Edifly in the messaging ointment? A Skype-like provider is taking aim at type b air cargo messaging that could make SITA as relevant as AT&T's legacy telephone network.
Unlike SITA, Arinc and other networks using Type B, the new entrant's EDIfly is decentralized and offered as a software package rather than a messaging infrastructure with pay-per-use charges. Written in Java, it has been extensively tested, according to its developer, and is about to be launched commercially.
Focusing on Type B pits the new player against existing setups, notably SITA. One veteran IT developer close to the new outfit likened the approach to "Skype versus AT&T".
SITA's Type B network, the chief vehicle for this type of messaging, certainly is a behemoth. Offering end-to-end management of messages across a single, secure private network worldwide, it switches more than 25 million messages a day. The organization's 550 members represent over 90 percent of the global airline community.
Its architecture accepts, stores, routes and delivers messages over its network and beyond, with gateways that can deliver messages to any fax or telex machine globally as well as to the air traffic control community's aeronautical fixed telecommunications network.
With multiple access options, assured delivery of messages, flexibility on addressing and routing, storage of all messages for 90 days on a central database, and links to other messaging environments, SITA's Type B network is the default platform for most airlines and other industry players, usually extending far beyond cargo applications.
"Type B is part of a package that is ubiquitously available," says Henrik Ambak, vice president and head of IT at Cargolux. "It's a cost that is in principle never nice to have, but it provides a conduit between us and forwarders and handling agents."
That conduit comes at a price, large enough to induce cash-strapped airlines to seek reductions. KLM Cargo moved away from the platform several years ago to save an estimated $700,000 a year.
Others have shied away from such drastic steps but tried to whittle down their SITA bill by going through their invoices to identify the clients that generate the largest amount of Type B messages and shift the communication with these to direct links.
While this approach curbs these airlines' payments to SITA, the direct links are cumbersome and expensive to maintain as well, making the savings less substantial than they may have seemed at first glance. Moreover, the sheer workload associated with building up direct links with a host of partners and clients is often prohibitive.
"You can't change all your connections individually. You have to move via a host," says Ambak.
When Northwest Airlines Cargo moved house air way bill reception to an electronic platform in preparation of the four-hour rule for US-bound cargo a few years ago, it took the carrier six months of work to get everything in place.
"It was a lot of work, and that was just with Northwest. The forwarder then had to repeat that process with each airline," recalls Jim Friedel, an independent consultant who was president of NWA Cargo at the time.
SITA's offering is not the only Type B show in town; there are other networks, albeit much smaller. The fundamental difference between them and the new EDIfly approach is that the latter is decentralized, as it resides in users' computers and moves messages over the Internet based on existing EDI standards including IATA's Cargo-IMP, ANSI X12 and EDIFACT.
According to Innovative Software, the objective is to create an alternative that is reliable, secure and decentralized.
The server, which acts as a message broker, looks on the Internet for the designated receiving server. Once the connection is established, the message is encrypted and sent to the receiving unit, which decrypts it using a unique private key issued by Innovative Software for individual clients, and then sends back a receipt.
According to the developer, EDIfly can be installed on any available machine, provided it has Internet access.
The software is designed to handle any standard Type B message and can be expanded to support any message format, the developer claims, adding that for now the focus is on Type B messages. This means that it applies not only to air cargo applications but extends to other fields of activity, such as passenger operations. At this point, Innovative Software is looking chiefly at the air cargo sector with all-cargo airlines identified as a logical place to start.
Ambak says he is not aware of a new offering, but confirmed Cargolux's intention to move its operations to the Internet. "We've been waiting for the 'iPod moment' in our industry," he comments.
This is not to say that Cargolux is unhappy with its current message network. "Type B has done a great job over the years," Ambak says. "The question is, does it have the right cost profile today?"
Unlike their counterparts from all-cargo airlines, the cargo departments of combination carriers have found it hard to establish the precise cost of using the SITA infrastructure--if they bothered to find out at all.
"The way SITA and Arinc do their billing, messaging is one of a host of services, besides support communications and other offerings. In most organizations only the IT department would know [the exact cost]. For the departments it's a utility, like the phone," comments Friedel.
NWA Cargo did not tackle Type B messaging during Friedel's tenure, mainly because the responsibility for managing the process resided in the parent airline's IT department.
Moreover, the ease of use of SITA's set-up and its ubiquity makes it very appealing. "I think the challenge for any internet-based alternative is that it needs to somehow overcome the convenience that SITA provides. While SITA might be faulted for using old-fashioned, high-cost technology, they are tops for convenience because they are a one-stop shop: you connect to them once, and they connect you to everyone else," Friedel remarks.
Innovative Software does not cast its EDIfly offering as an alternative to SITA's Type B infrastructure. Most airlines are clients of SITA and are not going to jettison their arrangement with the provider (which usually goes well beyond Type B messaging), but they can use EDIfly to reduce costs of selected links, the company reasons.
Besides helping users reduce messaging costs, the new avenue could arguably add momentum to the e-freight initiative. If users are charged a flat fee regardless of the volume of messages they send, there is no reason to hold back on that front to save a lot of money.
Skype-style messaging versus SITA?
The internet-based investment site Seeking Alpha has this to say about a prospective Skype IPO valued at $4.8 billion. The opinion is relevant in the context of the trend toward cloud computing rather than the legacy networks used by the airline industry. "Luxembourg-based Skype is the leading internet-based communication company with 560 million registered users completing 200 billion minutes of calls annually. Skype has over eight million paying customers with an average revenue per user of around $100.
"For 2010, Skype will report close to $900 million in revenue with an operating margin of nearly 20 percent.
"Skype makes most of its money on calls to non-Skype phones. It charges a few cents per minute versus the tens of cents or even dollars that phone companies charge for the same call. New features like video calls and desktop sharing are broadening the appeal of the service and the way people use it. Additional features will roll out soon, like click-to-call, which will be integrated with services like Google Search, Maps, and Facebook.
"Skype works at scale and its infrastructure is software-based. That means it has built a technology platform on which many more features, and much more revenue, can be layered with low incremental costs."
A 2010 report by TeleGeography Research says Skype-to-Skype calls accounted for 54 billion, or 13 percent, of all international call minutes last year. In the first half of 2010, Skype says it users made 88.4 billion minutes of Skype-to-Skype calls with approximately 40 percent as video calls.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||feature focus: SITA|
|Comment:||Edifly in the messaging ointment? A Skype-like provider is taking aim at type b air cargo messaging that could make SITA as relevant as AT&T's legacy telephone network.(feature focus: SITA)|
|Publication:||Air Cargo World, International ed.|
|Date:||Nov 1, 2010|
|Previous Article:||Kazakhstan: a sizable challege.|
|Next Article:||The largest virtual airline in the world?|