<B>Allies To Meld Tech</B>
<I>Interlining E-Tickets One Small Step Toward Seamlessness</I>
By Jay Campbell & David Jonas
Airline alliances still have not shown their value to business travelers beyond such cosmetic services as shared frequent flyer programs and lounges, but some have made progress toward meaningful technological integration, particularly by interlining electronic tickets.
That the "seamless service" so highly touted by alliances remains such a long way off is understandable, given the ever-changing skyscape of ownership and partnership. The latest alignment to be formalized came late last week as Delta, Air France, Aeromexico and Korean Airlines unveiled their global partnership, SkyTeam.
When it comes to significant technology integration, Continental and Northwest have made great strides in the domestic market, particularly regarding customer service. However, members of the Star Alliance, which launched its information technology organization one year ago, have done some of the heaviest lifting.
United and fellow Star Alliance member Air Canada earlier this month delivered a rare, tangible alliance-based service in launching electronic ticket interlining. The system enables passengers to use a single e-ticket for codeshare flights operated by either airline or itineraries involving both.
American and Canadian were first to interline e-tickets, followed by Continental and America West last fall. Sabena, Swissair and TAP Air Portugal also interline e-tickets in Europe, according to Amadeus. Air Canada and United, however, are the first airlines to connect separate computer reservation system hosts. United is on Galileo, while Air Canada uses its own internally developed ResIII.
For now, interlined e-tickets are available only by booking directly through the carriers' reservation systems. Functionality for travel agents is expected in the fourth quarter and for Canadian Airlines flights operated by Air Canada sometime later this year. United said that more than 60 percent of all tickets it sells are electronic.
Meanwhile, Continental and Northwest expect to make available an interlined e-ticket system in late August for flights beginning in mid-September. "It has been beneficial that Continental already interlines with America West and brings a lot of experience to the table," said Jackie Astleford, Northwest's e-commerce director. She said communication between Continental's EDS host system and Northwest's Worldspan host system is more difficult to achieve than the earlier link with America West, which also is hosted by EDS.
Northwest next will establish e-ticket interlining with TWA and Hawaiian Airlines, and is working with KLM to help the Dutch carrier expand its limited e-ticket system. Discussions are ongoing with United. Apart from coordination with Northwest, Continental also is aggressively pursuing interline agreements and expects to have a system up and running with United by year-end.
While interlining between alliance partners is a start, e-ticketing will not reach its potential until links are created between all of the largest carriers. A few industrywide efforts are underway to make e-ticket interlining a reality.
The Open Travel Alliance, for example, is developing standards to help facilitate e-ticket proliferation. "The OTA has issued an RFI to software writers to do all the tagging for interlined e-tickets," said Jim Young, OTA president and Continental Airlines' managing director of distribution planning. "When a flight is canceled, for example, we'll be able to bundle all e-ticketed passengers together, attach a single flight interruption manifest to the whole group, send it off to a carrier offering an alternate flight and tell those passengers their boarding passes are waiting at that gate."
Meanwhile, IBM is on schedule to deliver an interlining solution this summer, after giving up on the single, industrywide program it began with the International Air Transport Association (<I>BTN</I>, Oct. 11, 1999). IBM is "talking to alliances since there appears to be a desire to have alliance-based interlining first," said Patty Jones, vice president for IBM's travel industry group.
The IBM e-ticket interlining product is part of a suite of airline services announced June 6, under the ConnectEdge brand, including Internet auctions and aircraft maintenance.
Other tech vendors said there is more to come. Sabre said later this year it will enable interlining within the Sabre complex, most likely with a pair of airlines as launch customers. Amadeus said it could easily link e-ticket interlining between LanChile and Finnair, whenever those two carriers see cost advantages.
Beyond interlining, technology vendors feel they have a lot more to offer if only the alliances could first show some stability and then get their respective decision-making acts together.
All the global distribution systems are offering computer reservation system displays that group the alliances together for the benefit of ticketing agents who may not be up to speed on the latest alliance membership changes.
The airlines have shown that a panacea of putting an entire alliance on one host inventory system is nearly impossible, so the GDSs, IBM and others are instead focusing on servicing pieces.
"Progress toward integration is really not that significant because the airlines are having issues about prioritizing spending within the airline versus the alliance," said IBM's Jones.
In terms of alliances offering seamless service to travelers, Jones said, "I would characterize it as very modest progress. Pretty quickly the airlines are recognizing that to move applications to a common set of systems for the benefit of the alliance, when the alliance partners could change, might be really throwing away good money."
"The airlines are doing it piecemeal," said Michael Robinson, senior director of strategic architecture for Sabre. "They're now breaking up what used to be one big bid. An airline is configured by many organizations. If you try to take entire airline systems and move them, you change the whole organization. But if you pull out one part, you can focus on the people, processes and technology to manage the change better."
Worldspan is "involved in numerous RFPs right now" to provide pieces of a hosting system, said vice president of airline sales and marketing Rickey Heath, such as ticketing or fares and pricing.
Amadeus next year will implement hosting for BA and Qantas, reaching most of the Oneworld alliance with the notable exception of American on Sabre. But Amadeus said cooperation between the GDSs for an alliance makes sense.
"I don't think it's necessary for alliances to be on the same host," said Hans Jorgensen, vice president of partner and provider strategy for Madrid-based Amadeus. "Have I any hopes that American or United will come to Europe? I think not--the infrastructure costs for them are almost prohibitive." But, he said, a pipe between Amadeus and Sabre already exists and "I see no reason why we could not service the Oneworld alliance over the twin peak."
Even if the technology is more nimbly sold in pieces, though, tech vendors believe the alliances need to establish commonality among their rules and procedures before linking systems. Most likely, it is the alliances' instability that is holding many back.
"You need to enter alliances as quickly as you can but with an exit strategy in mind," said Mark Abe, vice president of strategy and solutions for EDS' global transportation industry group. "The ones that will succeed are those who can engage and then disengage quickly."
IBM agreed: "You want to be able to unplug from one system and plug into another," said Jones.
Both in conjunction with and separately from global distribution systems and other third parties, alliance partners have focused on the more difficult and highly prized technology links that go beyond interlining.
To that end, Oneworld, which late last week named its management team, appointed Bob McNair, currently general manager of e-commerce at Qantas, as its vice president of information technology. McNair's duties, effective July 1, include coordination of alliance members' IT resources.
Meanwhile, Continental and Northwest have been integrating several technology initiatives and correlating various policies, procedures and airport services. This week, the carriers' joint electronic service centers will be able to check in passengers for flights on either airline. "This will be a soft launch," said Northwest's Astleford. "The real benefit and time-savings will come with e-ticket interlining, especially in light of upcoming codesharing expansion."
The partners have a system up and running, called Interhost, which provides travelers on either airline a boarding pass and baggage tags at the initial boarding point. The next step is an expansion of the system to develop seamlessness among three or more carriers.
Northwest and its partners also meet monthly to discuss opportunities for joint e-commerce initiatives. "There are a lot of synergies in this area and places where we can share costs," Astleford said, citing the availability of KLM seats in Northwest's E-Biz Perks Web-based small business program (see page 26).
Furthest ahead is the Star Alliance, which last June set up a full-time IT organization. The unit, based in Los Angeles and headed by Tim Moore, folded all pre-existing technology committees under one roof and reports directly to the board of member airline CEOs. "We are not involved in all the coding, but handle everything else, including project management, operations oversight and major planning," Moore said. "At first, the focus was bringing on new carriers into the group and getting over the dating jitters. But in the past 10 or 12 months, we have been looking at investing in the integration and developing common products."
Though a cross-alliance e-ticketing interline solution is on the list, the immediate priority is enabling ticket agents to access and use an alliancewide data-sharing network. Called StarNet, the network rolled out in the first quarter and will continue to draw "significant investment dollars" (<I>BTN</I>, July 19, 1999).
"Our strategy for IT is to provide private bandwidth with intelligent gateways on StarNet for protocol conversion, data mapping, etc.," Moore said. "The idea is for agents to transparently navigate through the legacy systems from any workstation. The first network nodes and applications will be ready in the fourth quarter."
Moore said process harmonization is even more of a challenge than connecting the airlines' various host systems. The goal is to arm any agents with the ability to check in passengers for any of the 15 carriers with minimal retraining by minimizing differences on the desktop and consolidating processes and graphic user interfaces. "I don't care which host system you are on as long as you can abide by the standards," Moore said. "In fact, 80 percent of our investment is in middleware."
Nevertheless, there has been some host system consolidation within the alliance as Austrian Airlines moved to the Lufthansa system and Canadian Airlines is being folded into Air Canada's.
A second primary focus is customer service and the airport experience. Though through checkin, baggage handling, lounge access and frequent flyer programs all are to some extent universal, Star is hoping to simplify the airport experience by further consolidating operations. "The challenge in delivering in that area is facilities, then people, the product and then technology," Moore said. "We are looking for places where we can overcome the first three. We already have the technology."
Handheld technology is another area of emphasis for the Star IT group. "We need to put technology in the hands of buyers," Moore said. "That direct sales channel to business travelers is the new push and we will be upping the ante significantly over the next 18 months."
"The Star Alliance deserves praise and it is the one that we need to catch," said Delta chairman and CEO Leo Mullin at last week's SkyTeam unveiling. "We anticipate moving into the number two position and eventually matching, then surpassing Star. They certainly are a worthy competitor.
"We are training all sales personnel to make joint sales calls. We expect these efforts to result in a substantial increase in traffic and revenue."
Delta said its year-old partnership with Air France already has generated incremental revenue near $400 million.
"It can be argued that the alliance contains the primary element to attract corporate clients: network reach," said Fred Reid, Delta's executive vice president and chief marketing officer. "We will have to evolve over time into a single corporate contract arrangement, but that can only come with bilateral or multilateral antitrust immunity."
With that immunity an uncertainty and a few years off at best, Reid said the carriers would continue to offer "effective independent contracts and an integrated product" which includes coordinated frequent flyer programs and airport services.
Like existing alliances, SkyTeam will have to work diligently on technology integration to provide travelers and corporate buyers real value. In fact, the carriers said they delayed the alliance announcement until communication was established between their passenger databases and other internal systems.
Meanwhile, SkyTeam is considering congregating on a single CRS host system. "Amadeus certainly provides superior hosting but we need to evaluate that strategy," Reid said. "There are many ways to make our systems talk to one another."
Case in point, Delta and Air France already have linked their systems to recognize each other's elite passengers. Similar links will be developed with Korean by year-end and Aeromexico sometime next year. The alliance also will develop electronic ticket interlining but does not expect a working system to go live anytime soon.
On Oct. 1, however, all ticket agents at the four member airlines will have direct PNR access, enabling any agent to view passenger records in any of the other systems.