<B>DOT Clears Tix Codes</B>
<I>Approves IATA Voluntary ID Over Corporate Buyer Objections</I>
By Amon Cohen
The U.S. Department of Transportation has approved the introduction of a global client identification code system by the International Air Transport Association, despite stiff opposition from many U.S. travel managers and agents.
Critics of the system claim it will fatally tip the balance of power between airlines and corporations toward the carriers because of the increased knowledge of client spending patterns they stand to gain.
"My reaction is disappointment," said National Business Travel Association president and Colgate-Palmolive travel buyer Cyndi Perper. "I really feel this is a violation of the right of corporations to privacy of information."
The eight-figure alphanumeric codes, which will be entered on passenger name records rather than physical tickets, will enable airlines to build an accurate picture of corporate clients' travel patterns.
The professed aim of the system is for carriers to pass that information on to clients to allow them similarly to understand their travel spend more precisely, especially as it will enable them to track flown data for the first time. However, although the scheme is voluntary for both clients and airlines, several major corporations, plus the NBTA and various travel agents, fear it may become compulsory and have lobbied DOT not to give the go-ahead.
DOT withheld approval while it examined the issue but finally gave the nod June 1, the same day the system was supposed to launch. All other governments signified their approval earlier in the year. Barring any last-minute appeals to DOT, the scheme now is expected to launch later this month. IATA hopes up to 20 airlines will subscribe to it over the next two years, and that these pioneers will create enough interest for it to be adopted globally.
Several of the protesters have labored under the misapprehension that IATA is planning to allocate identification codes to clients whether they want them or not. The U.K. and Ireland's Institute of Travel Management, for instance, complained in a letter to IATA secretary general Pierre Jeanniot about "mandating" the codes. However, IATA documentation specifies that companies only receive coding if they apply for it formally.
Corporations can apply for up to 1,000 sub-codes to enable them to identify subsidiaries, departments and cost-code centers. Information is gathered through the global distribution systems and passed to the airlines which, in theory, pass the data on to its corporate clients. Each airline receives only details of its own transactions from clients. It does not see transactions that clients have made with other carriers.
Although in its simple form, the data are based on ticketed information, since codes are entered at point of sale, systems can be enhanced to provide flown data, according to Mike Muller, IATA assistant director of passenger services. "If you wanted to make it flown information, the airline could link up with its departure control systems," said Muller. "Some airlines could do that; others would not be tooled up for it."
One Top 100 company in the United Kingdom already is using the system on a pilot basis with British Airways--one of the keenest airline backers of the project--and provisionally is pleased with the results. "It is already giving me a comparison of ticketed and flown information in five countries and that will soon go up to 14," said the company's travel manager, who did not want to be named. "So far it looks like good data. This gives me a feed from the airline that is a lot cleaner than I have had before. At the moment, I see nothing to deter me."
Indeed, the travel manager's only concern is that he will not get a comprehensive picture of his air spend because not enough airlines will subscribe. The issue of confidentiality does not concern him. "They can get most of the data in any case from the GDSs," he said.
In spite of these potential benefits, and support for the code in Europe, the new system has worried several leading business travel managers in the United States.
"IATA has said to me on numerous occasions that this system is voluntary, but these things have a way of becoming mandatory," said Perper, who is director of corporate travel services for Colgate-Palmolive Co. "I wouldn't want to be told that to have a deal with the Star Alliance, for instance, I would have to have a corporate code. What happens if we go out to negotiate and people already know our hand? Shouldn't it be at the discretion of the company to share it? I also don't understand their need for this level of data. We don't like anyone to have that much information about us.
"I might be able to find out whether Procter & Gamble had stepped up its travel to London and ask questions why it was doing that," Perper continued. "Airlines might also be able to combine the data in countries where they don't have antitrust immunity. There is no way of policing this system and making sure that nobody is violating it. You never know who might get their hands on it. Thanks to the Internet, there are whole populations of people out there having problems with their identities being stolen."
Individual corporations that have protested to DOT include PricewaterhouseCoopers, Black & Decker, McDonald's and Morgan Stanley Dean Witter.
"Since airlines currently have the ability to identify a corporation's activity via the ticket designator, why would they need a common universal number other than to share it among themselves?" asked Black & Decker director of travel and meeting services Pete Buchheit. He expressed particular fears that there would be no restriction on how airlines use the data outside the United States and that "there may be a significant impact on discount carriers, which are an important ingredient in the struggle to ensure appropriate air competition levels."
PricewaterhouseCoopers global travel leader Jim Lennon is equally worried. "This opens up a can of worms," he said. "We already have a perfectly good way of capturing our data. There are some advantages, but I am not sure that they outweigh the risks. A universal code would make capturing travel on a global basis easier, but being easy is not always the best if it makes the information too accessible."
Across the Atlantic, the United Kingdom's Institute of Travel Management chairman Ian Hall described the move as "the thin end of the wedge," and wondered who the intended beneficiaries are if it is free for corporations to register, but airlines pay $5,500 to subscribe.
IATA appeared genuinely surprised by the level of opposition to its system. "Corporations want to do deals with as many airlines as possible and this will help them to compare apples with apples, using the same tracking techniques," said Mike Muller. He also believes it will facilitate the hitherto elusive negotiation of deals with alliances, which have found it difficult to combine management information. However, he conceded airlines could share information with impunity where they have antitrust immunity.
On the question of compelling corporations to adopt the code, Muller said, "If corporations don't want to share their information with airlines because they want to be gray about or exaggerate the business they do, I can envisage an airline saying, 'here is the deal if you are completely transparent with us or here is another one if you are not,' but I can't see carriers walking away from a deal altogether."
DOT director of the office of international aviation Paul Gretch waved through approval of the client code proposals, noting they "appear to be in conformity with our substantive policies and concerns. As such, they raise no public interest issues and will be approved." He said the codes were not likely "to lessen competition substantially" and granted immunity from antitrust laws.