Airlines in race against time to issue e-tickets

Middle East airlines could face serious financial consequences if they do not meet a deadline set by the International Air Transport Association (IATA) to start issuing e-tickets, industry experts are warning.

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By  Diana Milne Published  February 5, 2006

Middle East airlines could face serious financial consequences if they do not meet a deadline set by the International Air Transport Association (IATA) to start issuing e-tickets, industry experts are warning. The airlines have until December next year to start issuing electronic tickets but just eight out of the region’s 23 airlines currently provide such tickets, according to a straw poll conducted by IT Weekly last week. Industry figures warn that the financial consequences for those that don’t meet the December 2007 deadline could be dire. “If airlines are not capable of having electronic ticketing for their major interline agreements this will be a big obstacle,” said Gero von Götz, senior vice president of sales EMEA at Lufthansa Systems, which is currently working with Qatar Airways, Eithad and Royal Air Maroc on the implementation of e-ticketing systems. “It depends if the interline relationship plays a large role. It could drive them out of business if they don’t move fast enough,” he added. Götz said he believed the cost and complexity of such projects had been underestimated by many airlines. He estimated just two-thirds of the region’s airlines will meet the deadline for issuing e-tickets on their own routes and half that number would set up e-ticketing systems to serve their interline agreements with other carriers. Interlining refers to the practice where airlines will accept a booking for a passenger’s entire journey, then liaise with onward carriers for destinations they do not cover. After December 2007 the 60,000 IATA affiliated travel agents across the world will no longer issue paper tickets from airlines that don’t issue e-tickets and those airlines that do not issue electronic tickets will no longer be able to continue such interline agreements. If smaller airlines fail to hit the deadline they could face losing these agreements and millions of dollars in the process. Philippe Bruyere, business programme director at IATA, explained that the consequences of this on airlines in the Middle East could be particularly serious as it is so well positioned for long-haul-to-long-haul flight connections. “We say that if you don’t implement e-ticketing you get marginalised because you get cut off from the worldwide distribution network,” he said. “It’s particularly important from a business model point of view that airlines in this region maintain these (interline) relationships,” he went on to add. The region’s airlines have had since 2004 — when the IATA set its deadline — to implement e-ticketing systems. But of the airlines contacted by IT Weekly last week, the following were the only ones to say they offered e-ticketing —Gulf Air, Air Arabia, Emirates, Oman Air, Royal Air Maroc, Tunis Air, Qatar Airways and Royal Jordanian. Etihad Airways was one of the airlines that said it does not currently offer e-ticketing, but said it will have a system in place to do so by spring this year. “Small carriers depend on interlining,” warned Klaus Giesemann, IT manager of Etihad Airways. “If a big airline loses an interlining partner it’s not a big problem for them but for a smaller carrier it can cause big problems,” he warned. Globally the Middle East has the lowest usage of e-tickets in the world at just 2.7% compared to the world average of 40%. Giesemann described the change over to electronic ticketing systems as a “painful implementation” one that he said could also prove very costly. “For an airline like Lufthansa to have a project that costs one or two million dollars, that’s peanuts. But the same amount for small-to-medium carriers is quite some money,” he said. Bruyere said that despite the difficulties of implementing e-ticketing he was confident that the region’s airlines will hit the deadline. “We are quite confident, not only because everybody will have enough time to meet the deadline but because the Middle East airlines we met last year told us they had firm plans to meet the deadline,” Bruyere revealed. “What they need to do is turn their plans into action, we are running out of time. There is still time but 2006 will be a critical year,” he went on to add.

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