European Tickets Cross Borders

<FONT SIZE="+3"><B>European Tickets Cross Borders</B>

By Amon Cohen

European Union companies can now issue and distribute airline tickets to employees in other European countries via satellite ticket printers.

After the International Air Transport Association resolution allowing the use of satellite ticket printers to distribute tickets across European Union borders went into effect late last week, any company will be able to issue tickets for all its EU locations from any of its plants or offices that have an agency location. Similarly, agents will be able to consolidate pan-European accounts in single reservations centers and cut costs by closing smaller offices throughout the EU. Until now, STPs could be used only in the same country as the computer that produced the booking.

Alain Le Doare, Carlson Wagonlit vice president for international information technology, describes the change as "potentially a revolution in terms of marketing and distribution," and corporate purchasers are just as excited. The first buyer to conclude a cross-border STP arrangement could well be the European Parliament, which moves its offices every month from Brussels to Strasbourg and back. It hopes to have the system working by the end of the year.

However, although the technology is there and agencies such as Carlson Wagonlit have lists of clients ready to go with cross-border STPs, there are some severe obstacles. Questions have to be resolved over whether the tickets must be purchased in the host country or the country with the STP, which currency is used, which country's laws cover the tickets and which national Billing and Settlement Plan (BSP) organization will collect money for the fares on behalf of the airlines. In addition, said Baudouin Gillis, Carlson Wagonlit vice president for new distribution channels in Europe and country manager for Belgium, "behind each national BSP is the national carrier, and they are not all ready for cross-border ticketing."

The EU is hampered by not having a single cross-border BSP. Instead, each national BSP operates under its own system with different sets of rules and conditions for payment. Indeed, some BSPs, including France and Spain, do not even allow the use of satellite ticket printers within their own borders.

The European Commission, the executive body of the European Union, is anxious to strip away such barriers to a single internal market and is threatening legal action against what it regards as the intransigence of some of the BSPs.

"It may well be that we will have to take legal action against them," said a senior source in the Commission. "We want to have this going by the time full liberalization is achieved by April of next year."

But Rob Gesinus, IATA director of agency services for Europe, Africa and the Middle East, claimed that the association's decision to proceed with cross-border STPs would clear any remaining obstacles.

"If an agency is based in London and wants to service a customer in Strasbourg, it will be able to," he said. "We will be issuing the information to BSP offices. We don't see any problems other than teething troubles that will probably be more on the technical than the administrative side." Gesinus said tickets would be issued in the currency of the issuing agent's location.

BSPs are likely to encounter significant pent-up demand among multinational companies, such as Inter Ikea Group. The company, which handles the marketing, design concepts and treasury for the Ikea chain of furniture store, coordinates all its travel through its headquarters in Waterloo, Belgium. But it also has a large office in Delft, the Netherlands, and smaller ones in the United Kingdom and Poland. Employees who regularly travel between Waterloo and Delft carry air tickets for other staff members or leave them at Schipol Airport. Tickets for London and Warsaw are sent by courier, but that can be done only if time allows.

The obvious solution, said Inter Ikea travel services manager Yves Galimidi, would be to install STPs in Delft, London and Warsaw. "Technically, it is really easy to do; it is just a question of rules and procedure," Galimidi said. "We asked IATA about this last year but were told it was legally not possible. Consolidating properly will allow us to have a higher volume so that we can negotiate better deals with the airlines."

Carlson Wagonlit also claims to have a string of clients champing at the bit for such services. "Clients are showing interest here in Brussels, where we have a lot of European headquarters," Le Doare said.

However, not everyone is convinced that cross-border STPs are a panacea. Piet Stokman, European purchased travel services manager for 3M, thinks that by the time the system has cleared all the necessary legal hurdles, STPs will be obsolete, having been superseded by self-booking software and electronic ticketing.

But Carlson Wagonlit U.K. director of development and marketing Toby Joseph said that STPs were an "engine for change" because they were provoking alterations in legislation that are vital for cross-border electronic ticketing.

"This will enable true consolidation of an account through a single European call center, which will lead to greater productivity and in turn drive down costs per transaction," he said. "Having a single center will also enable easier consolidation of statistics and measurement of performance, and we will be able to apply the latest technology to all markets simultaneously. For suppliers, it will help ensure greater compliance, leading to identifiable shifts in market share, and therefore they will be able to offer better deals to the client."

Joseph acknowledged that agencies would have to work hard to prevent loss of local knowledge, just as they have done during national consolidations. But, he said, language will not be a problem; he pointed to several travel companies that have successfully consolidated their reservations centers in one European location, such as American Airlines in Dublin.

Fare Play?

Another tricky question to be resolved before the full impact of cross-border STPs is understood is whether travel agents will be able to source all their purchases from the EU country that offers the cheapest fares. Because most national carriers offer lower fares outside their home countries, could Shell, for instance, buy all its U.K. employees' flights with British Airways through its offices in the Netherlands, or even in Greece?

It sounds too good to be true, and probably is. Le Doare compared the situation with that of the United States where, following deregulation, agents found they could save fortunes by buying, for instance, all their United Airlines tickets from an American Airlines hub, where United offered more competitive rates than in its own hubs. But once the carriers wised up to this trick, they quickly eliminated such regional price differentials.

Nevertheless, there could be room for some maneuvering in Europe. "We will exploit every legal possibility to bring down prices for our clients," Le Doare said. But even without the possibilities of fare manipulation, the potential of cross-border STPs seems enormous for companies consolidating across Europe, he said. "For implementing anything on a European basis, having a single European center is the obvious solution," he said.