Welcome to the XIIth Annual Conference

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Welcome to the XIIth Annual Conference

• 29th 30th October 2003
• Crown Plaza, St James
• London

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Mr Ian Nurdin

• Business Travel Manager Nestlé

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IATA WHAT VALUE?
The impact of IATA on Corporate Purchasing
IAN NURDIN BUSINESS TRAVEL MANAGER NESTLÉ UK
LTD VICE-CHAIRMAN - ITM
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TODAYS PRESENTATION - itm Institute of
Travel Management - Industry changes - IATA
value to the Corporate?
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4,350 business travel buyers and suppliers 95bn
(150bn, 140bn Euro)
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INDUSTRY CHANGES - SSR and on-line booking
tools - Outsourced Travel Management -
Airline consolidation - GDS deregulation -
GDS bypass Direct Bookings - Farewell to the
TMC? - And IATA?
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IATA WHAT IS IT? - International Air
Transport Assoc. - 274 members - 96 of all
operations - Agency Programme - OPEC and IATA
only legal cartels?
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KEY ELEMENTS - ACCREDITATION - Agent gets
licence to trade credit facilities -
Airlines get a recognised outlet at zero
cost - A unique code number giving global
recognition - Travel Buyers know Agent meets
standards
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KEY ELEMENTS - BSP - Agent gets neutral
ticket, reports sales, remits net -
Airline gets sales reports, remittance and
data - IATA administers system paid for by
airlines - Agent can provide travel buyer with
management system
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KEY BENEFITS - AIRLINES - Prime distribution
system, - Low cost, little or nothing to do
- Reporting, remitting, data all
common - Guaranteed cash flow and low bad
debts
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KEY BENEFITS - AGENTS - Licence that adds
value - 1 agreement for 250 airlines - 1
set of documents, 1 remittance - Gains
extended credit facilities
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KEY BENEFITS TRAVEL BUYER - Trust the
brand - Access to airlines - Management
System
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IATA agreement was a partnership that benefited
all

• Airline
• Neutral set of harmonised rules
• Safe system due to agency accreditation
  financial guarantees
• Simplified accounts due to BSP
• System retains control of agent activity
• Tariff system protects yield management

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IATA agreement was a partnership that benefited
all

• Agent and Corporate Buyer
• Neutral set of rules
• Airlines relied on agents
• Competition between airlines
• Simplified accounts due to BSP
• Offered buyers a choice of carriers prices

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BUT THE HISTORICAL MODEL IS BROKEN!
AIRLINES Declining revenues, Rising
operating costs, Increased competition
from low cost carriers TMCs Falling
revenues due to reduction in commissions, must
globalise to serve multinational clients needs

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AND FOR THE CORPORATES - Shift of travel
department from profit to cost centre due to
reduced commission. - Increased costs must
pay service fees to TMC. - Pressure to reduce
cost of travel. - Must compete effectively in EU
market.
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ACTIONS WE CAN TAKE - Consolidate travel
operations along regional lines - Leverage
multi-national spend volume to negotiate
regional contracts - Leverage on-line
corporate booking technology across regions
- Access lowest fares regardless of distribution
channel.
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• PROGRESS NOT HELPED BY IATA REGULATORY
  LIMITATIONS
• Country-specific BSPs Technology exists to
  manage with a single BSP
• - Multiple Market operations not helped by
  IATA Ticketing and Licensing rules

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SO WHAT ARE WE DOING ABOUT IT? - Meeting at LCY
April 2003 - Invitation from IATA to present
at June 2003 Conference - Unique
collaboration between TMCs and Industry
associations
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PRESENTATION TEAM

• Tom Stone Paragon Partnership
• Bernard Harrop GBTA
• Marilyn Clifton ACTE

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IATA resolutions increase Corporate costs

• Higher than necessary operational costs
• Higher fares due to tariff regulations

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Complexity increases cost of doing business for
Corporations

• IATA ticketing and licensing rules
• Multiple market operations
• Airline administration

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1. IATA ticketing and licensing rules

• Ticketing requirements / Licensing rules / STP
• Application varies by airline / by country
• -------------------------------
• Restricts development of true European operations
  
• Limits operational efficiencies economies

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2. Multiple market operations
European Example
National Reservation Centres
National Fulfilment Centres
Customer Contact
Back Office
B S P
Change needed from this
To this
Host Reservation Centre
Customer Locations
Distribution points - clients or POD
Host Fulfilment centre
Back Office
Euro BSP
One Telephone Number
Back Office
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3. Airline administration

• E.g. Agency Debit Memo
• Over 55 are less than 50
• Ave. between ticket date and ADM date 175 days
• Ave. time to issue, submit receive 24 days

Source American Express 2003
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Impact on cost of operations

• Cost to European
• Corporate Customers is
• over 1bn
• through inefficient processing

Source Frontier Economics Sept 2001
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Dear IATA,

• Eliminate need for country-specific BSPs and
  implement a pan-European BSP
• Standardise IATA accreditation requirements
  across Europe
• Remove cross-border booking and ticketing
  restrictions
• Change the rules about STPs modify the tariff
  structure to enable standardised faring
  regardless of booking or ticketing location

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PROGRESS REPORT - Presentation well received
- Positive feedback - TBC Low value ADMs
to be eliminated? - Involve the
Corporate - the relationship has
changed!
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THE EC AND IATA - Accreditation - BSPs
- Access to fares Source BTW August 2003
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IATA WHAT VALUE?
The impact of IATA on Corporate Purchasing
THANK YOU FOR LISTENING! ENJOY YOUR CONFERENCE!