Saving airlines $6.5 billion in annual costs is no easy task but that’s exactly what the International Air Transport Association’s (IATA) Simplifying the Business (StB) campaign aims to achieve.
Through the effective use of technology and the setting of industry-wide standards, IATA plans to create a more efficient travel experience for both users and providers. There are five core elements to the campaign:
IATA envisions 100 percent ET worldwide by the end of 2007, a move that will save the industry approximately $3 billion. E-tickets cost about $1 to process while a paper ticket can cost up to 10 times as much. Together with an obvious convenience factor and readily-available technology solutions, it makes a case for ET that is hard to ignore.
RFID is viewed as a catalyst for a change and a good focus for baggage management improvements. The whole baggage handling process will become more efficient, fewer bags will be lost and there is the added benefit of enhanced security.
BCBP already have an accepted 2D standard—PDF417—giving not only greater reliability but also the potential to put an entire itinerary on one boarding pass, making it a natural tie-in with ET. Some airlines are considering using bar codes on cell phones for check-in, negating the need for a passenger to carry any paper documents whatsoever.
CUSS is already established and allows airlines to share self-service kiosks. Because carriers no longer need proprietary machines, valuable space is freed up in congested check-in areas. The kiosks can even be located in non-traditional locations such as railway stations or hotels.
Finally, e-freight aims to take the paper out of cargo. By avoiding complex documentation—duplication, poor data quality and lengthy processing times are rife—IATA will save the industry $1.2 billion annually. Currently, every shipment generates an average of 38 documents at a cost of $30 and international travel times have not significantly altered for 25 years. A 2010 deadline has been set for the project.
ET Ignorance
There is no doubting the potential of the StB campaign. However, full implementation requires co-ordination throughout the industry and ground service providers have a vital role to play. Despite this, awareness of the initiatives—and a willingness to adopt them—is not as evident as their importance implies.
“Late last year IATA completed a comprehensive survey with over 400 ground handlers worldwide to gauge their readiness for 100 percent electronic ticketing,” says Bryan Wilson, project director, ET, IATA. “We found a considerable degree of ignorance about ET amongst ground handlers—including the all important question of whether their DCS systems were ET capable. As a result IATA is encouraging airlines to pressure their providers to describe their capability and address any shortfalls. Those ground handlers that don’t make the adjustment may well find themselves with a shrinking client list.”
Ground handlers will need to use an ET-compliant DCS system that has been connected to their airline customer’s ET database. According to Bruno Riesen, chief information officer for Swissport International, the company is “faced with development costs” but admits these are “mostly taken over by the airline,” making the expenditure justified. There is no special equipment necessary for ET though of course some machinery, such as ticket printers, becomes obsolete.
Even though most of the ET processing takes place within a DCS system, ground handlers will need to train their staff to use the ET commands. “Staff will need to be able to understand the concepts of electronic ticketing and then deal with all the situations where they process paper tickets today—that is, checking the validity of ETs, searching for ETs, dealing with no shows and irregular operations,” says Wilson.
“The DCS system provider should provide the necessary explanation of how to use their system for all these situations. Ground handlers may also expect their airline customers to start requesting use of their own DCS system, perhaps through a CUTE connection, so that the handler has full access to the airline’s ET database,” he adds.
Although Swissport hasn’t been involved in any of the ET Working Groups, Riesen believes it will be “a real benefit for a handling agent when airlines aren’t bringing their own hosts to the airport.”
A Shared Experience
Riesen further points out that ET will boost the self-service processes, a growing element of passenger activity and something the industry is keen to promote.
Swissport has been involved in the CUSS Management Group and has embraced the concept, seeing it as an opportunity to add value to its service to airlines. Others, like Globeground are also reported to be in favour.
However, Paul Behan, project manager, CUSS, IATA, argues that most still see CUSS “as a threat.” He continues: “Sooner rather than later, either handlers will have to move to CUSS because their competitors are doing it or their customers are going to demand similar savings.
“The main difficulty ground handlers face is in terms of ownership. They are neither airports who own the place, nor airlines who are the primary tenants. However, due to their large volumes and global reach, large ground handling operations could conceivably invest in large-scale infrastructure to offer CUSS to the masses."
Some training is required. At a basic level, it involves familiarity with several airline applications while at a more detailed level, the ability to change paper stock and re-boot the kiosk is needed. Any other issues should be covered by the vendor’s maintenance and support contract. “The real value here is in service recovery, customer service and customer education on how to use the kiosks,” Behan says.
The Cost of RFID
While CUSS is gaining acceptance, RFID badly requires a charm offensive. At the moment, potential users are wary of the cost involved. An RFID tag is about four to six times as expensive as a bar coded tag and full, worldwide, RFID roll-out will require investment in new infrastructure.
Riesen admits that Swissport is in general agreement with the initiative but notes: “The first installations of RFID, for example in Hong Kong, show that the pay-back for the investment in such a technology is currently five to seven years, which is far too high for our business. The prices for RFID readers and tags are still too high.”
RFID does need global take-up to be cost-effective. Implementation of the technology on an individual basis is not the answer. “As long as the main volume is not RFID-tagged, the improvements in respect of mishandled bags are not major,” Riesen says. “The local baggage is not the problem but the transfer baggage. Therefore, most outstations have to work with RFID tags otherwise the benefit is marginal.”
Vanderlande’s Vincent Kwaks, manager of systems, is more optimistic and believes RFID “will bring new potential and innovation to baggage handling.” Together with several other companies, Vanderlande has established an RFID Test Centre in Veghel and is operating it on a daily basis. “Looking at the calculations made by IATA on baggage process related error costs, a return on investment is achievable on relatively short time scales,” Kwaks says. “The more difficult integration aspects of UHF technology in combination with passive tags are resolved or are being resolved quickly. Also this knowledge is becoming increasingly shared across the industry.”
However, according to Andrew Price, project manager of RFID, IATA, ground handlers have not been involved in any consultation procedures as yet with the exception of IATA Strategic Partners in the AIS (Automatic Identification Standards) and Passenger Services Groups, who have contributed towards those standards that have been agreed. “Ground handlers are a recognized component of the program, but most of the direction to them comes from the airports and airlines,” he days.
Jaak Aendekerk, vice president of information technology, Aviapartner, concurs with this assessment noting that RFID will be mostly airline-driven for passenger handling. “It will require some adaptation of airport structures,” he adds, “which means this might still be a little further away in timing. As far as cargo is concerned however, this is probably more real, as a tag on a ULD represents a smaller relative additional cost than for handling a piece of baggage.”
IATA reports an RFID pilot is essential prior to an industry-wide rollout as current data on costs and hard benefits is insufficient to support business cases either for implementation at individual airlines or at the overall industry level.
The pilot will aim to create a representative network to test and validate RFID technology using various criteria including interlining, diverse geographical representation (assess different radio frequencies), representation from different airline alliances, airport importance as a transit hub and general willingness to consider RFID as the next generation in baggage handling.
Critical Mass
Like RFID, BCBP adoption is largely an airline/airport decision. That said, again IATA’s perception is that ground handlers are aware but slow to adopt the concept. However, ground support will be impacted once BCBP reaches critical mass and handling it will be a pre-requisite of service.
Companies will need to be trained how to handle BCBP, mainly printing and reading the boarding passes, and there may be some new procedures to define. This is likely to be the only investment needed, however.
If fully implemented, StB will generate enormous savings. Notes Aviapartner’s Aendekerk: “We think the work of informing the passenger, which is currently being done at the check-in desk, will then gradually shift towards providing support at the CUSS kiosks, at the drop-off baggage points or at the gate.”
Some areas of the campaign are more advanced than others but all require an industry-wide effort. At the moment, that level of co-operation is hard to come by and ground service providers need to find their voice.
