31 May 2008

Continental Two Step?

So UAL's United Airlines having jilted its fellow Star Alliance Partner US Airways is not promoting a deal with Continental as the wave of the future.

Having been the "rebuffer" already in merger talks in April, CO would be very unwise to hook up with the rather long in the tooth Chicago based carrier in an alliance partnership. Its fellow Texan, AMR corp is very keen to have Texas a solid OneWorld Alliance market.

For those of you who have not been following the Forsythe Epic Saga of Airlines - here is a recap of CO's position.

Rejected United on April 26th. Recovered its Golden Share back from Northwest (even if the Delwest marriage doesn't go through). Has danced with AMR for a partnership and entry into the OneWorld Alliance. Is constrained until 2010 from leaving its current alliance Skyteam unless Delwest does go through then it can leave 9 months after that formal Union takes place. CO is not a party to the 6 way Skyteam Anti-trust immunity (AF-KL-CS-AZ-NW-DL).

CO is therefore every-one's favorite gal to sleep with but she is playing hard to get. The only one, the two time visitor to Chapter 11 has not slept with at this point is the sole other US airline still standing who also has taken two visits to the Chapter 11 courthouse - US Airways. (Aloha doesn't count anymore as it is no longer offering passenger service).

So decisions decisions. Perhaps there is a possibility of a happy arrangement where there is regular fraternization with more than one player. A Texas Two-Step with AMR and a Pas De Deux with United? Perhaps even CO can take a leaf out of Alaska Airlines playbook where lots of players get to sleep with the Eskimo. Domestically that means CO-NW-AA-DL and HA. Internationally a further few with CX-QF-LN-KL-BA and AF are all partners.

Boy this is getting more complicated than SOAP.

The end of the paper ticket. IATA PR (aka BS)

"Press Release: Industry Bids Farewell to Paper Ticket"

Well at least those nice people in Geneva think so. They are looking for the last issued BSP paper ticket now. I think it will be in the pacific somewhere tonight. BUT it wont be the last issued ticket on paper. Not by a long shot.

We still have a year validity of tickets that have been issued and there will be paper tickets (OK we wont be allowed to call them tickets because that is now officially banned), issued in the coming months and years. Also there is still a lot of non-IATA players issuing paper tickets, even IATA Airlines in domestic mode are going to be issuing paper tickets.

Of course if we were all very smart - we would go TICKETLESS not that expensive crapola solution called eTicketing.


Your Humble Servent.............

Text of the PR Release follows:
May 31st 2008.

Industry Bids Farewell to Paper Ticket
Meets deadline for 100% ET

Istanbul –The International Air Transport Association (IATA) today launched a new era in air travel as it bid farewell to the paper ticket on the eve of the industry’s conversion to 100% electronic ticketing.

“Today we say goodbye to an industry icon,” said Giovanni Bisignani, IATA’s Director General and CEO. “The paper ticket has served us well, but its time is over. After four years of hard work by airlines around the world, tomorrow marks the beginning of a new, more convenient and more efficient era for air travel.”

The history of tickets…

Paper tickets date back to the 1920s. Each airline used a different form with varying rules. Airlines soon recognised the need for standardisation of traffic documents, regulations and procedures to support the growth of an industry that spanned the world. In 1930, the IATA Traffic Committee developed the first standard hand-written ticket for multiple trips. These same standards served the industry into the early 1970s.

The first ticketing revolution occurred in 1972 with automation. The IATA Billing and Settlement Plan (BSP) for travel agents began in Tokyo that year. This led to the birth of the IATA neutral paper ticket. For the first time the IATA logo appeared on the cover of tickets that could be used by any travel agent to ticket journeys on almost any airline in the world.

The next revolution took place in 1983 when the system was further automated with a magnetic stripe on the ticket back. This allowed all of the ticket information to be stored electronically on the ticket itself and it could be used as the boarding pass as well.

At its peak, 285 million of IATA neutral paper tickets (both versions) were printed in 2005.

The first e-ticket was issued in 1994. By 1997 IATA had adopted global standards for e-ticketing. But the evolution was slow and by May 2004, only 19% of global tickets were electronic.

Simplifying the Business

At the 2004 Annual General Meeting in Singapore, the successive crises of war, terrorism and SARS were still being felt, the price of oil was approaching US$40 per barrel and the imperative for cost efficiencies was critical. IATA presented a plan for Simplifying the Business, the highlight of which was to achieve 100% e-ticketing.

Over four years, IATA deployed a global team of 150 people to work with airlines and system providers around the world to facilitate implementation.

“In four years we achieved what many thought was impossible. We made 100% ET a reality everywhere – from our largest hubs to small remote island airports with no electricity. It is an incredible industry achievement,” said Bisignani.

“The benefits to the business are real,” said Bisignani. A paper ticket costs an average of US$10 to process versus US$1 for an electronic ticket. With over 400 million tickets issued through IATA’s settlement systems annually, the industry will save over US$3 billion each year.

Consumer benefits…

Consumers can look forward to easier travel in an electronic world. 100% ET eliminates lost tickets. ETs can easily be changed and reissued without necessitating a trip to a travel agency or airline ticket office. And they enable a wide array of self-service options such as online and mobile check in.

”With ET a reality we can now enter the next phase of Simplifying the Business,” said Bisignani. “We are moving ahead with a further revolution - Fast Travel that will provide convenient self-service options from check-in to baggage tracing and re-booking.”

Cleaning-up paper…

While IATA will no longer issue paper ticket stock, IATA neutral paper tickets issued by travel agents before June 1 remain valid for travel under the conditions they were purchased. Paper tickets may still be provided by an airline from its own offices or from a travel agent in the USA, although it is anticipated the volumes will be very low.

To complete the conversion IATA has contacted 60,000 travel agents in more than 200 countries to collect the remaining unused paper tickets in the system – some 32 million worldwide. These will be securely reclaimed, destroyed and recycled. “An era has ended. If you have a paper ticket, it’s time to donate it to a museum,” said Bisignani.

Last paper ticket ceremony photos

For more information on Electronic Ticketing and Fast Travel visit: www.iata.org/stbsupportportal
- IATA -

Lorne Riley
Manager Corporate Communications
Tel: +41 79 542 1961

Editors Notes:
• IATA (International Air Transport Association) represents some 230 airlines comprising 93% of international scheduled air traffic.
• The IATA Billing and Settlement Plan (BSP) is a system by which IATA, as an independent third party, manages the transfer of money derived from cash sales of airline tickets between travel agents and airlines.
• IATA has 80 BSPs covering more than 162 countries and territories that handle some US$220 billion annually.
• When the ET project was launched in June 2004, the industry was at 19% Electronic Ticketing.
• IATA has 150 staff supporting its Simplifying the Business programme.
• IATA invested $1.3 million in an ET Buddy Programme to provide free consulting to airlines needing assistance in launching their ET projects.
• Since June 2004 IATA has held 23 workshops worldwide to support ET implementation.
• Key Dates
o IATA interline manual ticket established: circa 1930
o Transitional automated ticket (TAT) established: 1971
o IATA creates standard for Neutral Paper Ticket: 1972
o IATA launches BSP Japan and Neutral Paper Ticket: 1972
o Automated Ticket & Boarding Pass (ATB) established: 1983
o Electronic Ticket (ET) established: 1994
o IATA standard for ET established: 1997
o IATA Board of Governors pass resolution for 100% ET: 2004
o 100% ET – June 1, 2008


30 May 2008

Fly UB Air

This is an expansion of the story that was first published by those nice people at Travel Weekly. So freely adapting their article by Lester Craft here goes
This is the new flight menu for a carrier in organization formed by some of the industries heavyweights. Rumour has it that this is the business model for Delwest Air

Code name UB Air for Unbundled Airways. Herewith the airlines’ pricing charges:
What do you get for your ticket.
• An electronic ticket.
• The right to change your ticket for a fee
• The right to cancel and pay the airline for the priveledge (unless you die in which case a partial refund less fees) will be allowed.
• The right to be charged taxes
• The right to be charged fees
• The right to board the aircraft
• The right to leave the aircraft
• Baggage $25 first bag, and it doubles for each additional bag. No limit except for weight which is pegged at 15 kilos
• Frequent Flyer miles, $100 extra.
• Seats, $100 extra. A few years back, it was rumored that airlines were developing "standing-room-only" configurations. Well, now's the time to make sitting a valuable add-on.
• Arm rests, $15 each.
• Leg room
• Delwest will deploy the new version of its international coach configuration which will be “fixed recliners” your seat is actually a leaning position
• Standing up or changing your position is only allowed with the permission of the Flight Attendant and your handing over of a $5 prepaid chip).
• Leg room, sold in 1-inch increments at $20 an inch. Very lucrative, especially since there is zero leg room currently and everyone would have to purchase at least an inch or two.
• Under-seat storage, $10. Enforced by a little panel with a built-in card swipe. And it's worth pointing out that this is not just about storage. Airlines in fact have long missed out on a chance to promote the fact that they actually offer passengers foot room as well as leg room. Imposing an upcharge could help call attention to this important but overlooked convenience.
• Charging by the pound (as in passenger weight). For example, "New York to Los Angeles, only $1.99 a pound!" This is especially important as the mass of travelers increases in direct proportion to their weight. Unlike freight that tends to bulk out before it weights out, passengers will be charged by gross weight. The Southwest hidden “People” sizewize will be adopted for the new airline.
• Fold-down trays, a dollar a minute. But why stop there? Clean trays are extra at $25 premium.
• Use of an overhead bin, $10. A bargain compared with checking those extra bags.
• Toilets are a steal at 50 cents. Coin-operated, of course, but they also accept most major credit cards.

Delwest’s innovative pricing model will be introduced as soon as their reservation system is upgraded to take all these new enhanced services. Each will appear on your invoice as PLC, Passenger Luxury items


Niche Low Cost Business Class Airline Model RIP

Silverjet threw in the towel today. Ceasing operations after valiantly attempting to stay afloat. They needed but $5 million to keep the operations open but after being refused a lifeline loan and the deal with Viceroy falling through there really was no chance.

There is an old Axiom if you do business in the GCC. An LOI is worth nothing. Only the money in the bank is the ultimate test. As one of our friends put it, precision for a Brit and a Yank is about 90% done. In the GCC it is only about 50%. Clearly this was a lesson that Silverjet’s management had not quite learned. There will be a lot of mad people out there now, individual investors and those who plowed money into it.

The demise of Silverjet follows EOS and Maxjet. Eos actually had quite some months of operation in cash before they needed their injection . But despite everything they knew the situation was hopeless. In the GCC this model could have worked with newer aircraft and a smaller number of seats based on frequency. However the low cost high end airline in Saudi Arabia Al Khayala soldiers on but it is a short haul carrier offering service inside the 3 major cities and erratic service to Dubai. We believe that like its sister company NAS Air it is not making money.

So L’Avion is the last one left. If they have any sense they will seek protection under the wing of Air France. PrivatAir on a ACMI basis seems to be doing just fine.

Alas poor biz class model – we hardly knew thee.



So yes Virginia there is a recession Version 2.0 this time with proof.

The recent study by TIA makes sobering reading. Trips not taken, unhappiness with the process. The chief drivers of revenue are the most pissed off.


I think we are all now feeling the pinch. The anecdotal evidence is overwhelming.

The problem that has overcome us all have been shielded by older data forms and statistics that are from a bygone era. I believe we could ask any person in the country (GWB exempted) and she/he will tell you that the world is in recession. Even the Oracle from Omaha calls it that way.

We draw our evidence from the following sources:

GDS sectors are way down (latest to report is Travelport) so far Sabre and Amadeus are not talking.
Savage cuts are now showing up across the board. Hawaii we believe we be down by 20% or greater before the end of the year when all the elements are in.
Significant cuts are being planned. Ryanair was first to announce its Winter 08-09 cuts. Now we see it across the board.
American will drastically reduce its Caribbean traffic and others across the board at the same time parking 75 plus aircraft. The headcount numbers are not yet out.
Las Vegas is WAY off
Hawaii is WAY off
We could go on but lets stop here for now.

So chaps, accept it for what it is and live with it. We are in for a long one. The first real recession the world has seen in more than 2 decades. The world will emerge (I hope) and there will be a different world at the end of it. The slope of the recovery curve will be a lot less resilient and SLOWER. During this time those people who have been the prime drivers for revenue on the legacy carriers (business travelers) will find alternatives. That includes the new virtual there from Nortel. And probably Skype will be the preferred form of communication if eBay ever lets it.

For all of us this is going to reshape the business we are in. So now we need to start rethinking that fundamental new set of thoughts. Collaboration will work better than individual contributions. Are you in?

Good luck to all of us.



29 May 2008

So Does Predatory Behavior Pay? Let's Ask...

American Introduced JFK-STN services in 2006 specifically to counteract the threat of the new low cost Business Niche players which at the time included EOS, Maxjet and Silverjet. They even went to double daily in 2007. Today they announced the cut back of the service and cancellation of the route effective July 7th. Thus leaving AA with a single gateway for all of London.

I guess they were able to achieve what they wanted. Too bad about the collateral damage.

28 May 2008

Do you blame the Saudis for the high price of oil?

The Saudis are being royally lambasted by the US Congress and others for not doing enough to affect the price of gas. The solution seems to be simple enough pump more oil. As one of the few that have the capacity to do so - the Saudis are being expected to turn on a dime and just do that.

However I posit a different point of view. It is actually not in their interests to do this. Why?

They are not the root cause of the problem. The Saudis are one of the few oil producers who have consistently invested in new production according to a recent piece on CNN. Others have not been so smart. Further the cause of the rapid rise is not necessarily (carefully put) the problem. Rather it is speculators - largely in the US Commodities markets who have been driving up the cost. The Saudis through their investments are one of the few that do have a variable oil production. We should be a little thankful that they do.

So if the Saudis do increase production, then at the moment it is not something that will affect the price of oil. There is a certain amount of hoarding going on by the Chinese and even by the traders themselves, Also I should note by the US where it is called the Strategic Oil Reserve. As soon as it would be opportune, the traders will dump their positions and switch sides generating instead a short position from which the price of oil will plummet.

Nope we have to continue to be frugal for now and put in place LONG TERM solutions. I the mean time get rid of the SUV and start being smart about your energy costs.

Religion and the GDS world

Seems we now have religion as a GDS decision criteria.

Sabre announced that the Vatican has selected the GDS to bring the Faithful and presume ably keep them in line with catholic behavior. The AACO representing a secular and non-secular carrier list has selected Amadeus from Jan 1 2009 kicking out Travelport's Galileo in the process.

So now I understand that the Buddhists, the Hindus and the Protestants (especially the Southern Baptists) are going to select their GDS's in the near future. Not to be outdone there is a rumour that John Travolta and Tom Cruise on behalf of the Scientologists are going to personally hold an RFP and interview candidates.

I want to squash any rumours that we have been involved in any of these talks.



Sanity returns?  United, US Airways reach impasse on merger talks

Wow - looks like the irrational exuberance of the airline business has finally returned to earth a little fast.

UA and US have put their merger discussions "on permanent hold".

'Nuff said. Now lets move on

Is Windows Vista really Windows Millenium revisited?

Well it just may be according to reports from the press.

The leaks are just starting about Windows 7. ( maybe I missed one but I counted only 5 but no matter).

Clearly Vista has not lived up to Microsoft's expectations and of course for the few of us who bought (and paid for) Vista Ultimate - it has been a huge disappointment. It has had about the same impact as Millennium. Which was pretty bad.

That said I wont give up Vista now and go back to XP. I saw a demo of the Table computing. It is VERY cool. I even spoke with a person who has actually played with it. CSI Miami is just a mere understudy. The wall or table versions are almost here. The real thing could be even cooler.

So brace yourselves... we are two years away from No 7. Perhaps I will wait for #9.



American Saabs Away

American is putting meat onto its 11% reduction in capacity. Gone are several marginal and unprofitable routes including a popular ORD-HNL service. A restructuring of all the service in SJU will occur. Many MD80s will be dumped but also look to see A300 capacity cut and a resulting reduction in capacity in the Caribbean. Finally Saab Saab - the SF340Bs will be retired by the end of the year.

ATRs would be a better bet - however I suspect we will see Embraer 135/145s replacing the Saabs.



Delta joins the Paypals

It seems that someone is listening. We have long advocated the broadening of payment options (we call it financial fulfilment) by established vendors in the Travel and Tourism marketplace. With Northwest and Southwest last year accepting Paypal as a form of payment we now see Delta joining the fold.

Credit cards represent one of the last major controllable cost elements for an airline. Therefore turning to alternative forms of payment keeps a competitive environment. With Visa and Mastercard now public, American Express remains a giant in the charge card space and now Diners Club USA has been acquired by Discover - we see a level of competition and of course PROFIT in the market. This will result in upward pressure of the costs/prices. Airlines have been a cash cow for credit card vendors for many years. Now they are finding alternative solutions.

So chaps - you got this far - what about Google Checkout!!!



26 May 2008

Very Sad Story - LHR Homeless

As you probably know I am pretty hard on BAA and LHR's management. But this shows another side. One of the world's busiest airports is also "home" for about 100 people who are homeless compared to the approx 60 Million who pass through it as passengers.


If you are reading this you are probably more fortunate than the people depicted in this story. Good for LHR to actually take steps to take care of these people.



UK Immigration Stats exposed using duff data

Under the file usually marked "What were they thinking" comes this one.

A UK parliamentary select committee was convened to look at various complaints from local government authorities about the number of newly minted immigrants using resources in the UK regions. The central government of "New" Labour led by the dour Gordon Brown steadfastly refused to admit that the UK had an immigration problem stemming from the expansion of the EU in 2004 onwards.

Turns out those overstretched local authorities were actually right.

So it comes from the way in which estimates are calculated at the Central Government level. So guess what they are using to estimate population?

Well its that good old report that indicates SO WELL (NOT) the true travel patterns of people the IPS - International Passenger Survey. The latter by the way still hasn't figured out that over 50 million Europeans user Ryanair and that countless others (it would appear) use other low cost carriers to get into the UK.

The select committee was not amused!

Existing methods of estimating migration and population figures are not "fit for purpose" say MPs. The International Passenger Survey, designed to provide data for tourism, now plays a central role in migration estimates, the committee of MPs said.
They said it was "not fit for this purpose" and methods of measuring movement in the UK "unsatisfactory".

The committee said new surveys were needed. The Lib Dems said ministers had "totally lost track" of the population. (Understatement of the year!) And of course given the influx of people coming in on LCCs they are not even counting tourism properly.

In its Counting the Population report, the Commons Treasury Committee accepted that the UK was in a period of "significant population change" which made it harder to estimate numbers of people in each area. But it said population estimates were "central to every national system of official statistics", used to estimate funding for local government, the NHS and other public services. Getting them right was therefore "a matter of social responsibility" the report said.

For many years I have held the position that the IPS does not reflect true travel patterns and is a flawed metric. I am glad someone else thinks so!