30 December 2009

The Professor's 2010 Crystal Ball Gazing

As the old decade draws to a close now I have to dust off the old cloak and the all rusty ball and decide what is going to happen next year.

General Travel Trends: Modest growth of both traffic and yields. Leisure will move ahead even further. This has significant impact on airline and hotel product offerings. One surprising trend will be that Intermediaries will gain market share vs Direct which will benefit GDSs in the short term. Increased use of corp video and personal video conferencing tools will be finally proved to reduce airline traffic. I predict someone will publish a study on this effect. Google will continue to make more money out of Travel category than any other player. Green wont be a big deal in 2010 as the recriminations from Copenhagen (aka Hopelesshagen) continue. Some countries will now apply unilateral green policies. Fuel will rise. Inflation will start to bite. Travel Industry employment will remain low. Airline deliveries will continue to see deferments.

Winners and Losers in airlines. surprisingly Southwest will struggle with its business model. It has reached the end of the current low cost model and it will morph into a hybrid airline. One US major will unveil a lower cost "simplified" domestic product and will be instantly matched by the others which will stimulate traffic probably in first quarter. UA and CO will move even closer together. US will start to look around feeling a little out in the cold. Look for perhaps a relationship with part LH owned jetBlue. DL will further consolidate and shrink a little further but will complete its partnership with JAL after the venerable carrier goes through its bankruptcy re-org. FR will have a moderated growth year - U2 will see a major challenge on some of its turf by a (former) legacy carrier. Look for one LCC based merger to take place in Europe. Consolidation will continue in India with another carrier losing its corporate identity. China will recover. Virgin Blue will continue to struggle. All LATAM carriers will continue to grow - look for at least one carrier their to switch allegiance in 2010. Trend of the year will be Merchandising although some airlines will get this wrong in spectacular fashion.

In Hotels. Pegasus will continue to struggle Synxis will continue to grow. PCLN will further solidify its growth. Look for a major merger in hotel distribution coming from an Asian base. Expedia will try to clean up its act in hotels and improve yield which will upset some of the major chains at least one of whom will have a major spat with the Bellevue travel giant. Look for Expedia to become the world's largest agency in 2010-2011. Orbitz will improve but corporate parent Travelport will offload a dismembered GTA.

In Distribution the big news will be the Q2/3 IPOs which will go out with modest success. The Money Venture Men will be happy. The poor debt ridden rumps left behind will continue to be unhappy. The allure of the cash flow will continue to seduce the uncanny investors all of whom will regret their buy in after about 6 months. The Term Full Content will have new meaning. Most major carriers will have adopted Opt-in content deals which will compromise the legacy GDS model. A lot of people will focus on replumbing XML based infrastructure. Merchandising at the point of sale will be a major trend. The Term OpenGDS will come to have more meaning. Look for major players to build bilateral relationships as opposed to traditional multilateral based links. Financial fulfillment will emerge as a major trend with EMD becoming a household word. Look for a degree of consolidation among corporate agencies. There will also be continued failings among smaller/mid size players as the shakeout grows. Search will continue to drive everyone crazy but teams will start to look to address the high cost of search. Twitter's light will grow dim as more commercialization and ghost/fraudulent usage grows.

Cool Stuff? The new iTablet (and clones) will start with an instant following. It will be the product of the year. Someone will finally do a mashup of all the "There's an App for that" different applications to create a viable first generation Personal Travel Assistant. Look for "Virtual Extension Reality". We have already had time shifting now we will have reality shifting with "Augmented Reality" being but a version 1.0 of this stuff.

So what will the end of the year look like... better than this one.

Happy New Decade from the Professor.

With special thanks to CBS, Demi, and the old guy for the image use.

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