IATA

Industry Efforts to Simplify Gain Momentum

Results of a survey IATA recently conducted with over 400 airlines show industry efforts to simplify the business are picking up steam.

The survey polled over 400 airlines - IATA’s 265member airlines as well as those participating in Multilateral Interline Traffic Agreements - on all five Simplifying the Business initiatives (100 per cent electronic ticketing by the end of 2007, common use self service check-in, bar coded boarding passes,RFID for baggage management, IATA e-freight –freeing cargo of paper by end 2010) to determine their interest and level of readiness to deliver.

Our vision is for a low cost industry that delivers high levels of passenger convenience. Effective use of technology is the only way forward and gathering business intelligence on airline readiness is a key element in our strategy.

Overall the results are encouraging and show that we are on the right path to improve service and generate the US$6.5 billion in cost savings Simplifying the Business makes possible.

Electronic ticketing

Electronic ticketing is the top priority Simplifying the business project with a fast-approaching deadline and US$3 billion in industry savings at stake. IATA’s mandate on e-ticketing is to engage the airlines,determine each airline’s level of readiness and support them in achieving the goal

Survey results reveal that significantly more carriers are either offering electronic ticketing or have plans to do so than in the past years when compared to the findings of an e-ticketing survey conducted by IATA in November, 2004. The number of carriers that issue electronic tickets has jumped from 20 to 35 per cent. Whilst none of these airlines has yet issued all of its tickets as e-tickets, the overall proportion of travel agent issued tickets, which are now ET, has reached32 per cent of the world market outside the USA. Airlines are now rapidly advancing their plans to implement ET – with the number of airlines that had neither ET capability nor plans to implement reducing dramatically from 75 to 27 per cent.

This is a promising trend and our goal is to make sure all carriers have plans by the end of this year. The fact that 99 per cent of carriers that either have e-ticketing or have plans to implement it say they will meet the deadline is a strong signal that we are on track

Not surprisingly, findings also show that larger airlines are ahead on e-ticketing. Smaller carriers that cannot e-ticket now represent only 14 per cent of volume. E-ticketing capabilities are most advanced in the Americas and Europe and least advanced in the Middle East, North Asia and The Commonwealth of Independent States (CIS). We will be working closely with these airlines to bridge that gap

Common Use Self Service – CUSS

As the e-ticketing revolution unfolds, the reliance of passengers and airlines on common use self-service technology (CUSS) will escalate proportionally. Common use refers to several carriers providing check-in through the same ‘box’. IATA estimates a total of US$1 billion in annual industry savings with a market penetration of 40 per cent. In terms of benefits to the airlines it will result in cheaper self-service applications, reduced training requirements and broadened customer service opportunities.

While there is no comparative data, as the 2004 IATA survey focused on e-ticketing only, results clearly show there is a lot of interest in shared check-in kiosks.

A full 87 per cent of airlines are either active or interested in implementing CUSS. Of those, 12 percent of carriers have CUSS compliant applications, 11per cent are testing these with the remaining 63 percent planning development. While Europe and the Americas are clear leaders among the regions, strong interest is now emerging from Asia Pacific and North Asia.

Bar Coded Boarding Passes

This product is emerging on the market due to its potential to ease travel by allowing passengers to print their own boarding pass at home and cut industry costs by US$500 million per year makes it an interesting prospect for airlines. The survey findings back that up with 10 per cent of carriers reporting an implemented solution, 14 per cent testing a solution and 63 per cent indicating they are planning to develop one. In 2004IATA established an industry standard for its application and is actively promoting its use within the industry.

Radio Frequency Identification (RFID) for baggage management

Whereas 20-30 years ago bar code was touted as the baggage solution, RFID is the wave of the future. We still have to build the business case though to prove its value to airlines.

The survey results show that only 1 per cent of airlines have implemented RFID, 8 per cent are testing and 71are investigating further. If fully implemented RFID would improve baggage delivery and track and tracing performance and yield US$760 million in annual savings.

IATA e-freight

Air cargo’s contribution to airline finances often makes the difference between profit and loss. Yet the contributions could be even greater, if cargo wasn’t shackled by complexity and weighed down by paper.

Air cargo is a US$ 40 billion-industry that is currently performing stronger than the passenger side, in terms of both volume and yield. It can improve the bottom line even more if we simplify processes across the cargo supply chain and remove the paper.

Such is the goal of IATA e-freight - a project designed to implement simpler, electronic, paper-free air cargo shipping worldwide by 2010, with a fast track capability for stakeholders that can do so by 2007.

Recently launched, IATA e-freight survey results show that 9 per cent of airlines are testing one but 64 percent of all airlines, while interested, have taken no action to this point.

A key launch point for the project was the IATA e-freight conference scheduled for November 1-3 in Geneva, Switzerland. The case for change is compelling, faster shipping with less paper and lesser costs.

Simplifying The Business: Next Steps

IATA now has 140 staff members, including headquarters staff, regional offices and country representatives, fully mobilised for the Simplifying the Business effort, with first priority assigned to making e-ticketing universal. The initiative is being led by StB Programme Director Philippe Bruyère

With the next wave of IATA activity, our aim is to get carriers that still lack plans or e-ticketing systems to move toward implementation.

In what will become a quarterly exercise, IATA will again meet face-to-face with all IATA carriers and their non-IATA airline partners at airline head offices to see what progress has been made on all projects, where the roadblocks are and develop solutions to overcome them. Part of the solution lies in IATA’s matchmaking efforts – bringing carriers the solutions or expertise they need. To that end we have signed MOU's with six leading solution providers – Amadeus, Lufthansa Systems, Sabre, SITA, Travelsky and Worldspan. We have also set up an StB Preferred Partner programme with other key suppliers. Most recently IATA has launched ET Buddy System that provides airlines without electronic ticketing up to 15 days of free consultation with experts from ET-enabled carriers.

IATA will also focus on removing some of the barriers to delivering simplifying the business initiatives including skill gaps, regulatory and legal issues and implementation costs. To provide additional support,workshops and online tools have been developed to make business intelligence readily available to airlines as well as to provide quarterly reports and an industry scorecard to track progress.

We will continue to measure progress, move quickly and focus our efforts to help airlines and their partners eliminate roadblocks and develop solutions. With this approach and with the ongoing support of airlines across the globe, we are confident we will simplify the business – for the benefit of customers, the profitability of airlines and the overall health of our industry.

Biography

Tom Murphy joined IATA twenty-seven years ago,bringing with him a wealth of experience from previous posts within British Airways. In IATA he was responsible for IATA Passenger Services activities in Montreal from 1980 to 1983. He moved to Geneva in1984 when he became responsible for IATA’s Industry Automation activities. In 1987 he became head of IATA’s Traffic Services Division and in August 1991 his responsibilities were broadened to include Financial Services, Industry Monetary Affairs and Management Information.

In 1998 he became the Senior Vice President of a new business unit within IATA, IDFS-Industry Distribution and Financial Services, which is responsible for managing the airline industry’s distribution and financial systems. This business unit, which includes agent accreditation and the settlement systems,operates in 154 countries. 90,000 agents are accredited by IATA and the Financial Systems process$180 billion annually. Mr Murphy is also responsible for a number of major projects, including the Simplifying the Business initiative launched by IATA in 2004.