16 August 2008

Phelps may be all gold - but International Travel is failing to qualify

The latest stats from IATA point to slowing across the board. With the US $ rising against the pound and the Euro - we have a very weird situation.

The US economy may be not as bad as the others now that the markets have taken the US decline into consideration. But Europe and UK are a different matter.

As a result we have declining oil rates (down from a high of $148 to $116 at the moment. We have declining precious metals - gold and especially silver. We have declining Euro and Pound.

So traffic is slowing internationally. The blood bath will be across the board. The latest IATA numbers point to a world wide decline in both cargo and premium pax traffic.

Ouch this is still ugly....

Chart and numbers courtesy of IATA

15 August 2008

Hell's Grannies on JetBlue - JetBue's in-flight Stasi

This is an amazing story.

I first heard about this from Addison Schonland. Listen to the interview with Marilyn Parver the Granny who was arrested AND put on the No-Fly list for what is a wonderful example of the excesses of an airline in today's paranoid environment.

It was originally picked up by Chris Elliott. It was picked up even by the Wall Street Journal:


As Addison says in the podcast that this is out of a Police State.

ABC has the broadcast rights for video - so check out Good Morning America next week!


Listen to the whole podcast.


I have personally witnessed a situation of where a power mad Flight Attendant engaged in a similar activity. In my case a United Airlines flight attendant was so mad at an 11 year old child who cracked a joke had the boy, the elder brother and the father (not the mother) were arrested and taken off the flight in plastic cuffs. A gross misuse of power. If someone is a general threat then they should be dealt with - severely.

This and similar instances are a clear abuse and a stupid waste of brand equity by JetBlue.

Moral of story... airlines' customer service personnel can ruin your whole day. Let's not forget this is the same airline where during their melt down last year had its CSRs literally hide and not deal with the passengers who were suffering. http://www.msnbc.msn.com/id/17166299/

Its also the same airline where a scam of "found" credit cards were misused by employees.


Chaps not a good way to run an airline...



BAAABI's argument for immunity at LHR - not so fast boys

The filing of anti-trust immunity by British Airways, American Airlines and Iberia is based on a number of factors. Not least of which is the argument that the world has changed since 2002 when the immunity between BA and AA was disapproved by the regulators.

So I thought I would go back and look at the slot situation at LHR and see what teh difference was between the last time they filed and the situation today.

Using official BAA statistics and based on the summer 2002 schedule vs the summer 2008 schedule at LHR here are the stats for the 3 airlines.

2002 2008 % Change
BA 37.90% 41.50% 9.50%
AA 2.30% 2.60% 13.04%
IB 2.30% 2.10% -8.70%
Total 42.50% 46.20% 8.71%

So in fact there has been an INCREASE in the share that the OneWorld Alliance has at LHR further cementing the dominance of the incumbents.

Given that there has been a concentration in the number of holders of slots into Alliances, the argument for allowing this form of dominant concentration goes against all the usual benchmarks of competition both in Europe and in the UK itself.

So Branson has a point.

For the record VS and BD shares are as follows:

2002 2008 % Change
BD 13.10% 11.40% -12.98%
VS 2.40% 3.40% 41.67%

Merril Lynch puts its money where its mouth was - at US Airways

ML has been talking up US Scareways for a few months now. They raised their rating to a buy recently. Well today they put their money where their mouth is. They bought 19 million newly issued shares. This would give them about 16% of the total company enough for them to get a board seat I would think. it also gives US the ability to ride out the winter down period.

So lets see if anyone else wants to buy into the Airlines' stocks. We are finally seeing some normality return with Airline stocks becoming counter cyclical to oil stocks.



14 August 2008

BAAABI it's warm inside. The Alliance of Champions?

So the news was not exactly unexpected that the BAAABI alliance would finally come to fruition.

So replicating the DLAFKL structure of a formal JV - the partners think they can get around any of those silly objections from the regulators. And it looks like it works.

Now in context the Alliance across the Atlantic has some winners and losers. Clearly people like Virgin Atlantic and BMI will be none too happy. And of course the beasts are going to start creating two tiers in the Alliances. So Finnair and other lesser mortals in One World will suffer somewhat. But this will go a long way to reducing the footprint and competition across the Pond. Is that good?

I will go out on a limb and say probably not.

Unless of course that the BAAABI Alliance has to give up both slots and routes/frequencies to make this happen - then it could be interesting. But who can this benefit?

I can't see others jumping in quickly. Here is the text of the email sent to BA's premium traffic members



Dear Mr O'Neil-Dunne,

I am writing to you to ensure that you are one of the first to hear about the latest news from British Airways. Today we have reached agreement with American Airlines and Iberia to form a joint business, which if approved, will enable us to co-operate on flights from the UK and Continental Europe to the US, Canada and Mexico.

We plan to file for worldwide anti-trust immunity from the US Department of Transportation. The European Commission will also review the deal. If successful, we will be able to form a closer working relationship providing significant benefits for customers. All three airlines will continue to operate under our separate brands.

Closer working will create opportunities to enhance customer benefits. It will enable us to better align schedules giving more access to destinations and improving connections through key airports. Other benefits for customers include greater opportunities to earn and use frequent flyer miles on the other airlines' transatlantic network along with enhanced frequent flyer tier features. Our Executive Club members will continue to be able to enjoy lounge access with British Airways and its oneworld partners as they do today.

Our overall aim is to continue to deliver an upgraded travel experience to you. Financial efficiencies that the joint business agreement will give British Airways will help us to continue to invest further in our products and services, despite the demanding economic environment that the airline industry faces.

It is both a challenging and exciting time for British Airways and I will ensure that you are updated on developments as the proposed venture nears completion.

Warm regards,

Woody Harford
Senior Vice President, Commercial, Americas

13 August 2008

Skytrax Awards - the Professor thinks a little differently

Skytrax just released their 2008 awards.

All wonderful stuff - but there are some discrepancies that clearly don't get covered.

So here are my choices - some may not gibe with yours but given that I fly a goodly number of miles - I hope that you will forgive this indulgence. Here are my specific awards for best in class.

1. Best Biz lounge - 1st and Biz class - JAL at NRT airport. Without a doubt the best lounge I have ever experienced.
2. Best Inflight entertainment system - Delta. Surprised? I was - it is not too overwhelming and I can actually use the damn thing. Plus its reasonably easy to restart - I have seen the others like QF that are diabolical.
3. Best short haul/domestic biz class - Virgin America. A class above the rest. I may just defect from Alaska as a result.
4. Best Alliance - One World. Still knocks spots off the other two. Star Alliance - eat their dust
5. Since I have not taken many first class flights this year - no award there.
6. Best Airport - Changi again - the new terminal has made a good airport great. I have sampled all 4 terminals including the LCC offering.
7. Best Biz Class Bed. BA. The new seats and services are pretty darn good. Just hurry up with the service. I have not tried SQ nor EK's biz product so I cannot attest to their value.
8. Best LCC. Tiger. I wish others could do what Tiger does. Ryanair please note.
9. Best value for money. Still Ryanair. Play the game right and you get the best value.
10. Best Booking site for an airline- Delta. Sorry chaps - the rest of you suck. Only DL doesn's suck quite as badly.

Later I will work on the WORST awards. To be known as the Braniff Awards. if you wish to participate - please send me a note.



Have ever tried to visualize the complexity of our Air traffic?

WARNING only read this in the evening when you are feeling REALLY mellow!

Professor Mike turned me on to a great TV program that is currently airing in the UK called the Britain from Above:


It has some of the most amazing images of Britain and its infrastructure. Some of the coolest stuff is not even here - it is on a separate website: Gizmodo has put it all together so you don't have to, and of course your very own Professor has pulled it all together:


The chap behind the design of this stuff is a designer guy called Aaron Koblin. His website has some of this amazing stuff that is literally mind blowing. it is built on work from the celestial mechanics project. The Flight Patterns visualizations are the result of experiments leading to the project Celestial Mechanics by Scott Hessels and Gabriel Dunne (no relation!!!). FAA data was parsed and plotted using the Processing programming environment. The frames were composited with Adobe After Effects and/or Maya.


Good stuff for Mushrooms and other forms of Timothy Leary (also no relation) chemical compositions.


For his stuff on the USA and a similar visual of the USA air traffic go here:


With a little kudos to Mike Idov (New York Magazine) and NPR.

check out Mike's article on Gridlock in the skies.


Happy Surfing.



Genesis, etc al - Bishins side of the story and implications.

You will need to register with Travel Weekly to read the whole piece. It is an interview between Nadine Godwin and Bruce Bishins the leading light of this ill fated agency based GDS solution

Sidestepping any of the real issues - he blames Atraxis (SwissAir's reservation system) and various other sundry sources for the demise of Genesis.

I will add little to my previous blog on this subject. I think it was a bad idea and badly executed in a time when the idea had no merit. The number of ARC registered locations fell from the peak in 1996 of over 50,000 to under 20,000. That should be a real cause for concern for the business. But I guess in his new role Bishins doesn't want to discuss that.

One point he raises - a pet peeve of mine - is the issue of GDS caching. This is one of the dirty little secrets we all realize but don't want to admit. IE that the real issue is that there is no ubiquity of inventory. For hotels a common inventory image is a goal but not possible - for airlines it is a statement of fact but in reality the statement is a lie. The cover all for this is the PCA - Participating Carrier Agreement - which allows the GDS to guarantee a segment on a carrier. PCSs do not extend out in any great number to resellers - but if/when it does then the GDS model is really toast.

As for Atraxis, many of the original customers stayed with EDS. It is only in the last 2 years that they have started to migrate away due to the lack of investment by the (soon to be division of HP) EDS. One player who has taken Atraxis to a new level is Emirates so I doubt that this is an issue of the core technology.

My last word on this - Travelport has announced a significant drop in GDS segments for 1H 2008. Down 9% already. For August the numbers are tumbling rapidly. This doesn't take into consideration the massive cuts planned for September.

The GDS model is finally biting the dust.Chaps you still have some time to fix it by embracing new models and technologies. Sadly I don't see this happening in a resource constrained environment when the Private Equity owners of the GDS businesses are not going to be too keen to do that.

12 August 2008

A better search? Cuil has a long way to go

I have been playing with Cuil (www.cuil.com) which is pronounced in a valley kind of manner for the word Cool.

It is an interesting upgrade to the process of search. So far it is following its Google-based lineage with a clean and clear interface.

It has a long way to go though. I tried to enter "best deal to hawaii and got real estate results. But the promise of contextual search is very attractive.

In the mean time - i will stick with Google (the new evil empire) and dogpile.



11 August 2008

Compliance in an age of austerity - Big Brother would like you to save money

Perhaps I should have titled this piece - "Love in the time of Cholera"

At the recent NBTA conference in Los Angeles there was a lot of talk about how the airlines new “ancillary revenue” programs are upsetting the apple cart of corporate travel management. It has become a hot button because there are now a slew of charges flying around that don’t necessarily fit under the control of the travel management programs that corporations and their respective independent travel agencies (Called TMCs or Travel Management Companies) such as American Express, Carlson Wagon Lit, BCD and the new comers such as Orbitz for Business and Expedia Group’s newly renamed Egencia.

This got me thinking about the whole process of travel in corporations and the impact in an age of austerity and sky high prices for travel services.

The information problem manifests itself in a simple way. You book your ticket. You pay the required upfront fees but when you get to the airport you have to pay extra. Worse the charge that you pay for that first or second bag appears on your credit card bill as “Miscellaneous Charge”. So the trackers back at the HQ office have no idea what the charge was for. Upgrade, meal, bags, change of flights etc etc. The information chain is broken at several points. Firstly there is no consolidated data source that can compare the total cost of the service provided by the airline in a package that can be compared in a matrix. Apple to Apple. Corporate travel policies can be pretty complex, but even a simple one like you get a meal paid for during your trip away from home becomes a nightmare to track and therefore police. Does the airline give you a meal (hell no!) but Continental does. Therefore if you fly CO during a meal flight then you can eliminate a meal from the expense thus saving approx $25 per meal time.

There is a good article on some options covered by such expense management players and trackers as Concur and TRX. Go here to read Scott McCarthy’s Middle Seat article this week. http://online.wsj.com/article/SB121848940345831141.html?mod=djemseat.

But all of these tools are a bit draconian in nature and don’t solve the problem of saving money. The best decision is actually to not fly then you can save the most money. Perhaps the better solution is to create a budget and provide guidelines for how its spent. IE this is your travel budget, it should result in X deliverables (like sales). It should also be trackable accordingly. Many moons ago I led a team who created a solution that basically created a cost benefit analysis for each trip. The government wonks loved it but the corporations hated it because if actually required some one to commit to creating a value for each trip. Something that no one ever wants to have to do.

At the end of the day the company must justify its travel budget and make it perform just like any other asset. Perhaps now is a good time to see such a system in place rather than asking for a huge number of hoops to be jumped. The solution to the problem for many companies is to just cut the trips or issue blanket policies like “No non-essential out of state travel” (This is Washington State’s new travel policy) or “Each trip must have at least 2 layers of management approve it”. That’s an effective thing for a division head to be doing.

I love to tell the story of one of our client’s who was at a cocktail party one day in the early days of the dot com boom. He had a fellow entrepreneur come up to him and said “I love your company. Your website is now our corporate travel management system.” Our client looked incredulous at this statement since they were a pure leisure site. But the entrepreneur was quite effusive. “Our new travel policy saves us money, time and hassle. Already this quarter we have saved over 40% of the previous out of pocket costs, we fired our travel agency and have a much faster turn around on our expense reports.” Our client (and me listening beside him) asked “That’s great Richard, but how do we help you?” To which Richard replied” Our new policy is chose the flight from the top options off the first of your results page. If not then they have to write to me a 4 page memo as to why they have an exception or didn’t choose it. So far I have not received one memo!”

We actually sat down with him and found that his numbers were right. It was quite interesting.

Bottom line – this is a battle for everyone to fight. Responsible parties in companies need to do a better job of managing the budget. A Big Brother policy is not going to help if it causes extra work for the people it is designed to serve. Similarly if you have widespread abuse of a policy – then either the policy is wrong or your people do not have the right attitude.



So how deep are the cuts? A Primer.

We have been tracking the extent of the cuts in Airline services and the numbers seem to be all over the map. It is going to be difficult to see where the real cuts occur depending on the source.

So for the benefit of the un-initiated - let me just make a few statements as terms of reference.

There are essentially 2 elements that make up the raw components of what comprises the term "traffic" these are:
1. Aircraft. Type, Size, seating capacity
2. Routes flown and frequency. The aircraft takes off and lands each take off and landing is tracked differently. An aircraft "movement" comprises for airport a single event - a take off or a landing. Thus there needs to be one of each to comprise a pair. Airports measure the aircraft by type (not capacity) and by the number of movements.

There is a host of different measurements that comprise what is included in these elements. Frankly some of them are extrapolated and some are averages. For example a Delta B737-800 may be pretty different from a Ryanair B737-800. Airlines calculate capacity typically by taking the number of seats available and then how many seats are flown. These are called ASMs Available Seat Miles, also known as ASKs with the unit of distance being a Kilometer. The number of passengers filling those seats are RPMs - Revenue Passenger Miles (also RPKs). The load factor takes the RPMs divided by the ASMs to give you a load factor. NOTE that this is where the airline gets passenger revenue. So that if a person is flying on company business (such as an airline crew deadheading) then this is not included. Also if you are flying on an award ticket for free (i.e. no passenger revenue then you are also not included in this number. This is why frequently the load factor number underestimates the actual capacity of the aircraft. With the airlines going to ancillary revenue and now charging for FF "free" tickets perhaps that number needs to be rethought.

I have always thought that the measurement of RPMs vs ASMs to be somewhat false. But the airlines frequently translate things into CASMs - COST per ASM as a measurement component of their profitability.

As there is no universal form of translation and the airlines do not want to break out their premium traffic statistics into exact detail - we do not have precise numbers by cabin available.

For a carbon footprint, we are now seeing a measurement that shows that the footprint share by passenger should rightly be apportioned to the unit of space in the cabin. Thus the amount of personal space available to a Coach passenger is frequently less than 50% of that of a premium class passenger.

So this should help you to put in perspective the relative measurements being touted by the various parties of the different statistics on the cutbacks.

IATA is claiming as is OAG that there are total cuts of the order of 7%. This is based on aircraft capacity cuts flight numbers x aircraft types. The airports are claiming a much lower cut and indeed still showing positive Y/Y growth for all of 2008.

So bear this in mind when you are looking at the numbers and look behind the statements and see if you can actually see the real numbers underneath.

Good luck interpreting - we will be searching this for you but perspective is always good.



10 August 2008

Alitalia moving into bed with - Lufthansa?

Intesa SanPaolo those nice people who are clearly on the ball and advising the Italian Administration on what to do about not killing Alitalia are recommending that the "New" Alitalia takes up with the Germans.

I will try avoid any jokes about this - but it is just too funny!

So AirOne's relationship with LH is clearly some of the bearing. Also the fact that LH has made Italy a focus shifting resources to Milan in its regional fleet.

of course this is all speculative as it will be next week that they start the negotiations. LH is remaining cool about this saying that they have absolutely no interest in Alitalia's business. Of course they are unlikely to turn it down. In the mean time according to CAPA's latest numbers AZ's RPKs are down more than 20% from last year.

Take the dog out and shoot it!

(No animals were actually harmed in this blog posting!)



Ryanair clams down on Screen Scrapers - Agents too?

Ryanair is one of those airlines that seems to have found a successful business model and absent the current disastrous decisions on Fuel Hedging, they are likely to be one of the big survivors. One of their strengths has to be the way in which they have rigidly enforced the Low Cost model.

So it is not surprising that occasionally they go after intermediaries who are re-selling the Ryanair product. Currently there is an interesting spat over screen scrapers. The story is that Ryanair has stated effective Monday they will automatically cancel any bookings made by screed scrapers. This act has the improbably situation with condemnation coming from several sides including of all people ABTA - the Association of British Travel Agents. Holiday Which (the UK consumer magazine which acts as a consumer advocacy group) I can understand but ABTA????

Before you readers scream and shout that Michael O'Leary is at it again (well he is but read on...) and that he deserves this condemnation, think a little more carefully.

There are 3 main types of screen scraping. This BTW has been going on since the Trip.com first scammed Expedia, Preview and Travelocity in the early days of OTAs.

Type 1 - screen scrape aggregate and then forward the user to the supplier or real seller's site. Examples are usually with permission of the supplier site and include Kayak, Farechase, Yapta, Skyscanner et al.

Type 2 - screen scrape aggregate and then make the booking in the background without redirecting the consumer sometimes without the consumer knowing this is taking place. Examples of this are V-Tours in Germany and Bravofly and Irish company based in Switzerland.

Type 3 - screen scrape for fare comparison purposes without using the data in the consumer flow at all. Almost all sites use some tool to compare and contrast the prices offered by others. It keeps the game interesting and prevents wild swings.

Type 2 is the nasty one because it is essentially fooling the customer. It is also EXPRESSLY verboten with Ryanair and just about everyone else. Ryanair's T&Cs section 3 - here is an extract:

"Permitted use. You are not permitted to use this website other than for the following, private, non-commercial purposes: (i) viewing this website; (ii) making bookings; (iii) reviewing/changing bookings; (iv) checking arrival/departure information; (v) performing online check-in; (vi) transferring to other websites through links provided on this website; and (vii) making use of other facilities that may be provided on the website. Use of this website for any purpose other than the aforementioned private, non-commercial purposes is prohibited. In particular, use of any automated system or software to extract data from this website for display on any other website (“screen scraping”) is prohibited. In addition, the website may not be used without Ryanair’s prior written consent for providing on a commercial basis details of Ryanair flights to others, offering Ryanair’s services for sale to others, purchasing of Ryanair’s services for resale to others, or the like,."

Easyjet is a little nicer but the essence is the same:

"easyJet.com acceptable use policy
easyJet permits you to use this website strictly for personal, non-commercial purposes only. Use of the website for any other purpose is prohibited. If you do not agree with the terms of this Acceptable Use Policy (“Policy”) then you may not use this website."

I have an issue with the use of Screen Scraping and have never been a huge fan despite the value that can be derived. The core root of the problem is that the backend systems are really not designed to cope with these types of searches and therefore it creates a resource issue which ultimately costs money. Is it fair therefore for a scraper to make money out of someone else's resources?

BA's website is a little more specific on this topic.

"Acceptable use
You may only use this website in accordance with these Terms and Conditions and, in any event, for lawful and proper purposes which includes complying with all applicable laws, regulations and codes of practice within the UK or other jurisdiction from which you are accessing this website.

In particular, you agree that you will not:

post, transmit or disseminate any information on or via this website which is or may be harmful, obscene, defamatory or otherwise illegal;
use this website in a manner which causes or may cause an infringement of the rights of any other;
make any unauthorised, false or fraudulent booking;
use any software, routine or device to interfere or attempt to interfere electronically or manually with the operation or functionality of this website including but not limited to uploading or making available files containing corrupt data or viruses via whatever means;
deface, alter or interfere with the front end ‘look and feel’ of this website or the underlying software code;
take any action that imposes an unreasonable or disproportionately large load on this website or related infrastructure; "

In my humble opinion therefore Ryanair is well within its rights to take this action even though it is objectionable and puts the consumer in the hot seat.

As with everything else - lest we forget - caveat emptor and RTFP - Read the Fine Print!!!