May 11, 1998

With its razor-thin profit margins and endless battles for customer loyalty, the $102 billion commercial airline business is one of the few industries that stand to benefit, or to lose, much from a successful transition to electronic commerce.

But commercial air carriers, though much praised for their early embrace of information technology for flight, fare and maintenance schedules, are a few yards short of the gate when it comes to their first big step toward online commerce: electronic ticketing, or e-tickets.

Most major airlines today issue electronic tickets, which are paperless tickets that exist only in the memory of an airline’s computer system.

The idea is that instead of having to pick up a paper ticket or wait for it to be delivered, e-ticket travelers simply arrive at the airport with a receipt, picture identification and, when necessary, the credit card with which they purchased the ticket. Since the ticket is stored in the computer system, there is said to be no such thing as losing a ticket, and itinerary changes can be quickly accomplished by telephone without requiring fresh tickets to be delivered.

The system has rapidly grown in popularity since it was introduced by United Airlines in the mid-1990s. Continental Airlines says that electronic tickets represent almost 40 percent of the tickets it issues today; at United they account for 52 percent.

But despite their growing popularity, business customers, in particular, are wary.

The Internet marketing expert Don Peppers, who lives and breathes electronic commerce and travels nearly full time, says that e-tickets are too ethereal for his taste.

“I’m worried that I’m going to forget I have e-tickets and just keep buying new ones, and that I won’t get a refund,” Peppers said. “And I’m afraid I won’t be able to prove that I have a ticket when I want to change my plans. The one time I used an e-ticket, there was a dispute and I almost lost my seat because of it.”

Mark Benerofe, another Internet consultant who constantly travels between the East and West Coasts, does use e-tickets. But he says he is aware that they eliminate critical freedom for business travelers who fly on unrestricted tickets.

“A paper ticket is like holding a title to cash,” he said. “If I’m holding a full-fare paper ticket for Delta and something happens and I need to fly United, I can walk right up to the United desk and my Delta ticket is valid. My e-ticket is not cash. My e-ticket receipt is just a glorified confirmation number.”

Susan Fullman, who as director of distribution planning is in charge of deploying the electronic-ticketing system for United Airlines, agrees that this lack of reciprocity — she calls it “interlining” — is one of two big holes in the e-ticket system.

“Today, if you wanted to go to another carrier and claim your ticket, you’d have to go to the United desk first and have them generate a paper ticket for you,” she said. “We’re working on solving that.”

The other hole, she said, is that customers are not adequately notified about the electronic tickets they may have outstanding in the computer system and for how long those tickets are valid. “We’re very aware of the problem, and we’re working on a product for the business corporate community that would give them complete disclosure on that,” she said.

United has no immediate plans to provide such a disclosure service for ordinary customers.

And not every airline sees disclosure as a problem. Steve Cossette, staff vice president for distribution planning at Continental, said that his company did not send notifications of outstanding e-tickets to its customers and did not inform them when those tickets were expiring.

But he added: “Nor do people who buy theater tickets, or people who don’t make it to the football game, expect us to find them and refund their money. If you don’t use the tickets, we don’t seek you out. We’re not in the credit business. We’re in the airline business.”

Such practices may be hostile to customers, but they are not illegal. Although lawyers at the Federal Trade Commission expressed surprise that electronic-ticket refunds were not automatically issued before the tickets expired, they said that the Fair Credit Billing Act required only credit card companies and department stores to refund credit balances automatically.

Whatever the legal requirements, it is interesting to contrast Continental’s attitude to, for example, that of Amazon.com, the pioneering Internet bookseller.

Amazon’s online account maintenance system provides its customers with secure, password-protected access to everything about their account at any time. Aside from ordering books, they can view their entire purchase history, track orders, customize virtually everything about the system to their own tastes, and reach the bookseller by e-mail at almost every turn, for any reason.

Though such information flow to and from customers would paralyze most old-line companies, Ms. Fullman, who uses Amazon as an example of online customer service, would be delighted if her biggest problem were how to handle high-volume e-mail. Instead, she says, she faces the arduous task of trying to glue together United’s many database systems in a way that is both useful to customers and secure for transactions.

David Risher, Amazon’s senior vice president for product development, said: “Good online customer service requires thought, and it is hard — and it’s probably easier if you’re starting from scratch than if you’re retrofitting. Unlike the airlines, we didn’t build Amazon for 150 agents or 150 stores; we built it specifically for the individual customer, and that works to our advantage.”

Denise Caruso

Copyright 1998 The New York Times Company