Simplifying the Business - Final Destination
The move towards paperless travel, which began in 2004 with electronic ticketing, will culminate in IATA’s e-services project
With a benefit to the industry of US$2.9 billion in savings and the promise of additional revenue opportunities, IATA’s e-services project is significant in its own right. However, e-services has implications for the industry that go much further. As Philippe Bruyère, IATA’s Global Head of Passenger, puts it: “E-services will bring a new way of interacting for airlines—with passengers and with partners. The airline product can be looked at with fresh eyes, the pricing structure reviewed and the journey experience enriched.”
The e-services project will drive the adoption of the electronic miscellaneous document (EMD). This will replace the final bits of paper in the airline reservation system, dealing with matters such as excess baggage, special needs and lounge access.
Paper tickets have already been consigned to history. Magnetic-stripe boarding passes will soon follow and remaining paperwork will disappear as airlines and global distribution systems convert to EMD. The vision of e-travel—paperless travel for passengers and airlines—will become a reality.
The IATA Board has set a mandate for 100% industry capability to issue EMDs by the end of 2012. By the end of 2013, the Board has agreed that there needs to be 100% usage in IATA systems. Standards are already in place, having been agreed as far back as 2007. The past couple of years have been spent confirming the business case and ensuring airlines were in a position to offer e-services.
Unbundling the product
Existing processes will be made more efficient by the new project, but the real impact comes from the way it allows airlines to unbundle the product, isolating certain elements if desired, or recombining them in unique ways.
“A passenger may not want to travel business class, but perhaps requires lounge access or a limousine service,” suggests Bruyère. “Airlines will now be able to offer this not only through their website, but also through travel agents. For passengers this means that everything can be done in one place, at one time.”
Airlines will be able to interline the services, allowing partners to interact across the spectrum of products, facilitating a smooth travel experience for passengers. This could have enormous commercial appeal.
Low cost carriers (LCC) already make up to 20% of their revenue through ancillary services, but such revenue streams have been largely underutilized by network carriers.
Whereas a few years ago the major airlines had to launch a low cost subsidiary to compete with the LCCs due to the rigid nature of their legacy systems, this obstacle has now largely been overcome. They will now be able to offer the flexibility of LCC services together with all the benefits that come with size—such as hub access, enhanced networks, better flight times and frequent flyer miles.
Importantly, e-services will build on the technical know-how gained through the other Simplifying the Business (StB) projects. StB, of which IATA e-services is part, focuses on a thorough understanding of integration issues as well as any legal requirements. The aim is to benefit all parties involved in the travel process—from passengers to airlines to GDSs. Tangible benefits across the industry supply chain pave the way to deliver large-scale change.
The real challenge, says Bruyère, is ensuring the e-services gains the visibility required to make the deadlines feasible. “We need to ensure that airlines, GDSs and ground handlers understand exactly what they need to do to implement the standard and are mobilized to deliver the vision by 2012,” he notes.
IATA is now finalizing memorandums of understanding with those solution providers that will work on enabling the project. Early adopters are already onboard and the aim is to have 10 airlines issuing e-services by the end of the year.
Finnair is a launch customer and Pia Viljaniemi, Director, Direct Channels, Commercial Applications & GDS Distribution, says the airline is happy to lead the way. “At the moment we use paperless miscellaneous change orders but then we can replace them all with EMD,” says Viljaniemi.
“EMD is a great product because it can be available in all online and offline channels, so no more ATB printers are needed. We’ll use EMD for change fees, gift vouchers, deposits in group bookings, and excess baggage.”
Further information on the e-services project will be presented at the IATA annual meeting in June. By this time, the initial work should have yielded a clear roadmap for all airlines to begin implementation.
The Benefits of e-Services
- Lower costs and increased revenue resulting in an industry benefit of between US$2.4 and US$2.9 billion a year
- Simplified revenue accounting and back office processing. Airlines will be able to track and attribute revenues faster and more accurately
- Opportunities to sell more services, such as lounge access or in-flight services, through new distribution channels, including travel agents and mobile phones
- Real time access to the status of all documents, not just electronic tickets
- More services. A paperless environment enables a whole range of optional services–from fast track security to wifi access to a limo home
- These services can now be offered across journeys, even those that involve multiple airlines, making life simpler for passengers travelling on alliance or interline partners
- Easier access to services. Airlines and travel agents can sell these services quickly and easily
- Just as electronic tickets made ticketing changes easier, e-services will make changes to optional services easier
Malaysia achieves platinum status for BCBP airports implementation
IATA’s bar-coded boarding passes (BCBP) project will conclude at the end of 2010 with all IATA members compliant. Alongside the $1.5 billion in savings, BCBP enabled new options, such as mobile boarding passes. “It is not only about getting rid of the magnetic stripe,” affirms Philippe Bruyère, IATA’s Global Head of Passenger. “BCBP leveraged e-ticketing’s paperless platform to give passengers more convenience—so they can get their boarding pass online, on their phones, at a kiosk or at a check-in desk.”
Four Malaysian Airports—Kuala Lumpur (KLIA), Penang, Kota Kinabalu and Kuching—have been awarded platinum status by IATA for their implementation of BCBP.
This means all the IATA member airlines operating at the airports are issuing 2D bar coded boarding passes. The gateways are also mobile-enabled, meaning they are truly bringing paperless travel to passengers.
“These services are imperative to ensure that the aviation industry’s needs and customers’ demands are met,” says YBhg Tan Sri Bashir Ahmad, Managing Director of Malaysia Airports (MAHB). “The collaboration between the airport operator and all the airlines operating at these airports indicates the synergy and sharing of common objectives.”
Malaysia is no stranger to StB projects. It is also part of the e-freight network and more than 60,000 customers a month use Common-Use Self-Service kiosks at KLIA. MAHB has also played an important role in piloting the crucial Baggage Improvement Program.
“To be one of the leaders in such initiatives gives us a competitive advantage and niche, especially in this region where the airports are highly competitive,” says Tan Sri Bashir. “It also shows confidence in and recognition for KLIA from IATA, for our continuous improvement effort for efficiency as well as its potential as a leading hub in the region. “The StB initiatives result in industry-wide action and focus on a mutually beneficial approach for everyone involved,” concludes the MAHB Managing Director.
“It could save the industry up to $14 billion a year. The airports, airlines, air cargo industry and passengers will be able to enjoy seamless processes, greater efficiency and more control. StB saves time and increases accuracy.”