Making STB happen

Last month’s cover story on IATA’s Simplify the Business (STB) programme provoked a strong reaction in the local market. As such Abdul Wahab Teffaha, secrety general of the Arab Air Carriers Organisation (AACO), outlines how AACO is helping airlines with STB and why he is confident that Arab carriers will meet the 2007 deadline for 100% e-ticketing.

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By  Neil Denslow Published  September 6, 2005

|~||~||~|How is AACO helping local airlines with the Simplifying the Business (STB) programme, particularly in regards to e-ticketing? Following IATA’s announcement of the STB initiative in June 2004, AACO immediately established a taskforce comprising IT and commercial experts from across its membership. The executive committee [of AACO] directed us to focus on the implementation of e-ticket as a top priority. We also tackled the issue of CUSS kiosk deployments, but clearly it was a race against time on the e-ticketing front. Starting in July 2004, we convened meetings with seven industry vendors to discuss the technical aspects of the ET deployment and the commercial structure of the relationship between the airlines and these vendors. We actually started the discussions with a learning process due to the fact that the GDS and interline aspects of e-ticketing are extremely complex. ET also touches upon numerous domains that need to be changed so that the technology can deliver the promised simplicity to all the stakeholders in air transport. The discussions with the vendors about the deployment of e-ticketing and the commercial structure for doing that took around eight months to complete. The end result was that the AACO members split into a number of sub-communities and they then adopted proposals — or on the verge of adopting proposals — from a preferred vendor to do their online e-ticketing database, GDS connectivity and travel agent sales, as well as to join more that one e-ticket hub for interline connectivity. Contracts are being finalised as we speak and AACO has issued a project plan and a roadmap for the airlines for their deployment of e-ticketing. This roadmap gives priority to deploying e-tickets for online sales before going into the deployment of GDS and travel agency sales. This second phase starts in the airline’s home markets and then fans out to other markets. It ultimately then leads to the gradual deployment of interline e-tickets from June 2007 at the latest. It is a colossal task to do the GDS and interline connectivity, and we will continue to work with the taskforce to make sure that airlines are benchmarking themselves against the optimum project plan we have created. What are the different challenges airlines face in implementing ET for online and travel agency sales? To do e-ticketing for your own services is the easy part. This explains the high penetration rate for ET in developed markets, as it is primarily because of the growing role of low cost airlines, which were the first to identify the full potential of e-tickets. It is also why network airlines were latecomers to e-ticketing and why their activities were primarily focused on selling e-tickets for their own services online in response to the success of LCCs doing the same. This is also why the Arab market lags behind in the implementation of e-tickets — primarily because of the lack of low cost airlines and of the business model where e-ticketing becomes the preferable means of sales to customers. ET sales through travel agents is where the complexity starts, as you need to educate travel agents and to help them change their processes in order to relinquish paper from their business. It then becomes a prerequisite to have bank settlement plans (BSPs) in place in order for travel agents to issue e-tickets. Then, of course, comes the need to have realtime interfaces with the GDSs, and all of the reservations and departure control systems in every single airport that the travel agent issues a flight coupon for. Next comes an even trickier part: revenue accounting, which needs to change radically to deal with interline e-coupons. This area has also singled out another dimension of complexity, which is the interfaces that need to be created with the groundhandling agents across the world, the departure control systems deployed in the airports and the e-ticket databases of the more than 500 airlines that currently exist. ||**|||~||~||~|What are the particular challenges of issuing ETs for interlining agreements? The interline system of IATA currently enables the issuing of interline tickets that are accepted by the interline partners on the basis of IATA’s published and approved fares. This is still an important part of the airline business and the smaller the airline the more it is in need of the formidable interline system that IATA has created. However, in an electronic environment, if there is not a universal industry system that will allow airlines to continue interlining by simply plugging in, each airline needs to identify its most important interline partners and enter into commercial agreements with them about interlining. The two airlines then need to create technical interfaces for their DCSs to be able to recognise electronically an e-ticket issued on the partner carrier’s e-ticketing database so that they can issue a boarding pass for a passenger with an interline ticket. This requires resources, money and time and it will be, at the end of the day, an interline system whereby interline partners have to be pre-identified and wired together. This is by far the most complex part of the e-ticketing deployment and we hope that IATA through its good efforts and the leadership it is providing to the industry will be able to establish an industry-wide system or to get interconnectivity between different e-tickets hubs. This would enable airlines to plug into one system and to then connect with all the other airlines that are members of that system in one go. Given the cost of all this, do you think that ET and the wider STB initiative are financially worthwhile? I do believe that STB is beneficial and that it will ultimately result in cost savings, but not in the short term. E-tickets and self-service kiosks, since these are two short term projects, will deliver cost benefits as shown by low cost airlines, in particular, around the world. The savings will vary though from one carrier to another depending on the cost of labour for each airline. However, having said that, AACO’s approach is to look at the totality of the distribution environment. E-tickets and self-service kiosks are part of that, but the other parts are related to how airlines sell their product to the customer and the necessity to diversify the distribution channels and to self-equip with the right IT platforms to be able to deliver the right products for various customers’ needs. This is why AACO has launched a study with Unisys to look into future passenger IT platforms and strategic directions for distribution in order to prepare for that kind of change. This is being done in parallel with the e-ticketing work and the study will be finished by the end of November 2005. Do you think IATA’s deadline of 2007 for 100% e-ticketing is achievable? I believe the deadline is necessary regardless of whether or not it is realistic for some airlines. The alternative to a deadline would have been leaving the market to evolve through the deployment of online e-tickets and by airlines identifying ET as a necessary step and then making connections with interline partners as required. This alternative, of course, would have taken much more time to proliferate and perhaps would have been preferred by some. However, we in AACO totally subscribe to the IATA initiative and in fact have a lot of respect for the new IATA role in spearheading progress for the industry. The Arab airlines will be ready by the end of 2007. Enormous resources and time are being put by the airlines into complying with IATA’s deadline and I believe there is no reason why the Arab airlines should not be ready by that deadline.||**||

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