International Air Transport Association
Partner Brief
Strategic Partnerships Newsletter

33rd Issue • Quarter 2, 2010

Aviation and alternative fuels

Michel Baljet, IATA’s Assistant Director, Fuel Services, Operations, explains why alternative fuels are essential to the future of aviation.

Alternative fuels are defined by what they are not—petroleum-based fossil fuels (crude). Produced using renewable resources, biofuels are the preferred alternative fuel for aviation.

However, not all biofuels are created equal.

First-generation biofuels were produced from crops previously intended as food, which detracted from their viability. To correct the problem, the focus has shifted to sustainable energy. Next-generation, sustainable biofuels grow on barren land inhospitable to food crops. As a result, these biofuel sources can generate up to 80% less greenhouse gas emissions during their lifecycle.

Replacing fossil fuels
As it continues to expand, the aviation industry is considering the use of biofuels to keep emission levels low, thus achieving its goal of carbon-neutral growth. However, lowering carbon emissions is not the only reason for this shift to alternative fuels.

Economists estimate that fossil-fuel supplies are likely to begin peaking in 20 to 30 years. This situation will obviously have a major impact on aviation. In 2007, global jet-fuel use was 200 billion gallons per year. Supplemental sources are required, with biofuels the cleanest, greenest versions of the new fuels presently available.

The good news is that these new sustainable drop-in fuels are easily assimilated with conventional jet fuel, which is necessary to facilitate the transition. In addition, these biofuels can be used in existing aircraft and distributed within existing infrastructure.

Government incentives
Governments have a part to play in promoting the production and use of sustainable biofuels.

For a start, specifications have opened up to include biofuels just this past year, as recently as last September. North American specifications already exist, with Europe soon to follow by fall of this year.

Recently, the European Union launched the implementation of an emissions-trading scheme. Biofuel use is encouraged, as biofuels are to be tax exempt. This type of incentive has proven successful, since airlines, interested in the tax exemption, are keen to begin employing biojet fuels. More incentive programs and investment would guarantee widespread use and a ready supply of next-generation fuel.

IATA initiatives: creating a marketplace and a new area of involvement
The environment is an IATA priority, demonstrated by its four-pillar environmental strategy.

One of IATA’s key initiatives is bringing together new fuel producers and airline fuel purchasers. Establishing a marketplace for biojet fuels will make them commercially viable. The launch of the “marketplace” initiative took place just this May, at the Aviation Fuel Forum in Los Angeles.

The Strategic Partnerships program has also developed a new Alternative Fuels area of involvement. The area is open to any company involved with, or consisting of, producers of clean, green or alternative jet fuels, located anywhere in the world.

A sustainable future
The technology already exists, and the need is immediate. But the transition to 100% adoption will be slow without a concerted effort on behalf of all stakeholders.

Securing funding and a steady supply of biofuels are two of the greatest challenges. Aviation authorities, principally ICAO, need to get involved in setting targets. One target, for instance, could be that suppliers and airlines incorporate at least 5% biofuel into their fuel supply. Something similar has already been done in some jurisdictions with biodiesel legislation. Adoption of biojet fuels on a mass scale would also serve to bring prices down.

By working together toward this worthy goal, we ensure the future of our planet as well as our industry.

For more basic information on biofuels, please consult The Beginner’s Guide to Aviation Biofuels produced by enviro.aero.com.

To find out more about recent developments in alternative fuels, please consult the IATA Alternative Fuels Report.

To learn more about the new area of involvement, please visit Alternative Fuels and the Strategic Partnerships program, or contact the SP team at partnership@iata.org.

 
 
 

Condon & Forsyth LLP: The Airline Deregulation Act

An appellate court in California has held that passengers may not sue airlines to recover government-imposed taxes collected from passengers actually exempt from paying the taxes. The court held that federal law barred any claim requiring the airlines to screen passengers to determine if they are exempt from the tax.

The basis for the decision is the Airline Deregulation Act. This federal law prevents any state from making any law or regulation relating to an airline's “rates, routes, or services.”

The decision is critical, because airlines routinely collect a variety of government fees and taxes. This decision protects the airlines from claims and lawsuits, including class actions, if the fees and taxes are not collected properly. 

Airlines must take care not to make any statement on their website—advertising or otherwise—that can be interpreted as an agreement by the airlines to determine if a specific fee or tax actually applies to each passenger.

It is advisable for airlines to include language on their websites and at other points of sale to the effect that

  • the airline collects certain taxes as part of the price of the ticket.
  • passengers are ultimately responsible for determining if each fee or tax collected applies to them.
  • passengers may request a refund, within a fixed period of time, if they believe that the fee or tax was collected improperly.  

It is important to caution that this decision does not apply to any activity which the airline agrees to perform voluntarily.

condonlaw

Frank A. Silane

Rod D. Margo

www.condonlaw.com

 
 
 
IBM: Air Canada extends customer self-service
beyond the airport
Air Canada wanted to extend service beyond the airport by delivering self-service through mobile devices. Patrice Ouellette, Director, Customer Service Platform, explains: “We were intrigued by the concept of the mobile phone as a travel companion that would enable customers to connect to us where and when they wanted. More fundamentally, we saw the opportunity to transform aspects of our self-service into a more real-time dialogue with customers.”

Air Canada engaged IBM to develop applications for the iPhone, iPod touch, and BlackBerry that allow passengers to download electronic boarding passes, check in, obtain their flight status, book rental cars, and more.

There were over 30,000 downloads of the iPhone app from 64 countries during the first six days, with a 60% increase in mobile check-ins. The app saves 80% of the per-check-in cost compared to counter check-in. In recognition, Air Canada won the Canadian New Media Award for Best Mobile App of 2009.

Air Canada made a strategic decision to consolidate all of its self-service channels including Web, kiosk, and mobile devices on a single software platform using the same enterprise services, such as flight-status check. This creates a seamless customer experience and provides flexibility for the future. The efficiency of reusing common services drastically reduced the time required to bring the mobile solution to market.

What makes Air Canada stand out isn’t the fact that they are doing self-service, but the way they are doing it.

IBM

Brian E. O’Rourke

www.ibm.com/smarterplanet/transportation

 
 
 

Kale Consultants Ltd.: Saving up to 2% on airlines’ direct operating costs

For every flight it operates, an airline incurs certain operating costs, such as fuel costs, airport charges, catering charges, and so on. These costs comprise about 50–60% of an airline’s overall cost structure. However, airlines find it difficult to control these payables, because of complex vendor contracts and the unavailability of a good contract-management system.

For most airlines, the operations data required to reconcile invoices with actual services used are non-automated and unavailable at a single source. This fact, combined with high volumes, makes it practically impossible to audit all vendor invoices for services used. 

Kale’s experience in the domain has helped to identify common reasons for airports’ excessive invoicing:

  • Variation in passenger count
  • Miscalculation of parking hours
  • Incorrect maximum take-off weight (MTOW)
  • Variation in parking units
  • Rebates or discounts not considered

According to Kale’s audit findings, cost leakages may be as high as 2–4% of the vendor-invoice values and are therefore a significant element of any cost-management strategy. There is an urgent need for airlines to plug these leakages and circumvent many of the limitations mentioned above.

Kale recently helped a leading European carrier implement a comprehensive Direct Operating Costs (DoC) Payables Audit on invoices received for airport charges. Kale’s audit application and methodology identified 1–2% potential recovery at each of the airports audited. Even the charge drivers showed a discrepancy of 0.5–1%. The audit exercise revealed a potential recovery of over US$250,000 for a six-month period.

Kale Consultants

Sanjyot Tawde

www.kaleconsultants.com

 
 
 

Lufthansa Systems: Online upgrade for Austrian Airlines’ web check-in

In order to reduce costs, airlines are making check-in more efficient by adding passenger self-service processes. However, as average yields are set to remain low for the foreseeable future, airlines are looking for extra revenues aside from basic ticket sales. Offering chargeable services that provide an added value to passengers is a logical next step.

Austrian Airlines had already been using Lufthansa Systems’ Internet and mobile check-in products when it requested a new upgrade feature for its Internet check-in solution. Implementing the upgrade feature marked a new way of thinking and created a win-win situation for both the airline and its passengers.

Travelers can buy an upgrade to Business Class while checking in online. The airline individually controls the availability and pricing of the upgrade offers, depending on the booking situation of every single flight. Passengers, on the other hand, can choose to pay for the upgrade by credit card or with their bonus miles.

Launched last December in time for the Christmas travel season, Lufthansa Systems’ upgrade tool proved successful with passengers right from the start. Without any marketing or consumer communication, Austrian sold the first four upgrades within five minutes of the system going live.

The system also confirms the fact that the right timing determines the success of an offer. A passenger may not intend to travel in Business Class when purchasing the ticket in advance. However, he may well be open to buying an upgrade shortly before departure as he is preparing for the trip. So it literally pays for an airline to not only meet passenger demand, but also to anticipate it.

LH Systems

Sandra Hammer

www.LHsystems.com

 
 
 

NCR Corporation: Self-service travel solutions

As an IATA Strategic Partner for the past 11 years, NCR has collaborated on a number of self-service initiatives to improve the passenger experience.

In 1999, NCR joined IATA to help shape industry standards for Common Use Self-Service (CUSS) and Common Use Passenger-Processing Systems (CUPPS) solutions. An early member of the IATA-CUSS Technical Committee, NCR helped define the industry standards and structure for today's common working groups. This involvement resulted in improved operational efficiencies and better passenger movement through airports.

We have worked in concert with IATA and Air Transport World to drive awareness, education, and the adoption of IATA's Simplifying the Business (StB) and Fast Travel initiatives. For instance, NCR hosted online educational sessions that drew more than 1,000 participants. Highly rated as helpful and informative, these sessions fostered discussion about the positive impact self-service is having on airline operations and customer service. 

We believe that collaborating with IATA has helped strengthen NCR's position as a leader in self-service travel solutions. As this partnership continues to evolve in the areas of education and best practices, we look forward to serving today's traveler more efficiently.
NCR

Owen Wild

www.ncr.com

 
 
 

QSL Consultores: Enterprise risk management

Airlines and aviation organizations are facing difficult and complex scenarios, mainly affected by the global crisis. Organizations need to face the future and cope with uncertainty, focusing on possible events that will impact their objectives, maximizing opportunities, and mitigating threats.

Risk management is an excellent way to understand uncertainty, optimize processes, and define new business strategies. It is also mandatory for safety management systems (SMS) based on ICAO requirements and in compliance with the 2002 Sarbanes-Oxley Act (SOX).

The problem is that organizations have been using diverse standards, frameworks, philosophies, and terminologies in their various departments, such as marketing, operations, and finance, as well as in their support processes. The different levels of expertise within the organization have also contributed to a confusing internal environment. This situation has made it impossible to manage risk on behalf of the core business and to understand the organization as a single entity.

Working with its airline customers, QSL Consultores developed a method to define enterprise risk management (ERM). Based on the best international standards (COSO, ISO 31000, AS/NZS 4360), QSL focused on corporate objectives deployed throughout the airlines in the various areas and processes. By studying all the processes and desired results, QSL was able to grasp the clients’ netting objectives and needs in order to develop specific ERM systems.

Through intensive training, communication, and consultation activities, these airlines started developing their own ERM system using a common framework and terminology. By focusing on their business as an entity, these organizations were able to meet their objectives while complying with aviation and governance requirements.
QSL

Jose Castellanos

www.qsl.cl

 
 
 

RM-Group A/S: Emergency Response Systems

Helpful in the event of incidents and/or accidents, web-based emergency response systems (ERS) are rapidly being adopted throughout the industry by both airlines and airports. The popularity of these tools is largely due to the automation of crucial procedures for dealing with incidents and accidents.

However, companies are using so many different systems for daily operations that it is difficult to incorporate another tool seamlessly.

The RM-Group, a supplier of risk-management tools for airlines and airports, was asked whether it was possible to extend the ERS’ functionality without compromising its set-up at airlines and airports.

As a result, the RM-Group partnered with two IATA member airlines and an airport to explore the following questions:

  • Is it possible to get multiple uses out of certain operational systems?
  • If the answer to the first question is yes, then can companies use the ERS functionality in their daily operations? 
  • If so, can this be done without compromising the ERS set-up?

Our findings answered the first two questions in the affirmative. It is possible to integrate a daily-log module in the web-based ERS, and the system can also be used for day-to-day operations. Though the system’s main purpose remains the same, some of the advantages of integration include the automation of crucial procedures, the logging of all deviations from normal operations, and so on. With the implementation of a filter, the system can also be used for incident reporting, keeping track of daily tasks, and the quality assurance of daily operations.

We also concluded that extending the ERS’ functionality can actually enhance efficiency. Using the ERS for daily operations serves to familiarize users with the system. This in turn increases reaction time if and when an incident occurs, raising the safety level of airlines and airports. As an added bonus, the new and improved system now performs multiple functions without additional cost.

RM Group

Ole Smedegaard

www.rm-group.dk

 
 
 

TRAXON Europe: Standardizing processes for Swiss

For almost a decade, Swiss WorldCargo, the cargo division of Switzerland’s national freight carrier, has relied on TRAXON Europe for messaging services tailored to the airfreight industry.

Host-to-host (EDI) messaging facilities are an integral part of Swiss WorldCargo’s service offering. The carrier is continually optimizing its electronic services in cooperation with suppliers to simplify an airfreight forwarder’s working day. Moreover, continuing efforts to reduce paperwork is good for the environment.

Easy-to-access, cost-effective EDI messaging also helps to advance the cause of two air-cargo initiatives promoted by Swiss WorldCargo and TRAXON Europe: IATA e-freight and Cargo 2000. Since February 2009, SWISS has performed e-freight-compliant transactions on various trade lanes.

With TRAXON Europe, Swiss WorldCargo’s exclusive provider of EDI messaging, effective May 1, the carrier’s aim is to make its increasingly standardized processes faster and more streamlined. TRAXON’s worldwide network ensures a stable interchange of messages between logistics partners and the air-cargo carrier. The services provided cover e-booking, air-waybill data transfer, status information, and consolidation-list transmission for customs. As a result of this partnership, Swiss WorldCargo is benefiting from greater cost efficiency.

TRAXON

Karin Siegmund

www.traxon.com

 
 
 

Unisys Corporation: Smooth IT integration for two world-class cargo carriers

The recent merger of Delta Cargo and Northwest Cargo shows the speed with which a shared vision can become a well-executed reality.

To achieve the merger’s promised benefits, the carriers required a single system, operating one set of processes and presenting one face to customers. Previously, Delta had operated on the hosted Unisys cargo system and Northwest on its in-house system. Therefore, the major technical challenge was integrating processes and data.

The first choice was what that single system should be. Delta chose the Unisys-hosted cargo service, as it ended up being less costly than operating Northwest’s in-house system. Being browser-based also helped with training and transition.

Delta engaged Unisys to help manage the integration project at the end of March 2009. The Unisys and Delta teams came up with a “drain-and-fill” approach, transferring bookings from the Northwest system to the Delta-hosted one. That approach, and the 50 functions migrated from the Northwest system, were tested in three dress rehearsals. As a result of this teamwork, the business was operating on a single system just seven months later.

Though there were technical issues to address, the biggest challenge was minimizing the impact of the implementation on customers. In this sense, above all, the integration was totally successful.
Unisys

Christopher Shawdon

www.unisys.com

 
 
 

Simplifying the Business: focusing on collaboration

IATA relies on the contributions Simplifying the Business (StB) makes to improve industry operations. This ongoing adaptation would not be possible without IATA Strategic Partners’ dedication to delivering the quality products that bring IATA standards to life.

Consequently, StB is committed to strengthening its collaboration with the Strategic Partners in 2010.

StB on target
StB is on track to meet its 2010 targets, reflecting the industry’s commitment to implement Bar-coded Boarding Passes (BCBP), the Baggage Improvement Program (BIP), Fast Travel, IATA e-freight, and IATA e-services.

The deadline for 100% BCBP capability is 31 December 2010. The BCBP project team plans to reach out to industry professionals by offering a webinar entitled “Are you ready for 100% BCBP” this May. The webinar discussion will address the key issues related to BCPB reaching full capability.

This past year, BIP met with great success, as baggage mishandling plummeted by 23.8% in 2009. The BIP self-help program takes off this year, allowing airports and airlines to help themselves using the BIP-solutions toolkit. By the end of 2010, 20 airports are expected to participate in the self-help program.

Fast Travel is expected to surpass its target of 60 new implementations in 2010 across its five project areas: bags ready-to-go, document check, flight rebooking, self-boarding, and bag recovery.

The first IATA e-services results are expected shortly.

IATA e-freight continues to build a critical mass of paper-free trade lanes. Locations that account for 80% of international air-cargo volumes are expected to be e-freight live by the end of 2010.

StB’s online communities
StB also offers Strategic Partners a modern platform to keep up-to-date with its projects. Fast Travel has opened a Facebook page entitled “Fast Travel: Self-service for airline passengers,” which will update fans about the projects’ latest news and developments. Elsewhere, the BIP has launched a “Baggage Improvement Program” community on LinkedIn. This will include the latest BIP news as well as case studies, specific BIP discussion topics and testimonies.

Strategic Partners are encouraged to use these initiatives to present new developments and products aligned with the StB program.

Stay up-to-date by visiting Simplifying the Business.

 
 
 

IATA Conferences and Events

IATA conferences, exhibitions, and industry meetings provide outstanding networking opportunities as well as an association with the IATA brand, a world-class global endorsement. These events cover areas as diverse as pricing, ground-handling, legal issues, fuel and security, among others, which benefit airlines, airports, travel and cargo professionals, as well as service providers and governments.

Featured events

  • The Annual General Meeting
    6–8 June 2010 — Berlin, Germany
    The Annual General Meeting (AGM) is IATA's pre-eminent event. In addition to fulfilling statutory obligations, formalizing industry positions, and demonstrating airline unity, the AGM provides a focus for emerging industry issues and a forum for members to meet and network.

  • 126th Schedules Conference
    17–20 June 2010 — Berlin, Germany
    With 1,000 delegates from some 300 airlines and representatives of over 200 schedules-facilitated or fully coordinated airports, this semi-annual meeting is IATA's largest event.

Watch for upcoming events!
Revenue Accounting Meeting
14–16 September 2010 — Budapest, Hungary

Aviation Health Conference
28–29 September 2010 — London, United Kingdom

IATA Clearing House User Group Meeting
20–22 October 2010 — Kuala Lumpur, Malaysia

AVSEC World
2–4 November 2010 — Frankfurt, Germany

127th Schedules Conference
11–14 November 2010 — Melbourne, Australia

IATA Commercial Strategy Symposium
7–9 December 2010 — Istanbul, Turkey

Check IATA Events regularly for an updated list of all upcoming events.

Michael Huntington
Manager, IATA Conferences and Events
Tel: +1 450 715 1313

 
 
 
New Strategic Partners

Since 1990, IATA Strategic Partners have been contributing to IATA and the air transportation industry through their involvement in the Strategic Partnerships program.

We are happy to introduce the following new Strategic Partners.
Access the company websites directly by clicking on their logos.

3M   Accenture   AIRDEX
3M Security Systems   Accenture   AIRDEX International, Inc.
Aurion   BioJet   CAE
Aurion Aviation   BioJet Corporation   CAE, Inc.
Certis Cisco   Custom Engineering   Flughafen Berlin
Certis Cisco Aviation Security Pte. Ltd.   Custom Engineering   Flughafen Berlin Schoenefeld GmbH
Fraport AG   Globerobe   ICTS
Fraport AG   Globerobe, Inc.   ICTS Europe Systems
Kam   LARGENT   LifeConEx
Kam Controls, Inc.   LARGENT fuels   LifeConEx
M.R.S   Mechtronix   NTT Data
M.R.S Oil Nigeria Plc   Mechtronix World Corporation (MWC)   NTT Data Corporation.
OPIS   Spencer Stuart   ST-Airport Services
Oil Price Information Service (OPIS)   Spencer Stuart   ST-Airport Services Pte. Ltd.
SwissRe        
Swiss Reinsurance Company        

For a complete list of Strategic Partners, and to learn more about what they offer, please visit our online directory.

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