Impact of border security on airlines' marketing relationships [AM 2011]

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  • Part of Leverhulme-funded TL project: use of transactional data for regulatory purposes and the impact that such use has on organisations and their customers
  • - It has been noted in the tourism marketing literature that the consumption of tourism products is affected by a range of global issues and circumstances ( Tosun et al., 2005 ). - Security is an important feature of the macro environment for tourism, with perceived safety problems and associated border security measures known to impact negatively on the demand for air travel. Also commercial implications, with travel businesses needing to devise ways to reduce the real and perceived risks, including providing information or offering free insurance coverage ( Fuchs and Reichel, 2011 ). - Therefore, research must take into consideration the macro setting in which the tourism activity occurs ( Ashworth and Page, 2011 ). We investigated the impact of e-Borders on the key stakeholders affected by the initiative, reflecting on the relationships among these parties and the power and decision making at play.
  • - Following high profile terrorist attacks in the US, UK and elsewhere, organisations moving tourists both into and out of the UK are being required to play a critical role in the country ’ s national security programme.The scrutiny of cross-border passenger traffic is deemed essential for blocking the entry of problematic individuals ( Salter, 2004 ) such as terrorists. Since 2009, the monitoring of travellers across UK borders has been carried out within the e-Borders programme, which requires all carriers to collect and electronically transmit travel document information (TDI) and service information for any individual entering and leaving the UK. Also called advanced passenger information (API). Currently only air carriers collect such information, though by 2014 all carriers should comply as well The rationale for involving commercial organisations in the government ’ s national security programme is that these firms have direct contact with their customers, enabling them to collect passenger identity and behavioural data. By adopting an inter-organisational approach to national security, the government hopes to optimise the process of monitoring cross-border passenger traffic. From the carriers ’ viewpoint there is a major change in the macro setting and it is important to investigate how this impacts on their marketing programmes as well as on their relationships with other stakeholders in the sector.
  • Consequently, we investigate the following research question: What is the impact of e-Borders on the carriers ’ relationships with their customers and other stakeholders ? We studied the micro-level dynamics between stakeholders, a valuable yet underutilised research perspective in tourism studies ( Arnaboldi and Spiller, 2011 ). Initiatives bringing together multiple organisations have been documented in various areas of tourism management such as sustainability (e.g., ( Erkus-Ozturk and Eraydin, 2010 )) and cultural districts (e.g., ( Arnaboldi and Spiller, 2011 )). Each case is characterised by a complex problem that any one organisation alone cannot solve. A consequence of the conditions of interdependence and uncertainty that parties face is that they adopt collaborative strategies to optimise the payoffs in the domain ( Jamal and Getz, 1995 ).
  • These and other studies of inter-organisational initiatives draw attention to three broad areas: i) identification of key stakeholders and their interests; ii) power distribution and the emerging mechanisms for decision making; and iii) the long term outcomes and structure of the multi-stakeholder process.
  • Exploratory research methodology key informant interviews, enabling access to the knowledge and experiences of a wide range of individuals and groups. The inclusion of key informants from a range of organisations increased the external validity and generalisability of the findings. 24 interviews were undertaken in 10 organisations (see Table 1) between June 2009 and November 2010, enabling changes in the stakeholder interactions and context to be monitored. Iterative approach, reflecting on each interview as it was undertaken. Transcripts and notes were coded with Nvivo. To address bias, coding was undertaken by one researcher and independently assessed by others from the research team. Combining data from multiple interviewees with differing roles and augmenting it with documentary evidence offered a rich contextual picture. The findings are briefly presented according to the three areas previously identified.
  • e-Borders affects a variety of organisations over and above the government and the carrier. For instance, the travel agents, tour operators and seat brokers which sell tickets on behalf of carriers are also affected by e-Borders. Each organisations has its own set of interests, which are defined as the individual or group's needs, hopes, concerns and fears (Jamal, ( 2004 ), and which may conflict with each other. Interviewees reported tensions between the legal requirements and their commercial obligations. For agents and partners dealing with different customers or airlines, it is cumbersome to provide data through varied corporate interfaces. The collection of data required by e-Borders also takes time: ‘ It adds at least 15 minutes to the customer service encounter, no matter what medium ’ . (Interviewee 12, Airline) Some staff felt that the legal requirements conflicted with the nature of their jobs. Respondents also reported tensions with competitors, largely due to the differential impact on incumbent firms of the costs of complying with e-Borders. While major legacy carriers already collect the information required, other operators will have to find ways to do so The lack of clarity surrounding regulations and their implementation was also a source of tension. This was particularly so in relation to the EU ruling about the legality of the programme, which brought significant uncertainty and changes to the implementation work already undertaken.  
  • - Carriers collect and submit specific passenger data within strict time frames (namely, 24 hours to 30 minutes before travel). The responsibility for identifying suspicion lies with the UK BA, which pursues ‘ an intelligence-led approach to border control ’ (Interview UK BA, 2009). Where concerns arise, alerts are generated for border staff. However, the European Union (EU) has warned that whilst the e-Borders programme is not illegal, freedom of movement within the European Community means that citizens can not be stopped from entering or leaving Britain if they refuse to pass on personal information ( Whitehead, 2009 ). UK BA has established requirements for the type of passenger data to be collected and the timing of its transmission. Furthermore, it established a consortium of suppliers to build the data transfer, storage and analysis system. Considerable discussion about the system ’ s interface was needed, in some cases requiring substantial investments from firms using formats which differed from the industry standard. Discussions involving pan-industry bodies on behalf of travel firms also took place. In 2010, the government severed ties with the main IT contractor in the consortium, resulting in uncertainty, delays and increased expense across the majority of stakeholder groups. - Respondents felt that the government had not taken into account how the industry already worked: ‘ We do commercial business together and our systems have to talk to each other. Whatever we do in terms of development has to be done harmoniously so that our systems talk (…) They failed to recognise that aspect (…) They were having conversations with system suppliers rather than carriers. The obligation falls on the carrier but the system supplier had to do the development work ’ . (Interviewee 12, Airline)   Interviewees saw significant disparity between the type of air carriers – legacy, leisure or budget carrier – and the respective legacy systems. This resulted in a perceived power imbalance, with legacy carriers seen as having a greater say in the development of e-Borders. Smaller firms find it difficult to fund the necessary investments in systems, staff and training. They also express frustration with the decentralised aspects of e-Borders, whereby UK BA make air carriers responsible for collecting and transferring data, rather than having a unified central government portal for e-Borders information.
  • - e-Borders encountered a number of problems since its inception. The launch of the initiative was moved from May to October 2009, after travel operators cautioned that introducing the system during the peak holiday season would lead to chaos ( Millward, 2009 ). In July 2010, the government dismissed the main IT contractor in the consortium of suppliers due to significant delays in delivery ( Kollewe, 2010 ). As a result of these difficulties, by the end of 2010, the programme was collecting details of only half the number of passengers envisaged, with implementation unlikely to be completed by the planned end date of 2014 ( Commons, 2009 ). Whilst the scheme continues to operate, those involved face changing requirements and considerable uncertainty. - Carriers are the focal point in the emerging structure. However, they rely heavily on tour operators and travel agents to collect data from customers; and on the government to define the requirements. Carriers also have relationships with other partners, such as tour operators, that book seats on their aircraft; while airlines outsource many airport services to a third party ground handling company. Such agents and partners provide an interface with the customer. Competitors can both influence and be influenced by the focal firm. Respondents frequently expressed frustrations that reflect the tensions that exist between stakeholders: ‘ Collectively, the airlines have actually made E-Borders work. I think you ’ ll find that the ferries certainly, and possibly Eurostar, are doing very little, although they represent a big chunk of what comes through the border. So, there ’ s an impact and competitive situation there that annoys us a bit. ’ (Interviewee 15, Trade Body)   Currently UK BA identifies activity they believe to be suspicious and takes action. However, the onus for action is ultimately expected to shift to the operator: ‘ e-Borders is likely to be developed to include an ‘ Authority to Travel ’ system. In this, carriers will be required to check passengers against a ‘ watch list ’ of who cannot be brought into and out of the country – and they will be prosecuted if they transport these passengers. (Interviewee 4, Government)
  • Tourism is a very important economic activity, though policy makers often prioritise other issues ( Ashworth and Page, 2011 ). This case study describes a change in the legal macro setting for tourism, which results from a complex problem of national security that cannot be solved by the government alone. Due to their proximity to the end user, carriers are enlisted to develop, implement and finance traveller monitoring systems, effectively internalising some of the costs of providing effective ‘ national security ’ . The problem of reconciling public vs private costs and benefits is familiar in tourism ( Ashworth and Page, 2011 ), and understandably creates resentment among industry players, particularly at a time when they are affected by recession. However, safety is a key variable in destination choice, regardless of the tourist ’ s demographic characteristics ( Smith and Carmichael, 2005 ). While all stakeholders would insist upon safety as a high priority, a clearer understanding of the real costs – including the intangible costs – to stakeholders of these changes is of great interest to both practitioners and researchers. Importantly, our study has identified a range of intangible costs that impact on service delivery. Chief among these are the additional transaction time, the complex process involved, and the possibility of mistakes. These factors impact negatively on the interaction, which is of concern in a sector that increasingly emphasis the customer experience ( Shaw et al., 2011 ). The long-term impact of such inconvenience on the route of travel is unclear. While people are travelling more and the UK (particularly London) is a clear tourism receiving area ( Ashworth and Page, 2011 ), gateways are by no means permanent. Tourism is a discretionary activity strongly affected by the tourist ’ s psychological and social contexts ( Pearce, 2005 ), and highly sensitive to congested infrastructure and inconvenience ( Riganti and Nijkamp, 2008 ).  
  • In addition to the relationships between firm and customer, we have explored the impact of e-Borders in the firm ’ s interactions with a network of other stakeholders. Taking a relationship marketing perspective of this network amplifies the interplay between these stakeholders, or what Christopher, Payne and Ballantyne ( 1991 ) describe as markets : internal (staff), influencer (government), referral (agents and partners) and supplier (IT consortium) markets. The relationships with the influencer and supplier markets are particularly strained as is common in circumstances where power brokers have a disproportionate influence ( Jamal and Getz, 1995 ). This strain impacts negatively on the interaction with customers, through the changes and uncertainty it brings. The relationship between the firm and the referral market is therefore critical, as the cooperation of these organisations which interact directly with customers can significantly smooth the data collection process. Moreover, these parties also face technology, personnel and recruitment costs from e-Borders. Therefore, developing a strong relationship with these organisations is likely to benefit both the passenger carriers and their customers.   Our analysis also highlights the close interconnection between firm and competitor, a stakeholder or market not traditionally considered in the relationship marketing literature. The benefits of such collaborative networks between competitors have been documented in other instances of public tourism goods, such as sustainable tourism development ( Erkus-Ozturk and Eraydin, 2010 ). If carrier firm and competitors come together they have more power to influence the government and the emerging technical solution, which is beneficial for all involved. In conclusion, the case has explored how the implementation of the e-Borders programme in the UK has impacted upon passenger carriers ’ relationships with their stakeholders. The study has reflected upon the stakeholder interests, power and decision making at play, and the long term outcomes and structure of the multi-stakeholder process. Findings have revealed tensions in all of these areas; a greater understanding of these tensions and their causes, along with possible paths to their resolution, are of great significance to managers in the tourism sector, and should be explored in greater depth as the programme proceeds.

Transcript

  • 1. AN N U AL C O N FEREN C E 201 1 Special SessionsThe Impact of UK Border Security Controls on Passenger Carriers’ Relationships with Stakeholders Kirstie Ball, Sally Dibb, Elizabeth Daniel, Maureen Meadows and Keith Spiller - Open University Business School Ana Canhoto - Oxford Brookes University Ball et al 2011
  • 2. Global issues – local impact Ball et al 2011
  • 3. e-Borders• Scrutiny of cross-border passenger traffic• Carriers, on behalf of UK Borders Agency – Since 2009, air; All should comply by 2014• Rationale: – Firms’ direct contact with their customers enables them to collect passenger data• Major change in the macro setting Ball et al 2011
  • 4. Research QuestionWhat is the impact of e-Borders on the carriers’ relationships with their customers and other stakeholders?-Complex problem involving multiple organisations-Interdependence and uncertainty-Focus on micro-level dynamics (Arnaboldi and Spiller 2011) Ball et al 2011
  • 5. Research FrameworkInter-organisational research in tourism studies:2.Identification of key stakeholders and theirinterests3.Power distribution and the emergingmechanisms for decision making4.Long term outcomes and structure of themulti-stakeholder process Ball et al 2011
  • 6. Methodology Interviewee Type Number of Interviewees Number of OrganisationsTrade Body 2 1Travel Agent 7 3Tour Operator 7 1Airline 4 3Airport Operator 1 1Government 3 1Total 24 10 Ball et al 2011
  • 7. Findings: 1.Key Stakeholders and Their Interests• Various organisations and sets of interests – E.g., travel agents, tour operators, seat brokers…• Tensions: – Legal vs. commercial obligations – Nature of jobs – Competitors – Service delivery: • Mistakes and time consuming• Uncertainty – EU ruling, IT contractor, … – Impact on implementation work already undertaken? Ball et al 2011
  • 8. Findings: 2.Power and Decision Making Mechanisms• De-centralised system: – Frustration• UK BA: – Sets data and transmission requirements – Chose consortium of suppliers to build the IT system – Discussion about the system’s interface with pan- industry bodies BUT largely ignoring how the industry worked• Disparity between air carriers’ legacy systems Ball et al 2011
  • 9. Findings: 3.Long Term Outcomes and Structure• Changing requirements – Onus expected to shift to carrier• Carriers as the focal point in the emerging structure – Rely on others to collect customer data – Rely on government to define the requirements• Impact on customer interface – E.g., airport services• Competitors influencing each other Ball et al 2011
  • 10. Discussion• Commercial vs. political interests• Carriers internalise costs – Resentment, particularly during recession• Range of intangible costs – Transaction time, complexity, mistakes… – Impact on service delivery and customer experience• Unclear long-term impact on the route of travel – Safety is key variable in destination choice (Smith and Carmichael, 2005) Ball et al 2011
  • 11. Discussion• Strained relationships with influencer and supplier markets – Disproportionate influence of power brokers (Jamal and Getz, 1995) – Negative impact on customer interaction• Relationship between firms and referral market is critical – Can significantly smooth the data collection process – Also face technology, personnel and recruitment costs• Interconnection between firm and competitors – Influence government and emerging technical solution – Present in other public tourism goods – e.g., sustainability (Erkus-Ozturk and Eraydin, 2010) – Not traditionally considered2011 the marketing literature Ball et al in
  • 12. AN N U AL C O N FEREN C E 201 1 Special SessionsThe Impact of UK Border Security Controls on Passenger Carriers’ Relationships with Stakeholders Kirstie Ball, Sally Dibb, Elizabeth Daniel, Maureen Meadows and Keith Spiller - Open University Business School Ana Canhoto - Oxford Brookes University Ball et al 2011