Is traveling lighter better?
Tan Wei

No wonder Pan Shan is nervous. When he and his wife travel to Hainan for vacation soon, they will fly for the first time. But even more stressful for Pan, 60, they will have to use e-tickets.
“With e-tickets now, we can get only the ticket number but cannot see the real ticket, so I feel insecure,” said Pan, who repeated their names and identity card numbers again and again when telephoning to book the tickets in case of any mistake.
But whether China’s passengers like it or not, the e-ticket is finally becoming a reality across the mainland like in more developed nations.
The China Air Transport Association and the International Air Transport Association (IATA) have been hard at work advancing the cause of paperless air tickets, aiming at electronic air ticket usage only in China by 2007. Indeed, beginning October 16, all ticket agents in China can only sell e-tickets to passengers, except for some international air routes and a few transfer flights.
But beyond its impacts on passengers, the e-ticket has major ramifications on Chinese industries. For the airline industry and e-commerce players, it’s a boon. But for others like ticket agents, there are dire consequences.
Airlines’ saving grace
Chinese airlines are doing their best to promote e-tickets, and for good reason.
“They will certainly be active since it is airlines that benefit the most from using e-tickets among the whole industrial chain,” said Wang Yili, Marketing Director of Yoee.com, the largest electronic air ticket booking website in China.
For airlines, it’s all about savings.
The paper ticket, costing over 20 yuan, has been cast away in favor of a printed itinerary that costs less than 0.1 yuan. Actually, the itinerary itself isn’t even necessary to print.
Since air tickets are viewed as a type of bill, paper ticket stubs are necessary for airlines to keep for inquires, which requires expenditures.
But according to IATA’s estimation, operational costs of e-tickets are only 10 percent of those of traditional paper tickets. In 2005, at least 80 million air tickets were sold, so a total of 1.6 billion yuan could have been saved-even more than the total profits of all domestic airlines.
“I cannot allege that e-tickets must help domestic airlines make up for the losses and gain profits, but at least the airlines can reduce much of their costs,” said Zhang Baojian, IATA’s Vice President for North Asia Regional and Chief Representative to China. “Profits of all domestic airlines add up to no more than 1.6 billion yuan. If e-tickets can save 1.6 billion yuan, aren’t they making money?”
Although all the saved 1.6 billion yuan would not actually go to airlines, as they need to be shared by all links of the industrial chain, airlines’ financial needs should be much better satisfied, Zhang said.
Taking e-tickets to the bank
Meanwhile, during the China International E-Commerce Conference held in Beijing in September, Zhang Shaofeng, General Manager of the Electronic Channel Department of Shanghai Pudong Development Bank (SPDB), was smiling a lot, showing plenty of teeth.
“As e-commerce develops in China, it is our banks that benefit the most!” said Zhang, who was discussing electronic air tickets in particular.
Since SPDB launched online payment of e-tickets last year, monthly growth has been more than 20 percent, Zhang said.
Banks that offer this service stand to profit because they impose a service charge for online payment, typically 1 percent, Wang said.
Sources from China Southern Airlines show that the daily transaction volume of e-tickets stands at 200 million yuan. With increasing popularity of e-tickets, what this enormous market will bring to banks is unimaginable profits.
Ticket agents doomed
On the other hand, the e-ticket revolution could seriously bruise air ticket agents.
“Ticket agents are standing at the crossroads,” said Tan Zhiguo, President of 96115.com. In his opinion, although capable of making a living at present, the once profitable air ticket agents cannot keep up with the demand of the time.
“Agents should earn stable profits,” Tan said. “With 3-5 percent commissions on average, they can easily feed dozens and even hundreds of employees. But in fact, this industry is full of crisis now.”
While agents are still in demand to help promote and expand e-ticket sales, soon they won’t be, he said.
“E-tickets make passengers more likely to have direct contact with airlines and airlines may reduce their contact with ticket agents,” Tan said. “After airlines become the leading agent themselves, they may launch attacks on the agents, reducing or even abolishing commissions.”
Regional ticket agents should prepare to come under the heaviest fire.
It is undoubtedly a death warrant for those small agents who are used to doing business in their nearby areas.
Now, e-commerce companies can expand their businesses quickly via Internet, while small and medium-sized agents will die rapidly under converging attacks from airlines and large agents.
Tan supposes that ticket agents may survive for five or 10 more years, but that’s it. The only way out is to change themselves. According to him, more than 30 percent of air ticket agents in Shanghai have begun to set up their own websites, inputting 600,000 yuan to every website on average, and 96115.com is one of them.
However, Wang is not optimistic about the transformation of ticket agents.
“The key point is capital,” Wang said. “Profits of agents are meager and it is too risky to input so much in network construction.”
According to him, the largest advantage of ticket agents is their customer resources.
“Agents used to serve airlines, but now, they are required to serve the customers, improving their services and enlarging customer resources through face-to-face service,” Wang said. “The sooner that small and medium-sized agents can finish this transformation, the sooner they will secure better opportunities.”
Online collectors smell victory
There’s one more likely winner from the popularization of e-tickets: online payment collecting service providers.
These providers charge a certain proportion of commission on every online order and are finding e-tickets to be a potentially very profitable sector.
“We must find a key industry fitting into online payment to develop our business and the air ticket sector is the best choice,” said Yu Chen, Vice President of YeePay.com.
But this “best choice” has not brought collecting service providers as many profits as imagined.
“It is generally accepted by the industry that we must continue despite that fact that it is a losing business [so far], because everyone wants to occupy a position in the field of e-tickets,” said Luo Peng, Manager of Public Relations at Cncard.com. According to Luo, since the market is under rapid construction, one must secure a portion or be squeezed out of the industry.
But these collecting service providers cannot survive by just drinking water.
“We need to pay commission to banks-about 1 percent,” said Qiao Yang, Sales Director of the Payment Business Department at Cncard.com. “There might be some discount if we have a large volume of customers, but the discount will not be too much. Therefore air ticket agents should pay us more than 1 percent. But at present, most of the collecting service providers charge less than 0.5 percent, absolutely unable to make ends meet.”
Qiao also points out that many collecting service providers say their business models are much broader than just involving this sector alone.
“Some companies are operating other businesses,” Qiao said. “The whole company can be profitable even if the e-ticket payment business is losing some money. Other companies come to the e-ticket market just for getting listed in the securities market. To those companies, it is of top priority to occupy the market and increase clicks of their websites,” he said.

(The Daily Mail-Beijing Review Articles Exchange Item)


It’s still all about oil in Iraq
Antonia Juhasz

While the Bush administration, the media and nearly all the Democrats still refuse to explain the war in Iraq in terms of oil, the ever-pragmatic members of the Iraq Study Group share no such reticence. Page 1, Chapter 1 of the Iraq Study Group report lays out Iraq’s importance to its region, the US and the world with this reminder: “It has the world’s second-largest known oil reserves.” The group then proceeds to give very specific and radical recommendations as to what the United States should do to secure those reserves. If the proposals are followed, Iraq’s national oil industry will be commercialized and opened to foreign companies.
The report makes visible to everyone the elephant in the room: That we are fighting, killing and dying in a war for oil. It states in plain language that the US government should use every tool at its disposal to ensure that American oil interests and those of its corporations are met.
It’s spelled out in Recommendation No. 63, which calls on the US to “assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise” and to “encourage investment in Iraq’s oil sector by the international community and by international energy companies.” This recommendation would turn Iraq’s nationalized oil industry into a commercial entity that could be partly or fully privatized by foreign companies.
This is an echo of calls made before and immediately after the invasion of Iraq.
The US State Department’s Oil and Energy Working Group, meeting between December 2002 and April 2003, also said that Iraq “should be opened to international oil companies as quickly as possible after the war.” Its preferred method of privatization was a form of oil contract called a production-sharing agreement. These agreements are preferred by the oil industry but rejected by all the top oil producers in the Middle East because they grant greater control and more profits to the companies than the governments. The Heritage Foundation also released a report in March 2003 calling for the full privatization of Iraq’s oil sector. One representative of the foundation, Edwin Meese III, is a member of the Iraq Study Group. Another, James J. Carafano, assisted in the study group’s work.
For any degree of oil privatization to take place, and for it to apply to all the country’s oil fields, Iraq has to amend its constitution and pass a new national oil law. The constitution is ambiguous as to whether control over future revenues from as-yet-undeveloped oil fields should be shared among its provinces or held and distributed by the central government.
This is a crucial issue, with trillions of dollars at stake, because only 17 of Iraq’s 80 known oil fields have been developed. Recommendation No. 26 of the Iraq Study Group calls for a review of the constitution to be “pursued on an urgent basis.” Recommendation No. 28 calls for putting control of Iraq’s oil revenues in the hands of the central government. Recommendation No. 63 also calls on the US government to “provide technical assistance to the Iraqi government to prepare a draft oil law.”
This last step is already under way. The Bush administration hired the consultancy company BearingPoint more than a year ago to advise the Iraqi Oil Ministry on drafting and passing a new national oil law.
Plans for this new law were first made public at a news conference in late 2004 in Washington. Flanked by State Department officials, Iraqi Finance Minister Adel Abdul Mahdi (who is now vice president) explained how this law would open Iraq’s oil industry to private foreign investment. This, in turn, would be “very promising to the American investors and to American enterprise, certainly to oil companies.” The law would implement production-sharing agreements.
Much to the deep frustration of the US government and American oil companies, that law has still not been passed.
In July, US Energy Secretary Samuel Bodman announced in Baghdad that oil executives told him that their companies would not enter Iraq without passage of the new oil law. Petroleum Economist magazine later reported that US oil companies considered passage of the new oil law more important than increased security when deciding whether to go into business in Iraq. The Iraq Study Group report states that continuing military, political and economic support is contingent upon Iraq’s government meeting certain undefined “milestones.” It’s apparent that these milestones are embedded in the report itself.
Further, the Iraq Study Group would commit US troops to Iraq for several more years to, among other duties, provide security for Iraq’s oil infrastructure. Finally, the report unequivocally declares that the 79 total recommendations “are comprehensive and need to be implemented in a coordinated fashion. They should not be separated or carried out in isolation.”
All told, the Iraq Study Group has simply made the case for extending the war until foreign oil companies — presumably American ones — have guaranteed legal access to all of Iraq’s oil fields and until they are assured the best legal and financial terms possible. We can thank the Iraq Study Group for making its case publicly. It is now our turn to decide if we wish to spill more blood for oil.


Will chaos overtake ME if US troops leave Iraq?
Gwynne Dyer

When an official American report talks about collapse in Iraq and catastrophe sweeping through the region, its sheer novelty after years of denial gives it a certain credibility. Don’t be fooled. The Iraq Study Group’s report is just as unrealistic as all the other plans for getting the United States out of Iraq without loss of face. But don’t assume that some cataclysm is going to shake the entire Middle East, either. It’s just an American defeat, not the end of the world, and the wild talk about chaos spreading across the whole region is an almost exact parallel to the “domino theory” that held sway in the United States the last time it was losing a war, in Vietnam. Former US Secretary of State Madeleine Albright once claimed that “We are the indispensable country,” but there are no indispensable countries.
“The situation in Iraq is grave and deteriorating,” says the ISG report, but it never acknowledges that this is the direct result of the US presence there. Before the US invaded, the country was impoverished as a result of Saddam Hussein’s wars and United Nations sanctions, but it was no longer any threat to its neighbors (the Iraqi Army was never rebuilt after its defeat in the Gulf War of 1990-91), and there had been no mass killing of regime opponents since the failed Shiite revolt that the United States had encouraged at the end of that war.
It was the American invasion that unleashed the violence that is now devastating the country. The departure of American troops will not automatically end it, for the invasion “opened Pandora’s box,” as Zalmay Khalilzad, the US ambassador to Iraq, admitted last March. The rival groups cannot even begin the end game until the US forces pull out — and yet the ISG report still does not commit the United States to a full and final withdrawal from Iraq. There are some useful minor advances over previous Washington doctrine in the report, like the admission, finally, that almost all the resistance fighters in Iraq are local people — there are only 1,300 “foreign fighters” in Iraq, according to the ISG — but there are no new ideas in it. Fair enough; as the newly appointed Secretary of Defense Robert Gates put it, “Frankly, there are no new ideas on Iraq.” But re-arranging the old ideas won’t work either.
Build up the Iraqi Army and police? They are already divided into sectarian units that will not act against their own sect. Get Iran and Syria to help? Why on earth would they, after being painted as “rogue states” by Washington for the past six years? Broker an Israeli-Palestinian peace deal? Sure, with a Bush administration that has never dared to put any pressure on Israel, Hamas rejectionists at the heart of the elected Palestinian administration, Lebanon trembling on the brink of a new civil war, and a largely paralyzed Cabinet of discredited hawks clinging to power in Israel. In any case President George W. Bush, one of the world’s more stubborn individuals, will probably reject any recommendations that require abandoning his delusional optimism on the subject. It is very unlikely that the bulk of the US troops will be out of Iraq before the next US election in November, 2008. However, it is very likely that they will be out of Iraq six months later, no matter whether the new president is a Democrat or a Republican. And what will happen then?