveyed by IATA forecast online e-ticketing by the end of 2006, more than a third have a question mark hovering over them. “Will the other 130 carriers achieve e-ticketing and interline e-ticketing all in 2007?” asks Bryan Wilson, IATA’s project director of electronic ticketing.

Sabre is one of the software companies offering the interline hub solution. Gianni Marostica, president airline passenger solutions at Sabre, describes the hub as a “conference call” between airlines, enabling communication between carriers issuing interline e-tickets through a central exchange.

Sabre has 57 airlines in its hub system, says Marostica, with Gulf Air set to join next. The hub is also set to link up with one developed by another software provider, Worldspan, Marostica adds, which will mean even easier communication between interlining carriers.

Fall-back scenario

IATA acknowledges there may need to be a fall-back scenario for specific reasons, explains Bruyère, for example where a large e-ticket-enabled carrier wants to maintain a relationship in the short term with a small carrier that has not yet achieved interline e-ticketing.

In such circumstances, although IATA will no longer support industry systems linked to neutral paper tickets, if the large carrier is prepared to accept its partner’s paper tickets “this is not a show stopper for the deadline,” insists Bruyère. “We will not sacrifice our vision for the 0.1%.”

Milton is equally emphatic: “The IATA board has made it very clear that there is no turning back.” ■