IATA is leading a global push for universal e-ticketing by 2007, speeding up the drive to simplify travel as the world's airlines confront technical and cultural issues in interlining
The days of the paper ticket are numbered. As IATA met for its annual general meeting in Singapore at the start of June, topping the list of new initiatives was a clear pledge to move its clearing house system over toe-tickets by the end of 2007.
"We will drive paper tickets out of the system, reduce airline costs and at the same time improve customer service," said director general Giovanni Bisignani, outlining a cornerstone of IATA's push to simplify the business. IATA, he says, estimates gross savings of $3 billion once ticketing is paperless. And that could be conservative.
In North America, where some major airlines are issuing more than 90% of their tickets electronically, it was cost savings that drove the earliest adoption. Now some say the widespread estimate of savings of $9 for each booking is too low. Some US carriers say that by eliminating the issue of paper tickets through a travel agent, savings of $15-24 a booking are realistic. At Continental Airlines, which adopted the practice early, e-ticketing eliminates as many as 12 steps in the process by which airline employees handle the paper ticket.
Tom Murphy, IATA's senior vice-president for industry and distribution services, says of the 2007 deadline: "Setting targets and goals is crucial. It focuses the mind, as did the IATA goal of eliminating handwritten tickets. Some carriers may be challenged in meeting the goal, and we will work with them." Significantly, the latest Airline IT Trends Survey from Airline Business and SITA suggests that 20% or more of carriers are over three years away from moving a majority, let alone all, of their tickets to e-ticketing.
But major airlines welcome the IATA move, with Continental noting that it will be paperless by the end of the year. Others say that 2007 is an ambitious goal, although Richard Eastman, the travel technology consultant of the Eastman Group, calls the IATA date "certainly do-able. There are some parts of the world that are so heavily dependent on consolidators that it may take longer, but the technology is there."
So far, though, the pace of adoption is remarkable: from a concept a decade ago, e-ticketing is now widely available in most parts of the world. For most of the industry, ticketing is a pillar of the architecture of passenger interaction. At American Airlines, for instance, e-ticketing grew from 55% in April 2001 to 91% this spring. Indeed, usage rates well into the 90% levels are the rule for the majors, on carriers ranging from Air France, American Airlines, British Airways and Delta Air Lines, to carriers throughout Asia and the Middle East.
Emirates now offers e-ticketing worldwide, India's Jet Airways has recently adopted it, and Philippine Airlines is on the way. Al Lenza, Northwest Airlines vice-president for distribution and e-commerce, and widely acknowledged as one of its founding fathers, says that e-ticketing has become nearly universal, "farther than we thought and faster". Lenza says: "It wouldn't have taken off without self-service, the kiosks that automate checking." Indeed, the latest IATA endorsement will spur self-check-in with great promises of further savings, predicts IATA's manager of ticketing services David McEwen.
This rapid growth contains an irony. Leisure travellers generally began using e-tickets before business travellers, the group that had already shown itself as the most technologically inclined. Thus, the flyers most likely to be carrying a laptop computer were less inclined to embrace e-ticketing. In part, their reluctance stemmed from the requirements of corporate travel, but travel management departments and companies can now easily track unused e-tickets, make changes, request refunds, or make travel awards over the internet, none of which would be conceivable with paper tickets.
Larry Restiano, director of American Express Travel consulting, says: "Corporate acceptance is nearly universal, and with the technology that is now offered, the e-ticket makes it easier for accounting, expense tracking and the like." Restiano says the growing trend toward self-booking by corporate travellers has both encouraged and been encouraged by e-tickets.
David Cush, American Airlines vice-president of passenger sales, says e-tickets have become an advantage in interrupted operations, despite a common early belief by some passengers that a paper ticket was better protection in the event of a flight cancellation. He says: "Now that check-in kiosk deployment is this widespread, it is relatively simple to do rebooking." For instance, at Delta, kiosks can now print rebooking documents for most e-ticketed passengers whose journeys are interrupted. Terry Trippler, a US air travel consumer advocate, says: "We simply have not heard horror stories about e-ticket experiences for a long time. Now all we hear is that people want them."
For much of the world, individual carrier adoption of e-ticketing is passing and the industry is deep into the next wave. This phase focuses on the assimilation of e-ticketing by major global alliances and their smaller members. With this phase comes the challenge of interlining between the major airlines and smaller, second-tier carriers that are not alliance members and which for various reasons of corporate culture, technological or economic limitations, have not adopted e-ticketing.
Some international alliances such as oneworld are close to achieving the paperless state. Its dominant partners, American Airlines and British Airways, already share e-ticketing, and American has became the first airline in the world to offer interline electronic ticketing with all its alliance partners with the recent roll-out of the service by Aer Lingus and Iberia. Interline e-ticketing will be in place among all oneworld members by year-end, making it the first global alliance to achieve 100%, says American's Tim Kincaid. American was the first carrier to offer interlining when it introduced it in 1999 with the former Canadian Airlines.
With interlining, the challenges are technical, but they are far from insurmountable, say IATA's McEwen and other advocates. The real challenges, says American's Cush, come from differing corporate priorities. Some carriers simply have different philosophies, he adds: "Occasionally, problems arise in inventory alignment between fare categories and the like, and technical standards must exist so that records can be harmonised at all times." Michelle Weeks, Delta ticketing manager who has worked on e-ticket issues since 1994, says: "With interlining, it's just a matter of working it through. Sometimes everyone has to compromise to work with each other's technical standards."
Interlining, though, can be expensive - it can cost $100,000 per bilateral pact with a carrier, according to Neil Fyfe of Sabre Airline Solutions. Sabre offers an open systems software product that will let carriers interline e-tickets with each other without taking on the expense of creating their own e-ticketing systems. IATA itself also offers an interline hub in conjunction with SITA, and a variety of products are on the market from Amadeus, IBM and others.
Taking a hard view of interlining costs and benefits, Continental has told carriers with which it interlines that they must adopt e-ticketing by year end or lose the relationship. "Some of them bring very little to our customers," says Continental's Dave Messing. The airline has already ended 50 interlining pacts. American's Cush says: "We saw we had some agreements with carriers that proved in some cases to bring as little as $100,000 in annual revenues, which for a company of this size is perhaps of limited value. However, we are not being heavy-handed and unilateral about it, we explain and press them to adopt it."
Sabre's Fyfe thinks interlining technology will become affordable enough to be adopted by carriers that would otherwise be left out. IATA's Murphy says as the number of paper tickets decreases, the costs associated with each will rise, spurring e-ticket adoption. Within airlines e-ticketing has made the IT department more powerful says American's Cush. "They have given operations people the simplification they want, and the finance people their costs savings. That makes the IT people all the more important."
Unisys R2A vice-president Terry Elliott says most airlines are missing an opportunity to mesh their e-ticketing with their customer resource management (CRM) technology. "Usually, the IT functions are so stove-piped that ticketing remains in a separate area. With greater co-ordination with the CRM, airlines could see a frequent flyer's recent history and offer an upgrade or a drinks credit at kiosk check-in if the passenger was bumped or delayed last time." That, he says, may happen in the brave new paperless world.
Source: Airline Business