As the air transport industry makes its way towards the new millenium, it continues to wrestle with an old dilemma. How to maintain quantity and quality of service while at the same time trimming costs? For airports and airlines alike, it seems that an increasing part of the answer will come from the revolution taking place in smart technology.
In the airport of the future, cheap remote-read radio tags will be included in every ticket and luggage label, helping to ease the flow of passengers from parking through to departure. They will allow baggage and freight to be tracked throughout their journey. The passenger will be equipped with a single contactless smart card, which will act as a ticket, boarding pass, charge card and even possibly passport.
It may sound futuristic, but for those that ignore the opportuities offered by such new technology the forecasts are stark. Passenger traffic is forecast to double over the next decade. The number of available airports will creep up by only a couple of percentage points at best. Unless airports get smarter they risk failing to cope with growth.
Smart technology too will offer airlines and airports new opportunities to gain a marketing edge, taking better care of premium customers and offering a host of new products and services via the smart card.
Beyond ticketless travelThe airlines have already had a taste of what information technology has to offer with the advent of ticketless travel. Admittedly, the first generation systems do not involve smart technology as such. Usually, the customer buys an e-ticket by telephone or internet and receives an order number. But it has helped highlight the cost gains to be made along the way towards automation.
One immediate opportunity is to cut the cost of ticket distribution, which can amount to some 20-25% of overhead for a mainline international carrier. Southwest Airlines has made no secret of its longstanding agenda to bypass expensive listings on the Central Reservation Systems (CRS). Other international carriers, such as SAS and Malaysia Airlines, are equally frank about their aim of marginalising the travel agent. Others have been less bold. Even the UK's aggressively low-cost easyJet says that it wants to make the technology supportive of travel agents and others claim that the technology is driven more by customer convenience than cost. But at least one labour forecast suggests that a mix of fee capping and direct electronic ticketing will help make 20% of the world's travel agents redundant.
Either way, first generation ticketless travel has been a runaway success. The International Air Transport (IATA)benchmark suggests that 23% of airline sales goes on ticketing. The first generation of ticketless travel has already shaved this by several percentage points with more to come. In the first year of introduction, Southwest saved $25 million, Continental Airlines achieved a payback of less than a year and Northwest Airlines expects to halve processing costs.
As yet the passenger may still have to produce an identity photograph in order to receive a boarding pass, while issues over security and processing have also meant that the experiment has largely been confined to domestic or regional travel.
The next generation of ticketless travel is taking that a step further, adding a special smart card to the transaction. These are not only more efficient and secure than traditional swipe cards, but may also unlock the route to new earning streams. Effectively, they will allow airlines a means of offering passengers a range of new services beyond simple ticketing. For instance, the widely held Lufthansa cards are designed to replace a host of other plastic, providing automated entry into executive lounges and doubling for use in payphones in some parts of the world.
American Express, pursuing its even more ambitious concept of a universal card, has extensive trials with American and Continental Airlines. The aim is to bundle up a series of travel services into a single smart card. It will not only act as an Amex charge card, collect loyalty points and double as a ticket and boarding pass, but store preferences for hotel or car hire and produce expense reports. The business traveller saves time, avoiding form-filling, queuing and manual-check at hotels, airports and car-hire offices.
Such multifunctional smart cards not only offer the prospect of efficiency gains, but the potential to offer the card-holder a host of bolt-on services. There is, however, one cloud on the horizon. As IATA has rightly pointed out, airports simply do not have space to offer every airline its own card-reading machine. The association's solution is instead to standardise on a card for ten airlines at a time, accepted by one general-purpose automat. And it is the banks, which already operate vast numbers of automated cash machines, that IATA sees as the natural group to own and manage such a card system.
And here lies the problem. Although banks have moved rapidly towards smart debit and credit cards, they have relied on relatively old swipe-card technology with slow microchips and the need for contact between card and reader. Retailers have argued that such cards can take longer to use than cash, and there are examples of public bus companies giving up on such technology because queues were growing rather than shortening. Lufthansa has taken note, standardising on contactless cards for its non-bank ticketless travel card.
The response of banks is to trial combination cards with both contact and contactless interfaces for the airport, but this is a necessary evil rather than a choice solution. It increases cost, has more ways to go wrong and more opportunities for fraud. The good news is that charge-card giants Visa and MasterCard are working on contactless technology. Visa has projects in Australia and Spain, while MasterCard is under pressure from local banks in Israel among others to go contactless.
The airport gold card?The airports themselves have good marketing reasons to move over to smart card technology. Frequent business fliers and corporate travel departments can end up spending a small fortune at their main hubs each year. Yet they win few privileges from the airport for their valuable custom. That is beginning to change.
The UK's BAA airport group, which helped lead the retail revolution, is already looking at a range of potential perks.The group already provides heavily discounted travelcards for its 56,000 staff to get to work by public transport at its heavily congested London/Heathrow hub. That may also be extended to passengers. The discounts are provided free by the road and rail companies seeking to add volume. BAA also has an airport retail loyalty card accepted at over 150 retailers in their UK airports.
North American airports may not have so much invested in retail, but they can earn primary income from car parking concessions. Lubbock Airport in Texas, for example, has a contactless smart card for parking aimed at frequent flyers. They queue jump and get lower charges.
Such examples are just the start. A longer term goal could be an airport gold card offering fast track pay-on-foot parking and even special lounges free of charge to frequent fliers, but for a fee to other travellers. The big spending clients would have reason to stay loyal and the airport could create an extra source of income or make the exercise self-financing. The functions could be merged into an airline ticketless travel card if necessary.
Smart card technology is also being studied to tackle the perennial problem of queues for passport and visa checks. To date the fastest check has been demonstrated at only 15 seconds. Systems already tested in North America and Australia combine a smart card with hand print recognition.
Five years ago the USImmigration and Naturalisation Service began testing a system called Inspass at New York using a special identity card. Canada followed with the similar Canpass pilot project. IBMis also testing its Fastgate system in Bermuda, but based on a unique reference number, which could be encoded onto existing charge card or driving licence. That is checked against personal files on a central government computer. These two approaches could be combined under the Future Automated Screening for Travellers (FAST) project, which brings together 25 countries in an effort to lay out an overall framework for the technology.
Smart taggingMeanwhile, airports are looking at ways to speed the flow of passengers from parking to gate by the use of smart tags. These range in size from tiny microchip implants through to small radio tags can that can be read at anything from a few milimetres up to kilometres, dependent on price. Current airport experiments have centred on the radio frequency indentification (RDIF) tags which can be attached to existing tickets or luggage labels.
Earlier this year, BAA carried out a successful trial of a tag given to passengers that let the airline know when they had reached the departure lounge. Next will come tags that locate passengers anywhere in the airport. The savings are potentially sizeable, not least through helping to cut the number of aircraft delays.Current figures suggest that 6% of checked-in passengers arrive late at the departure gate.
Dallas-Fort Worth International Airport is streamlining parking by making use of existing vehicle toll tags. These are normally used for automatic drive-by payment of road tolls, but the airport is now accepting the tag for payment of car park fees. In the UK, Heathrow has committed over $6 million to a study of tagging airport taxis, buses and other vehicles to improve control and security. Airports are already increasingly tagging their assets with radio tags to prevent theft and slash the time taken for stocktaking.
All goods in airport shops will one day be radio tagged with price information which is picked up remotely on exit from the shop. The customer simply picks up the goods and walks out, having the price charged to his smart card - no tills and no transactions. Trials have begun.
This retail technology could be vital in safeguarding spending in airport shops as passage through the airport is accelerated. The potential conflict of interest is highlighted in Europe, where airports such as Brussels airport has the target of 20 minutes from car park to aircraft. Yet many of the regions airports are now earning up to half of their income from retailing, encouraged by the fact that passenger have had to linger in the terminal shopping areas.
Baggage taggingAirlines and airports on both sides of the Atlantic have now carried out trials of remotely read chip tags for baggage. These are usually based on the familiar disposable paper strip, but with a microchip and small printed antenna. Electronics suppliers predict a cost of between ó20 and ó50 for each tag in runs of 10 million.That should give a payback within one to three years through reductions in space for baggage halls and less lost luggage. The existing bar code systems have a failed-read rate of around 30%. Advanced cards and tags are being planned that have electronic displays, voice and location capability and even double as radio-telephones.
Freight is beginning to be tagged for similar reasons of cost, speed and security. Sophisticated tagging techniques are already being used by the military and more affordable spin-off technology will eventually become available for civil applications. But the Achilles heel of microchip tags is cost. Even for the simplest applications it will be another two years before a microchip tag with antenna comes down to the ó10 mark. Then it may only be in the form of something easily cloned and with as little as 8 bits of data, barely adequate for baggage tags or bus tickets. Thus the excitement surrounding smart tags without a chip, which will be smaller, simpler and virtually indestructable.
But to prove useful in aviation, chipless tags will need at least a metre range and some robust, simple method of scanning. Two promising technologies may offer both.
Printed coil array antennae, consisting of almost vanishingly thin deposited metal layers, are under development in the US. CW Over Technologies took out a patent in 1995 on technology suitable for airline baggage, which could be used as part of an existing paper tag. Although the tags are manufactured in huge quantities, each tag is given a unique mark in a second computer controlled etcher. These marks amount to a readable number for each tag. Current read range for a tag hidden in the standard baggage bar code is one metre with storage for 12 digits. The USGovernment has signed up as a partner to investigate the technology further, through the Federal Aviation Administration's William J Hughes Technical Centre.
A year ago US Airways tested the Over Technology's system within the existing automated in-bound/outbound sorting system. The trials, taking place over five days at Pittsburgh International Airport, showed that positive identification and read rates were far superior to the existing bar codes. Over Technology believes that the system has now reached the point where it is ready for commercial implementation and formal proposals have been submitted for sales in cooperation with a major manufacturer of baggage management systems.
A second chipless tag technology centres on the use of magnetic stripes which can be read from a distance, potentially even through layers of metal. Although at an early stage, promising discoveries are being pursued by two start-up technology companies in Cambridge, UK. These systems are still at the prototyping stage. Demonstrations to date have been limited to a handful of digits per tag and at ranges of 0.2-0.5 metres. But the eventual promise is for storage of hundreds of digits and range of around a metre.
Unlike some of the more sophisticated smart card applications, there is no need to wait for universal standards in order to make use of baggage tagging. It can be implemented on a selective basis wherever it makes economic or marketing sense. That could include any operation which has serious space and time constraints, such as the movement of transfer bags between congested terminals. More efficient tagging could give an immediate commercial advantage to a major airline or global alliance. Not only is there the prospect of cost savings, but also the powerful marketing advantage to be had from the pledge that the airlines never lose luggage.
The best prediction is probably that baggage tagging technology will come in two waves, both incorporating new smart tags into the existing paper luggage label. The first wave will see the use of chip-based smart tags, costing in the region of ó20-50. Then, as the technology improves, will come the chipless tag priced in the range of ó2-15.
A further part of the puzzle may finally fit into place as the smart technologies begin to converge. For example, with baggage tags linked to the ticketless travel cards. Malaysia Airlines is already experimenting with this link as a security check to verify that the passenger who checks in the luggage is also the same person who turns up at the gate to board the aircraft.
But, for all this fast-moving technology, there is at least one key problem for which there are yet no clear answers. That is how to create fast, secure, automated check-in of baggage. So far, no-one knows how to make such a system work. The only certainty is that tags, cards and biometrics will be involved in the solution.
Smart Facts and Forecast
| 1998 | Second generation ticketless travel extended by major airlines. Lufthansa smart cards accepted for extensive interline with strategic partners. Global airline ticket fraud over $1 billion annually. |
| 1999 | European ground handling monopolies phased out American Airlines standardises on smart card technology. |
| 2000 | Disposable contactless cards and tags commercially viable and in widespread use. Airport congestion costs Europe $6 billion per year and 27 million passengers. Immigration controls at the top 50 airports hit the 500 million mark. |
| 2001 | Frankfurt Airport has almost eliminated cash transactions for parking. World on-line travel bookings up to $5 billion from $500 million in 1997. |
| 2002 | Internet ticket sales close to $9 billion. 10 million ticketless travel cards in circulation, growing at 5 million a year. Third generation airline cards with new phone and financial services gain popularity. Forecast that 20% of travel agents have been driven out of business. |
| 2003 | IBM Fastgate automated passport control in 25 countries. 240 million chip cards sold for travel including air. |
| 2005 | Intelligent ticketing become the norm. |
| 2006 | World air passenger numbers pass the 2 billion mark. |
| 2007 | On-line commerce accounts for 60% of transactions with travel agents, airlines and banks. |
| 2010 | Most people, vehicles, baggage and freight auto-located at major hubs. |
| 2020 | Paperwork eliminated from cargo handling worldwide. |
Source: Airline Business
