at the gate who inserts the ATB into another
`special reader that retains one part for the air-
`line’s revenue accounting purposes and returns
`the other portion to the passenger as the pas-
`senger’s boarding card.
`Meanwhile,
`the airline in whose system the
`reservation was made and that produced the
`passenger’s ATB, reports the ticket details dir-
`ect to BSP, electronically. This saves the agent
`from having to batch and submit physical ticket
`stubs manually.
`
`The advantages to the airline of the ATB over the
`OPTAT ticket are fairly obvious. They allow the
`airline to mechanize its flight departure opera-
`tions to a far greater extent than ever before. But
`there are important advantages to the travel agent
`as well. Avoiding the BSP batching and reporting
`task is perhaps the greatest advantage. Then there
`is the satellite ticketing advantages as described
`in the following section, as Well. Finally,
`the
`customer even benefits because using an ATB will
`mean a faster transit through the airport and onto
`the flight.
`
`Electronic ticketing
`
`Electronic ticketing, or e—ticketing as it is commonly
`referred to, eliminates the need for paper tickets.
`Instead of a ticket being printed and the various
`copies processed by the agent, the passenger, the
`airline and BSP, an electronic image of the ticket
`is used to control flight boarding, settlement and
`revenue accounting. E—ticketing is possibly one of
`the most significant developments within the field
`of travel automation. Not simply because it makes
`life easier for the airlines but because it has far
`
`reaching implications for new electronic distri-
`bution systems like those based on the Internet.
`So, before we can explore these implications and
`consider the new systems that are beginning to
`surface, it is important that you grasp some of the
`fundamentals of e—ticketing.
`E—ticketing has been in widespread use in the
`USA for some time. However, in Europe, it is in
`the early stages of roll—out. Scandinavian Airlines
`System (SAS) and Lufthansa were two of the first
`European airlines to introduce e—ticketing; and in
`the UK, ticketless travel is supported by British
`
`Airways and British Midland. It is important to
`realize that e—ticketing is a CRS supported func-
`tion that can be used to book:
`(a) airline seats
`sold directly to customers by the carriers them-
`selves, and (b) airline seats sold to customers via
`travel agents. Travel agents obtain e—ticketing func-
`tions via their GDSs, which are of course connected
`to the airline’s CRS. So,
`for e—ticketing to be
`possible from a technical standpoint the airline’s
`CR5 and the travel agent’s GDS must both sup-
`port e—ticketing functions. Take, for example, the
`domestic air travel business of British Airways in
`its home market — the UK.
`
`British Airways e—ticketing
`British Airways piloted its e—ticketing system on
`the Gatwick to Aberdeen route for a period of
`six months. The pilot trial was judged to be very
`successful and as a result, BA together with most
`of its franchised carriers, introduced e—ticketing
`on all UK domestic routes on 12 March 1997. By
`early 1997 BA was carrying around 3,000 ticketless
`travellers per day. Also during this year certain
`travel agents could use Galileo or BA Link (British
`Airways’ own viewdata system), to interactively
`book e—tickets. Agents using other GDSs could
`issue BA e-tickets, but only by queuing them to
`the BA system,
`just like a ticket on departure.
`However, all GDSs have plans to add e—ticket func-
`tionality within the UK very soon.
`
`British Airways e—ticketing via Galileo travel agents
`Travel agents in the UK can use the Galileo GDS
`to issue e—tickets on British Airways domestic routes.
`The principal way that this is accomplished is via
`the various Galileo PC workstation products. The
`following section therefore explores in more de-
`tail, how BA e-tickets are issued by travel agents
`using the Galileo GDS. Before we begin, there are
`certain conditions that must exist before an e—ticket
`can be issued:
`
`0 E-ticket requirements The standard ticketing
`process commences when three basic condi-
`tions have been met: (i) a reservation has been
`made for an airline seat, usually via a GDS;
`(ii) payment for the ticket has been received
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`by a travel agent or other intermediary; and
`(iii)
`the departure time is imminent. For e-
`ticketing to take place, however, there are a
`couple of additional conditions. First of all,
`the ticketing carrier must support e—ticketing
`on the customer’s route, as booked. This is
`usually denoted by an ‘E’ on a GDS availabil-
`ity display. Second, the customer must have
`some form of plastic card that will enable them
`to use the self—service check-in machines at
`
`the airport (more on this later). For British
`Airways this may be either an Executive Club
`membership card or an E—ticket Access card.
`However, not all customers of the travel agency
`will necessarily possess an Executive Club card.
`In such cases the travel agent simply issues an
`E—ticket Access card from a stock supplied by
`British Airways (supplies of E—ticket Access
`cards may be obtained by the travel agent by
`telephoning a special British Airways hot—line).
`This enables an E—ticket Access card to be
`
`issued to a customer prior to commencement
`of their journey. Finally, it is necessary for the
`customer’s card number to be present within
`their booked PNR.
`E—ticket issue Once these conditions have been
`
`the travel agent makes a simple entry
`met,
`on the GDS terminal that initiates the issuance
`
`of an e—ticket (incidentally, if the travel agent
`does not use a GDS, the agent can still request
`the booking source — usually the agent’s air-
`line reservations office — to e—ticket on the
`
`ticket
`agent’s behalf). Instead of a physical
`being printed within the travel agency, an
`electronic image of the ticket is created within
`the ticketing carrier’s system. This is really no
`more than a data record containing all
`the
`items shown on a physical paper ticket, plus a
`few extra fields. The e—ticket image will even
`contain a ticket number, just like a standard
`paper ticket. This ticket number, which is pre-
`fixed with the airline’s unique three digit code,
`is used for accounting and reporting purposes
`in the usual way (see BSP in Chapter 7).
`Other documentation The only remaining
`piece of paper that must still be handed to the
`customer is that stating the terms and condi-
`tions of carriage, otherwise known as an air-
`line passenger notice (APN). These terms and
`
`72 INFORMATION TECHNOLOGY FOR TRAVEL AND TOURISM
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`the
`conditions were originally agreed by all
`airlines at a convention held in Warsaw many
`years ago. They must be given to the customer
`by the agent prior to departure. This is not
`normally a problem because there are usually
`several other items of paper also given to the
`customer at this time. For example, the itiner-
`ary, luggage tags, hotel vouchers and informa.
`tion leaflets provided by the travel agent. At
`least one of the information leaflets given to
`the customer will explain how they should
`check-in when they arrive at the airport.
`Self—service check-in Checking—in with e—ticket
`is quicker and easier
`for passengers when
`they arrive at the airport terminal, than with
`conventional paper tickets. The whole process
`takes only a few minutes and is controlled
`by self—service machines that resemble ATM
`cash dispensers but which use efficient touch
`screen technology. These machines are usually
`located near to both the drop—off zone and the
`terminal concourse, often within their own area
`designated as a self—service check-in lobby. They
`accept passengers holding either an ATB or an
`e—ticket. (For an ATB ticket holder, the cus-
`tomer inserts a cardboard ticket — the machine
`
`then prints a few additional fields and elec-
`tronically converts the ATB into a boarding
`pass.)
`insert their E—ticket
`E—ticket holders first
`Access card or Executive Club card into the
`self—service check-in machine. The traveller’s
`
`card is validated by the British Airways sys-
`tem controlling the self—service machine. The
`system will check the number on the card
`against the number that has previously been
`entered into the PNR by the travel agent at
`the time of booking. Should a traveller have
`more than one e—ticket for travel on the day of
`check-in, the self—service machine will show a
`list from which the traveller selects the appro-
`priate one. The flight details are then displayed
`along with the seat number originally allocated
`as part of the booking process. The traveller
`then has several options: either
`1. Retrieve the card and a boarding pass, which
`is automatically printed by the machine. The
`passenger may then proceed straight to the
`departure gate and board the flight.
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`2. Change the pre—allocated seat, i.e. the one
`originally assigned to them by the travel agent.
`This is done by viewing a seat plan and choos-
`ing another available seat on the aircraft.
`. Choose to receive a boarding pass for both
`the outward and return journey, provided
`the passenger is returning within 24 hours
`of departure.
`. Print another copy of the e—ticket itinerary
`and retrieve this from the machine along
`with the boarding pass.
`. Departure Having done this, the traveller pro-
`ceeds to the departure gate, boards the flight
`and departs. This can be a very speedy process
`for passengers with just carry-on luggage. How-
`ever, if the passenger has baggage that needs
`to be carried in the aircraft’s hold, then the
`passenger must still queue up at the manual
`check—in counter, hand over the baggage and
`collect a baggage check.
`Settlement and accounting In terms of the
`settlement process, e—ticketing allows settlement
`to be effected by current BSP processes. These
`systems had to be modified slightly in order to
`support e—ticketing, although this work has
`now been completed as far as the UK’s BSP is
`concerned. For example,
`the most obvious
`modification was that the ticket image passed
`by GDSs into the BSP systems had to possess a
`special indicator designating it as an electronic
`ticket for which there was no paper equival-
`ent. A similar identification had also to be
`
`present for refunds. In fact, many GDSs have
`already built automated e—ticketing refund pro-
`cessing into their back—end systems. Otherwise,
`e—ticketing from a sales reporting and settle-
`ment perspective is fairly straightforward. The
`processes involved are not significantly different
`from those used for paper tickets (see Chapter
`7 for a description of BSP).
`
`E—ticl<et benefits and the future
`
`E—ticketing offers many potential benefits to trav-
`ellers, travel agents and the airlines. It cuts down
`on paper processing, eliminates the ‘I’ve lost my
`ticket’ problem, allows last minute changes,
`i.e.
`right up to 30 minutes prior to check—in, elim-
`inates the need for TODs, simplifies the refund
`process and even has indirect benefit to airports
`in terms of easing congestion at check—in desks.
`Looking to the future, e—ticketing holds the prom-
`ise of delivering vast improvements in the quality
`and level of management
`information available
`to airline customers. However, e—ticketing does
`require a fair investment of resources of airlines.
`For a start there is the construction and operation
`of the self—service check—in machines and lobbies.
`
`But more importantly perhaps, there is the invest-
`ment needed to enhance the airline and GDS sys-
`tems to support e—ticketing.
`While this may not be quite so challenging for
`an airline’s domestic routes, a whole new dimen-
`sion of complexity is introduced when interna-
`tional routes are considered for e—ticketing. The
`reason for this is the existence of inter—lining agree-
`ments that airlines have negotiated with each other.
`What happens, for example, when a passenger on
`an overseas journey ‘holding’ an e—ticket wishes
`to change their flight for another airline that does
`not support e—ticketing? The administrative com-
`plexities and opportunities for endless bureaucracy
`are substantial. So, e—ticketing will no doubt come
`to pass, certainly for many domestic routes and
`even for flights within the EC. However, its wide-
`spread use around the globe may have to wait a
`few years. This is why for the moment, e—ticketing
`is only possible in the UK for BA customers with
`less than four sectors, none of which may be inter-
`national flights or flights involving other carriers.
`Some of the other major issues that e—ticketing
`faces are as follows:
`
`Finally, let’s briefly consider the situation where
`BA customers book their flights directly, for ex-
`ample, via a BA telephone sales unit. These cus-
`tomers have not had any Contact with a travel
`agent. However, they can still use the self—service
`devices at
`the departure airport
`to:
`(a) collect
`their travel documents as described above, and (b)
`pay for their tickets using their plastic cards.
`
`0 Commission levels Many airlines claim, quite
`justifiably, that e—ticketing reduces the amount
`of work that a travel agent needs to do, e.g.
`print the ticket and process the ensuing settle-
`ment. It has been estimated, for example, that
`issuing an e—ticket takes an agent 20 per cent
`less time, compared with issuing a conventional
`ticket. Airlines are therefore cutting, or at least
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`discussing the possibility of cutting, agents’
`commission levels, e.g. SAS and Lufthansa have
`already reduced the commission on domestic
`e-tickets to 5 per cent.
`Direct sales Some travel agents suspect air-
`lines of trying to use self—service ATM ticketing
`machines to build a customer prospect data
`base and then to use this to solicit
`these
`
`customers for new business. Although most
`airlines deny this, it is no doubt an issue that
`will only be resolved over the long term as
`new distribution channels evolve (see Chapter
`5 for a discussion of disintermediation).
`Legal issues Will the terms and conditions of
`flight, as agreed at
`the Warsaw convention
`be communicated to passengers effectively?
`Because this will only be a separate piece of
`paper and not an integral part of the ticket as
`is currently the case, will travel agents always
`remember to give this to their customers and
`will passengers pay any attention to it?
`Customer acceptance Some customers will
`always feel more secure with a piece of paper
`and may in fact demand that their travel agent
`produces one for them.
`Airport security There remain many airports
`around the world where people are not allowed
`to pass into the ‘air side’ of the terminal un-
`less they hold a valid ticket. The location of
`the self—service check-in lobby is therefore a
`critical issue for airlines. In most cases they
`will therefore need to be installed on the con-
`
`course before airport security.
`Interlining This refers to the flexibility cur-
`rently enjoyed by passengers using airlines that
`have an Interline agreement. Such agreements
`allow a passenger to travel on another airline
`instead of the one shown on the ticket. The
`
`problem is that in order for this to be effected,
`the validating airline needs a copy of the ticket
`in order to prove that the passenger has the
`right to travel on their airline.
`Shared check-in machines At present each
`airline that supports e—ticketing in a country
`needs to install their own self—service device
`
`within the airline terminal. In the UK, British
`Airways has already done this and British Mid-
`land is thought to be planning to install sim-
`ilar equipment. How long will
`it be before
`
`airlines start sharing each other’s self—service
`machines? This would make a lot of sense from
`
`i.e.
`a cost angle and from a logistics angle,
`in other words it could save a plethora of dif-
`ferent and incompatible self—service devices
`from being installed in UK airports.
`
`It is estimated that 20 airlines that participate in
`the UK’s BSP will move to e—ticketing over the
`next seven to ten years. These airlines have the
`required level of in—house technology to make
`e—ticketing a practical reality; and because these
`airlines tend to be the larger ones, it is not sur-
`prising that
`they represent about 60 per cent
`of the UK BSP’s ticket volume. Looking this far
`ahead, it is also possible to forecast e—ticketing for
`non-air carriers. However, despite these glimpses
`of a paper—less future, it is highly likely that travel
`agents will always need to keep a stock of hard-
`copy airline tickets for certain situations.
`
`Satellite ticket printing
`
`A type of printing of tickets, invoices and itiner-
`aries that is frequently used to service large busi-
`ness travel customers is known as satellite ticket
`
`printing (STP). It allows a small inplant location
`to produce airline travel documents without the
`need for travel agent workstations.
`STP works like this. First, the central travel
`agency must have a fully functional reservations
`terminal and a data line connected by a commun-
`ications controller to the remote inplant location.
`Then the inplant must have at least one printer
`that is connected via its own communications con-
`
`troller to the central travel agency site. It is usu-
`ally best for the inplant to have three printers:
`one for airline tickets, one for itineraries and a
`third for hard copy. It is then possible for reserva-
`tions made by the central travel agency location
`to be channelled to the inplant for document pro-
`duction, Because the inplant is usually situated
`right on the customer’s premises a very speedy
`service can be provided.
`It is important to remember, however, that the
`remote inplant location must obey all the relevant
`IATA rules for the holding of airline ticket stock.
`This includes, for example, the need for a safe on-
`site in which to store the blank tickets, fully trained
`staff and adequate security arrangements. In other
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`
`words the inplant must hold a full IATA licence.
`If, however, the remote location is using an ATB
`printer and ticket stock then the process is a lot
`simpler. With ATBs, only the passenger’s ticket
`need be printed remotely. The other parts of the
`ticket for the agent’s files, for example, can be
`directed to a printer at the agency’s main office.
`This does away with the need to have specially
`trained staff at the remote satellite location who
`know how to process the various copies of the
`traditional OPTAT stock. The net result is lower
`operating costs for the agent and a speedier ser-
`vice for the customer. STP is also available on a
`European—wide basis. For more information on
`Euro—STP, please refer to the section on BSP con-
`tained in Chapter 7.
`
`intelligent ticketing
`
`There is little doubt that an industry standard for
`the electronic encoding of travel ticket media is
`long overdue. The Association of European Air-
`lines (AEA) recognized this in 1996 and instituted
`a study of the possibilities and feasibility of estab-
`lishing standards for a common ticket that could
`be used for several different forms of transport.
`Given the appropriate standards, a single multi-
`modal
`ticket could be used by a traveller, for
`example, to fly from Madrid to London, stay over—
`night in the city and then catch the Eurostar train
`to Paris. Or by a transatlantic passenger arriving
`at London Gatwick and using the shuttle train to
`Victoria station in London. There are even better
`
`examples of how a single multi—modal ticket could
`be used in Scandinavia to travel between border-
`
`ing countries by air, rail and, especially, ferry. A
`multi—modal ticket with data recorded on it either
`
`in the form of a magnetic strip or an embedded
`chip, would enable the passenger to pass through
`machine—controlled gates and obtain boarding
`passes for travel.
`Unfortunately, the AEA study was terminated,
`mainly because there was insufficient commitment
`on the part of some leading travel suppliers but
`also because the rate of change in the industry
`is so rapid. In such a turbulent environment, who
`is going to try and ‘put a stake in the ground’ and
`commit to a set of standards for a media that
`
`may no longer exist in the next few years? Then
`
`of course there are the inevitable competitive
`issues. This is especially true now that rail services
`compete so directly with airlines between, for ex-
`ample, London, Paris and Brussels. To illustrate
`this, the new cross channel rail services have taken
`between 20 per cent and 30 per cent of the mar-
`ket on these routes, from the airlines. In any event,
`many rail companies are embroiled in developing
`their own set of standards based on the ATB.
`
`Their objectives are to allow travel agents to pro-
`duce rail tickets from the same printers that they
`currently use to produce airline tickets. Finally,
`there is e-ticketing, which threatens all forms of
`paper—based tickets in the longer term. If e—ticketing
`becomes truly widespread then physical airline
`tickets could become a thing of the past. Con-
`sequently,
`the intelligent ticketing project never
`really got off the ground.
`
`Smart cards
`
`the goals of the intelligent
`Despite its demise,
`ticketing project live on in the form of smart card
`technology. Indeed, many of the standardization
`objectives of intelligent ticketing are as relevant
`to this rapidly evolving area as before. A smart
`card is simply a plastic card in which a miniature
`computer processor chip with its own memory,
`is embedded. The smart card can be read and/or
`
`updated either: (i) by passing it through a swipe
`device just
`like a normal plastic card,
`(ii) by
`inserting it into a socket with pin connectors, or
`(iii) by its proximity to a remote reader/processor.
`Smart cards could solve the problems that intelli-
`gent ticketing sought to address. They could also
`help support the spread of e—ticketing and some
`of the new travel distribution technologies, many
`of which are explored in this book. Evidence of
`the potential opportunities that are offered by smart
`cards may be drawn from several industry wide
`experiments currently taking place. For example,
`the experiment
`that
`IBM, American Express,
`American Airlines and Hilton are undertaking.
`This aims to test the ability of a general purpose
`smart card that could,
`in the first
`instance, be
`used primarily for business travel.
`It
`is interesting to speculate how travellers
`would be affected by smart card based services, in
`the future. One possible way is for the service to
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`be based on an Internet site sponsored by either
`a GDS, a card issuer or even a joint venture
`between two or more travel and financial institu-
`
`tions. Customers of the service provider would be
`issued with smart cards that would be registered
`uniquely in their name. The customer wishing to
`embark on a trip could, for instance, connect to
`the Internet, sign-in to the site supporting the smart
`card application and then link to a GDS booking
`engine. A booking could be made in the GDS and
`the booking record downloaded for storage in
`the computer chip embedded in the customer’s
`card. Downloading could be accomplished either
`by means of a specially adapted telephone or by
`a smart card reader device attached to the cus-
`
`tomer’s PC. Then, with special smart card readers
`installed in airports, hotels, rail stations, retail
`outlets, ATMS and other locations, the smart card
`could be used to:
`
`terminal for e—ticket
`Register at the airport
`processing and boarding pass collection.
`Check—in at a hotel by using a self-service ATM
`type device to select a room and obtain an
`electronic room key.
`Check—out of the hotel via the self—service
`
`machine without needing to queue at the hotel’s
`check—out desk.
`
`Swipe the card through rail ticket barriers to
`board a train.
`
`Obtain cash more securely from ATMS by
`using the intelligent authentication features of
`the smart card.
`
`Spend electronic cash by using the stored value
`features made possible by smart cards, at des-
`ignated retail outlets adapted for this purpose,
`e.g.
`the Mondex experiment undertaken in
`Swindon, UK.
`restaurant meals,
`services,
`Purchase goods,
`fuel and other retail items, using the enhanced
`point—0f—sale authentication and credit
`limit
`monitoring features of the smart card. This
`could use local card chip processing to authen-
`ticate items under a certain value with on—line
`
`authorization being required only for purchases
`exceeding an upper threshold, depending upon
`the card holder’s personal profile as set by the
`card issuer. This could dramatically reduce the
`amount of on—line traffic, and therefore cost,
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`76 INFORMATION TECHNOLOGY FOR TRAVEL AND TOURISM
`
`that card issuers incur to run real-time author-
`
`ization systems.
`Store personal health data in the card for use
`while travelling.
`Record loyalty reward points (this is already
`being done by a leading German airline).
`Store a full
`transaction profile of the card
`holder that would enable: (i) the card holder’s
`travel and financial services to be finely tuned
`to meet their specific personal requirements,
`and (ii) allow suppliers to carry out some very
`highly targeted marketing aimed directly at the
`individual.
`
`There are many more uses for smart cards but
`there are also a number of issues that will need
`
`resolution before much progress can be made in
`this area. One significant issue is the opportun-
`ities that smart cards offer to reduce the amount
`
`of fraud that is currently experienced with mag-
`netic strip based plastic cards. It has been said
`that these cards have been severely compromised
`through counterfeiting. Interestingly, the introduc-
`tion of smart cards in France has seen the level
`
`of fraud decrease substantially. This is achieved
`through improved authentication methods at the
`point-of—sale, built—in credit control and a higher
`barrier to counterfeiting. The ability of the smart
`card to be updated as it passes through the travel
`consumption chain is also a factor that helps
`reduce fraud and enhance service levels.
`
`While it is true that the magnetic strip encoded
`onto ATBS can also be updated as travellers are
`processed through airline check—in desks, there are
`constraints on the future use of this technology,
`for example: (a) the amount of information stored
`and updated on an ATB is limited; and (b) the
`more widespread use of intelligent ATB process-
`ing outside of air, rail and ferry services in the
`future, is unlikely. One of the reasons for this is
`the cost of the equipment needed at the service
`point. In fact, the investment in point—of—service
`processing is probably the primary obstacle to
`more widespread use of smart cards. In the area
`of travel, there is no doubt that smart card readers
`are cheaper than ATB ticket printers. However,
`in the context of the global retail distribution chain,
`the travel agency sector is relatively insignificant.
`Even a comparatively small add—on cost affecting
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`

`
`every point-of—sale till would require a very large
`investment of capital indeed; and who would pay?
`The obvious answer is the card issuers, because
`they stand to gain the most from the consequent
`reduction in fraud. However, there are many com-
`peting arguments on this topic and it is a game
`that is being played for very high stakes. The dual
`issues of cost and funding therefore represent
`the principal barriers facing smart card issuers as
`they consider the more widespread use of this
`technology.
`Another fundamental issue is whether detailed
`
`information is actually stored in the smart card
`itself or whether the card simply contains a key to
`information that is held in an external computer
`system. The GDS booking record or PNR is a
`particularly good example. From a technical view-
`point, the PNR could be stored completely within
`the smart card. However,
`if this is done then a
`number of related issues arise. For example: ‘Who
`owns the data stored on the smart card?’ If it is
`
`then could the
`owned by the airline (or GDS),
`card issuer process the data, for example, to pro-
`duce integrated management information for cus-
`tomers? Also, how would the data be synchronized
`between that stored within the smart card and
`that stored within the GDS? Airlines sometimes
`
`have to change the booking records of their cus-
`tomers to reflect a service change. How would
`this new information update the travellers book-
`ing record if it was stored on their card? An altern-
`ative approach is for the smart card to store just
`the PNR locator that could then be used to retrieve
`
`the full booking record from the GDS. However,
`holding only a key might seriously constrain the
`opportunities for fully exploiting smart card techno-
`logy. These are just a few of the reasons why
`airlines and GDSS are reluctant to give up overall
`control of the booking information that they store
`on each of their customers.
`There is also the fundamental issue of: ‘Who
`owns the smart card service?’
`If this is to be
`
`the bank card issuers then it will be interesting to
`see how alliances with airlines, GDSs and other
`travel suppliers develop. Finally, there is the big-
`gest issue of all — standards. Standards are pivotal
`to the success of smart cards in travel. Without
`
`standards, the uses that I have identified above
`would not be feasible. Standards that define how
`
`the data are recorded within the chip and what
`form of security and encryption techniques are
`used. The problem is that these standards need
`to be agreed throughout the travel and financial
`services industries and between competitors. A very
`challenging issue, but one that should not be ruled
`out as unattainable. After all, when the stakes
`are high in terms of financial pay-off, there is an
`enormous drive for standards to be agreed. There
`are anyway, plenty of examples of intra—industry,
`intra-competitor collaboration in the standards
`field, e.g. EDI and the current magnetic strip plas-
`tic cards. So, the signs appear to be quite encour-
`aging; and a great deal of groundwork has in fact
`already been done in establishing basic standards
`for the multiple use of ATBs, electronic tickets
`and smart card data storage. Nevertheless,
`this
`whole area is one that is rife with issues although
`at present, i.e. mid 1997, it is also bereft of solu-
`tions and definite directions. Smart card techno-
`
`logy in travel and tourism will be one to watch
`over the forthcoming few years.
`
`Hotels
`
`There is little standardization in the area of hotel
`
`systems. The kinds of technology used through-
`out the hospitality industry, while bang up—to—
`date, vary widely depending upon the size and
`type of hotel. However, there is a lot going on in
`the area of IT within the hotel industry. Some of
`it is in the high profile area of distribution and
`the Internet is a prime example (see Chapter 5).
`But hotel back—office systems are becoming increas-
`ingly sophisticated and are now widely recognized
`as being a key to improved profitability; and it
`doesn’t stop there. Guest services are the current
`focus of attention and there are some really
`interesting experiments being conducted on a large
`scale. For example, Hilton, American Express and
`IBM are jointly exploring the opportunities offered
`by smart cards. Finally,
`in—room technology is
`rapidly becoming a very real competitive differ-
`entiator, especially at the top end of the hotel
`market. So, first of all, let me try and categorize
`the different ways in which hotels implement their
`systems. These really fall into three main areas:
`(a) in—house systems owned and operated by the
`
`SUPPLIERS
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`77
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`Apple, Exhibit 1021, Page 87
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`hotels themselves, (b) packaged systems that are
`purchased from software companies, and (c) out-
`sourced systems where a third party will run all
`or some of a hotel’s application functions. Let’s
`take a look at each of these in a little more detail:
`
`that can be automated by specialist application
`software. Let me put PMSs into context with other
`systems that are frequently used throughout the
`hospitality industry:
`
`0
`
`In-house Many of the larger hotel chains have
`managed to develop their own in-house sys-
`tems over a period of several years. Some of
`these systems have been purchased from other
`hotels and even other suppliers in related indus-
`tries. They have been modified to suit chains’
`individual needs and have developed into an
`important operations and distribution capab-
`ility upon which their businesses have become
`highly dependent. However, not many hotels
`develop their own systems these days;
`it
`is
`considered far to risky and expensive a ven-
`ture, which can detract a hotel from its core
`business.
`
`Small to medium sized hotels may
`Packages
`also develop their own systems but more usu-
`ally, they purchase a pre—packaged system avail-
`able from one of the many software companies
`specializing in the hotel sector. There are now
`a wide range of packaged systems available
`to hotels, each providing a specif