22 October 2008

Ryanair &Expedia - its ending in tears

Ryanair are clearly not happy with Expedia.

With much fanfare the deal was cut in early 2007 and GTA (Octopus) now Travelport was turfed out in favor of Expedia's hotel platform.

Today the commissions are not as Ryanair thinks they should be and Ryanair doesn't seem to like Expedia.

There are tears... it may be "C U in Court" we will have to wait and see.


Oops - Cut Capacity, Raise Fares Strategy failed US Airlines

You would think that the significant cuts in capacity from Labour Day onwards would have given the airlines market pricing power and the ability to raise yields. But even with the wonderful drop in fuel prices the airlines just cannot seem to win for trying.

So what did they do wrong?

In my humble opinion the airlines didnt quite do the right thing. So I will ignore for the purpose of this piece the issue of Fuel Hedging that seems to have bitten many airlines.

What didnt go right?

1. The capacity cuts were not enough
2. The reduction in premium traffic was underestimated
3. Reducing the cheap seats inventory was too aggressive
4. The airlines didn't spend enough money in marketing during this time period to boost sales.

What is going to happen next?

Again in my humble opinion we are likely to see some clear further actions:

A) More total capacity cuts
B) A review of the capacity parked and the right sizing of the cuts
C) Opening the cheaper buckets more widely to start moving those numbers back up
D) More cost cuts especially staff
E) Conversely a slowing of merger activity.

Will I be right? You be the judge


21 October 2008

Line up Airlines begining with the letter A...

And having ownership travails..... Alitalia I think comes before Austrian...

The deadline for Austrian Airlines sale passed yesterday with no confirmed bid. AF/KL declined to bid and the two declared contenders LH and S7 requested more time.

Is this all a plot we could ask ourselves?

Does someone have a vested interest in the situation?

clearly BA has no ability to be interested with its own troubles in getting its slam dunk deal completed. So what can we see here... the great mega carrier redraw may become a damp squid. With oil currently trading below $70 today (Nymex) the airlines may just be better off together. All those dire predictions seem moot. Although many (including the Professor) dont think these low numbers are sustainable - they just might be.

So Austrian better get a move on and not necessarily assume that there will be a sugar daddy coming to save the day.

WIT Blog live

Log onto the WIT blog and see live as things progress

The Professor and others are blogging insights there



Loyalty - Airlines have devalued their FFP currency

Steve Hay from ICLP in Hong Kong gave a short but very insightful presentation yesterday at WIT/2008/Singapore.

He demonstrated the difficult positions the legacy carriers are in with their FF programs and how they could address them.

Interestingly it is clear that the airlines have been slowly eroding the value of the currency. The impact has been yet more erosion of brand value amongst consumers. This has been a constant theme of the Professor - the big airlines have done a very bad job in maintaining their brand value.

Steve actually gave a couple of very good ideas about how the supplier community can continue to breathe life into their programs. These are no longer programs about incremental value and loyalty. FFPs are now a price of staying in business. Carriers who move to a la carte service models will be struggling to serve their "premium".

Unfortunately we didnt have time to delve into Steve's ideas but I believe that just ignoring what is going on elsewhere in the airline's marketing mix will come back to BITE them big time. Browsing through the FF sites - such as Flyertalk and Expert Flyer amongst others - it shows that things are definitely not good.

In the Asia-Pacific market - the profligate give-aways of the US carriers didnt happen. However some carriers because of their global alliances were forced to give away large amounts of miles. Qantas recently just destroyed the "Miles" accounts of almost all of its users. It now takes more than a million miles to have that "special" trip - say pair of long haul biz class tickets. Tim Hughes over at the BOOT has clearly vented his frustration at this bad behavior.

While I was writing this a PR release from Sabre crossed my mail. Have a quick peak:


Bottom line - WAKE UP AND SMELL THE COFFEE - you are further eroding the value of your brands.


20 October 2008

True of False - Indexing vs Consumer Requirements

OK - badly paraphrased by The Professor - but this was the question posed by Philip Wolf of Tim Hughes and Ram Badrinathan on a panel.

Answer - FALSE!!!

Despite doing the right things - you have to go to the 'Dark Arts' as Tim put it to get onto at least the podium which is the first 2 pages on search.

SEO is therefore now the whole game. UGH!!!

This is the sad and now ugly truth.

And - the biggest browser - Google. Too True. All that money flowing to California.

Double UGH!!!

WIT kicks off in Singapore

To record attendance and actually the largest number of speakers - 67, WIT - Web in Travel kicked off its 4h year at the Suntec Center.

Having attended and participated in the prior years activity - this one is just a little more mature but just as edgy.

Its a great mix of information, opinion and insight. This year's theme of Ideas, Execution, ACTION.

In these times of such uncertainty - its not just the elephant on the table - you need to think out of the circle. This is the place to get both sides of the brain functioning.

More as the sessions progress