Interview: UATP CEO Ralph Kaiser

To benefit issuers, merchants and corporate customers, Universal Air Travel Plan this year completed a multiyear modernization of the guts of its technology. UATP president, CEO and board chairman Ralph Kaiser said the technology changes were "another big jump forward" for the world's first charge card, which debuted in 1936. "The last such change was when we moved from paper to electronic," he noted. Kaiser recently spoke with Business Travel News payment and expense editor Mary Ann McNulty about the impact of the tech upgrades, new issuers and growth expectations.

What is the impact on your customers of all your tech initiatives—moving to Sita technology, rebuilding your acquirer network and launching the new billing system?

We cut over to Sita technology in May of this year, a little later than we wanted due to a delay, but it was a smooth transition. Earlier we rebuilt our acquirer network, ATCAN, for transactions. We modernized it and leapfrogged from 10-year-old technology to today's technology to provide more options for different types of transactions and points of sale. Now we're fully capable of doing all kinds of mobile, kiosk, onboard and other points of sale transactions. We also built a proprietary billing system called DataStream. It's a turnkey system that allows any air carrier to become a card issuer with no upfront costs. It used to be that airline issuers had to build their own billing system or buy one. Now we give a system to an airline issuer. It's removed a huge barrier to entry to airlines that didn't have the time or funding to build or buy a billing system. They don't pay for it until they start using it—and then on a per transaction basis. They don't pay for setup, implementation or consulting. We do all that. It's multilanguage and multicurrency so it works across borders—meaning that a U.S. carrier could issue cards in another country and it could still be invoiced through their system, and vice versa. It's made a huge difference. All the new carriers and shareholders we've signed in the last two years is because of that system.

Have any of the upgrades impacted corporate reporting?

DataStream is our proprietary reporting system that takes the charge feeds from the Sita system and allows airlines to send statements to their corporate customers. Two other products that go with DataStream—DataMine and DataView—allow travel managers and CFOs to slice and dice the trips to see citypairs, cost centers and Level 3 data in a dashboard format. We studied what was out there, what corporations wanted and created the last two reporting systems.

How many of your issuers are offering the reporting components?

Gol is using DataMine extensively. We launched in beta with a couple carriers in 2011. Now we're in production with El Al, Aeromexico and Etihad. It's going to be online soon with Qatar Airways and Malaysia Airlines.

You launched in China a few years ago. What are you doing there today and what have you learned?

We've been in China three years now and are very happy with the experience. The whole corporate card idea is new to the entire market—to airlines, companies and travelers. We made all the Chinese carriers merchants and worked with GDSs and travel agencies to build the market. UATP has been kind of the first movers in China on this with two issuers—China Eastern and Shandong Airlines. Both are growing in the market and putting corporations on their programs now. AirPlus also has a marketing partnership with AirChina, so in effect there are three airlines involved with the UATP network there. There's a lot of transaction volume, but in China the fares are not as high so the dollar volume is not as high as in the United States and Europe.

What other new markets have you entered this year?

We just launched with Etihad and we're about to launch with Qatar. Those are two premium carriers with very ambitious growth strategies. Again, we're in there at the foundation, building out the base of the market. We just signed Oman Air and Hala travel agency to accept UATP. We expect to see big growth there because unlike the Chinese market, ticket values in the Middle East are significant.

There is a lot of long-haul, premium business travel that goes through the Middle East to Europe, Down Under and even to the United States. If you look at the route maps for Etihad, Qatar and Emirates you can see that they go everywhere now and they're adding new destinations every month. They're trying to make the Middle East—whether Doha, Abu Dhabi or Dubai—more of a hub alternative to the traditional hubs in Europe of Paris, Frankfurt and London. They're trying to move some of the hub traffic to the Middle East and putting a lot of competitive pressure on Europe's big flag carriers such as Air France, Lufthansa and BA.

Where do you see your growth coming from in the next year?

Our biggest market is Europe, Middle East and Africa, and truthfully Europe. We've seen a bit of a slowdown in Europe with the state of the European economy and the eurozone. Our transactions are actually up globally, but some of the volume is depressed because of foreign exchange. The U.S. dollar is appreciating; year-over-year through July, the dollar gained about 14 percent against the euro so that changes our volume numbers. Our volume is flattening out a bit, even though it will still be $13 billion to $14 billion in total.

We're seeing a lot more transactions in Asia and China. One of our new issuers, Aeromexico, has a very big program expanded beyond just the Mexican market. We expect to see growth in the Middle East, and the U.S. market continues to be strong with the merged United and Continental programs, Delta post-merger with Northwest, US Airways and American.

About three years ago your board approved a plan to add hotel and car rental merchants to your network. What's the update on that?

Initially we launched for LaQuinta, Wal-mart and American Airlines as the issuer—to prove the concept. It's worked well and there is volume with those groups. We haven't pursued a global, all-in hotel strategy. As difficult as airline system integration is, we found that integration with hotel payment systems is much worse. They're far more fragmented; there are a lot of different types of transactions and multiple transactions in one booking. We weighted that investment against corporate demand and right now we don't have a huge corporate demand for it.

A lot of corporations are willing to put air on UATP and then have another T&E product for non-air. In the case of AirPlus, they combine their own MasterCard and Visa offering with a UATP offering for one consolidated statement. We're looking at doing similar things with outside providers that would bring in a hotel or car rental transaction to a UATP bill through co-mingling of data. It would be a virtual transaction and would appear as a UATP transaction on the bill. And we're looking at just having a third-party provider take data from another card and funneling it to our statements. ... taking the non-air spend and the air spend and combining it on one statement as an offering to enhance the UATP card.

If any airline or company comes to us and says, 'We need to have Marriott or Hilton for our corporate customers,' we'll certainly do that. But we don't just want to build it and hope people take advantage of it. We want to see some demand. We have so many other positive things going on; we need to rank what will be best for the ownership group and the network.