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The New Travel Intermediaries

Speaker Transcripts

Bruce Bishins
President And Ceo
United States Travel Agent Registry

I bring you greetings from the Board of Directors and the Travel Agents of the United States Travel Registry and we would like to extend our appreciation and thanks to British Telecom for giving us this opportunity to make this keynote address to you this morning.

I would like to begin my remarks by acknowledging the fact that there are some very significant differences and philosophies between the travel agency distribution system here in Europe and the travel agency distribution system in the United States and perhaps elsewhere in the world. Perhaps some perspective is in order.

In 1996 the BSPs, the Banking Settlement Plans, serviced more than 47,000 travel agency sales outlets throughout the IATA world. In our part of the world, in the United States, our airline controlled settlement plan, ARC, alone processed in excess of $60 billion in gross sales and serviced some 36,000 full service travel agency locations and 8,000 satellite ticket printing locations. One thing however is dramatically similar. With the advent of improved communications and the ease of access to emerging technologies and a growing recognition of the enormous contribution that travel and tourism makes to the world's economy, it would appear that everybody would like to be in the travel business.

While it is not particularly earth shattering to realise that air carriers and other mainstay travel suppliers have gone all out to repatriate business and to wrestle the way from the travel agency community, despite the marketing investments made by travel agents without which many of the suppliers would not have prospered at all, it is particularly unsettling that new businesses are entering the travel market place many of which have little experience at all in the travel business. And whether it's Microsoft and its Expedia product or Arthur Andersen, our sales channel seems to attract new entrants of all ilks.

Even more troubling is the disintermediation promulgated by companies which professed service and support to the present day travel agency sales channel and in particular the CRS companies are perhaps the worst offenders. Take for example Worldspan and its alliance with Microsoft, Sabre and its alliance with IBM Lotus and the Sabre Business Travel Solution product, System 1 Amadeus and its Travel Web product, Galileo, Apollo and the United Connection. Alliances such as these are clearly designed to syphon off business from the travel agency channel and funnel it towards the supplier direct channel. In simple terms, our sales channel is under attack by entities which have little regard or appreciation for the service and consultative requirements our business and, worst yet, provide ample concern that the reputation of the real professional travel agent will be substantially damaged in their wake. So while Microsoft's Mr Gates challenges the EC ruling on unbiased travel displays, travel agents everywhere are searching for solutions to protect their businesses and their professions. No alliance with technology, no alliance with CRSs and no alliance with enhanced processes will defend and strengthen the travel agency distribution system as we know it today unless travel agents themselves build, control, implement and take care of the technology which will take us into the next century.

The handwriting is on the wall and it has been for quite sometime. Air carriers will stop at nothing to repatriate business for which the past 20 years or more has been developed, nurtured and made expanded by the travel agency community. Airlines and the Banking Settlement Plans which they run treat CRSs as more than equal partners but keep travel agents at arm's length as poorly treated step-children and poorly valued distributors.

As airlines expand and embrace new technology to repatriate consumers, they offer incentives to consumers to by-pass travel agents; incentives which the travel agency community cannot afford to match. We are told that we have state of the art technology and that we have the finest automation distribution tools to meet our present and future needs. The truth is that we have severely out of date technology. We have out of date platforms and we are told that we have agency automation when, in fact, we have airline automation masquerading as agency automation. But finally the travel agency community must step up to the brink and take charge so that we can bring to our ranks the true point of sales system that we desperately need.

We are in a vortex. The travel agency community is encircled by CRS companies, airlines and BSP machinery that seek to drag us down as they move forward. The CRSs, BSPs and airlines are truly one and the same, although they would like to convince us that they are separate entities. They inhibit travel agents' technology, they prevent us from gaining access to the technology that we need through the normal distribution channels. It is highly disingenuous of them on the one hand to, say, embrace new technology and yet on the other hand to slap our hands when we do. The commission cops in the United States and the Internet commission cops are very typical of the CRSs and their airline owners in telling us to stay back behind technology while they forge ahead. The CRS community in the United States is an invasive aspect in the business of travel agencies. It prevents them from selling their businesses, it prevents them from growing their businesses and prevents them from moving to new automation platforms as those automation platforms become enhanced.

It is truly time for the travel agency community to break free. But it is not just technology, it is also the finance side of our business as well. We are not the only party in the CRS food chain, if you will, which is exasperated by this untenable situation. The US suppliers side of the industry spends close to $5 billion a year in CRS fees. CRS fees which are now being charged back to the travel agency community because the situation has gotten out of hand. Travel agents in the United States are being forced to pay for so called passive segments - passive segments being defined as entries in their CRSs which are put there for the purpose of allowing travel agents to have back office accounting and also front office itinerary functionality. But that is not good enough for the CRS companies and their airline owners. They want to continue to squeeze the travel agency community for every penny that they can. As such, it is not at all surprising that the industry on the one hand decries how much it must pay to the CRS companies and on the other hand does very little to control that outcome and that outlay of funds.

The travel agency community as well contributes to the airline bottom line in the United States some $15 million each year. That $15 million each year is solely for the purpose of remaining accredited. It is solely for the purpose of having an eight digit IATA number. It is solely for the purpose of having a travel ID card to benefit, if you will, some reduced rate transportation which is no bargain any longer. And yet at the same time that we contribute to the airlines' bottom line of some $15 million each year to both ARC, our settlement plan and IATAN, our IATA, wholly owned subsidiary that accredits travel agents in the United States, we are also finding that IATA as a worldwide association of airlines is moving into the distribution business as well. They are becoming a new intermediary, trying to sell distressed merchandise seats over their web site. Again, very disingenuous on the one hand to try and support a travel agency programme and then on the other hand to try and get into the business and sell seats on behalf of their members through their web site.

As such, the United States Travel Agent Registry was formed two years ago with the idea of trying to build the systems necessary to take the travel agency community into the next century, with its own independent systems, its own independent processes and its own independent CRS. We are formed in the state of New York as a not for profit business co-operative and we have devised among our ranks a board of directors and four working groups; each of the working groups taking responsibility for a component of the new re-engineered environment that we anticipate. Our board of directors is responsible for the overall processes at USTAR and we have coined a term that we will use for now and for the future for the development of these processes called the Genesis Project. The Genesis Project is a true re-birthing of the systems we will use in the future and the systems that will replace the airline dependent processes and functionality that today we are forced to have. Our board of directors is made up of 15 travel agencies from across the United States and they are responsible for overall project management, our bye-laws and the direction of all our working groups.

Our CRS working group is responsible for our reservations replacement for today's CRSs. We are committed to the idea of taking the profit out of CRS operations so that suppliers and travel agents alike can benefit from a system which is focused on distribution rather than on retribution. Our intention of operating a not for profits CRS environment will substantially reduce the booking fees that all suppliers worldwide have been forced to pay in order to get their product into an automated environment and at the same time will encourage hundreds of new vendors and suppliers who heretofore have not been able to afford agency automation or access to the automated travel agency. Above and beyond all of the obvious, we hope to have a platform that the travel agency community can respond to without feeling the pressures of the rather abhorrent CRS contracts which exist in the United States.

There is a tremendous degree of concern about HNC data being protected and I am not quite sure if you have been made aware but we already have a very well documented case in the US where a major airline owner of a CRS dipped into the CRS files and began calling customers booked on the competition to move them over to their carrier. This kind of abuse of the systems is of great concern to travel agents, not only for the protection of their data but also for the protection of their business. We are also going to bring, for the first time to the travel agency community, a true Windows environment to replace the so called Windows environment that we have - we really don't have a Windows environment today in CRSs. We have cryptic DOS based languages and UNIX based languages sitting in Windows but that's about it. And so we plan to bring on board a point and click environment which our industry desperately needs. Our CRS committee has been working with great gusto to give us the kind of CRS alternative that will be profitable and cost effective for the rest of this century and on into the next. Along with the CRS functionality we obviously need to bring on board a ticketing functionality and, despite the gains that perhaps some parts of the world have made with electronic ticketing, we are firmly convinced that there is still plenty of room for manual and automated tickets and we plan to enhance our documents in order to improve not only air and rail but a whole host of other travel, tourism and entertainment products that can be documented into entitlement documents that we will use in our system.

We have already met twice with IATA with the intention of seeking to use documents that mirror the IATA standard traffic documents. We have told them that we are planning to take those documents and modify them for our purposes and that if they would not give us a resolution to do so, we would go forth with our own documents and ensure they are compatible with carriers around the world. We have every intention of making those ticket documents inter-modal and we have every intention of making them compatible with airline revenue accounting systems to say the least. And a ticket without settlement, of course, is no ticket and consequently we will build and are building a separate non-airline owned settlement plan to mirror the BSP functions around the world, as well as ARC in the United States. Our back office and settlement functions will be very similar to the settlement functions that exist today except, however, they will embrace beyond air and rail hundreds of new companies that heretofore have not been permitted to participate in an industry settlement plan and thus it is our intention to widen and broaden the base of supply that we can provide travel agencies and thereby bring tremendous value to their businesses through a whole host of value added products that travel agents have found difficult to sell in the past.

And along with our CRS ticketing and settlement comes, of course, the thorny issue as to who is going to gain access to this new technology, this new platform, and so one of our most interesting endeavours over the past two years has been to set up the accreditation process by which the legitimate seller of travel of the future will be recognised by USTAR and be able to use our technology and functionality and we have spent many long hours trying to devise, and have successfully devised, to the satisfaction of all, the necessary attributes and characteristics of those business entities which will be approved by us to use our functionality.

Our implementation plan for the project is right on target. We have spent the last two years devising the necessary platforms in order to bring USTAR up to the level that would satisfy not only our board and working groups but also the hundreds of travel agencies that are working on the project. This past December 1996, we met in Toronto with 60 technology companies, telecommunications firms, all major names in computing and all major companies who provide services and/or functionality to the travel industry and we put forth an RFP. Our request for proposals was received by these companies with a due date at the end of February 1997 to respond to that RFP and to meet the various criteria that we had set forth as a requirement for our platform.

We have received responses to our request for proposals. The responses that we have received are very dynamic and we are now in the process of evaluating the various proposals that we have received and we will make a short list of the intended contractors some time at the end of June 1997. We will continue to meet and interview those prospective contract awards and make a final decision this August, at which point we will announce our platform. Having announced the platform in August of 1997, we will then meet with the supplier side of the industry - the airline, rail, cruise, tour, car, hotel, CEOs and CIOs in Mexico City on September 25 at which point we will unveil the platform to them and we will seek their funding of the portions of the project which are earmarked for supplier side funding. The travel agency community has its obligation of funding as well and that is on-going even today. At that point we will begin our platform development, our platform testing, our data testing and then we anticipate on-line launch in the fall of 1998.

We have received a tremendous amount of interest in this project from all corners of the globe. I returned last week from the UFTAA automation meeting in Amsterdam, at which point some 23 countries and 139 delegates were represented, where we made a presentation of this project. We have received hundreds of communiques from travel agency groups all around the globe. We recognise that our platform and what we wish to accomplish is a necessary platform. We also recognise that the problems that we face in the United States are very much the same problems that travel agencies around the globe face and, therefore, we hope that our efforts in the US are contributing to a global solution as well.

Information about our project can be found on our web site. We receive some 180 hits a day on our web site from all across the industry. About 30% of those hits on our web site are coming from the CRS companies so we know we are being watched. We are very excited about the progress that we have made with the Genesis project. We are very excited about coming down to the final determination of our platform and the many good proposals that we have received and we are ready to move forward so that we can bring functionality to our members and to travel agents who are interested in following our progress so that we can begin to have our own independent technology.

That is the exciting news at USTAR. That is the exciting news at the Genesis Project and I hope that I have given you in the short time that has been allotted to me an overview of what we hope to accomplish and how we plan to do so.

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