Flying into trouble

The countdown is on for the aviation industry to get e-ticketing systems in place, but it looks increasingly likely a large number of regional carriers will not even make it off the ground

  • E-Mail
By  Diana Milne Published  November 19, 2006

Introduction|~||~||~|Middle East airlines, along with all airlines globally, have been set a deadline of December 2007 to issue all tickets electronically. This is not a new situation — the deadline was set in 2004. However, when IT Weekly first highlighted the issue in February this year just eight out of 23 carriers in the region had begun issuing such tickets, despite the fact that not meeting the deadline could have potentially disastrous financial impact on carriers. Nine months later that number has not changed, with still just eight airlines here in the Middle East being able to issue e-tickets. The International Air Transport Association (IATA) has set the deadline, and after it has passed the 60,000 IATA affiliated travel agents around the world will no longer issue paper tickets. Those airlines that do not issue e-tickets stand to lose massive amounts of revenue, as they will no longer be able to participate in interlining agreements, as the travel agents will simply not issue tickets for their routes. An interline agreement is one where airlines will accept a booking for a passenger’s entire journey then liase with onward carriers for the destinations they do not cover. In order for electronic interline tickets to be issued, airlines must ensure that they are able to interface their disparate reservation systems. And herein lies the problem. Airlines, particularly major carriers, face a mammoth task when ensuring that they are able to interface with every interline partner they have. It is a task that leading figures in the region’s airline industry claim is extremely tough. Wahab Teffaha, secretary general of the Arab Air Carriers Organisation (AACO) said last month he was confident that his members will reach the deadline, but argued that it was overly ambitious. “To come to a market or an environment where e-tickets were never issued and to say that you have three years to issue it and form everything into an e-ticket is not an easy challenge,” he pointed out. Matthias Van Leeuwan, senior vice president of sales, EMEA at Lufthansa Systems, one of the main solutions providers for e-ticketing, agreed. “This is the major complaint of most of the airlines if you ask me,” he said. It costs airlines millions of dollars to deploy e-ticketing solutions and on top of that many have to upgrade or replace their revenue accounting systems so that they are able to process the e-tickets. Added to this is the cost of establishing links with other airlines’ reservation systems in order to issue e-tickets for interline journeys. Each airline has to establish a link with each and every other airline it wants to work with — and the cost of each individual link can be in the region of US$25,000, IT executives at some of the region’s airlines told IT Weekly. ||**||Prioritising routes |~||~||~|For an airline with hundreds of interline agreements in place that can swiftly mount up. Faced with the cost and complexity of carrying out such projects airlines in the region are acknowledging that it will be impossible to complete the work in time. Instead, carriers are looking at prioritising the routes they get the most traffic on, and getting those projects completed first. Teffaha accepts that his member airlines will not issue 100% electronic interline tickets by the 2007 deadline and said the only way for airlines to tackle the situation will be to prioritise which airlines they get the most interline traffic from and concentrate on establishing interfaces with their reservation systems. An example of an airline that will do this is Oman Air — which is one of the region’s most advanced airlines in terms of e-tickets and currently issues 55% of its tickets electronically using the Sabre solution. Edward Grauvogl, divisional manager of commercial and planning for Oman Air, said the airline expected to issue electronic tickets on just 20 of its 80 to 100 interline routes by the December 2007 deadline. According to IATA, worldwide, just 20% of the interline agreements between airlines account for 80% of the traffic. This suggests that electronic ticketing needs to be established between just a handful of airlines in order for the system to work. However, the consequences for smaller airlines if the larger carriers they interline with decide they are not a priority will be lost business. “There are some carriers in Africa where their interline relationships are very one sided,” said Rob Drotar, head of product portfolio management at solutions provider Sita. “So for a carrier that has that sort of a situation where they are constantly receiving in-bound bookings far more than receiving outbound bookings, it could be a huge chunk — a double digit percentage of their business which is at risk,” he warned. The delay by some airlines to put adequate systems in place means their interline partners are also unable to progress with their own e-ticketing projects. Lars Denlew Gulf Air head of distribution and e-commerce said his airline’s third biggest interline partner is only due to launch electronic ticketing next month. “That means we can’t do interline tickets with them — for us it’s a shortcoming,” he said. For a carrier the size of Gulf Air, the e-ticketing project can prove to be an enormous expense with little immediate reward, Denlew pointed out. “It is costing the airlines a lot of money to get this infrastructure in place so we can utilise the benefits we get on the other side of the mountain when we actually are 100% e-tickets,” he said. “I would say that for an airline of our size it’s millions of dollars we would pay to come to electronic tickets,” Denlew added. “To get a revenue accounting system in place we’re talking millions. Those are huge systems environments and it’s a very costly project to do this.” ||**||Ground handlers|~||~||~|For the airlines the bad news does not even stop there, with airlines also finding that those carriers that do have electronic ticketing solutions in place are restricted in the number of e-tickets they can issue because ground handling agents in the airports they fly to and from are not ready to process them. Ground handling agents at the airports must have departure control systems (DCS) that are able to interface with the airlines’ reservation systems in order to be able to process electronic tickets. Grauvogl claims his airline is already experiencing major problems with ground handlers at airports in the region as well as in India which are not yet ready to interface with the Sabre e-ticketing system Oman Air uses. He claims that this is the main reason why his airline is only able to issue 55% of its tickets electronically at present. “The major reason why we’re not further than that is because of ground handling interfaces.” Grauvogl explained. “Some of the airports we fly to are not yet in a position to accept e-tickets, where the specific check-in system they use is not yet linked to the Sabre system for purposes of transmitting this information back and forth.” According to Teffaha ground handlers in the region are ready for the influx of electronic tickets — but if airlines from other parts of the world have not interfaced their reservation systems with the DCSs in the region then passengers could suffer the consequences. “We will find some very unhappy people if this situation continues and is not addressed,” he said. IATA lays the blame for the region’s slow progress on the fact that some airlines were using home grown or outdated reservation systems that do not support electronic ticketing. In this case they must embark on the complex task of replacing their reservation systems before they can even start to issue electronic tickets. The body also stands firm over the December 2007 deadline. “The first thing we need to remind ourselves is that IATA didn’t set a deadline. The IATA members agreed to a deadline in 2004 at our annual general meeting and amongst those carriers were the carriers in the Middle East,” said Anthony Concil, director of corporate communications at IATA. The December 2007 deadline was, he said, a compromise between those members who were well advanced towards e-ticketing systems and those who needed more time to implement them. Globally, 30% of tickets are now issued electronically, he said, with members on target for 70% by the end of this year. IATA is “fully confident” of hitting its 2007 deadline, Concil claimed. For the Middle East, according to IATA’s own figures, e-ticketing usage stood at just 12% in August this year. For Teffaha, expecting the region’s carriers to be 100% ready is unrealistic. “It’s not going to be impossible to resolve, its not going to take forever,” he said. “But on January 1 2008, the travel agents and airlines will not be able to comply 100% with every single customer’s requirements for interlining. This is not going to be possible on January 1, 2008, no matter what,” claimed Teffaha. IATA is keen to point out that it is doing all it can to support airlines in meeting its requirements. But as the deadline grows ever closer and concerns increase over the complexities of interline e-ticketing and the readiness of ground handlers in airports across the world to handle electronic ticketing traffic it seems the organisation has a tough challenge on its hands. ||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code