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. Last Updated: 07/27/2016

Airlines Go Electronic, But Keep the Paper

Faced with a fast-approaching June 1 international deadline for switching to e-ticketing and clunky Russian legislation that requires a paper trail, Russia's major airlines have found a way to comply with both.

As members of the International Air Transport Association, or IATA, Aeroflot, S7, Transaero, Vladivostok Air and Volga-Dnepr Airlines must switch completely to e-ticketing as of Sunday, but Russian laws governing reimbursement for business trips mean that these airlines will still have to maintain the ability to issue some form of paper ticket.

Sergei Vilyanov, an aviation expert at Computerra.ru, said those traveling for work would have to continue to request paper tickets because of a Russian law requiring those on business trips and official assignments to support their expense reports with "hard-copy evidence" that can be presented to key official institutions, including the Federal Tax Service and arbitration courts. Current law considers paper tickets hard-copy evidence, but not e-ticket receipts.

"Travelers on company and official assignments cannot hand in a printout from the Internet instead of a hard-copy receipt because it does not carry a stamp," said Helene Lloyd, Russia director of London-based consulting firm Travel Marketing Intelligence.

Attempts by the Transportation Ministry to push a bill through the State Duma in October 2006 legalizing the use of e-tickets alone fell flat after deputies rejected it.

As a stopgap measure, the Justice Ministry last year approved a Transportation Ministry decree on e-tickets. The decree did not make the use of paper tickets illegal, however, it simply crafted a way for airlines to fulfill IATA requirements by allowing airlines to issue both e-tickets and the traditional paper kind. But this has been an imperfect solution.

"So far, offering e-tickets alongside paper tickets has created extra expenses for Russian airlines because they have to handle both systems simultaneously," said Irina Kolesnikova, a spokeswoman for S7 Airlines.

For Russian carriers, a refusal to develop e-ticketing capabilities could have closed the doors to international aviation markets, while Aeroflot would have risked being booted out of the Air France-KLM-led SkyTeam alliance.

But even if the airlines managed to move wholly to e-tickets, problems would remain.

"Any law that rules out the use of paper tickets would paralyze domestic flights," said Konstantin Tyurkin, a senior manager at Transaero Airlines. "Some Russian airports, such as Yuzhno-Sakhalinsk and Anadyr, are not technically equipped to handle e-ticketing," he said.

Kolesnikova added that passengers on charter flights — a popular, cheap way to travel — buy paper tickets because they mostly serve destinations that lack e-ticket technology.

When the conversion to e-tickets began in June 2004, only 18 percent of tickets issued globally were e-tickets according to IATA data. Today, however, more than 93 percent of tickets issued worldwide are e-tickets.

"When we began, over 28 million paper tickets were issued each month. We have reduced that number to less than 3 million," IATA director-general Giovanni Bisignani said. He added that e-tickets and e-freight are expected to save the aviation industry worldwide $6.5 billion annually, partially by reducing bureaucracy.

Russian airlines, which together carried 13 million passengers from January to April, according to the State Statistics Service, could potentially reap huge benefits from e-ticketing. While a paper ticket costs $10 to process, e-tickets only cost $1, according to the IATA.

But the international body remains concerned about Russia, noting in a statement that the penetration of e-tickets in Russia and the CIS was only 63 percent as of March. The low level of e-tickets in the region was one of the reasons the IATA extended the deadline six months past its initial activation date of Dec. 31, 2007.

TMI's Lloyd said Russia's slow start was not that unusual. In 2005, only 10 percent of Chinese travelers used e-tickets, but in 2006, e-ticket usage jumped to 90 percent, according to the IATA. China is now at 97.6 percent and is being closely trailed by Peru (97.4 percent), Ecuador (97.3 percent), Belize (97.1 percent) and the United States (97 percent). Nepal and Papua New Guinea have already achieved 100 percent.

Lloyd added that Russian authorities should work to make the laws more compatible with e-tickets.

"The world is changing, and Russia really has to adapt itself and move away from this kind of bureaucracy, because nobody wants the luxury of paper tickets," she said.

All the Russian airlines affected by the changeover have already adopted e-tickets with varying degree of success. In March 2007, Transaero became the first Russian airline to start offering e-tickets to a handful of destinations around the country. The company now claims to sell up to 85 percent of its tickets online.

Other mainstream Russian carriers, including Aeroflot and S7, have followed suit. After over a year of preparatory work S7, formerly known as Sibir, started an e-ticket service in April 2007.

Aeroflot began introducing new technology to accommodate e-tickets in 2005, even though it only began selling tickets online last summer. But Russia's flagship carrier has the least to lose from the new measures. Only 10 percent of Aeroflot passengers are registered as travelers on official assignments and would therefore require paper tickets. Other domestic carriers have reported that business travelers make up as much as 90 percent of their clientele.

Aeroflot issues e-tickets at its offices worldwide as part of its Interline e-ticketing partnership with its SkyTeam alliance partners, namely, Aeromexico, Continental, Korean Air, KLM and Delta, said Irina Dannenberg, spokeswoman for the company.

Booking and buying tickets online are expected to negatively affect tourist agencies, but many said the effect would be far from dramatic. Some actually support the measure, saying it would reduce their expenses on courier services.

Nikolai Kokora, vice president of Intourist, the former official Soviet travel agency that handles the bulk of foreign tourists visiting Russia, said e-ticketing was a welcome development that would allow foreign tourists to feel at home in the country.

Intourist made $500 million from tourism in 2007, and Kokora expects e-ticketing to boost profits by "eliminating worries" associated with keeping and procuring tickets.

"We had 200,000 tourists in 2007, and they are all foreigners who feel at home with e-ticketing," Kokora said. "We hope there will be even more when tourists realize we have taken a step forward in reducing bureaucracy."

Alexei Kashirsky, deputy director of Neva Travel, said passengers would be saved the hassle of visiting ticket sales offices while enjoying simplified registration and boarding procedures.

"Tourist companies put time and effort into issuing tickets for clients on chartered flights," Kashirsky said. "E-ticketing will eliminate this, as well as time spent to ensure that forms are correctly filled out."

Vilyanov said the paper ticket requirement for business travelers would not last forever. "As is often the case here, officials will devise some retroactive way to allow people on business trips to benefit from e-tickets," he said.

Some foreign airlines have already had to modify their ticket-sales rules to cope with the ambiguity.

Marina Lubennikova, a sales manager at Delta Airlines said the U.S. carrier issued special slips with names, flight dates and ticket cost to Russians traveling on assignments or business trip to help them with expense reports.

British Airways, the true pioneer of e-tickets in Russia, also instructs travelers in need of hard-copy evidence to print out slips confirming cost and flight destination.

"We simply do not have blanks for paper tickets anymore," Yelena Chernicheva, a sales manager at British Airways. "We do advise travelers to print out slips, and so far, we have had no complaints from accounts departments on the legitimacy of such slips."