27 March 2009

Is The Rhetoric Against Lufthansa's PFP Too Loud?

I have tremendous respect for Kevin Mitchell and his advocacy of the Business (Corporations) user community.

However I have to wonder why the heat is being turned up against LH? To read more please go here:


So why do I disagree with Kevin here? Frankly there is a sense of responsibility that has blame all the way round. LH's frustration with trying to get a resolution out of the GDSs has spilled over into the services model for the agencies. It is of course a classic squeeze play. I have listened intently to both the arguments from the GDSs and from the Airlines who are the real protagonists in this battle. However the agencies (TMCs in the main) and indirectly the corporations are drinking from the well of the Airlines cash which is being diverted by the GDSs for their express intent to retain their customers by using the cash to preserve their market share.

As a member of one of the teams that introduced the incentive model while I was at Worldspan, I can honestly say that the original intent has been somewhat perverted along the way. But frankly it doesn't matter how we got here - the fact is that we are here and the airlines whose cash it is - believe that they should be in control rather than the GDS.

Whether you agree or not, the end game here is that the incentive fees are likely to end or be substantially reduced. It is just an unsustainable model in a transparent distribution world economy.

Where I think there is a real issue is that the transition from a supplier paid model to a user paid model (which is currently under way) requires that the nice and easy holistic one size fits all model either delivers its promise (or its PR!) or the agents have to accept that they cannot rely on the GDSs for full aggregated content. As many regular readers know this has been a constant theme of mine. This is the moment I absolutely think the rhetoric has been misplaced.

I believe that my position is supported by the fact that the Agencies - particularly TMCs - rely ever increasingly on 3rd party automation to fix the inadequacies of the GDSs. Either in content provision (eg access to LCCs) Fare tools, Quality control tools or customer service management tools. The Corporations are happy to demand that level of quality service and even happier to pay for it - or so it would seem.

As the GDSs retreat from the full service model, they are attempting to simply preserve the status quo via a commercially unsustainable incentive program that robs Peter to pay Paul. Perhaps one should ask if that is fair?

Thus in reality if BTC is going to hold a mock trial then there should be a set of co-defendants in the dock. The Agencies and the GDSs are at least accessories to the crime if there is indeed one.

For now, if you follow the logic, LH should not stand alone in the dock - there should be another defendant added to the accused - Air France/KLM. But even then that is not all. You can easily add Gol, Norwegian and EasyJet.

While I think there was once a never never land where the GDSs provided all the tools and services that the agencies (Corporate and Leisure) needed, sadly that time has long passed. There is not going back. So like it or lump it the new world order makes the current model anachronistic at best. Unsustainable - that is for sure. LH is just doing what they think they can.

I just hope that the Airlines and the Corporations can get to an accommodation on this issue - that requires a good dialogue - for that Kevin is correct. But in case anyone is thinking that this will all get resolved with everyone making nice, I fear that they are going to be sadly mistaken. The underlying financial numbers in my humble opinion do not lie. There just isnt a way to make the numbers work for everyone. Whether it is in 2009, 2010 or 2011, the current model WILL undoubtedly change. On that you can depend - and that is no hot air. I simply do not believe the defendants have a case to answer.


26 March 2009

Project Hawkeye Launches Open Source

So here it is the first OpenSource GDS interaction system.

I have to chose my words carefully following my post on the Death of the GDS. Project Hawkeye is a departure from the old model of standardized closed systems into a brave new world of OpenSource, warts and all.


I have now sat through several presentations on Hawkeye, I have worked with it since it was released and I can truly say it is very different. It brings in many new capabilities that will please both Suppliers and Users. As it shares the same infrastructure for the Farelogix middleware platform, it means that user interaction can now be supported by green screen as well as GUI services side by side and interoperable.

From my personal perspective this is what should have been launched years ago. With the growth of disparate content, an integration strategy is essential. No matter which side of the distribution fence you sit, we all live in a disparate and fragmented world. Never mind the functionality - which is truly revolutionary - this is the next gen wave. I am confident that this sets the standard for others to follow.

For Airlines the benefits are obvious, the ability to add merchandising functions via fare families or individual components. For the sales environment - the ability to bring together multiple and fragmented content has to be a boon. This is a win win for everyone.

And just so you understand, I am a huge fan of this form of openness. We have already deployed the core platform for one of our clients in EMEA, and they are deploying a customized supported version of Project Hawkeye which will be available soon.

Welcome to the brave new world. Seems like it is arriving a little faster than we all thought. Perhaps they should have called it Wendys instead! (Just a little joke for Americans).


Has Expedia Crossed The Line?

The revelation that Expedia (and as it turns out many others) is selling Cookie based data has caused a minor flap.

The fact that they can has not been in doubt for quite some time. but the fact that they do is not the story that anyone wants to here.

The article in Travel Weekly/Dennis Schaal is enough to put many a privacy advocate on high alert.

to me there is a clear line between opt in - implicit approved behavior and selling.

I do believe that the line has been crossed. And what do you think?

Thanks to Professor Alex


25 March 2009

The Death Of The GDS

So my topic for 1000th Professor Sabena Blog is the Death of the GDS.

So is this trash talk or is it real?

Actually I think its very real. At CASMA's Spring Conference this week in Dallas (where I am still stuck due to weather) Henry Harteveldt called on the current GDS companies the proverbial big 3 to become GMS - Global Merchandising Systems. He could also mean Global Marketing Solutions. I agree. The age of passive distribution is over.

I hereby declare therefore that from now on the GDSs are officially dead.

Lest you think this is just me spouting off - lets examine the case for the GDS.

I put it to you that they are increasingly less Global. Their products can and generally are used Globally - but the share of the total market for Travel products has fallen to a point where there can be no thread of universality about their global ambitions. Indeed we have evidence that even the executive suites are seriously thinking of retrenching their marketing footprints - perhaps the re-emergence of the National Marketing Company model. Their solutions are no longer globally and more importantly exclusively relevant. There is this major need to add on value added products. As noted in early posts - the sheer percentage of total PNRs touched by a third party system is now staggering.

We see the dealership model emerging. We see a divergence in commercial agreements. We also see that Carriers will establish regional contracts not master global contracts. By necessity the ability of the marketing needs will result in fragmented commercial relationships. (personally I hate this idea but I see no real alternative).

Now if it pleases the court - let me present my case against Distribution. Passive distribution is as dead as Newspapers. Active Marketing and Merchandising is where its at. The GDSs are still not able to assist the airlines in this regard. The airlines will therefore deploy their own solutions in conjunction with - or frequently ignoring the GDSs. Fragmented solutions and requirements by airlines which are no longer part of the holistic model is going to drive everyone nuts.

And for my final argument - I present the GDSs own desire to change the way the customer file management systems work. This is actually very good. All 3 GDS company's have remote profile systems off the mainframe. Amadeus is turning off TPF in 2010. Sabre cannot be too far behind. Indeed Sabre's announcement that it is "flattening the PNR" is but another nail in the coffin of the GDS model.

I will grant you that they are Systems, but they are no longer ubiquitous.

So in summation:

The GDS model is indeed no longer sustainable as a one size fits everything. It has fragmented content, fragmented markets, and different applications. The sector no longer has a homogeneous business model.

So this is it. Farewell to the GDSs. They have served us well. Welcome to the new world of the GMS. Welcome to the new dawn where the servers can be here there and everywhere. Where the competitors will range from Sabre to Farelogix, Multicom to Zujui, Kayak to Expedia, Adventure Central to Pegasus, Travelzoo to Farecompare etc etc. All in some way shape or form a GMS platform. The legacy GDSs will stay around (I hope). But just like the rest of the global economy, everyone has a role in the future market. So too does the user and supplier communities. The GDSs will continue to evolve into GMSs. Losing their unique status is a blow to their ego and pride, but they actually gave that up a long time ago.

This will be fun. This will be hard. But tomorrow Scarlett is another day. And that day has finally dawned.

Cheers! And thanks to all of you. Here's to the next thousand posts. I wonder what the world will be like then!

Reflecting on Blogging, Tweeting and Social Media

So I admit that perhaps I am not as youthful as I once was. Social Media has definitely changed the way we do things. It has altered my life. It is decidedly a 2.0 activity. However I cannot say that I am truly comfortable with the chaotic nature of the communication tools.

Blogging was not something I took to easily. I am not a writer or a Journalist. However I hope that what I contribute to the ether is useful and valued. I do have people come up and say so (real people real conversations) as well as quite a lot of feedback. Not everyone agrees with things I write. That is one of the beauties of the new channels of communication. It is direct and it is clear and the 2 way nature of the channel makes its impact all the more greater in contrast with the traditional media.

Over the last 2 days, I subjected my Facebook and Twitter network to my Tweets streaming from the CASMA Sprint 2009 conference.

Twitter has a definitive function in Social terms but I remain skeptical about its generalized business use. I think it can be so in the future but right now it's just not quite there.

I dont think I am going to do it again - at least for a while. It requires a degree of responsibility and well it just interferes with the process of comprehending to what is being said perhaps my multi-tasking skills are not quite as good as I thought.

So my reflection on the process is that I think there are some things I am very comfortable with - such as Blogging and Facebook. These are more akin to DIY Publishing and a personal website.

However I still prefer the more normal use of email because I can target to specific people and groups knowing that my addressing is real and controlled. This is not the case for Blogging, Facebook and even more so for Twitter.

The decline of conventional media like newspapers to me is a lost asset, a national treasure. I morn the death of my own local paper. But I am as much of a contributor to its demise as anyone. I haven't used a classified ad in well 6 years that I can remember. I use Craig's list. I largely ignore the news paper ads. So much paper goes straight to recycling. I have a DVR and skip through the commercials. So with all these new tools come new responsibilities and new realities.

It is these new obligations that I find a little hard to absorb. But the biggest issue of all is what I would call the infoglut. Junk data. The extra work that I have to invest to sort through the trash of people's ramblings (mine included). I do try to keep my output focused and valuable. But others don't. There seems to be an expectation that someone (the magical hand of god) will rise and cure this problem. That is part of what I find a conundrum. The expectation that someone else will fix it. I have no such confidence. I also don't feel good about choosing solutions that are clearly bad or compromised just because its the only option out there. The rise of power of Google is a good example. On balance doesn't make Google a universally good company.

So with this - I complete my 999th Blog entry.

Tomorrow - maybe even today - then I will write my 1000th


24 March 2009

The Professor Is Tweeting At CASMA in Dallas

OK - I am going to try and do this.

I think this may be useful if I try and use twitter from the CASMA sessions.

I couldn't get online this morning (mea culpa) but I will try and do better this afternoon.

So bear with me. You know I am not a fan of indiscriminate forms of Tweeting. Hopefully I wont be doing the Twittarrhea thing


PS I shall be doing CASMA Spring09 as the lead

22 March 2009

US Airlines decline again

Its old news but these days the decline seems to be pretty constant. So far I have been focusing on a number that says that from mid 2008 to the end of that year traffic declines would be about 10%.The prediction for this year was to be a further 5 points decline. The latest numbers from ATA - the US Airlines body indicates that Feb was indeed down by 12% volume but that 8% revenue per pax flown was a bit of a jolt. Feb however was a larger month last year with both more days and more weekdays in it. So far I am tracking against my prediction.

The big question is when will the bottom hit. Economists are saying end of the year. I think they are being a little optimistic.

With ticket volumes down in the USA and revenue numbers also down significantly per ARC the true picture can emerge now.

If we compare Tickets as passengers and ticket revenue as sales on the airlines we see the following:

Source: ARC ATA

Tix/Pax. 18% 12%

Rev/Sls. 26% 19%

This tells me we really do have a differential between the GDS/ARC based revenue and he carriers' revenue. If Sabre says it is gaining share and Amadeus was smaller and not as affected, this points to some ugly numbers at Travelport.

I do believe we shall see these trends continue throughout 2009. The good news will be if March shows a slight improvement in the overall decline. This remains to be seen.

Fingers crossed.