The of Electronic Ticketing System with Particular Reference to British Airways - Case Study Example

BRITISH AIRWAYS 1.0 Introduction – British Airways is the UK's largest international scheduled airline, and flying to over 550 destinations. The British Airways group consists of British Airways Plc and a number of subsidiary companies including British Airways Holidays Limited and BA Connect Ltd. British Airways have many a first to its credit - the first airline to offer jet passenger services and the first to operate weather-beating auto landings. It is also the first to offer supersonic passenger services and the first to offer fully-flat beds. (British Airways, n.d.) 1.1 Project Details – The project involves the study of electronic ticketing system with particular reference to British Airways. We will study how the new e ticketing system ahs helped the organization in warding off competition from low cost airlines. The Purpose of the Project – The purpose of this study is to study the electronic ticketing system of British Airways and to find its usability and degree of success. The idea is to identify the problem areas if any, and recommend solutions to overcome the problem. Airlines Industry has emerged as one of the fast users of technology. They have quickly adapted to newest technologies and are dependent on interconnectivity and integrated systems. As a result, Internet-related services are the in things and they have revolutionized the way tickets are sold, clients handled and flights arranged. The airlines have started providing flight information on-line. This way they are able to transfer their calls to their toll-free numbers and in turn decrease their telephone reservations staff. Whenever passengers book and buy tickets via computer, airlines save on commissions to travel agents. (Maurer, 2003). Similarly they have started offering promotional fares on last-minute and they have turned out to be an easy way for airlines to advertise and sell seats that are going empty. ''E-tickets'' are becoming widely popular in the world, with many people preferring to use on-line method of booking tickets as it is much easier and comfortable to do so. Anticipated Outcomes of the completed Project : By this study , we hope to find out the benefits and disadvantages of using an electronic ticketing system. We would also try to establish that the use of e ticketing system has improved cost efficiency of British airways and made it possible for the airlines to compete with other low cost no frills carriers. 2.0 Background Information - 2.1 Nature and History of the Organization Covered – The history of British Airways dates back to 1910s. But it gained its current form and name by 1976. The first British airline -- the Aircraft Transport and Travel was established in 1919. The first scheduled flight was done in August 25th 1919 and its route was Le Bourget – Honslow. The airport of Honslow was used as the base of the airline. Later, two other airlines were established, the Instone and the Handley Page. These companies had to face stiff competition of French airlines who offered lower fares. Many of these airlines had to close prematurely because they could not compete with the low cost French airlines.. The only available solution was to merge the many small airlines to one big airline. And thus Aircraft Transport and Travel, Handley Page Transport, Instone Airlines and British Marine Air Navigation merged together to create the Imperial Airways, the first major British carrier. Imperial Airways started flying to many close and distant places like India and Egypt with a fleet of 18 aircrafts and an employee strength of 250 employees. This new airline alongwith a new carrier, the British Airways Limited, remained in service until the beginning of the Second World War I after which these two airlines merged and created the British Overseas Airways Corporation (BOAC). After the World War II, BOAC restarted its flights to most trans-atlantic routes. In addition, a new airline was created, the British European Airways (BEA), which was flying on the European circuit. In 1967, a committee headed by Sir Ronald Edwards proposed to merge BOAC and BEA. And finally in 1976, these two companies merged together to form British Airways. The company faced serious economic problems in 1980s and finally to settle all problems, the company was privatized in 1987. The new private British Airways started operations from the Gatwick airport. Today, British Airways is a major cargo airline and the British Airways World Cargo is one of the leading cargo airlines. (britshairways, n.d.) The airline once again faced economic problems, in the aftermath of the attack in September 11, 2001. Despite that, British Airways has now profits again and hopes for better economic results in the close future. Now the airline is strengthening its position through taking part in alliances with major airlines. 2.2 Organisational Chart (Breakdown of the organisation) British Airways is managed by the Board of Directors headed by the Chairman. The Board provides a dynamic leadership to the Company within a framework of prudent and effective controls. The main function of the Board is to set the strategic aims and objectives for the company and provide a direction to its future. It also provides for the necessary financial and human resources needed by the company to meet its objectives. It also reviews the management performance. The Board currently consists of eleven members and they have decided to remain at around this size to avoid becoming unwieldy. But this cap is at no cost to the organization as it ensures that the balance of skills and experience is appropriate for the requirements of the business. It also ensures that the changes to the Board's composition can be managed without undue disruption. As per the Combined Code of the Board, at least half of the Board, excluding the Chairman, comprises of non-executive directors. These should be the persons who are independent in character and who have no relationship which is likely to affect their judgement or those who have any unnecessary interest in the organization.. The Board of British Airways Plc currently meets at least eight times a year and sometimes more times if required to discuss any important issue or plan. The Board carries out detailed scrutiny of certain key areas through its four standing committees. The Audit Committee (which consists of independent non-executive directors) is concerned with the integrity of the Company's financial information and ensures that the financial controls and systems of risk management are robust and defensible.The Remuneration Committee of the Board (which consists of independent non-executive directors) is responsible for determining appropriate levels of remuneration for the executive directors. The remuneration packages offered by the company are comparable with other international businesses in the market. The Safety Review Committee oversees the operational safety and security of the airline and its subsidiary airlines and issues of health and safety. The Nominations Committee of the Board is chaired by the Chairman of the Company. It has the prime role in appointing, reviewing and removing, directors. It also includes issues of corporate governance. The Management consists of : Willie Walsh -- Chief Executive, Keith Williams Chief Financial Officer, Robert Boyle Commercial Director, Paul Coby Chief Information Officer, Garry Copeland Director of Engineering , Lloyd Cromwell Griffiths Director of Flight Operations, Gareth Kirkwood Director of Operations Roger Maynard Director of Investments & Alliances, Geoff Want Director of Ground Operations, UK and Overseas, Robert Webb QC General Counsel. (Board of Directors, n.d.) 3.0 Project Methodology We used both primary and secondary sources in our project. Primary research involved the collection and analysis of raw data through interviews and direct discussions . The data was analysed and discussed. Secondary research or library research as it is sometimes called was based on reading and gathering information through websites and internet. 3.1 Primary research : When we talked to different people about their experience with electronic ticketing, the response was mostly positive. Most people were happy with the e ticket system of British airways. Generally, we asked them about what they thought about this system and what improvements they would like to see in future. 3.2 Secondary research: We surfed the internet and tried to gather all information regarding the subject. We checked the official website of British Airways . We also browsed company information in their brouchers. We read different magazines featuring articles on this aspect. 4.0 Findings/Results : Let us first discuss what an e ticket means. 4.1 What is an e-ticket? An e-ticket is an electronic ticket. It contains all the information which is present on a paper ticket. This is stored electronically in the airline's computer system. When the e-ticket has been issued, the passenger needs to print out their receipt / itinerary showing the booking reference. At the departure airport the passenger goes straight to the airline check-in desk for check-in. Infact, even this can be done using kiosks or online system. The copy of the receipt, which customers are required to print instead of the old type of paper ticket, contains at least one of the following: the record locator, the reservation number, the e-ticket number, the confirmation number, or the ticket number. In addition, the customer can also print out a similar type of document that are called "Trip Details" or "Travel Itinerary" (Electonic ticket, n.d.) Electronic ticketing (e-ticketing), as a system is particularly advantageous to the no frills low-cost airlines. It is being used where online bookings are made. The cheap carriers prefer to use electronic ticketing since it can then cut out the travel agent from its loop and they do not have to pay commissions to them. It also helps in minimizing the cost of paperwork and administration. 4.2 Benefits of e ticket: The main benefits to the passenger are that the e-tickets cannot be lost and there is no need to stand in long queues for buying tickets at the airport. The itinerary changes (where permitted by the airline) can also be handled more easily. This form of ticketing is becoming vastly popular, and the International Air Transport Association are aiming for 100% implementation of e-ticketing worldwide by the end of 2007. When currency conversion is required, the e tickets helps in reducing the costs and the hassles associated with the process. It saves time and the user does not need to physically exchange currency. If travelers book and buy tickets via computer, airlines save on commissions that are given to travel agents. Last-minute on-line fares are offered by the airlines to sell seats that would otherwise go empty. Thus Having an e-ticket allows any passenger without any luggage to skip the check-in counters and proceed directly to security. The option to check-in online is available on airlines that offer the service. A passenger enters their confirmation number at the airline's website, and the passenger prints the boarding pass on their home printer. For airlines, it is estimated that approximately 9 US dollars in savings could be made when an electronic ticket is issued instead of a paper ticket. As per IATA, 100% e-ticketing will save the industry up to US$ 3.0 billion per year. (Electronic ticketing, 2004) 4.3 Disadvantages of the system : The primary problem is the incompatibility of most airline e-ticketing systems, which makes traveling on more than one airline during a single trip impossible. Another important drawback is the use of personal information that the carrier elicits from its users. Since the passengers are required to fill in lots of details specially after the September 11 attacks, their confidentiality and security concerns are quite valid. The information asked is so wide that it is quite possible for a computer expert to extract all information regarding a person through these sites. There is quite a possibility that identities can be stolen and used by terrorists or other anti national activities. 4.4 British airways and E tickets: Airlines industry has emerged as the biggest user of online technology. It relies heavily on interconnectivity and integrated systems. As a result, Internet-related services have changed the way tickets are sold, clients handled and flights arranged. British Airways is the first IATA carrier to offer e-ticketing in the United States through Worldspan - a reservation, ticketing and office automation system. Besides e-ticketing, they are also revalidating BA flights electronically and are also able to carry out exchange or refund transactions. (britishairways, n.d.) 4.5 Findings: British Airways is using a sound booking system where they store all the ticket details electronically. The passengers can access their booking through a unique six digit reference number. There are still some sectors where e ticket is not available , in that case a paper ticket is issued. The e- ticket receipt is easy and simple to read. There is no need to wait for a paper ticket to arrive in the post. If the booking is done on the phone, and no email address is provided by the user, then BA sends an e-ticket receipt by post. The ticket is received through email straight away when the booking is done on the site. The best part regarding an e-ticket is that it cannot be lost, forgotten or stolen. The system even allows the user to amend the flight details up to 30 minutes before minimum check in times. But this is done only for normal fares and not discounted fares. The Check in procedures for e ticket holders are simple and quick. With e-ticket the passenger can use check in at ba.com or an airport check in kiosk, where available. British Airways is using the Amadeus e-Ticket Server. It has implemented electronic ticket interline links through Amadeus with 40 airlines. These include all of its oneworld partners and recent collaborations with Austrian Airlines, Kenya Airways, and Singapore Airlines. They have announced that they will further increase their partners in the next two years. These new interline links has helped BA to grow the number of routes on which their customers can travel using an e-ticket and help British Airways advance towards the 100% e-ticket target set by IATA for the end of 2007. The Amadeus server has provided British Airways the capacity to interline with the carriers that are hosted on e- Ticket Server. It can also easily establish interline links with any other airline on-demand, even when they are hosted on external systems. (british airways, n.d.) The International Air Transport Association (IATA) and IBM, have announced that they are working on a system that will allow airlines around the world to exchange electronic tickets. IBM claims the system will be more efficient than requiring airlines to establish distinct electronic links with one another. (Electronic ticketing, 2004) The findings show that the e ticket system of British Airways is a success. They have announced that the service is now available for 76 per cent of all its journeys. This system of e-tickets was launched in 2002 and now the e tickets can be purchased for around 150 of BA's routes as the airline is moving towards an all e-ticket airline by the end of 2007. The e-ticket service is designed to help the airlines face competition from no-frills rivals. Their official ticketing website -- ba.com is available in five languages and it takes only a few minutes for customers to check in. It allows users to change their seat or pick up seat, depending on the availability, before boarding. Customers are allowed to print their own boarding passes from their homes and offices. British airways is also developing an inter airline e-tickets with rival airlines. This will thus enable business passengers to swap between airlines without having to waste time getting their paper tickets checked or endorsed. The e-ticket service helps the airlines in meeting their objective of making travel hassle-free and more comfortable than low cost airlines. November 2005 figures showed that BA is losing passengers and profits to low-cost rivals. The airline saw domestic and European passenger number shrink 1.1 per cent year-on-year. (Datamonitor, 2006) But after the introduction of e ticket service, it has been seen that the airways have started to improve its figures. See Table 1 for the financial trends for the company over the years. British Airways launched this system through an internet travel agency in 2002. It slashed ticket prices and distribution costs- and by-passed the travel agents. Ticketing, travel agent commissions and booking fees were totaling to about 20% of overall operating costs. By selling directly to customers and avoiding the commissions to travel agents the airlines have tried to maintain their profit margins. And this has also given them the freedom to allow better pricing at the same time. This successful operation of switching to etickets has helped BA to implement its cost-cutting plans. Operating stocks thus came down by 12.5% over the next three years.(Datamonitor, 2006) Table 1: Financial Trends for British Airways. Year Ended   Passengers Flown   Turnover (£m)  Profit/Loss Before Tax (£m)   Net Profit/Loss (£m)   Basic EPS (p)  March 31, 2006 35,634,000 8,515 620 467 40.4 March 31, 2005 35,717,000 7,772 513 392 35.2 March 31, 2004 36,103,000 7,560 230 130 12.1 March 31, 2003 38,019,000 7,688 135 72 6.7 March 31, 2002 40,004,000 8,340 (200) (142) (13.2) March 31, 2001 36,221,000 9,278 150 114 10.5 March 31, 2000 36,346,000 8,940 5 (21) (2.0) March 31, 1999 37,090,000 8,915 225 206 19.5 March 31, 1998 34,377,000 8,642 580 460 44.7 March 31, 1997 33,440,000 8,359 640 553 55.7 March 31, 1996 32,272,000 7,760 585 473 49.4 (Datamonitor, 2006) 5.0 Project Review: Thus we see that we have been able to establish the success of e ticketing system used by British Airways. We have also seen that this system is beneficial not only to the airlines but also to the end user or the passenger. Therefore, we would be more than comfortable in using the e tickets. We faced some problems while trying to assess the authenticity of data or information available on net. We finally were able to corroborate the data from the airlines offices. 6.0 Conclusions: To conclude we can safely say that e-ticketing system is here to stay and is beneficial to both the airlines and the customer. It is not only hassle free but also saves time and other necessary resources. And things can only go better from here as more and more airlines vying with each other to get their share in airline market segment. Such systems are no more an addition to the available facilities but a necessary requirement to stay afloat in the competitive market. 7.0 Recommendations : We strongly recommend that all sectors be brought under e ticketing system as soon as possible. There should be a common e ticketing system that should allow passengers to travel by different airlines within a single trip. The security of the personal passenger data should be foolproof such that it is not used by miscreants for unlawful activities. 8.0 Bibliography 1 BA Shares British Airways shareholder 'Reports & Accounts' Archive 2. Datamonitor, Oct 1, 2006, Business Reports 3. British Airways, Retreived May 20, 2007 from http//en.wikipedia.org/wiki/British_Airways 4 Maurer, E., 2003, Internet for the Retail Travel Industry, Delmar Learning 5. E ticket, retrieved May 20, 2007 from http// www.britishairways.com 6. Board of directors. Retrieved May 20, 2007 from http://www.bashares.com/phoenix.zhtml?c=69499&p=irol-govhighlights 7. british_airways, Retreived May 20, 2007 from www.cheapflights.co.uk/flights/british_airways/index.html 8. British Airways, Retreived May 20, 2007 from http://www.oneworld.com/ow/member-airlines/british-airways 9. Ba flies the web, 2000 Retreived May 20, 2007 from http//news.bbc.co.uk/2/hi/business/654251.stm 10. Electronic ticketing, retrieved may 20, 2007, from http://www.iata.org/events/agm/2004/newsroom/fact3.htm Read More