World Telecommunication Day 1999 |
Topping the $1 trillion mark on global revenue scales, telecommunications - the world's third-largest industry - is no lightweight. But it is still less than half the size of travel and tourism, the world's largest industry, weighing in at $2.5 trillion for direct personal and business travel alone in 1999, according to the World Travel & Tourism Council. If one adds the indirect effects of travel demand, the travel and tourism economy will generate $3.5 trillion and account for 11.7 percent of world gross domestic product this year, as well as 200 million jobs.
Travel and telecommunications still have a lot in common. Both are behemoths being transformed by changes in their business environments: deregulation, privatization, globalization, increased competition and more demanding customers (both corporate and consumer). Increasingly, travel is turning to telecommunications technology to meet these challenges.
Of course, the travel industry has been using networks and other technology for a long time. Airline reservation systems have been around for more than 20 years, with massive volumes of data stored on traditional mainframes. Hotel chains and car rental agencies have also come to rely on computer networks to conduct business. The recent move toward airline alliances, such as the Star Alliance and OneWorld, would simply not have been possible without computers.
But the Internet, says the industry forecaster Jupiter Communications, ''has had a huge impact on the travel industry, perhaps more than upon any other business.'' In 1999, Jupiter estimates that on-line travel bookings in the United States alone will reach $4.2 billion, growing to more than $16.6 billion by 2003. In Europe, growth is expected to be even more dramatic, leaping from 1.48 billion euros ($1.44 billion) this year to 18.59 billion euros by 2003. Consequently, Jupiter sees everyone in the travel business ''scrambling to retain market share and redefine their roles in the largest consumer industry in the world.''
The airlines are scrambling more than most, because they have the most to gain - or lose. Last year, the International Air Transport Association processed $125 billion worth of airline tickets, representing 80 percent of all air travel in 1998, says Michael Feldman, director of IATA's distribution system for passengers.
Between 20 percent and 25 percent of airline costs are spent on ticket distribution, primarily through travel agents. Since 1995, the airlines have been cutting agent commissions and seeking alternative channels of distribution, such as the Internet. An on-line sale saves an airline almost half of its distribution costs.
Electronic ticketing is another cost-saving innovation made possible by technology. Call it the travel industry's equivalent of the cashless society. By removing the need to give a traveler a specific document, an airline lowers its passenger-handling costs and improves customer service, explains IATA's Mr. Feldman. Passengers also benefit because e-ticketing eliminates the risk of lost or stolen tickets.
''The passenger still has a piece of paper with information and still has to show some form of personal identification, but enjoys greater ease of handling,'' says Mr. Feldman.
The IATA has been working with a number of technology specialists to encourage e-ticketing in the industry. One stumbling block has been the need to develop an e-ticket that will be accepted seamlessly when a traveler has to change airlines. As takeup rates start to equalize, this problem will be resolved, say industry analysts.
In the meantime, e-ticketing has taken off rapidly in the United States. Jean-Claude Guez, an Andersen Consulting partner with responsibility for the passenger travel industry in Europe, says that United is a leader in the U.S. market, with e-tickets already accounting for 50 percent of its domestic sales.
In Europe, British Airways is distributing e-tickets through airport kiosks. ''You get your boarding pass by inserting a mag strip card [a credit card or a BA loyalty card] into the kiosk,'' explains Richard Whitaker, IBM's marketing and communications manager, travel and transportation industry worldwide.
In September, Swissair finished testing its combination e-ticket/e-passport program called Fast Track. Using a special smart card, a select number of Swissair customers at Zurich airport were able to avoid check-in lines completely. ''If you flew from Zurich to London, you would go directly to passport control while a device would read your smart card in your purse or pocket,'' explains Erica Dubach, a technology consultant for Atraxis, Swissair's technology partner. ''We call it 'touchless technology.' The emigration officer would see your name on his or her computer and check your passport. Then you would proceed to the Fast Track counter, where your boarding pass and previously arranged seat assignment would be ready.''
The advantages for the passenger are convenience and seamless care. The airline benefits from lower processing costs and increased punctuality. Similar systems are being tested for SAS corporate flyers and on some Swiss trains.
Experiments are also being done with miscellaneous charge orders, or MCOs, a big factor in business travel, according to Mr. Guez. Because business travelers change their itinerary three times on average between the first order and trip completion, a company using a combination of e-tickets and e-MCOs can cut the cost of travel management substantially. ''At Andersen, we cut our own MCO costs in half, from $60 to $30 per trip,'' he says
Remote check-in is also becoming a reality. Arriving at an airport or en route to a hotel, travelers can be handed the plastic key cards to their hotel rooms, having transmitted the relevant information via mobile phones, personal digital assistants or other network appliances. Claude Guay, global executive, marketing and business development, IBM travel & transportation, says this would be a good idea for cruise lines as well.
In Europe, the GSM mobile phone standard is paving the way for many innovations for cellphone-carrying road warriors. Motorola has a two-slot phone that accepts a Visa card in one slot so that a traveler can pay for tickets or other travel expenses ordered on-line. IBM is working with Nokia and the global system Sabre to develop Web access to bookings from GSM mobile phones.
A coming distribution channel will use speech recognition. ''You may start by ordering your ticket on a PC, then modify it by phone,'' says Mr. Guez, adding, ''The major obstacles to growth in the travel industry are not technology per se, but the physical limitations of airports and air corridors.''
Claudia Flisi