E-ticket deadline could cost carriers

With the December 31 deadline looming for converting all airline tickets to e-tickets, some regional carriers are warning they will not be able to switch 100% in time.

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By  Michele Howe Published  May 13, 2007

|~||~||~|With the December 31 deadline looming for converting all airline tickets to e-tickets, some regional carriers are warning they will not be able to switch 100% in time. Industry body the International Air Transport Association (IATA), which represents more than 250 airlines globally, has set the deadline: after that date the 60,000 IATA affiliated travel agents around the world will no longer issue paper tickets. This will cause a huge problem for airlines that depend on interline agreements — where an airline will accept a booking for a passenger’s entire journey and then liaise with onward carriers for the destinations they do not cover. While some carriers, such as Emirates in the UAE, are claiming they will be 100% ready to issue e-tickets, with all interline agreements in place, others have admitted they will not. In order to issue electronic interline tickets airlines must ensure that they are able to interface their disparate reservation systems — and some airlines said this week they will not have time to do that for all the interline agreements they have in place. Lars Denlew, Gulf Air’s head of distribution and e-commerce, pointed out it is a complex task to put an interline e-ticketing agreement in place. “There needs to be links between the airlines, you need to have IT providers involved so that has been a big problem for the whole airline industry, to try to slot all these electronic interline ticketing agreements [together] and make them work.” While Gulf Air currently has around 200 paper interline agreements in place “even though we work day and night it will be impossible to do more than 50 [agreements], which means that we will still have in the range of 100 interline agreements that we will have to cancel,” he said. As well as time constraints, there is also cost — each airline has to establish a link with each and every other airline that it wants to work with and the cost of each individual link has been estimated to be in the region of US$25,000. Unsurprising therefore, airlines are prioritising their interline agreements: according to IATA’s own research, an airline typically generates 80% of its interline volume from just 20% of its interline partners. However, this also means that some smaller carriers in the region, who heavily depend on the revenue they generate in interline agreements with larger partners, will be severely affected if those agreements are not in place. Ahmed Al Ghambi, senior manager of systems airport information development at Saudi Arabian Airlines, said it would convert around 70 of its 200 paper interline agreements to electronic. “The problem is the commitment,” he admitted. “Most airlines are committed with the biggest member… it depends on the value between both airlines.” Some carriers also expect to continue to issue paper tickets — at least for domestic routes because of the low internet take-up in their home states. Hossein Hosseini, director of marketing at Iranian carrier Mahan Air, told IT Weekly his company would continue to use paper tickets for its domestic business “at least for a few months” after the deadline is issued because of the low rate of internet penetration in Iran. “We feel that if we go totally electronic, it probably will harm our business,” he said. He added that he expects other airlines will also continue with manual ticketing. “I think within 2008 and probably the first half of 2009, we will have enterprises who will continue with the paper ticket,” Hosseini said. The Middle East had the largest increase in electronic ticketing volumes, according to the IATA report, with its electronic ticketing volumes rising from 23% at the end of 2006 to 39% at the end of the first quarter of this year. The region still lags behind the rest of the world however, particularly the US where the e-ticketing penetration rate is 93%. While IATA is standing by the deadline, some regional carriers are now questioning at just what cost. ||**||

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