Leadership (Abuja)
Ime Akpan
13 June 2008
As the curtain is brought down on paper tickets and airlines embrace electronic ticketing/billing settlement plan from May 31, IME AKPAN takes a look at the implications of non-compliance and how African airlines have responded to the challenge.
May 31, 2008 was the deadline given by the International Air Transport Association (IATA) for all member airlines to migrate from paper ticketing to electronic ticketing (e-ticketing) in order to remain competitive in the dynamic aviation industry.
As of April 2007, e-ticketing global penetration reached 80 per cent and 1,100 interline agreements were established. While airlines forecast reaching 96.6 per cent e-ticketing by December 2007, IATA management produced data that projected 92 per cent as being more likely.
Based on this data and the concerns expressed by a number of airlines, the association decided to extend the deadline to May 31, 2008 The extension, according to IATA, would allow airlines behind schedule --due to late starts, system enhancements and regulatory limitations, example Russia--more time to complete their e-ticketing projects without jeopardising the efforts of airlines that were on target to reach 100 per cent e-ticketing by year end.
It also stated that the extension would allow enough time for all airlines to complete their project without jeopardising the efforts of others. There is no doubt that when IATA extended the time, it took African airlines into consideration.
To help African airlines, IATA and African Airlines Association (AFRAA), fitted the smallest African airline with up-to-date e-ticketing services spring as part of an experiment to look at ways of speeding up implementation of e-ticketing on the continent.
Virtually all the airlines in other continents have complied with the IATA e-ticketing plan. Even airlines in some developing countries have realised the importance of installing e-ticketing systems to meet passenger needs and compete effectively.
However, a survey of African airlines carried out by GBCS Air Transport Consulting showed that very few African airlines have complied with the IATA directive.
A sample of airlines that have either implemented or announced implementation gives some idea of current progress.
Air Seychelles launched a trial of internet ticket sales in 2004 on its Mahe-Praslin route that it later expanded to all routes. Air Ivoire had announced the implementation of online ticketing in December 2006.
In Nigeria , two out of the nine indigenous airlines operating in the country met with the IATA deadline. Virgin Nigeria complied with the directive some days before the expiration of the time while Bellview Airlines did so on May 31.
However, Aero Contractors, another Nigerian carrier operates its own e-ticketing that is not IATA-compliant. With its e-Tranzact platform and the Aero debit card, which it started two years earlier, customers can buy tickets online, select a seat of their choice and then print out a boarding pass.
Another Nigerian airline, IRS, had concluded plans to begin a test-run on its e-ticketing facility.
The e-ticketing strategy which is a modernized system would enable passengers to make reservations, buy IRS Airlines tickets and pay online via the company's website and it would be designed by TIKAERO of Thailand.
The general manager of the airline, Yemi Dada, said the company would partner with Union Bank Plc to issue a 'T-plus,' an electronic purse through which travelers would do all traveling processes and flight tracking. South African Airways had long offered e-ticketing but it will add the use of its own credit card, in association with Net Bank Ltd.
Kenya Airways, which launched its e-ticketing programme much earlier, has increased its passenger capacity for Internet sales.
In April 2007, Ethiopian Airlines implemented e-ticketing and announced publicly its objective of moving more and more ticket sales to the new platform.
However, some airline chief executives interviewed expected to implement e-ticketing by the deadline but there is little sign of any project implementation in many airlines. Sales and Marketing personnel interviewed were particularly keen on being able to offer their customers airline ticket sales using the internet.
Experts say the greatest challenge African airlines have in the world is that of ICT not being an area where they have strong comparative advantage and the impact of ICT on consumer enjoyment of the airline is significant.
Meanwhile, the Geneva-based IATA said it made its last order from seven specialised printers for some 16.5 million paper tickets to meet the needs of world markets until May 31, 2008.
The penalty for non-compliance is that after the expiration of the deadline, IATA will stop the production of paper tickets, so any airline that fails to migrate would have to bear the cost of producing paper tickets by itself.
"Now, if you consider that IATA hitherto provided tickets for all the airlines and now you'll have to print your paper tickets and you have to print a small quantity since it is now individualized, the cost of printing a small quantity is going to be very punitive.
That is the first problem airlines that are not e-ticketing compliant are going to face," explained Raphael Kuuchi, the Commercial director of AFRAA. IATA also added that all airlines that are not able to implement the e-ticketing by the deadline will risk a number of serious disadvantages.
One of such perils is that the airline would not be able to sell through key third party e-commerce providers. Airlines that are not e-ticketing compliant would be at a competitive disadvantage as a result of the continued high costs associated with paper ticket fraud and paper ticket issuance.
Above all, airlines that failed to meet the deadline had lost access to network of over 60,000 IATA accredited travel agents. Besides, they have to produce and distribute their own paper tickets at an astronomical cost and must resign from the billing settlement plan (BSP), which was launched in Japan in 1971 for the purpose of simplifying sales, reporting, accounting and remittance sales proceeds between and among airlines, travel agencies and other allied service providers to enhance convenience and cost effectiveness.
For the airlines that complied, Kuuchi said "e-ticketing has the functionality that links up to your reservation system, links up to your departure control system at the airport, links up to your revenue accounting system at wherever you are processing your revenue.
So, the second thing really is that your operations are completely streamlined. So, revenue seepage through pilferage, through ticketing fraud, etc is minimized if not completely eliminated." he explained.
Other benefits of the facility include:
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