24 April 2009

Yields for everyone. NOT PRETTY!

It is clear that there is a slowing of the decline in occupancy, passengers and load factors. What is also clear is that yields are way off. They are literally falling off the cliff. Some recent numbers are quite astounding.

Singapore has just released its tourist numbers for March. I use this as an illustration.

Visitor arrivals to Singapore reached 790,000 in March 2009, registering a decline of 13.2% compared to Singapore's visitor arrivals in March 2008. Visitor days were estimated at 3 million days, a decrease of 11% in comparison with March 2008.

Indonesia (128,000), P.R. China (91,000), Malaysia (60,000), Australia (55,000), and UK (53,000) were Singapore’s top five visitor-generating markets. These markets accounted for 49% of total visitor arrivals for the month.

Among the top 15 markets, Malaysia (+5.6%), Germany (+4.7%) and Vietnam (+1.9%) registered growth. This can be attributed to the occurrence of school holidays in Malaysia, and ongoing promotions in Germany and Vietnam.

Visitor arrivals in 12 out of the top 15 markets decreased compared to the same month last year, a reflection of the impact of the current global economic slowdown on consumer sentiments and discretionary spending. Korea led the decline recording a mammoth 48% drop in arrivals. Hong Kong came in second place with a 21% drop. Arrivals from the UK fell 14%.

Singapore gazetted hotels were estimated to generate Sin$125 million in room revenue, representing a decrease of 33.3% versus March 2008.

The Average Occupancy Rate (AOR) was 74% for March 2009, a 13.1 percentage point decrease over March 2008.

The Average Room Rate (ARR) was estimated to be Sin$196, representing a decrease of 18.5% over March 2008.

Revenue Per Available Room (RevPAR) decreased by 30.9% to reach Sin$145 in March 2009.

Hotel room revenue was estimated to reach Sin$125 million in March 2009, a drop of 33.3% against March 2008.

In US airlines as another illustration the numbers are also not happy. This is a quote from CAPA's April Newsletter:

US domestic yields plunged 14% in Mar-2009, according to the Air Transport Association. It was the fifth worst monthly fall in yields this decade, behind the 17.5% fall in Oct-2001 in the immediate aftermath of September-11, a 15.8% fall in Sep-2001, a 14.8% reduction in Nov-2001 and a 14.7% fall in Jan-2002.
But the 14.4% reduction in yield last month on the Atlantic route was the worst this decade – outstripping even the deep falls around September-11.
Gary Kelly, CEO of the formerly bullet-proof Southwest Airlines warned, “we'll have to consider all available means to restore our profitability, or else we'll be bankrupt like so many other airlines have been”.

We are not seeing any recovery any time soon based on these numbers but I believe that we will see some stabilization on gross numbers by the end of August.


23 April 2009

easyJet To API Users: "I Was Only Kidding"

So it seems my correction earlier has changed the rules in the game (ok now I am kidding).

Easyjet has decided that even though a number of good development companies have built and sold "official" API links from the easyJet host to form independent parts of distribution, from September they are going to shut off the sale of fares.

The about turn seems to affect about 19 API users including Elite and Advantage Agent groups and Thomas Cook who receive their interface from Partners Software of Bremen and Multicom (UK).

The API will still be available but for "predominantly business" based bookings. For Leisure, guess what - its back to the official easyJet website. Presumably this will encourage screen scraping again...

I understand the reasons what airlines want to do things a certain way. However I am empathetic to the need for a simple resolution to this issue. I would welcome any comments on the subject and will likely put a poll up in the next day or two.


****CORRECTION***** re: easyJet Scrapers

In my post yesterday on easyJet I left an impression that Multicom is screen scraping Easyjet. Thanks to Professor Mike, I am assured that this is not the case and that Multicom is in fact a licensee of the easyJet API.

I do not have verified proof of this but I believe it to be so.


22 April 2009

easyJet to Scrapers: "C U in Court"

Easyjet UK based, has finally decided to take action against screen scrapers. At least with Easyjet you have an option - which is to pay the license fee and then you can get access. Like Ryanair it explicitly forbids this activity on its website. For more explicit explanation go here:


As I understand the Easyjet programme - a developer can have access to the Easyjet host if they pay a license fee and generate a specific number of transactions. If you generate a significant number of bookings this cost can drop to zero.

Specifically Easyjet has decided to take Interes a German based IBE vendor to court and has filed suit in a Hamburg court.

Interes has a string of customers some of whom are high profile. Specifically again TUI - Europe's largest tour operator company (in part owned by a Russian Oligarch) is a major customer. Indeed TUI is also an investor into Interes (going back to approx 2002).

Are we clear?

In response to InteRes’s activities, easyJet said it had invited the company to connect to the airline’s Application Programming Interface (API), which gives real-time access to easyJet flight inventory.

But InteRes had rejected the invitation.

easyJet’s distribution development manager, Jerry Dunn (no relation I hasten to add) stated: “We offer screen scrapers (and others) a commercially viable and fully licensed alternative form of distribution, which a majority of former scrapers have already signed up to." He also added “We will not accept that some scrapers continue to go about their business to the detriment of our customers."

Then he pointed out the harm element of the complaint. "Screen scraping causes many technical problems, mis-selling of our flights and consequently to numerous customer service problems.”

Multicom - are you listening?


Expedia to Florida - BITE ME!

So the war between the Hotel Taxing Authorities and the OTAs was opened on another front.

Expedia has decided that after a long relationship of DMO partnerships with the State of Florida - that it will end the relationship if Florida's legislature proceeds with legislation to tax the Hotel sellers for the full selling rate and at source rather than the hotel to collect or the collection of hotel tax on net revenue not the gross selling price.

"There are a lot of places that have beaches. There are a lot of places that can satisfy the leisure traveler," Brent Thompson, vice president of government affairs at Expedia said recently.

I am sure that the elders in the State Legislature in Tallahassee are going to be dictated too....

"I just don't think it's credible to make the argument that changes in tax policy don't create changes in behavior," Thompson said. "Markets react. Tax policies have implications for incentives and how businesses operate."

Now is probably not a good time for anyone to be having this pissing match. So let's hope for everyone's sake they kiss and make up.


21 April 2009

Travelport Caves - AF/KL Deal through 2013

Air France Group and Travelport have come to a meeting of the minds on the GDS fee issue and so have negotiated a deal whereby AF/KL will get reduced fees in return for full content through 2013.

Given the speed with which these guys came to a conclusion - someone caved. I suspect it was Travelport. So without a shot being fired they came to a conclusion almost too quickly.

So a lot of GDS execs are probably breathing a huge sigh of relief. GDS users are probably also breathing a sigh of relief. But some people - me included - want to know what is the catch.

So does everyone think that there has been no change?

Think that at your peril

Delta to Agents: Pay Me Later?

So Delta has joined the chorus of pay for access to airline owned content.

Richard Anderson CEO said during today's analyst call reporting on Q1 results:

"Over time, the industry will evolve, People will pay us for our content." Clarifying that the content would be also purchased by GDSs - or maybe that Agents will pay via the GDS Anderson said:

"But GDS costs, will continue to come down. Ultimately, GDSs will pay for content, as is done for hotel bookings."

Following on from AA's Arpey, his comments seem to represent a statement of intent - a volley in the war that will come to a pitch battle in 2011 when the Full Content Contracts come up for renewal.

Gerard Arpey said, clarifying his earlier comments "I was simply making the observation that the paradigm in the airline business has been that historically we pay our distributors to sell our product. And that has been shifting over many years, because we have been able to cut domestic commissions, domestic overrides and booking fees.

I notice that nothing was said about the cost of Google in all this discussion.

So pay me now or pay me later - WILL YOU PAY?

Indeed a question for many of us to ponder.


20 April 2009

To Angst or Not To Angst - Delta Knows

Delta - yes those nice people who close the doors early - have a new angst generating tool.

Now on the website within 24 hours you can see where you sit on the standby list.

What is really interesting about this is that you can actually see ahead of time when the gate agent gives away the seats to DL staffers.


Well I digress. The tool lets you get all worked up about the day of flight upgrade. So on my flight (yes arriving nearly 4 hours late due to a mechanical) I was able to see that I was #3 of the standby list. When I showed up at the airport - all 3 spare seats were gone. Surprisingly there were 3 suspiciously looking smarter people sitting in the front cabin. Upgrades 3 of them ahead of a Platinum person? Oh well I am already pretty much a PNG with DL at the moment. So moral of the story - dont rely on the tool. Still you can never have too much information. Of course you can get too much data....


Big week for US airline numbers

This week Delta and United report numbers for Q1.
Analysts – me included - will be anxiously watching for signs that March showed a bit of an uptick and any signs that life is improving.

We all know that Jan and Feb were bad so the indicators to watch for are any positive notes from these 2 airlines. United has been trading a little higher than last month so somebody may have some view.

American's numbers didn't impress but I have a sneaking suspicion that DL may be a bit milder.

We shall see


BMI Cancels Most Multi Coded Flight/Route Flybe Steps In And Saves The Day

Before the age of Alliances there was one flight that carried more codeshares than any other on the planet, I recall seeing once that the flight carried more than 21 potential code share designations. This was the morning BD LHR-LBA flight. BD had originally 2 slot pairs for this route (at $40 million) a pop – this was worth a heck of a lot more than the small number of pax who took the flight.

No more. BD – soon to be part of the burgeoning LH empire – has relinquished the route and turn the slots to something more profitable. In its place (at almost no charge for the slots!) Flybe will step in and run 3 daily nonstops from LBA-LGW on Q400 planes.

My things do change….

19 April 2009

How About Some Thinking Out Of The Box - A Light Long Legged Twin?

(Picture Courtesy of Flight Global.com)

The great Herb Kelleher is loudly demanding a next aircraft of 120 seats for the short/medium haul market. (Read a replacement for the 737-500, despite the less than happy career of the A318)

I am going to go a little further and state what is really required for the development of International Air Transport is a Light Twin with a range of 7,000 miles or further.

Conventional Wisdom says that you cannot get a small aircraft to have the right set of economics under say around 160 seats. However consider what could happen if we had a seat mile cost of a B777ER/A330-300 but in a smaller size.

As we see traffic falling dramatically across the world - the need for a route development and thin market product is needed.

We are seeing both Seattle and Toulouse balk at developing their next gen narrow body twins. So I say - what about a long haul 120-180 seat puppy but with seat mile costs that are comparable to long legged players?

Clearly conventional technology will not deliver such an aircraft. But blended wing unducted fans and other technologies could bring the price point of the DOC of such a plane within reach making the aircraft both green and long legged.

If Obama is keen on restoring some technology impetus (read stimulus) to the US Aerospace industry - this should be something he should push out there. With effectively the US having only a single supplier in the airframe market - its time to inject some lifeblood into the market. Ditto to the Europeans.

For some more interesting pics courtesy of our friends over at Flight Global go here:

Also check out the interview with EasyJet's Andy Harrison:

Good to think out it... now is a good time

The Future Past History of Twitter

Thanks to Professor Joe for this one....


Quite entertaining!

However there is a serious point underlying the humour here. Twitter is flavour de Jour. Does it have legs as a utility application?

I am struggling with this question. I do believe that Twitter can have value - I commented on this after the Mumbai attacks and experiencing it at a conference (PCW last November).

But there is so much drivel coming out of the Tweets that people are putting out. We still have bad behavior. Let me give you an example. I follow several bloggers who are what I loosely call "Scoopers" they are in a situation to put out nuggets of information that have importance to the context that is my particular set of interests. However this is where the mining of these nuggets gets hard. Because one of the chaps who does this (and really valuable stuff there is too) also intersperses the tweets of value with absolute drivel about his lunch habits.

So I have come to a conclusion that one thing that unfettered data has unleashed on us is the lack of valuable context. In Newspapers for example the medium creates the context. Thus if a journalist I follow and read for his wisdom publishes in a Newspaper I can easily see and know that he is speaking from his professional view. Imagine if you will that all of a sudden his personal emails appeared right next to his columns? That is how I feel that me (as an audience member) is being "abused". I really dont want to know about his intimate details. I dont want or need to know about what he thinks about the color of the waitress's uniform.

Twitter doesnt care. Indeed there are many social media "channels" or outlets that also subject the reader to the same abuse. Facebook - are you listening.

However my biggest complaint about Twitter is the sheer volume of data that is pushed out unfiltered. So the big part of the history that is missing - and to me the killer Twitter app/behaviour - is/will be the context button.

So someone out there PLEASE invent a Twitter filter mechanism that is going to protect me from this digital garbage that is drowning me.

And here is an appeal. If you must Tweet - then consider that there is a social context to your output but also consider the need for a business context.

Twitter - I think you have to put this into the design and enhance the value of Twitter. I for one as a Tweet watcher will be much happier.

And thank you for limiting your Tweets.... Have a nice day!