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CEO of UATP talks about payment network for airlines

Ralph Kaiser, president, CEO, and chairman of Universal Air Travel Plan (UATP) joins Sandy Dhuyvetter on BusinessTravelRADIO.

CEO of UATP talks about payment network for airlines

Ralph Kaiser, president, CEO, and chairman of Universal Air Travel Plan (UATP) joins Sandy Dhuyvetter on BusinessTravelRADIO.

Before becoming President of UATP in 2003, Mr. Kaiser was general counsel for UATP. Under his leadership, UATP has grown from a US$5 billion corporation to an US$8 billion dollar corporation.

UATP is the low-cost payment network privately owned by the world’s airlines. UATP is the preferred form of payment for corporate travel in large international companies and small local companies worldwide.

Sandy Dhuyvetter: Today, we’re bringing in Ralph Kaiser. He is the CEO and chairman of the board for the Universal Air Travel Plan, and we call that UATP. If you look at your credit cards, you are going to see numbers at the beginning of these credit cards. If there’s a number 1 at the beginning, that’s a UATP card, and that actually is an indication that it’s the number 1 card. It was actually put into motion in 1936, the very first credit card ever. We’ve got Ralph now to bring in, Ralph thank you so much for joining us.

Ralph Kaiser: Hi Sandy, it’s great to be here.

Sandy: Yeah, great to have you on the show. We’ve had you on TravelTalkRADIO multiple times and we’ve been able to really educate our audience about UATP. Here we have a much more sophisticated audience and hopefully they’ve heard about UATP, and if they haven’t, certainly they are going to be hearing about it, you’ve been growing for many, many years, but you’ve done something very substantial in the last few years, and under your leadership you’ve certainly blossomed and brought lots to it. Let’s start from the ground level; you are owned by the airlines, is that correct?

Ralph: Yeah that’s right, and first I’d like to say congratulations on the new show. We think it’s great, and we hope that the audience finds the information we provide useful. We do provide a corporate charged product that is owned and operated by and for the airlines, but essentially UATP issuers are airlines that issue cards to corporations to have a direct relationship with the corporation, which provides added benefits to corporations and to the airlines themselves.

Sandy: So with this launch of the new merchants, you’re getting new merchants besides just airlines now, is that right?

Ralph: Right. I mean, traditionally it’s an air-only product, and as you mentioned in your intro, the UATP was founded in the United States by US carriers back in 1936. It’s grown now to be a global, closed-looped payment network. What we’ve done at the end of this current year, 2009, and what we are going to be aggressive with our launch in 2010, is adding hotels and rental car companies as merchants of UATP products. That means that today you can only buy airfare with your UATP card; very soon you will be able to buy hotel nights and rental cars, which is a big step forward for our airlines as issuers, but it’s also good for corporations. So they will have a lot more utility with the UATP card than they have had previously. We also know that UATP is the lowest cost form as payment for air, and we think that quite rapidly it will be known in same way for hotels and rental cars.

Sandy: Can you talk a little bit about the process and how you get your clients and what you look for and how they can find you?

Ralph: Well, it’s actually up to every airline that issues UATP. We have UATP issuers in Japan, Australia, New Zealand, Brazil, the United States, and Europe, really globally. What airlines do is they talk with their best customers, which is their corporate customers, about a direct payment tool, which is UATP, in order to have a UATP card. Once a corporation has that card, they buy their air not only from the issuing airline, but all other airlines throughout the world, and travel agencies accept UATP and, as we mentioned, so will hotels and rental car companies in the future.

Sandy: And then travel managers, how does this really come into their world?

Ralph: Well for a travel manager, it’s all about containing costs. UATP is a centralized product, meaning that a giant company might only have 5 or 10 accounts, and they centrally buy and pay for their travel, their air through these accounts so that you get a lot more adherence to the corporate travel plan and the corporate incentive deals by centralized booking and payment. That I think, particularly in a tough economic year like 2009, is a big plus. Centralized corporate managed travel is much more cost effective than having unmanaged travel or very loose travel policies where people can book and buy anything with any type of payment device.

Sandy: You know, we’ve had the opportunity to follow along with the Airline Distribution Conferences that you have hosted for many, many years, and we’ve learned so much more there. Can you talk a little bit about these conferences and why they are very important?

Ralph: Well, the conferences are educational, as most conferences are, but what we try to do is focus on sort of like the trends and the future of distribution in the airline industry, and that simply means the distribution of airline tickets and the sale of seats. I think most corporate travel buyers will know that airlines used to pay commissions to travel agencies, and that was a big cost for them. They took that cost out. The next thing that they talked about in the airline world was GDS costs. They worked with their GDS partners to kind of lower those costs in a lot of channels. The next big area, and I think the only remaining large area of distribution costs savings, is in form of payment. There are some very expensive ways to buy airfare, and those payment brands take the money right off the top of the revenue piece for the airline. UATP doesn’t do that. UATP does, in effect, lower the costs of the sales tickets in still affording the data and the use of a charge card in the process.

Sandy: Which is just amazing, because when you talk about everybody taking pieces off of those different levels of tiers in the transactions, pennies do make a difference don’t they?

Ralph: Yeah, and UATP is a niche corporate travel product. In 2008, we did US$12 billion in volume, so for a small niche product, that is a considerable amount of volume. Our goal is to make it less of a niche and more of a mainstream product. We’ve made great strides in that; we’ve probably added about a billion dollars a year in volume over the last 5 years. 2009 is not exactly going to be a record year for us, but I don’t know any companies that are having a record year. But our pipeline for next year is well positioned for a rapid return to the growth we’ve seen up till now.

Sandy: Do you think that’s a possibility, or is it just something you’re hoping for?

Ralph: No, it’s more of a reality. We’ve worked hard this year to position ourselves for a quicker comeback than I think a lot of companies. We’ve also added a new UATP card issuer in Brazil, GOL Airlines, which is based on sort of the Southwest Airlines model as a low-cost or low-fare carrier. They’re a very profitable airline. They are traded on the New York Stock Exchange, and they are now issuing UATP accounts in all of Latin America and Central America, and we are very excited to partner with GOL and get their program off the ground.

Sandy: And congratulations by the way, and, in fact, we do have a news feed at our site, and we have that article in there – the press release on GOL. And that’s something I would like to talk about – the launching of new airlines and how you do that. How often are you able to launch a new airline like that?

Ralph: Well we’d like to launch a new airline every week to be honest, but there is a long process in getting an airline to issue UATP cards in the market, at least there used to be. What we’ve done really in the last year, year and a half, is develop some ways to create a greater speed to market for airlines to issue accounts. The main thing we’ve done is we’ve built in-house, our own invoicing system. Everyone gets with a credit card, a statement every month, and they have to pay their bill. Well, airlines that issue UATP accounts are no different. They have to issue statements to their corporate customers to get paid, but a lot of times they either had to buy a system or build one, and that was kind of an expensive and very long, lengthy building process or development process. Since we now have our own system, we give that to airlines with no charge, and they just pay for the use of it on a per-transaction basis. So really, we’ve taken the cost and complexity out of becoming an issuer. While airlines core business is not issuing charge accounts, it certainly is lowering their cost of sale, and it certainly is building loyalty with their best customers, which are the corporate customers who fly in the front of the plane.

Sandy: Talk a little bit, if you don’t mind, about 2010 as you were, saying you’re looking for a good year. Where is the next Airline Distribution Conference, and what do you expect to happen from there?

Ralph: Well, as you might guess, we’re going to be in Brazil next year for Airline Distribution 2010. We are going to be in Rio, Copacabana beach, and that’s going to be the last week of April; that information will be on our website. We do partner with Airline Business magazine to put that conference on. It’s really well received. We have a very senior C level participants, and we’re looking for a big event in Brazil next year. And we hope that by April, we are already starting to see signs, we are expecting that by April, that there will be a much stronger business travel climate, and there should be a lot of airlines interested about learning how to save money in distribution but also to learn a little bit more about the UTAP network. And as I said, in 2010, we will be adding hotels and rental car merchants, so I think that our distribution conference is going to really continue to grow rapidly.

Sandy: Well, I’m sure it will, under your leadership. Thank you so much Ralph for joining us. Ralph Kaiser is president, CEO, and chairman of the board of the Universal Air Travel Plan; we call it UATP. You can go to uatp.com and learn a lot more about it, and you’ve got a great staff that is there for all kinds of questions and answers if you have anything you’d like to learn about. Ralph, thanks again for joining us. I really loved having you on the show.

Ralph: Thanks a lot, Sandy.

Sandy: You bet.