21 December 2007

US Airlines - Grow up and stop complaining

The US Airline community as represented by ATA has for a long period of time - specifically since 9/11 been an oligopoly who has disdained consumers in favor of their own goals and objectives.

However Consumers are finally getting their day in the sun - if not in court.

On Tuesday NY Judge threw out a challenge to the NY State law enacted post the debacle of last winter with passengers imprisoned on aircraft at JFK and other places. http://www.boston.com/business/globe/articles/2007/12/21/court_rejects_airlines_suit_to_block_ny_law_on_passenger_rights/

The US airlines have been woefully inadequate in their following even the basic guidelines (note not law) as agreed with the US DoT. http://airconsumer.ost.dot.gov/publications/flyrights.htm

However - now we see the States stepping in to mandate tougher consumer protection.

In Europe a similar effort was mounted by all airlines but in 2004 new regulations that are far more strict were enacted.
http://ec.europa.eu/transport/air_portal/passenger_rights/doc/2006_flyer_be_informed/2006_be_informed_flyer_en.pdf These apply no matter if you are flying on a first class ticket or short LCC hop. Even charter airlines - notorious for their lack of consumer services are all identically covered. Impact? Better behavior and no huge financial impact on the airlines.

So US Airlines and ATA - get over it... join the rest of the world.

T2 Podcast 208 Predictions

Listen to Managing Partner Timothy O'Neil-Dunne


2008 Predictions... a lively conversation

20 December 2007

Paying the Piper... a comment on the US Financial Sector Meltdown

For once I am going to stray outside - actually pretty far outside - our normal area of expertise and talk about the US economy. I have no expertise in this area but my personal frustration and that of my colleagues has reached the point of not being able to remain silent.

The current meltdown in the US Financial Sector has been driven by the usual and predictably explainable factors. However we cannot avoid the responsibility of understanding that the current US Administration's policies of mortgaging the future through a number of "must-have- instant-gratification" moves has failed. Funding a war with amounts of money that are simply untenable has beaten the US economy to a pulp. The Administration's policy of hoping (yes it was that - just a hope) that the domestic economy would be the engine to drive a need for less tax and no worries about the value of the dollar has clearly failed. So now those of us who are subject to the dictates of the US Administration are now going to pay ... and pay ... and pay.

But there is an even worse price. The very economic factors (namely a free market) lauded by the Bush Administration means that the more fiscally conservative and financially stable (read smarter and rich) nations of the world are now picking up the bargain basement opportunities right across the US economy.

For me personally the one that brought it home was the announcement by Singapore Inc's Tamasek Holdings taking a large share in Merril Lynch.

I am not advocating a return to restrictive practices of currency controls and restraints on trade - far from it. I am just stating that the US Administration and the Weany Congress have but a few months - not years - to figure out what to do about the War. Clearly common sense and Body bags are not enough to convince anyone that the War is morally and factually wrong and should be terminated. So now the economic argument might ring true.

The economic value of holding on to Iraq has been washed away. The right of that country to self determination - should be granted and let the Iraqis take that responsibility for themselves. If that includes their own civil war - then now is the time to let them do that. But let's just stop funding one man's stupidity and an Administration's Folly. Enough is Enough.

So now it must be a decision that is based on what is best of the worst situation rather than doing what was once a seemingly noble deed - however flawed.

Let's hope for all concerned that America's next Administration and the current Congress are able to grapple with the real issues rather than the "spin" of what makes no sense.

The American Economy is on Life Support. Having it being funded by China, Singapore, UAE as well as larger smart commercial organizations should be an embarrassment.

One final thought: Ignorance is no excuse.

19 December 2007

US Travel - Flat at best in 2008

We are seeing more signs of slowing in the economy. Unlike GWB the team at T2 does not believe that everything in the garden is rosy. We firmly believe that there is a real recession and it will bite hard for at least the first 2 quarters of 2008. Recovery won’t happen until after the election in November. Uncertainty is the watchword.

We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.

We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.

Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.

International NON-US market will be more robust but will also feel some of the same heat. More on that later



18 December 2007

Only a few more hours to go; Will the Italian Government Postpone the Alitalia decision again?

OK so today is D day for Alitalia well at least its scheduled that way.

There are 2 front runners (AF/KL and AirOne investors) and a dark horse (local Italian investors) and several - well others (SQ, perhaps) - waiting in the wings.

Most people are betting on AF to win. But we have a slightly contrarian view that this may not actually happen even if the Prodi Government chooses AF or even AirOne. How so?

Remember a little earlier this year that the European Commission ruled on a small case of RyanAir and Aer Lingus? Don't think that Mr O'Leary has forgotten this little sleight. There is a strong possibility - no make that a certainty - that who ever wins will see a challenge filed by Ryanair amongst others.

The EC is going to have a pretty hard time approving an airline merger given the concentration argument it used against FR+EI. Further there is still a simmering dispute on the question of how much State Aid will need to be paid back.

Folks this one may yet run for months. Even with Alitalia losing altitude all the time.

Happy punting....

17 December 2007

T2 Podcast on 2007 - The year in Review

Addison and I had a good banter today on the 2007 Year in Review.

If you would like to listen in - please click here.




16 December 2007

Amadeus gets into the consulting business

Sheez, not only do we have to contend with all the new consulting agencies springing up but now we have to compete with Amadeus. Those nice people can even bring you a video to show you how nice they really are. http://www.amadeus.com/airlines/x79170.html

I think this was made by the same group that did those nice 20 year anniversary personalized emails called Thank you!

Oh well... lets see if they are any good. If anyone uses their services please drop me a line and let me know what you think of it. timothyo@t2impact.com