100% e-ticketing by ‘07

Leaders of the world’s airlines committed to 100 percent implementation of e-ticketing by the end of 2007 as part of a blood initiative to re-engineer many of the air transport industry’s processes to "simplify" the airline business process.

"We will drive paper tickets out of the system, reduce airline costs and at the same time improve customer service," said Giovanni Bisignani, Director-General and CEO of the International Air Transport Association (IATA), who was in Manila recently. With him were Andrew Drysdale, Regional Vice President, Asia/Pacific; C.S. Kong, Regional Director, Asia/Pacific and Anthony Council, Director, Corporate Communications, IATA.

The decision to implement the e-ticketing came as a resolution of the Association’s 60th Annual General Meeting (AGM) held recently in Singapore. The other projects that will be led by IATA include Common-Use Self Service Kiosks (CUSS), Bar Codes and Radio Frequency Baggage Tag Identification (RFID).

"Airlines have done a great job at innovation. Now it is time for IATA to take the next step and apply the latest technologies to 21st century business practice and change the way the world travels in air. Consumers demand convenience and value. But they are not willing to pay for the complexity that we have built into our global air transport system. We need to simplify our processes to respond to the consumer’s need while at the same time ensuring commercial viability for our struggling airlines," Bisignani said.

E-ticketing will save the industry up to US$3.0 billion per year. It will be noted that IATA processes 300 million paper tickets each year. An e-ticket costs $1 to process while paper tickets cost up to $10 to process.

The country’s flag carrier, PAL has started e-ticketing already so with Cebu Pacific.

Bisignani said that all major components for e-ticketing are in place, namely, technology, various solutions for interconnection of ET System for interline ET (hub ware solution developed by different providers), and technical expertise.

The CUSS will achieve an industry standard and implementation plan for common use check-in terminals worldwide.

The Bar Code Standards will achieve an industry standard and implementation plan to replace magnetic stripes with bar codes on boarding passes that can be printed by the passenger. In the future, it will reduce lines at airports.

The RFID will replace bar coded baggage tags with auto-identifying RFID and work together with the airports to exploit this technology for baggage handling.

In 2003, the industry survived "the four horsemen of the apocalypse – SARS, war in Iraq, terrorism and the economy. Now a fifth horseman – the price of oil – could add up to $1 billion per month to our costs and deny us profitability yet again. If the average price for the year is $33 we break even, and at $35 a barrel, they will report a collective loss," Bisignani said.

Crude oil was trading above $40 a barrel earlier this month, forcing many airlines to pass on the additional cost to passengers. Recently, the New York Mercantile Exchange contract for July had dropped to $38.37 a barrel in Asian trading.

After at least two years of lost growth, traffic is back in pre-September levels in moist parts of the world. First quarter 2004 passenger traffic was 6.5% above the same period for 2001 while cargo volumes were 15.5% above 200 levels.

For the first five months of this year, IATA members saved $331 million in infrastructure costs and had $133 million in fuel savings. Last year, global passenger traffic fell 0.6%, marking the third straight year of decline and the longest in commercial aviation industry. On international scheduled routes, IATA’s airline members made an operating loss of $1.3 billion in 2003 and a net loss of $4 billion.

To cope with these challenges, "We must move from fighting fires to designing new industry structures. Cost flexibility has never been more critical – and this includes labor. Consumers pay for value not complexity," said Bisignani.

Geneva-based IATA’s 275 airline members in 136 countries, accounts for 98.4% of the world’s international scheduled traffic and a total international freight of 22 million tones.