IATA's initiative to simplify the business, spearheaded by its deadline to dispense with the paper ticket, is a positive start in attempting to get the industry working together on new collective goals and standards. But it is only a start
IATA could hardly have better captured the industry zeitgeist with its call to simplify the business made last month at the annual general meeting in Singapore. The complexities of the old order are long time-expired - no longer tolerated by customers, exposed as old world by the slick operations of new low-cost competitors and, above all, horribly expensive. The immediate IATA goals, on e-ticketing, RFID bag tags, common user self-service kiosks, automated interlining and bar code standards all, in their way, offer the potential to strip out layers of inefficient paperwork from the system.
The small matter of delivering on these goals has still to come. "These projects may seem simple but they will require significant changes in the way we conduct business," says IATA director general Giovanni Bisignani and he is not wrong. But any sign of leadership in getting the industry focused on setting new standards that work and abandoning the old that do not is encouraging indeed. It is woefully overdue.
In the past, the industry has prided itself on acting as a community, working together the systems and back-room processes needed to achieve a global network. IATA itself has played a central role, while SITA, for instance, was set up more than half a century ago to establish the basis of a global telecommunications network that otherwise simply did not exist. Yet, of late, faced with the high- speed assault of new technology and new business models, the industry as a whole has looked short on action to take control of and own the task of setting new targets and standards. In parts of the world, it has looked positively bewildered by the assault.
IATA certainly deserves some early credit for finally getting down to tackle the legacy of which it has more or less been custodian over the decades. The organisation was, after all, the vehicle through which the standards and processes were built up - from the paper ticket to the interlining system and clearing house. Not so long ago it looked an unlikely champion to start tearing them down, but now appears to determined to see the project through.
The discussions apparently started with a bold question to its network airline members as to whether they wanted to retain much of the existing infrastructure at all. The answer came back that they did, but not at the old costs - so the simplification initiative began.
It is not before time. The e-ticketing debate is a case in point. Although to some, IATA's target date of ending paper ticket transactions by the close of 2007 may look like an ambitious goal, for the US majors the game is already largely over. Some are already talking of moving entirely to e-tickets by the end of this year. The gap shines through in the latest Airline IT Trends Survey, conducted by Airline Business and SITA and outlined in this issue. While the research suggests that the industry as a whole should be on course to move over to majority e-ticketing within the next three years or so, the penetration of e-tickets in regions such as Africa and the Middle East is barely in its infancy. SITA and IATA both have a role to play in bringing the slowest adopters up to speed rather than slowing down the progress of the swift. Both are now committing to that challenge, but the deadline looms.
Technology and the benefits it brings cannot be put on hold while the world waits for industry to grind out standards and common infrastructure. But that is not an argument against standards, rather one in favour of tackling the issues sooner in the cycle and with clearer road maps. Take the example of e-ticket interlining. Alliance partners have forged ahead within their respective groupings, but now face the task of interlining with other outside carriers. If they do not, then the network offer to premium travellers will only be weakened as e-tickets become the norm.
The dangers of fragmentation are ever present if the industry moves too slowly or out of step. There are already two standards in the area of RFID radio tags, and IATA's initiative in the area is to bring all parties together to help to agree and implement only one. However, significantly it is not the airline industry that is setting the pace on RFID standards, nor on driving down the price, but giant users led by the US Department of Defense and retail giant Wal-Mart. Building coalitions and relationships with powerful outside stakeholders is all part of the modern mix, but the airline industry needs to be clear of what it wants collectively if its voice is to count.
The speed with which the world is changing is itself part of the challenge. Five years ago online ticket sales were an interesting new technology, in five years time the web is due to be the main channel for buying air travel. The potential benefits of the web-enabled world are huge, but to access them the industry will need to act together to overhaul the legacy systems and fast.
Source: Airline Business
