COMMENT: WTM and IATA
World Travel Market (Monday 10-Thursday 13 November) comes at a time when VisitBritain has just released the latest inbound tourism figures which show in the three months to September 2003 visitors to the UK from North America are beginning to arrive again. September alone saw a 14% increase compared to the same month in 2002. Visitors from Western Europe during September also rose by 7% on the previous year, continuing on the 6% growth in August. WTM itself has increased in size by 5% for its second year at ExCel and now has a record 189 exhibiting countries, an increase of five more than last year ”Abu Dhabi, Albania, Belarus, Bonaire (Netherlands Antilles) and Vietnam.
Once again a major discussion highlight will be ExCel itself, its location and its accessibility. For reasons best known to themselves the organisers have failed to promote the Silverlink north London services to the site, suggesting that we all try and squeeze onto the DLR or walk from the Underground. Bookings indicate that exhibitors are at least prepared to give it a further go.
Another major topic for conversation is possible litigation concerning two organisations that are not even at the show but are an essential component of the air travel business, without which the industry, as we know it, could not flourish. Whilst surface transport and ferries have their role to play it is the airline business that supplies the means of fast long distance travel.
IATA (International Air Transport Association) represents some 273 airlines throughout the world including all the established long haul international carriers. OAG, a British company (and one time known as ABC), is a major supplier of flight information to the travel industry with over 900 airline clients.
OAG has lodged a complaint to the Competition Directorate of the European Commission in that IATA is behaving anti-competitively in the role it is playing in the distribution of scheduled flight information within the airline industry. This covers the agreements, arrangements and practices within IATA, contending that these are in breach of Article 81 of the EC Treaty.
Currently, individual airlines provide their flight schedules through a variety of distribution channels to consolidators and intermediaries (such as OAG) who create their own data products and services, which are distributed to airlines, businesses, passengers and the travel industry. However, IATA is establishing an industry-wide consolidation service, known as the Schedule Reference Service (SRS), designed to provide what it claims is a single, neutral industry schedule database for the collection, verification and onward distribution of schedule information for the whole air transport industry. OAG says that this monopolistic channel of supply will have serious anti-competitive consequences as IATA, through its member airlines, will be able to control the way the data is distributed. The loss of competition would inevitably increase prices, stifle technological innovation and reduce choice for users of airline information.
IATA has entered into a Marketing Agreement with OAG's principal competitor, US-based Innovata, which will operate the SRS service while IATA is responsible for marketing and promoting the service to the airlines. OAG's Complaint states, "OAG strongly believes that IATA's endorsement of Innovata under the Marketing Agreement of itself constitutes a serious distortion of competition, by appointing one company as the preferred supplier to the airlines, in preference to its competitors."
What is very apparent is the changing face of international aviation with literally dozens of airline start-ups all around the world trying to emulate the success of South West in the US, and its copycat carriers in Europe. A major part of IATA is the operation of its financial clearing house by means of which airlines balance their books against other carriers without cash actually changing hands. With only point-to-point traffic and direct bookings (paid in advance) these airlines, in the main, have not joined IATA. They have no requirement for the many unique services that the trade organisation has to offer (or can buy the skills in the market place) and, true to their title of budget airlines, feel no need to pay membership of the club. The major airlines are also quickly joining the direct booking fraternity with all its benefits. The Clearing House volume (USD30.3bn) declined last year by 4.3% and this might become a rush.
Since its establishment in the years just after the Second World War IATA has done, and continues to do, a magnificent job in supplying the essential standards for the airline industry in all its many varied aspects. Whether it is correct for IATA to stray into the realms of commercial business is something else. Clearly another aviation headache for the EU to consider. And for that matter too the member airlines. How do they see the future role of their club? The director general and CEO of IATA, Giovanni Bisignani, writing in the forward to the 2003 annual report, notes that the organisation is an agent of change. IATA is clearly now at a crossroads. Is it a commercial operation or a fellowship of airlines, the 21st century version of the Guilds of old? Who will decide? The Courts or perhaps its members. http://www.oag.com http://www.iata.orghttp://www.iata.org/srs/innovata