FedEx Builds Worldwide STP System

<H1> FedEx Builds Worldwide STP System</H1>By Stefani C. O'Connor

<I>Memphis </I>- After more than 18 months of wrangling with how to handle its international travel business in a faster, more cost-efficient way, Federal Express has begun deploying a network of satellite ticket printers in the United States, Europe and Asia.

The plan kicked off last week with installation of an STP at FedEx's Memphis headquarters. STPs are expected to be operational in the company's major hubs in Brussels and the United Kingdom on Oct. 2, and two or three Asian sites will come online in November or December.

Stephen Waring, FedEx's managing director of corporate travel services, sees STPs popping up overseas at a brisk pace: "I would say within a year, we would have 10 in Europe. With Asia, we're probably going to start with Singapore, Hong Kong and Tokyo and we'll probably expand from there to about 10 locations, perhaps Australia, the Philippines, Korea."

The move marks a significant step forward in an effort that the delivery giant began in January 1995 to improve the agency services contract for its approximately 1,000 non-crew frequent travelers. The creation of the STP network is being facilitated through a new two-year, transaction fee-based contract with SatoTravel for managing $10 million in international air expenditures. FedEx pulled that piece out of the agency services contract for handling its $40 million air volume previously held by American Express, and then gave the incumbent agency a separate contract for the rest of its business

Because the airline-owned Sato has its own settlement plan worldwide, it has not had obstacles faced by other agencies, such as the one removed last month barring cross-border ticketing via STPs in Europe. In August, the International Air Transport Association began allowing use of STPs to distribute tickets across European Union borders. Previously, only STPs in the same country as the computer doing the booking could be used (<I>BTN</I>, Aug. 5). There is no such arrangement currently between the Airlines Reporting Corp. and the European bank settlement plans.

The Sato settlement plan is separate from but similar to the ARC plan used by all other U.S. agencies. Both report and settle air sales through the National Processing Center in Louisville, Ky. Additionally, the cycles for reporting and remitting funds to carriers are identical. It differs in that Sato owns its plan.

International air sales also are processed through the Louisville center. As SatoTravel president and CEO Michael Premo explained, "Under IATA classifications, we are neither an agency or an airline; consequently we own our own ticket stock. We don't file our sales through bank settlement plans overseas. We're not required to. Our activity with government accounts over the past several years has been de minimis so far and is likely to remain that way."

This appears to give Sato a significant advantage over other agencies that must deal with multiple bank settlement plans when facilitating business travel internationally.

"Despite the fact that the bank settlement system has been seen as an obstacle to cross border ticketing, there is no reason it should be," Premo said. "If it requires a travel agency reporting data through the German bank settlement plan, for instance, what's the big deal? Meanwhile we don't have to do that. But any travel agency should be able to do that."

While that is certainly technologically feasible, Sato's unique position makes it far easier for FedEx to put its plan into effect.

When Waring first put out RFPs to mega agencies a year and a half ago, FedEx was intent on taking advantage of the new technologies then being promised.

"We were looking for automated request, automated reservations and an automated expense reconciliation system," he said. "We were really looking for a comprehensive travel package, front to back end. When we got down to it, we found that none of the products that we had reviewed or seen were even out of beta testing, or they were still in the developmental stages. So we postponed a decision about what we were going to do until the travel companies brought some of these things to market for about nine months."

Waring said the company decided not to go with a 24-hour system at the on-site, and opted instead to funnel its reservations through Sato's Sterling, Va. res center. From there, the tickets will be queued to the STPs overseas.

"What we've been lacking internationally is a centralized reservations system," Waring said. "Normally, if our people are in a foreign country, they'd have to call the United States to make a reservation or e-mail to our U.S. operation in Memphis, where American Express has an on-site."

FedEx initially will use the agency's Eagle automated booking and ticketing system, and expects to make use of SatoTravel's Navigator self-booking software, which Sato plans to roll out by year-end.

"FedEx is obviously a very automation-intensive company," said Premo, "but a good chunk of its business is done via e-mail, so we'll be tying into the FedEx e-mail network, as well as looking at ways to put Navigator into the FedEx system."

For the present, Waring has high expectations for time and cost savings.

"I see travelers having real-time access in their time zone from anywhere, whether that be through e-mail or through a telephone conversation with a travel specialist. They've not had that in the past, so I see that as a big benefit to the travelers.

"I see there's a big benefit to the company as well," Waring said, "in that we were unable to provide timely service to travelers' emergency travel needs, meaning there wasn't enough time for them to make the request to Memphis, for us to turn around and get a ticket to them to travel. They would have to procure those locally and forego discount arrangements we might have with airlines. Now, we'll be able to take advantage of discounts a greater percentage of the time.