BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. APPLICATION FOR APPROVAL OF AGREEMENTS BY THE INTERNATIONAL AIR TRANSPORT ASSOCIATION

Transcription

1 BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Agreements Adopted by the Traffic Conferences of the International Air Transport Association OST-2009-XXXX APPLICATION FOR APPROVAL OF AGREEMENTS BY THE INTERNATIONAL AIR TRANSPORT ASSOCIATION 8 December 2009 Communications with respect to this document should be sent to Douglas Lavin Regional Vice President North America International Air Transport Association IATA Washington, 601 Pennsylvania Avenue, N.W. Suite North Building Washington DC 20004

2 1 Summary DOCKET: OST-2009-XXXX US DOT ORDER: pending Date: 8 December 2009 Filing fee / IATA Acct: USD 61 / US/UST involved: Yes End of Government Filing Period: 14 January 2010 Meeting site, date: Geneva, October 2009 Intended effective date: 1 April 2010 Agreement: Composite Passenger Tariff Coordinating Conference Resolution 017c (Memo 1555) r1 017c

3 2 APPLICATION FOR APPROVAL OF AGREEMENT Pursuant to statements submitted by Member airlines of the International Air Transport Association (IATA), the undersigned has been constituted to be their attorney-in-fact for filing with the Department of Transportation copies of agreements adopted by the IATA Traffic Conferences. On their behalf, and pursuant to Sections and of Title 49 of the United States Code and Parts , and (c) of Title 14 of the Code of Federal Regulations, I am filing with the Department this application for approval of an IATA agreement. This agreement and related factual and explanatory material and documentation required by 14 C.F.R and Department and Civil Aeronautics Board (CAB) precedent are contained in the IATA Traffic Conference documentation summarized above. This agreement arises from the continuing process of Tariff Coordinating Conferences and was developed in the context of prior Department and CAB rulings addressing related resolutions which reflected regulatory and market conditions then in effect. Thus, the present agreement should be viewed as part of a dynamic process of IATA Member airline adjustment to governmental and economic factors. On previous occasions, the Department has found such agreements to be consistent with the public interest when they do not result in fares or rates that are unlawful or injurious to competition in the markets at issue. Approval of the present agreement would not yield fares or rates that are unlawful or injurious to competition. Moreover, approval of this agreement, which reflects compromises among the differing economic and social philosophies of the many nations whose airlines are parties, will advance the public interest in maintaining good aviation relations with other countries. We request early approval by the Department of the foregoing agreement, pursuant to 49 U.S.C , and the grant of full antitrust immunity, pursuant to 49 U.S.C The conferral of full antitrust immunity would be in the public interest and necessary for the transaction to proceed. This agreement is a product of the IATA Tariff Coordinating Conferences which the Department found to be anticompetitive but nevertheless approved and immunized in Order (May 6, 1985) on foreign policy and comity grounds because such action is necessary to achieve the serious transportation need of maintaining good aviation relations with other countries and these benefits are not obtainable by reasonably available means having materially less anticompetitive effects. This agreement concerns fares or rates between non-u.s. points and thus has at most indirect application in foreign air transportation. The U.S. authorities have recognized (e.g, Order , 30 August 1979) that the interests of sovereign nations in the conditions governing air transportation between them greatly exceed any that the U.S. might have by reason of U.S. airline, citizen or shipper participation. This agreement is not adverse to the public interest or in violation of the Act and, therefore, should be granted full immunity. Respectfully submitted Douglas Lavin Regional Vice President North America International Air Transport Association

4 3 CERTIFICATE OF SERVICE A copy of this application or a summary notice thereof has been served by first class or priority mail on the following person Chief, Transportation, Energy & Agriculture Section Antitrust Division Department of Justice Washington D.C Douglas Lavin 8 December 2009 Date Served

5 1 December 2009 MEMORANDUM PTC COMP 1555 TO: Members Participating in Tariff Coordinating Conferences (SP-6026) FROM: Global Head, Passenger SUBJECT: Composite Passenger Tariff Coordinating Conference Geneva, October 2009 Resolution 017c Intended Effective Date: 1 April 2010 RESOLUTION - ADOPTED Attached is Resolution 017c, which was adopted at the above meeting for an intended effective date of 1 April The filing period for the attached Resolutions ends 14 January Members are reminded of their obligations under Resolutions 001 and 006 to advise this office by the end of the filing period whether approval by their Government authorities is required and, if so, to accomplish the necessary filing formalities. The effective date will be declared in accordance with Resolutions 001 and 006, when all the known necessary Government approvals have been received. Alban Sato Manager, Interline Tariffs IDFS Passenger International Air Transport Association Route de l Aéroport 33 PO Box 416 CH Geneva 15 Airport Switzerland Tel: Fax BB tariffs@iata.org

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7 RESOLUTION ADOPTED AT COMPOSITE MEETING OF PASSENGER TARIFF COORDINATING CONFERENCE GENEVA, OCTOBER 2009 EFFECTIVE DATE: 1 APRIL 2010 RESO TITLE COMMENTS RD 017c Construction Rules for Fare Components Amending 1 PTC COMP 1555 GVA, Oct09

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9 ADOPTED Res Doc: 1 Resolution: 017c CONSTRUCTION RULES FOR FARE COMPONENTS PTC1(85)017c (amended) PTC2(160)017c (amended) PTC3(87)017c (amended) PTC12(191)017c (amended) PTC23(155)017c (amended) PTC31(123)017c (amended) PTC123(171)017c (amended) Amending Filing Period Begins 7 December 2009 Intended Effectiveness: 1 April 2010 Ends 14 January 2010 Expiry: Indefinite RESOLVED that, Resolution 017c is amended as follows 1 Paragraph 6) One Way Backhaul Rule, Paragraphs a) and b) are amended Type A 6) ONE WAY BACKHAUL RULE (BHC) a) this Paragraph does not apply i) for journeys pricing units wholly within TC1 ii) for journeys pricing units wholly between Argentina, Brazil, Chile, Paraguay, Uruguay and TC2 iii) for pricing units wholly within Europe b) this Paragraph applies only when using normal one way fares and special one way fares pricing units PTC COMP 1555 GVA, Oct09

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11 SUMMARY OF AGREEMENT Composite package Intended Effective Date: 1 April 2010 The Composite meeting met in Geneva October The agreement contains amendments to Composite Resolutions with an Intended Effective date of 1 April The change is briefly described below. Deleted application of One Way Backhaul Rule on special fares in the Resolution 017c Construction Rules for Fare Components Rule. PTC COMP 1555 GVA, Oct09

12 1 December 2009 MEMORANDUM PTC COMP 1553 TO: FROM: Members Participating in Tariff Coordinating Conferences Global Head, Passenger SUBJECT: Composite Meeting of Passenger Tariff Coordinating Conferences Geneva, October 2009 MINUTES Attached are the Minutes of the Composite Meeting of Passenger Tariff Coordinating Conferences, which was held in Geneva, October 2009 under the Chairmanship of Mrs. Patricia George. Alban Sato Manager, Interline Tariffs IDFS Passenger International Air Transport Association Route de l Aéroport 33 PO Box 416 CH Geneva 15 Airport Switzerland Tel: Fax AS tariffs@iata.org

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14 OUTLINE OF CONTENTS Opening of Meeting Attendance Record Determination of Voting Membership Examination of Credentials of Accredited Representatives and Alternates Status of composite resolutions Approval of Minutes of Previous Meeting Regulatory developments on immunity for tariff conferences Basis for discussions Passenger Tariff Conferences Steering Group (PSG) Report Resolution Advisory Panel Resolution Advisory Working Group (RADWG) Resolution 024E Rules for Payment of Local Currency Fares Section E Resolution 017c Construction Rules for Fare Compnents Resolutions 300/301/302 on Baggages Close of Meeting Attachment A Attendance Record Attachment B Terms of Reference Resolution Advisory Working Group (RADWG) Attachment C ATPCO Presentation on Automated Baggage Solution Attachment D Workplan Automated Baggage Rules Implementation PTC COMP GVA, Oct09

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16 COMPOSITE MEETING OF PASSENGER TARIFF COORDINATING CONFERENCES Geneva, October 2009 OPENING OF MEETING M I N U T E S 1 The Chairman, Mrs. Patricia George, opened the Composite Meeting of Tariff Coordinating Conferences at 1530 hours on Tuesday, 21st October The Meeting had been convened by Memorandum PTC COMP 1524, dated 16 April It comprised the following: 86 th Meeting of Passenger Tariff Coordination Conference tst Meeting of Passenger Tariff Coordination Conference 2 88 th Meeting of Passenger Tariff Coordination Conference nd Meeting of Passenger Tariff Coordination Conference th Meeting of Passenger Tariff Coordination Conference th Meeting of Passenger Tariff Coordination Conference nd Meeting of Passenger Tariff Coordination Conference As with all traffic conference meetings, this meeting had immunity from US anti-trust laws, on the condition that all agreements were submitted for specific approval by the US authorities. IATA would submit the agreements to the DoT in accordance with this condition. Consistent with this, IATA's Board of Governors had determined that any agreement reached at this meeting must not be put into effect prior to its declaration of effectiveness. This ruling was contained in the Provisions for the Conduct of the IATA Traffic Conferences and must be complied with. ATTENDANCE RECORD 3 The Attendance Record is at Attachment 'A'. DETERMINATION OF VOTING MEMBERSHIP 4 The Voting Membership for the meeting was determined in accordance with the Provisions for the Conduct of the IATA Traffic Conferences. EXAMINATION OF CREDENTIALS OF ACCREDITED REPRESENTATIVES AND ALTERNATES 5 The accreditation received by IATA was examined and found to be in accordance with the Provisions for the Conduct of the IATA Traffic Conferences. STATUS OF COMPOSITE RESOLUTIONS 6 The Status of Composite Resolutions was noted and in addition Members advised approval for the following memoranda: Hong Kong SAR: PTC COMP 0677, 1490, 1510 Thailand: PTC COMP 1394 Kenya: PTC COMP 1477, 1490, , 1516, 1525, 1532, 1535, 1547 APPROVAL OF MINUTES OF PREVIOUS MEETING 7 The following minutes were approved: PTC COMP GVA, Oct09 Composite Meeting of Passenger Tariff Coordinating Conferences

17 Geneva, 9-10 October 2008 Memorandum PTC COMP 1494 dated 3 November 2008 REGULATORY DEVELOPMENTS ON IMMUNITY FOR TARIFF CONFERENCES 8 An update on recent regulatory developments impacting IATA Traffic Conferences, including the Passenger Tariff Coordinating Conferences and its initiative for selfassessment with the US DoT was provided by IATA. BASIS FOR DISCUSSION Amendments to Manual 9 The following amendments have been made to the Passenger Composite Resolutions Manual since its annual print in April 2009 Memo Reference Memo Date Reso Action For effect PTC2 ME Feb09 017c Attachment A specified routing amended 01May09 PTC COMP Mar09 024e Attachment A Egypt source for rates of exchange PTC COMP Mar09 024e Attachment A Kenya source for rates of exchange PTC COMP Mar09 024e Attachment A Viet Nam source for rates of exchange PTC COMP Apr09 024e Attachment A New Zealand source for rates of exchange 05Mar09 19mar09 30Mar09 08Apr09 PTC COMP Apr09 024a Attachment B Latvia added to list 01Jun09 PTC COMP May09 024e Attachment A Mongolia source for rates of exchange PTC COMP Jul09 024e Attachment A Saudi Arabia source for rates of exchange PTC COMP Jul09 024e Attachment A Kenya source for rates of exchange PTC COMP Jul09 024e Attachment A Kenya source for rates of exchange further to PTC COMP May09 07Jul09 07Jul09 10Jul09 PTC COMP Jul09 024a Attachment A Nepal deleted from list 01Aug09 PTC COMP Jul09 024e Attachment A Ethiopia source for rates of exchange PTC COMP Aug09 024e Attachment A Nepal source for rates of exchange PTC COMP Aug09 024e Attachment A Armenia source for rates of exchange PTC COMP Aug09 024e Attachment A Kyrgyzstan source for rates of exchange PTC COMP Sep09 024e Attachment A Japan source for rates of exchange PTC COMP Sep09 024e Attachment A Qatar source for rates of exchange 21Jul09 06Aug09 27Aug09 27Aug09 04Sep09 02Oct09 10 The manual together with these amendments formed the basis for discussion at the meeting and any resultant changes. PTC COMP GVA, Oct09

18 PASSENGER TARIFF CONFERENCES STEERING GROUP (PSG) Report 11 IATA presented a short summary of PSG activities of The PSG did not hold a formal meeting in However their opinion was requested on certain policy issues during the year through exchanges as well as taking action on changing the terms of reference for the RAP (agenda item COMP- 5/02 refers). The most important policy item was embracing the vision to achieve 100% Flex Fares as soon as possible. This endorsement was provided in recognition that members are finding it increasingly difficult to send delegates to face-to-face meetings and IATA will no longer be able to support such meetings after June Other advantages of accelerating the transition to a world of 100% FlexFares are: - Simplified tariff coordination processes - Simpler fare structures for multilateral interline fares - Significant shortening of the regulatory approval process The Conference was pleased with the progress made and the Members were reminded to instruct their delegates to transition remaining areas to Flex Fares as soon as possible. RESOLUTION ADVISORY PANEL 1 APRIL The RAP Report was presented by IATA. In addition to the proposals from RAP, IATA reported that the Panel had also addressed: Resolution 727a Cancel penalties versus Change Fee Resolution 017f Exchange, Reissues and Refunds Impact of tags Resolution 100 Most restrictive conditions Resolution 024e Rules for Payment of Local Currency Fares Resolution 024d Att A versus BSP requirements 13 The Chairman expressed her thanks to the RAP for their efforts in trying to resolve industry problems. RESOLUTION ADVISORY WORKING GROUP (RADWG) 14 Background There has been much discussion with RAP participants with the aim to revitalise RAP activities and make them more relevant. The main goals have been to broaden the areas of discussion and open the meeting to more airline participation. PTC COMP GVA, Oct09 IATA synthesized various comments from airlines/suppliers and presented new terms of reference. The major changes compared to the previous terms of reference are: - participation open to all IATA airlines - broader scope of discussion topics to better serve industry requirements - implementation issues to be decided upon by consensus - close liaison with other IATA groups as necessary - no compensation for airline attendance

19 Action The conference was asked to endorse the new Resolution Advisory Working Group (RADWG) group and its Terms of References as shown in Attachment B. 15 The Conference endorsed the new working group and its terms of reference. IATA advised that the first RADWG will be called for early EXPEDITED 15 DECEMBER 2009 RESOLUTION 024E RULES FOR PAYMENT OF LOCAL CURRENCY FARES SECT E 16 IATA proposed Delete Section E Local Panel Action as such panels have not been called and no longer required. Absent opposition, this was adopted. RESOLUTION 017c CONSTRUCTION RULES FOR FARE COMPONENTS One Way Backhaul rule (BHC) Background 1 APRIL As normal one way (OO) levels are being established at 60-75% of the round trip (RT) levels a majority of the RAP no longer saw a strong market requirement to maintain the BHC in the current environment. However, one member still found merit in keeping this check especially for pricing units involving the USA. Proposal 18 Consequently RAP recommended limiting the application of the BHC to normal one way fares only thereby exempting special fares from the use of the backhaul formula as follows: 6) ONE WAY BACKHAUL RULE (BHC) a) this Paragraph does not apply i) for journeys pricing units wholly within TC1 ii) for journeys pricing units wholly between Argentina, Brazil, Chile, Paraguay, Uruguay and TC2 iii) for pricing units wholly within Europe TC2 iv) for pricing units wholly within TC3 v) for pricing units between TC2 and TC3 b) this Paragraph applies only when using normal one way fares and special one way fares pricing units 19 To simplify some TC members proposed to delete the rule. A vote for the deletion revealed support of 15 members and firm oppositions from AA, UA with TG being able to abstain. The opponent to the deletion advised that this rule was still required, to be consistent with the Circle Trip Minimum check for round trip and circle trip pricing units. PTC COMP GVA, Oct09

20 20 A vote on the proposal as shown in paragraph 18 above revealed opposition by CX and KQ, who did not like to see any further exceptions to this rule if complete deletion could not be achieved 21 An another vote on the following, removing exceptions and canceling the check for any special fares was taken. PTC COMP GVA, Oct09 a) this Paragraph does not apply i) for journeys pricing units wholly within TC1 ii) for journeys pricing units wholly between Argentina, Brazil, Chile, Paraguay, Uruguay and TC2 iii) for pricing units wholly within Europe b) this Paragraph applies only when using normal one way fares and special one way fares pricing units Absent opposition, this was adopted with KQ abstaining. RESOLUTIONS 300/301/302 1 APRIL 2010 AUTOMATION OF NEW INTERLINE BAGGAGE PROVISIONS PROCESS Background 22 Airlines have for some time been working with the Airline Tariffs Publishing Company (ATPCO) to design an automated application that will support reservations, pricing, ticketing and check-in systems to identify individual operating carrier baggage allowances, baggage charges and excess baggage. Historically a rather simplistic approach to baggage had been in place in that under the weight system passengers had either 20 kilos, 30 kilos or 40 kilos (or the equivalent in pounds) depending on cabin entitlement and 2 pieces under the piece concept (depending on class, variable dimensions). This approach had a long standing basis in IATA Tariff Composite resolutions 300 and 301. In some cases excess baggage calculation was also defined. It was always understood that for interline journeys these resolutions should be used. This is not the reality today since carriers are defining their own baggage allowances and charges. Airlines have adopted new ways of assessing baggage, which is based on individual Operating Carrier rules rather than the simplistic generic rules in these tariff resolutions. The baggage options are extensive with many variables. The ATPCO baggage solution seeks to automate the complexity that now exists. In addition it should be noted that the IATA Composite Resolutions 300/301 are expiring on 31 march 2010 unless an extension is agreed by Tariff conference members and authorized by the US. DoT. As much as ATPCO were working with many Members to define a data application to calculate baggage allowances and charges, IATA in parallel was trying to develop a replacement Resolution to become effective once 300 and 301 expires. At the Tariff Composite Conference held in October 2008 a new Resolution 302 was adopted to replace 300 and 301. In line with business drivers this new Resolution no longer mandates baggage allowances and charges but provides a step-by-step mechanism to govern the handling of Interline baggage by defining a process that determines which carrier's rule to apply for an Interline journey. The new term Most Significant Carrier is part of this new process that could apply to a given interline itinerary. This Resolution approximates the methodology applied in the ATPCO application. Indeed Resolution 302 hierarchy will be coded into the ATPCO solution. In principle Resolution 302 will be the last reference point after all other carrier baggage filings options had been eliminated. As Resolutions 300/301 which have

21 been the basis for interline baggage allowances are expiring if there is no alternative solution and fallback Resolution 302 then there would be no IATA interline baggage standard. In fact the interlining of baggage could be placed under serious threat. To manage interline baggage allowances a high degree of automation will be required. The ATPCO baggage product allows carriers to file operating carrier baggage allowances and baggage charges but it is proving difficult to implement. Members with ATPCO have completed the work of defining the data applications and an 800-page reference document has been completed by ATPCO. Interline baggage is already complex but there is little automation to support it. This new Most Significant Carrier rules methodology will be even more complex if there is no automation in place to support the new business drivers. A multi disciplinary meeting to address the implementation issues was called for January 2009 however there was very little interest from some of the required attendees. Only a small number of airline commercial representatives and the system providers had confirmed participation. There was no ticketing nor airport handling expertise. The issues now arising are numerous:- How, when and where should the automation be placed o Reservation system o Pricing system o Check-in system o What is the impact on interline baggage allowances for international journeys and domestic to international journeys? o Whose baggage allowance should take precedence? o What is the impact on ticketing? o What is the impact on baggage handling and interline through checking? o What is the impact on ground handling and the airport experience? o In self service devices o at the check-in counters o through check-in (TCI) o How is any excess baggage calculated? o If this automation is going to be placed in DCS systems how will the ground handlers and the DCS systems providers be engaged assuming they are willing to do so? There may be more that have not as yet been identified. Many IATA Members attended the ATPCO meetings however it would appear that in many cases this activity has not filtered through to other areas. Note that unless the automation is implemented there will be little opportunity to accurately define Most Significant Carrier based baggage allowances and charges (if any) that may apply and it will be impossible to audit and settle in interline billing. Because of this note this agenda item were placed on the various other working groups during the spring of 2009 with a request to discuss the issues in their areas of responsibility. Unfortunately IATA received limited feedback and no real support to determine an industry way forward. PTC COMP GVA, Oct09 Proposed Action: This Composite meeting was requested to discuss the impact on all areas of responsibility, provide comments and feedback as to the impact and propose the best way forward on how the industry might best engage all stakeholders to drive this forward. 23 A presentation was made by ATPCO on the status of automated baggage rules solution and this is shown in Attachment C. 24 At the Joint Passenger Services Conference (JPSC) held earlier in the week, a joint IATA/ATPCO Task Force was formed under JPSC to build the business case

22 and to implement the automated baggage rules as soon as possible. The work plan for the task force can be found in Attachment D. 25 IATA advised that the Members will be informed. Each airline and strategic partner will be contacted to nominate a "champion" within their organization to lead the implementation project. Based on the business case developed by the Task Force, IATA will propose a new implementation date for the Resolution 302 Baggage Provisions Selection Criteria. The proposed date will be advised no later than the end of February KQ requested that IATA support the implementation of the automated baggage solution through regional forums such as AFRAA, AACO. 26 The conference endorsed the strategy as outlined by IATA. 27 LH stated that Resolutions 300 and 301 were not used anymore and that they should not be extended. They did not see any connection between Resolutions 300/301 and the implementation of Resolution The Chairman reminded all the participants of their responsibility and cooperation to make this transition and implementation process as smooth and efficient as possible. CLOSE OF MEETING 29 The Chairman thanked the delegates and IATA staff for their support, cooperation and active participation in the discussions. 30 The Composite Meeting was closed at 1100 hours on 21 October PTC COMP GVA, Oct09

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24 ATTACHMENT A PASSENGER TARIFF COORDINATING CONFERENCE COMPOSITE MEETING, GENEVA, OCTOBER 2009 CHAIRMAN: PATTY GEORGE Airline Representatives Company Name Code Name Telephone Air France AF Bernard CHARRIER becharrier@airfrance.fr All Nippon Airways NH Mihoko HARADA mi.harada@ana.co.jp All Nippon Airways NH Mitsuyo IDE m.ide@ana.co.jp All Nippon Airways NH Akiko OYAMA a.oyama@ana.co.jp All Nippon Airways NH Takashi IMABAYASHI waka@ana.co.jp American Airlines AA Richard RUMMELL richard.rummell@aa.com Austrian Airlines OS Branislav KRSAK branislav.krsak@austrian.com Austrian Airlines OS Karin GRASSL karin.grassl@austrian.com British Airways BA Martin MCCOOL martin.mccool@ba.com Cathay Pacific Airways CX Shirley YAN shirley_yan@cathaypacific.com China Eastern Airlines MU Junhui CHENG jhcheng@ce-air.com China Eastern Airlines MU Weiyi PAN wypan@ce-air.com China Southern Airlines CZ Chen YONGGUANG benchen@csair.com China Southern Airlines CZ Li DAN SONG lidansong@cs-air.com Czech Airlines OK Michal HAJEK michal.hajek@csa.cz Czech Airlines OK Jirina KLIMOVA jirina.klimova@csa.cz Czech Airlines OK Marta POSTULKOVA marta.postulkova@csa.cz Egyptair MS Ingy NABIL engy@egyptair.com El Al Israel Airlines LY Linda GRINFELD * linda@elal.co.il Finnair AY Marko HAAKSIALA marko.haaksiala@finnair.com Finnair AY Sirpa VÄNTTINEN-VAN RIJ sirpa.vanttinen-vanrij@finnair.com Iberia Airlines IB Montserrat COYA mcoya@iberia.es Iberia Airlines IB Amparo COLOMER acolomer@iberia.es Icelandair FI Linda STEINGRIMSDOTTIR lindast@icelandair.is Icelandair FI Rut JULIUSDOTTIR rutjul@icelandair.is Iran Air Lines IR Mansour REZAEI rezaei@iranair.com Japan Airlines JL Ross LEGGETT ross.leggett@jal.com Japan Airlines JL Yoko GOTO yoko1.goto@jal.com Kenya Airways KQ Rose WANGUI * rose.wangui@kenya-airways.com KLM KL Madeleine VAN RIJNBERK madeleine-van.rijnberk@klm.com KLM KL Marina DAALHUIZEN marina.daalhuizen@klm.com KLM KL Johan LODEWIJCKX johan.lodewijckx@klm.com Korean Air KE Keunhae KIM kimkh@koreanair.com Korean Air KE Minjung OK mjok@koreanair.com Korean Air KE Kyung Yong LEE * kylee@koreanair.com Kuwait Airways KU Mansour AL SULTAN * ext 3493 alsultan-m@kuwaitairways.com LAN Airlines LA Silvana MOLETTO +(562) silvana.moletto@lan.com LOT Polish Airlines LO Elizabeth DMOWSKA e.dmowska@lot.pl Lufthansa LH Tanja PRITZKOLEIT tanja.pritzkoleit@dlh.de MEA ME Salim KHARRAT kharrats@mea.com.lb Qatar Airways QR Stephane BAUDEMONT * sbaudemont@qatarairways.com.qa Rossiya FV Svetlana PUSTOKHINA s.pustokhina@rossiya-airlines.com Royal Jordanian RJ Amal KAMAL * amal.kamal@rj.com S7 Airlines S7 Irina ANOKHINA ext 4572 i.anokhina@s7.ru Saudi Arabian SV Samir ALOMAIRI somairi@saudiairlines.com PTC COMP GVA, Oct09

25 Company Name Code Name Telephone Airlines Saudi Arabian Airlines SV Roman TARABZONY Scandinavian Airlines SK Kurt SAETRE kurt.saetre@sas.se Tarom RO Margareta VASILEVSCHI * margareta.vasilevschi@tarom.ro Thai Airways International TG Cherdsak WAIARSA cherdsak.w@thaiairways.com Thai Airways International TG Pranee WASINSOMBUT pranee.w@thaiairways.com United Airlines UA Carol SWANSON carol.swanson@united.com Virgin Nigeria Airways VK Dorcas AKETCH * dorcas.aketch@virginnigeria.com Virgin Nigeria Airways VK Olayiwola-Abiodun ALABI abiodun.alabi@virginnigeria.com Observers Company Name Name Telephone ATPCO Fred FOOTE ext.1328 ffoote@atpco.net Airports Council International (ACI) Arturo GARCIA-ALONSO agarcia@aci.aero IATA Name Job Title Telephone Philippe BRUYERE Global Head, Passenger bruyerep@iata.org Mike MULLER Head, Passenger Interline Standards mullerm@iata.org David MCEWEN Manager, Passenger Interline Standards mcewend@iata.org Colin FLYNN Senior Legal Counsel flynnc@iata.org Alban SATO Manager Interline Tariffs satoa@iata.org Lars SELLSTEDT Manager, Tariff Meetings sellstedtl@iata.org Cristina ROTOR Manager, Industry Solutions rotorc@iata.org PTC COMP GVA, Oct09

26 RESOLUTION ADVISORY WORKING GROUP (RADWG) ATTACHMENT B Terms of Reference The Resolution Advisory Working Group (RADWG) is a forum whereby IATA Members and IATA Strategic Partners may: 1. Discuss and develop uniform interpretations of existing resolutions and procedures relating to the application of tariffs and interlineable fares and rules; 2. Discuss developments in distribution channels and recommend changes to existing resolutions and procedures relating to the application of tariffs and interlinable fares and rules; 3. Review and advise on the implementation strategy of adopted changes and interpretations to current tariff resolutions, procedures and methodologies. Membership is open to all IATA member airlines and Strategic Partners. Procedures Meetings will be called as necessary; The RADWG will liaise closely with other IATA groups as necessary, e.g. the Ticketing Committee; Implementation issues will be decided by consensus; Recommendations regarding IATA tariff coordination (TC) resolutions will be agreed by a simple majority vote for which only IATA TC members may vote. Such recommendations will be forwarded to the Composite Conference for their consideration via the Passenger Steering Group (PSG). Recommendations regarding other IATA resolutions will be forwarded to the appropriate Committee for their consideration. PTC COMP GVA, Oct09

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28 ATTACHMENT C ATPCO PRESENTATION ON AUMATED BAGGAGE SOLUTION PTC COMP GVA, Oct09

29 Baggage Allowance and Charges Background Baggage Allowance and Charges Regulatory Situation IATA resolutions Government regulation Goals Solution and Automation Opportunities Status

30 Baggage Allowance and Charges Background Passenger Ticketing GDS specific process that often: Specifies free allowance only Relies on a table driven process Involves manually maintained data Is not current or easily updateable Is unable to vary allowance by passenger, fare product, status, operating carrier etc. Provides fare owner information only Omits embargo information Baggage Allowance and Charges Background Passenger Check-in Involves a DCS process where: Rules of down-line carriers not always known There is a heavy reliance on agent knowledge Check-in carrier rules are often applied Issues may exist collecting fees at departure Creation of accountable documents often involves paper

31 Fees Baggage Allowance and Charges Background Fees and Collection Ancillary revenue yearly increase of 345% Baggage revenue represents a large portion First bag / Second bag Pre-paid Varying fees / application Point of check-in / payment Passenger type / status Negotiated Fares Baggage Allowance and Charges Background Fees and Collection Fee collection is not standard: Calculation of fees is not known Under collection of fees can occur Down-line fees ignored Accountable documents are not created

32 Baggage Allowance and Charges Background Interline Processing Interline baggage rules are not transparent Often not clear to the passenger Often not applied at time of check-in Minimal interline baggage settlement 12% of passenger tickets involve interline settlement 1% of passenger tickets involve excess baggage charges Risk in interline tickets where baggage fees are Not collected, Under-collected, or Not interlined Baggage Allowance and Charges Regulatory Situation IATA Resolution 300/301 Resolution 302 Government US DOT ATPCO PTBs 15OCT09, 02APR09 Transparency to the passenger

33 Baggage Allowance and Charges Goals Provide data content to manage online and interline travel Provide accurate baggage allowance and charges information at all touch points to the passenger System accurately calculate charges Correct revenue accounting and billing Meet regulatory requirements Baggage Allowance and Charges Solution and Automation Interline travel and IATA Resolution 302 Document process to align interline provisions Provide data to determine whose rules apply Accurate application of allowance and charges Online and interline Piece and weight systems Data in IATA Resolutions 300/301 Carrier rules Alliance harmonization

34 Baggage Allowance and Charges Solution and Automation Support processing of embargos Notify Passenger Minimize customer service impacts Revenue Management and Accounting Create accountable document Support interline settlement Minimize revenue leakage Consistent application Ticketing Check-in Revenue Accounting Baggage Allowance and Charges Solution and Automation Display, Itinerary Pricing, Passenger Ticketing Passenger request for information on baggage allowance Indication of free baggage allowance on Passenger ticket / receipt / coupon for purchased airfare Embargo / restriction communication

35 Baggage Allowance and Charges Solution and Automation Passenger Check-in Determine checked points Check for baggage embargo Verify free baggage allowance Assess applicable baggage charges Baggage Allowance and Charges Solution and Automation Excess Baggage Ticketing, Handling Produce an accountable document (Electronic Miscellaneous Document) Revenue Accounting, Interline Settlement, Reporting Support account functions to ensure proper collection Interline billing / settlement

36 Options: Opportunities Baggage Allowance and Charges Provide Content to impacted areas / system Centralized Repository Text subscription product Data products for systems processing Centralized Baggage Calculator Centralized Repository: Opportunities Baggage Allowance and Charges ATPCO builds a collection system for data Translation of data into readable format based upon rule owner Provide internet based access to ATPCO data

37 Opportunities Baggage Allowance and Charges Centralized Repository Text Subscription Product: Opportunities Baggage Allowance and Charges ATPCO builds a collection system for data Translation of data into readable format based upon rule owner Provides subscription product Direct sales for customer information Passenger check-in for manual validation Passenger check-in for manual collection of fees Revenue Accounting for interline billing and revenue allocation Audit

38 Opportunities Baggage Allowance and Charges Text Subscription Product Opportunities Baggage Allowance and Charges Data product for system processing: ATPCO builds a collection system for data ATPCO documents system processing requirements for automated data Provides data to subscribers for automated processing by GDS, CRS, DCS, Revenue Accounting and Auditing systems Passenger Pricing, Ticketing, Inquiry Passenger check-in for validation of allowance Passenger check-in for automated collection of fees Revenue Accounting for interline billing and revenue allocation Audit

39 Opportunities Baggage Allowance and Charges Data Product for system Processing Opportunities Baggage Allowance and Charges Centralized Baggage Calculator: ATPCO builds a collection system for data Provides request / response handling for inquiry Defines transaction input / response for Passenger Pricing, Ticketing, Inquiry Passenger check-in for validation of allowance Passenger check-in for automated collection of fees Revenue Accounting for interline billing and revenue allocation Audit

40 Opportunities Baggage Allowance and Charges Centralized Baggage Calculator Status and Next Steps Agreed upon industry solution ATPCO design complete Required data identified Processing of data documented Carrier/subscriber commitment required ATPCO will host Project Driver workshops 4Q09/1Q10 with interested airlines/systems ATPCO development targeted to begin mid 2010 Near term delivery opportunities?

41 ATPCO Contacts Status and Next Steps Fred Foote, Manager Industry Solutions extension 1328 Marcus Maginniss, Sr. Business Analyst extension 1664

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43 ATTACHMENT D Work Plan Automated Baggage Rules Implementation (as endorsed by JPSC/29 PSC/31 GVA, October 2009) 15

44 1. Introduction 1.1 About Automated Baggage Rules 1.2 The Challenge 1.3 Statement of Fact 2. Business Case for Automated Baggage Rules Implementation 2.1 The Benefits Selling the Project to Implementation 2.2 The Vision Statement Industry Direction 2.3 The Business Case For the Industry 2.4 The Cost Benefit Analysis 3. Flow review of current procedures and processes 3.1 The Scope of the Project Distribution Airport Services Financial Information Technology (IT) 3.2 Current Business Process Review Procurement of the Excess Baggage Ticket Airline Dedicated Stock Reservations and Ticket Issuance Multiple Sales Channels Airport Processes and Procedures Check-in Boarding Post Departure Other Airport Functions Other Airport Issues Financial System Functionality Self Evaluation Interline agreements and ground-handling evaluation Messaging 4. Participants In The Process 4.1 The Passenger 4.2 The Airlines 4.3 Travel Agents 4.4 Distribution Channel Provider (GDS) 4.5 Ground Handler 4.6 Revenue Accounting 4.7 Application/System Interfaces 4.8 Passenger Reservations 4.9 Departure Control System (DCS) 4.10 Industry Settlement Systems 4.11 Revenue Accounting 4.12 Interline Billing 5. Automated Baggage Rules Processes Description 5.1 Automated Baggage Rules Marketing Process 5.2 Automated Baggage Rules Relationship with ET Issuance Process 5.3 Automated Baggage Rules Relationship with Ground Handling Process 5.4 Automated Baggage Rules Revenue Accounting Process 16

45 1. Introduction 1.1 About Automated Baggage Rules Historically interline baggage rules have been governed in a rather simplistic approach governed by IATA Composite Resolutions 300 and 301 which expire 31 March Carriers have a new business model requiring baggage rules to be assessed at the operating carrier level. ATPCO has been working with carriers to fully define a filing architecture for carriers to file their individual baggage allowances and charges. This inherently creates a level of complexity never before seen in baggage. One could say it was analogous to the complexity that has evolved with carrier fare filings. Now we have carrier baggage rules filings. IATA Resolution 302 was adopted to provide a hierarchical approach to selecting a carriers rule that would be applied across an interline journey by defining carrier selection criteria based on most significant operating carrier. To be successful automation across a wide range of applications is required. 1.2 The Challenge Resolution 302 has been exempted from US DoT regulatory scrutiny. Despite all the work done with ATPCO with commercial, tariffs and revenue management representatives there has been in consultation there has been little interest with other areas of the business as to what is needed to drive implementation. There appears to be growing sentiment that this is an important issue and that the industry requires direction and leadership to define what needs to be done to bring the solution to market. 1.3 Statement of Fact Resolutions 300/301 expire officially 31 March The only standard to look to in case of interline disputes will be resolution 302 unless carriers apply a different approach themselves. ATPCO have defined a filing architecture but to date no one has shown any interest in implementing the solution. 17

46 2. Business Case for Automated Baggage Rules Implementation 2.1 The Benefits Selling the Project to Implementation Individual airlines must make up their own minds whether to proceed. It is necessary to clearly define the benefits of moving to an automated solution to both internal and external stakeholders and identify the consequences of remaining without an automated solution. Importantly a lack of automation could signal an end to a seamless interline process as we know it today. Some of the business drivers could be: Opportunity to establish new revenue streams, Opportunity to audit and validate current baggage policy, Opportunity to distribute baggage policies through multiple channels. What is required is to identify the benefits of an automated baggage solution versus remaining with the current situation for airlines, travel agents, airport processes and the passenger experience. See below for the work that needs to be completed. Benefits of Automated Baggage Rules - Carrier Existing Baggage Rules (nonautomated) New Automated Baggage Rules 2 Benefits of Automated Baggage Rules Travel Agency/Agent Existing Baggage Rules (nonautomated New Automated Baggage Rules 18

47 Benefits of Automated Baggage Rules Airport Check -in Existing Baggage Rules (nonautomated New Automated Baggage Rules Benefits of Automated Baggage Rules Passenger Existing Baggage Rules (nonautomated New Automated Baggage Rules 2.2 The Vision Statement Industry Direction From the exercise in 2.1 we should now be better able to provide an industry vision statement. 2.3 The Business Case For the Industry Why should we do this as a strategic implementation. The industry business case is not completed and not defined. Without a business case it is difficult to define an implementation strategy. We need to have Conference action to help define a business case. 2.4 The Cost Benefit Analysis The cost benefit analysis has not been completed. There is no global industry business case. There is a high level view of the main drivers but there is no real sense that anyone will implement this even if the solution from ATPCO was already built. There is no real understanding of the solution and what impact it will have. Accordingly major stakeholders are not engaged because no one is sure what they are being asked to do and which areas are most impacted. Moreover no one knows where the solution will reside (e.g. will it be a message to an ATPCO database or will the application sit in the check-in systems). 19

48 However the final infrastructure will have the following cost areas that will need to be evaluated: System provider supplying the automated baggage rules product Initial implementation Transactions Maintenance Upgrades to own system Support Cost of integration into systems and connections Staff resources and training IT resources and man hours Distribution to BSPs/ARC cost by GDS Website development Ground Handling Deployment 20

49 SCHEMATIC DIAGRAM Travel Agency Distribution (BSP/ARC) via the GDSs Home Market and Other Countries X # GDSs and countries charged Other Channels (e.g. secure agency portal on the internet) Direct Sales Carrier Reservations System Carrier Pricing Systems ATPCO AUTOMATED BAGGAGE RULES SOLUTION Check-in system (DCS) Handling Agents Check-in Systems (DCSs) x # Ground Handlers or DCS as charged Interline Partners Information to/from interline partners Check-in System X # interline partners Revenue Accounts 21

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51 3. Flow review of current procedures and processes Implementing an automated baggage rules solution will affect virtually every part of an airline s business. It is not just about applying a technological solution as found in normal Information Technology (IT) implementation projects but more, it will affect how business is done in the future. It is important to note that in order for the project management team to be effective there should be a full and complete process and procedures review of how business is being conducted today without automation. However, more importantly, at every step and in every department the question should be asked, What are the consequences for this process when the automated solution is implemented A carrier needs to be open to change and be ready to question why a particular process or procedure is in place and whether this will still be required in an electronic environment. In addition, it is important that a carrier knows at the beginning where their current systems are located, which platforms they are on (e.g. which EDIFACT message version is running), what vendors are used, which processes are automated or manual and which will need to be integrated. Key decisions will have to be made as the project evolves (e.g. changes to revenue accounting systems that can handle certain data may be required, amongst others). These decisions can only be made effectively and within an agreed time frame if there is full view of the facts. It is important to complete a self-evaluation to determine from what base line the project is starting. At each stage it is important to ask, Do I need this process and what is the impact on my other procedures and processes if I remove it? In order to start the process review, it is necessary to examine the business process as it is today. The following section documents the different processes and procedures that are used. This section raises a series of issues that will need to be addressed. However, as each carrier is different, it does not cover every single issue that may arise. 3.1 The Scope of the Project The scope of the project is wide-ranging and covers all departments. The project manager will not be able to manage the implementation without breaking the project into more manageable parts. To deliver the automated baggage rules solution and realize the revenue, there are four major areas that are involved. We will, for the purpose of this discussion, refer to them as The Four Pillars. 1. DISTRIBUTION: from first contact to ticket issuance; 2. AIRPORT SERVICES: from check-in to departure; 3. FINANCIAL: from sales reporting to revenue accounting; 4. IT: from systems support to systems integration. 15

52 Each of these areas will have a major part to play in the procedures and process review. As these areas will be the ones most affected, it is important that these 4 areas are involved at the earliest stage. In fact one could say that automated baggage rules implementation is not one project but 4 projects making up the implementation Distribution Distribution can be identified as the process by which a contact is converted to a sale and a ticket for carriage is issued. Typically this might involve sales and marketing, tariffs, reservations, call centers, travel agents, airport ticket offices, city ticket offices and ticketing service centers Airport Services This is the moment of truth. This is when the passenger realizes the product they have paid for. Up to this point all they have is a ticket and possibly an idea of their baggage allowances if any. This area will involve check-in, passenger handling, station management, departure control, gate and boarding control and coupon control Financial This is the area that is responsible for the money. Finance are involved in making sure all the sales transactions are reported correctly, the revenue accounting department books the revenue once the passenger has flown and coupons used and prepares bills for interline settlement. They take care of accounts payable and accounts receivable and play an important role in ensuring the financial stability of a carrier. The revenue in the financial area is realized by the presence of the ticket. They also agree the budget for the implementation of the project Information Technology (IT) The link between each area of the business is facilitated by the movement of the electronic ticket (and in some cases paper tickets) at each point in the process. IT s role in an airline is usually primarily concerned in ensuring that the different systems a carrier is running operates efficiently and reliably, trouble-shooting when things go wrong. However the reservations system may operate independently from the check-in system. The back office revenue accounting systems will work totally independently from both the reservations system and the check-in system. Carriers typically will be running many other systems that support their operation but typically they all operate independently of each other. Some of them may be in-house solutions built and maintained uniquely by a carrier, still others may be purchased from vendors, system or software providers. 16