IATA Regulations: Not Just An Issue for Europe

1
IATA Regulations Not Just An Issue for Europe

• Cheryl Hutchinson
• Customer Advocate
• Travelocity Business
• San Francisco, CA
• May 18 , 2004

2
IATA
International Air Transport Authority
What is it? Why is it there? What impact does it
have?
3
What Is It?

• An Airline Trade Association (274 members)
• A Secretariat working for airlines with three
  main purposes
• Infrastructure
• Standards
• Distribution System

4
What Is It?
68 Offices covering 146 countries Based in
Montreal and Geneva

• Fundamentally unchanged from its beginnings
• Full of jargon and mystery

5
They define themselves as .
AIRLINES
IATA
AGENTS
6
Our View of IATA

• Servant of the airlines
• Vehicle to pass and protect rules
• Blurred responsibility and accountability
• Sponge not meat

7
Our View of IATA
Possibly indispensable
However In urgent need of total overhaul and
re-focus
Why? Because it is based on a Principal/Agent
relationship
8
Why Change?

• The Principal/Agency relationship no longer
• exists
• The old distribution model is gone for good
• Airlines are doing their own thing
• They cannot police own members
• The arrival of new players and stakeholders
• Corporates going global

The market has changed but IATA has not
9
Why Change?
They do not pay the agency any more The corporate
does instead Yet They still require the agency
to follow their rules
Outdated, expensive and biased
10
Why Change?
Rules agreed by PACONF Only serious input is from
airlines Need for 100 approval So . no change
But now there is a new catalyst for change
The European Commission
11
And a new player!
AIRLINES
IATA
AGENTS
Client
12
IATA Focus on Distribution System

• Agency Programme - Accreditation
• - BSP
• - Regulation

Badly in need of re-negotiation and reform
13
IATA In Summary

• Performs important tasks
• Totally controlled by suppliers
• Mystifies decision making
• Unable to reform itself

Writes the rule book and polices it
14
How Is IATA Impacting Corporates
The airline industry is not moving quickly enough
to recognise the corporate migration in travel
management!
For example
International Service Centres
15
Case Study
Client X in 38 Countries
Options Local Service every country Single
Service one country
Issue Where will you get the best fare?
16
Ticketing Outside Country of Origin
Turin/Rome/Turin - 404.00 for sale
anywhere Same journey - 90.00 for sale in Italy
only!!
Turin/Frankfurt/Hong Kong cheapest Y
return 653.00 for sale anywhere 553.00 for sale
in Italy only
17
Grey Market Fares
Cork/Amsterdam/Beijing return 6,464 for sale
anywhere 1,985 for sale in Ireland only
Therefore, to ensure clients get the best fare,
local market conditions and ticketing must be
implemented.
18
Cost Implications
Airlines often want separate country
IATA numbers, licences and printers to track,
record client deals.
19
Example Cost Per Location (UK)
Printer/Maintenance 2,430 p.a. Licence 1,320
Safe 1,600 Installation
630 5,980 Plus staff security, training,
inspection etc.
20
One client in 38 countries, albeit serviced in
one country must have 38 national/local
licences 38 printers Staff to issue, report,
BSP/ARC Facilities office space Technology
MIS
Total cost - 603k
21
Single Centre cost 269k
Therefore additional cost to corporate
334k
22
Other Issues
Ticketing - Currency implications Fares -
Combination complications Rules - Fragmented
and arcane Accounting - BSP Anomalies Disputes
- Unilateral charging
23

• Example
• Airline and GDS Fare Guarantees?!
• Guarantee for the GDS quote.
• Reserve the right to charge an additional amount
  if the fare is wrong by the agent.
• No commitment to apply the most advantageous
  combination to the corporate/traveller.

24
Example Lon-Dubai-Jburg-Lon Fare quote -
4,918.00 Business Class
Best combination Same Class - 4,001.00 same
airline
Its legal too!
25
Industry Challenge
IATA necessary but out of date Unwilling to
change itself Inhibiting globalisation Costing
corporates money Blocking best deals
We need to ACTE now!
26
ACTE - Driving Positive Change
A Multifaceted Approach Toward a More Efficient
Market Environment
27
Objective

• Drive positive changes to current IATA
  regulations that result in
• The creation of a Europe-wide BSP,
• Simplified travel agent accreditation on a
  Europe-wide company basis not by location,
• The ability to book, fulfill, settle, and receive
  tickets anywhere within the EU,
• Complete availability of fares and transparency
  on tickets,

28
Objective

• Drive positive changes to current IATA
  regulations that result in
• Binding Service Level Agreements between agents
  and airlines,
• Ongoing formal collaboration with associations
  representing corporate buyers to identify and
  remove obstacles inhibiting efficiency.

29
ACTE Strategies

• Pressure IATA from multiple sources to expedite
  regulatory changes.
• Raise awareness within the industry of the need
  for regulatory change.
• Estimate and communicate the financial impact of
  current IATA restrictions.

30
Pressure from all sides
280 Airlines
31
A Multifaceted Plan of Action
CoCoA
Utilize official IATA channels to effect
regulatory changes Support CoCoA coalition
efforts (ACTE, Paragon, GEBTA)
280 Airlines
32
A Multifaceted Plan of Action
Build influence with key EC
representatives Measure and communicate economic
impact
CoCoA
EC
Utilize official IATA channels to effect
regulatory changes Support CoCoA coalition
efforts (ACTE, Paragon, GEBTA)
280 Airlines
33
Calls and letters to airline executives Raise
awareness financial impact, need for change Get
message to airlines IATA representatives
ACTE Board
Airline HQs
Build influence with key EC
representatives Measure and communicate economic
impact
CoCoA
EC
Utilize official IATA channels to effect
regulatory changes Support CoCoA coalition
efforts (ACTE, Paragon, GEBTA)
280 Airlines
34
Calls and letters to airline executives Raise
awareness financial impact, need for change Get
message to airlines IATA representatives
ACTE Board
Airline HQs
Build influence with key EC
representatives Measure and communicate economic
impact
CoCoA
EC
Utilize official IATA channels to effect
regulatory changes Support CoCoA coalition
efforts (ACTE, Paragon, GEBTA)
280 Airlines
Airline Sales (Local)
Raise awareness of regulatory impact on
corporations Communicate estimated financial
impact Pass message on to airlines IATA
representatives
Corporate Buyers
35
(No Transcript)
36
Andreas Konkel, Carl Zeiss Germany
Mike Perkins, Cisco Systems, UK Mark Avery, PwC,
UK
Ann Cleveland-Oey, Global Travel Manager, Warsila
Corporation, Helsinki, Finland
Nadine Dewart, BMC Software, Netherlands Elisabeth
Koblik, Hosteen, Belguim
Vic Van Den Brandeler, Walt Disney Company, France
37
ACTE Tools to Support Your Efforts

• Find ACTE tools at www.acte.org , click on IATA
  initiative.
• ACTE IATA Perspective, Regulating Efficiency
• List of Questions to ask your local airline
  representatives
• Case study measuring financial impact of outmoded
  IATA regulations use to estimate the impact on
  your organization
• Feedback form tell us which airlines you have
  approached, what was the response, ideas to speed
  change.

38
ACTE Board
Airline HQs
CoCoA
EC
280 Airlines
Airline Sales (Local)
Corporate Buyers
39
Committees Task Forces