13 June 2009

Is It Time To Rethink Safety?

We take safety for granted.

We are complacent.

We are in danger.

There are so many studies on the subject of safety that you can drown in the amount of information. It is clear that the travelling public has been essentially "lucky" in that the number of accidents is not higher than it is. Hopefully this luck is not an accident of chance but a result of systematic focus on safety.

One of the most dramatic improvements in cockpit management has been the Electronic Flight Bag - EFB. However the recent incident involving an Emirates A340 at MEL highlights that there is still a problem with the overall safety of the system - namely the human factors side.

There is no answer to the question of how to manage safety - it is essentially unmanageable. We just have to hope and pray that the combination of factors that can cause an accident either never happen or that we can create mitigation for them.

Reading the reports of the AF447 accident, it would seem to the layman (and that includes me) that there are circumstances when things go wrong and nothing can be done to fix them if there is a major external distracting event going on. The lessons of Eastern Flight 401 have been researched and analyzed yet the core combination of factors continue to cause either accidents or almost accidents.

The recent revelations of the CO commuter Q400 accident reveals some things that should never have happened. Yet they still do. Crews commuting from more than 2000 miles away and sleeping on couches in a ready-room. Etc Etc.

We all as public and as professionals must be vigilant. We have to ensure that safety is not someone else's job. Its all our job. There is an excellent article in ATW June 2009 entitled back to basics. It makes a sobering read. We cannot just look for politically expedient solutions. We have to bring a culture of endemic focus on safety that embraces us all. We are all part of the solution. We can be thankful to the boys and girls in the front who guide the tubes to their destinations. But they are just part of a machine. That machine needs to work at 100%, all of the time.


12 June 2009

Once Was Not Enough - Airlines Cut More

Twice was not enough
Will the third round of cuts be enough to bring capacity inline with demand?

Just in time for the Paris Air Show next week we see another dose of (new and really real this time) reality hitting the market. Pursuing the conventional pendulum (aka knee jerk response) to a down turn - we are watching another round of cuts take place in the market. Delta and American shaved another 1-3 points off their capacity in total for the post Labor day schedule. BA is warning of cuts across the board from labour to shuttering OpenSkies. In this month's Air Transport World, Editor Aaron Karp ("Were They Tough Enough? " - http://www.atwonline.com/magazine/currentTOC.html ) makes the case that the bloodletting at the end of 2008 and the first quarter of this year was just not sufficient for the airlines to sustain their business model. The empirical data in support is stark. Yields are in the toilet. US travel agency derived airline passenger revenues were off almost 30% in the month of May 2009 on only a less than 9% drop in passengers. That is pretty bad by any measure.

Those of you who are regulars of this blog will recall that I singled out United last year for not cutting their head count costs commensurate to match the reduction in their fleet.

Now we see the new Boeing CMO 2009-2028 being released and for the first time ever (as far as I can tell) the plane maker is actually cutting its long term forecast. So the pull back is not just temporary. We are seeing a structural change in the market.


As an aside here it is a great tool and this years version is much easier to use and gives better quality data.

With oil prices rebounding and headed north of $100/ppb, the spectre of the gas guzzling uneconomic fleet is rising again. with effective deflation, rising costs and still declining demand - the airlines are in this perfect storm of bad news. As Willie has exhorted his boys and the rank and file - standard solutions and behavior are not acceptable. However I wonder if the rhetoric matches the execution. And of course while BA is a poster child for this perfect storm of bad news but they are by no means the worst and the sole victim of this situation. At least BA has the ability to control much of its own destiny (Unions willing we think!).

So chaps - brace yourselves for the long haul. There will be more cuts and more belt tightening.

However - while this would be a good time to think about how to radically change the airline cost model not just applying the scalpel, I am just not seeing any evidence of this occurring. Chaps - wake up and smell the coffee. You are being presented with a golden opportunity to make your businesses stronger for the long haul.

Not taking this chance means that the airlines are going to be condemned to having to cut again, and again... Then the opportunity missed will be looked on as a luxury! I hope that in future time I wont have to write about the time when the airlines missed their golden moment.


11 June 2009

1 Swallow? Try 5 - Assessment of ARC 2009 Year to Date

So we now have 5 full months under our belt and the variances shown from the extra day in 2008 and the differences in Easter now all mitigated, what can we see from the ARC data.

Well we see that the transaction numbers have been slowly improving. But where the big hole exists - its in yield. This bodes badly for the rest of the year for the airlines.

Transactions improved to only being down 8.4% BUT the sales totals are off just under 30%. That means that the airlines must be heavily discounting to maintain revenues. With commissions creeping back into the Airlines and agencies lexicon - something has to be done to improve yield. The airlines don't have the bounce of a strong book of revenue to fall back on either. this puts the airlines into that nastiest of all quandaries. Whether to discount further to capture just about any cash that's out there or to start investing in smart distribution arrangements to boost traffic and reduce COGS.

The drop in sales tracks directly with the drop in commercial traffic. We estimate across the board as a generalization that the market is off 15%. Stories coming from BA, LH and premier GCC and Asian carriers indicate that premium traffic is just off by 30%. No amount of 2 for 1's are going to improve this yield. Further the corporate wallets are going to stay shut for at least through the summer months. Even the last 2 quarters of 2009 are not going to look that much better as the Corporate traveler adjusts to the lack of approved spending.

Chaps we are not anywhere near the bottom yet.


Longevity, The Gene Pool and ...Travel?

Mortality - we all to some extent (other than the odd monk or two) fear it.

At my mother's passing a few weeks ago, it fell to me to write the Eulogy and I had to assess what defined her life. She was born in India, moved to Canada, then back to England all before the age of 18. During her marriage to my father - they traveled the world extensively and were a part of what constituted then, the jet set. Of course her real passion was always her dogs!

Travel and the cultures they encountered defined the life of my family. My father also was born in a then exotic locale - Shanghai. As I go through the process of closing down the family home - I was struck by how much of what is in the house and was part of my family's life, symbolized that essence of travel - the small mementos and the (in some cases quite large) artifacts they acquired along the way.

Returning to my own home - it struck me that I too have followed that same path. However what was a past time for both parents has turned into a passion for me both professionally and personally.

Travel is far less glamorous today than it was in my parents' time. I recall personal encounters in airports as a child which seemed all quite normal yet today would be regarded as extraordinary. Still the lure of travel affects us all.

However the risk of travel was brought home to us last week with the loss of AF447. My father missed a flight on the original Comet only to be waiting at the airport the next day when news came of the total loss due to a design fault.

My mother lived to a right old age of 98. The week before she died we discussed her coming to visit all her family in the USA this summer. She really loved to travel and frequently - by that I mean every few months - she did so, short and long haul. The family eventually decided to entitle the Eulogy and the service as "A Life Well Lived". I only hope that when it comes time for me to board the great jetliner in the sky, that others will say that Travel defined my life as much as it did hers.

Keep traveling and spread the passion. Travel does indeed make us better people and the world a better place. The longer we live the greater the opportunity to learn and contribute to a better place on this planet. Hopefully that really does get into the gene pool.


PS The Professor would like to again thank everyone who sent in emails and wrote cards, Facebook entries and even texts. We encourage everyone who would like to commemorate her life to contribute to her favorite charity which was Guide Dogs for the Blind. There are many such organizations around the world for example:

US: http://www.guidedogs.com/site/PageServer
UK: http://www.guidedogs.org.uk/

I thank you.

Social Media And The Act of Hooking Up: No Intimacy And No Loyalty

As I live in America - I am somewhat starved of conventional media's thinking opinions. The BBC and the commercial channels in the UK seem to have a better way of looking into issues - not too superficial and not too self serving. My favorite non-musical radio station where I live is my local NPR outlet KUOW.

On driving to an appointment on Monday I heard a very interesting piece on Sex without Intimacy (a link to the broadcast is below) - this got me thinking of the impact of Social Media on the current generation. If they just want sex without intimacy then surely they have no need for conventional loyalty. And so it seems that as we have changed our channels of communication - the ensuing attachments to (previously) conventional mores seem to have been lost. Perhaps because I am a little older - I value things like loyalty, honour and duty. Today loyalty from Millenials and even Gen X and Gen Y'ers is primarily to one's friends and not to the greater good. Definitely they don't feel the same attachment to brands. If they are the attachment is governed more on the basis of convenience rather than values.

So this got me thinking about brands and loyalty in travel in the age of social media. Bear with me on this one - I think its one of those observations that I hope you will think about.

Therefore it is important for us to consider when pitching to these groups to understand their motivation. While this is probably not a light bulb idea for most people who read this blog - it has taken me quite some time to appreciate it and the depth of the sentiment. It must be that nostalgic streak in me.


Listening to the young ladies that were interviewed for the program it somewhat unnerved me to think that they had come to separate the essence of their relationships by splitting the concept of Love Making, Friendship and Intimacy. So too one can infer that these same people have the ability to separate their sentiments and desires when it comes to making purchases - especially for life-style products such as Travel. Please note I am not criticizing this behavior, merely trying to understand the impact of the core thinking by this class of people who are clearly very important to our market.

I put this down to the ability of the young to multi-task like never before and to compartmentalize their emotions and decision making skills. Both left and right sides of the brain. Would that I had that natural skill or that my own brain was rewired in this way. (Banishment of guilt!!!!)

The challenge of brand building in this environment must be enormous. It is probably more relevant today than at any time in the past when one appreciates how difficult it is to build a long lasting brand in this "noisy" environment and just how quickly it can evaporate.

Think about it... ponder the question. Can loyalty actually exist in today's Social Media?

Comments please at your convenience. And don't worry - I wont shout at you nor attempt a virtual Hook Up!


10 June 2009

BA AA IB - last chance? Maybe, Maybe Not...

The guns are drawn the submissions are in and the old protagonists are lined up ready for the great shoot out at the Heathrow Coral.
Could this be the last chance for the BAAABI alliance to get its long sought anti-trust alliance approval?
In my humble opinion - there is no certainty one way or the other.

So lets do a quick review.

BA+IB. This has gone nowhere lately due to the GFC and the impact on the premium business market especially LHR-NYC. IB is feeling the pain but perhaps to a lesser extent that BA how is publicly wearing its hair shirt with Willie Walsh being surprisingly open about the extent of the impact on the former UK Flag Carrier. With the pound's fall against the Euro the value proposition would be hard to make in pure financial terms. Therefore I believe that this part of the deal is dead for now.

The Star and DL/AF alliances have powered ahead and built a considerable legal and commercial framework for Transatlantic service. While the product doesn't match the commercial model yet - and it will take some time to do so - these make a compelling case for equal consideration for BA and AA.

Virgin's unaligned status is perhaps the biggest fly in the ointment for the proposed tie up. Sir Richard is vociferous in his opposition. He knows full well that should the alliance be approved then his position as an independent will become almost if not actually untenable.

On the regulatory front - the Regulators have bowed to airline pressure and suspended some key anti-competitive measures such as the use it or lose it rule at major EU airports.

So will it happen?

My personal opinion is that judging from recent approvals under the current incumbent of the EC's Transportation Czar that their will be tacit approval. However not so fast. The EC has launched investigations into the LH dominance while at the same time approving LH's acquisition of BD. There is no rush on anyone's part at the moment. The sea of red ink - with IATA screaming BASTA - will likely be $9 billion this year. There really is no urgency to get this done. The impatience of BA and AA even if Transportation gives them approval will have to wait for significant anti competitive investigation that frankly could take years.

Like I said at the beginning - this has yet to run its course and while another battle with the old gunslingers shooting at each other doesn't mean the end is in sight.

I think we can rest easy in our beds knowing that there will not be any major casualties and even if someone does get wounded - they are going to get up and fight another day. Wyatt Arpy and Doc Walsh are not going to be the heroes, not today anyway.


08 June 2009

WIT Program Focuses on Startups

I have always had a soft spot for start ups. In my career I have probably reviewed hundreds of business plans and heard innumerable pitches of good ideas and frankly some real corkers.

For WIT in Singapore October 20-23 entrepreneurs will be given the chance to pitch to some of the most experienced people in the field and a crack at a 50,000 dollar grant. For full details go here:


The process starting now will lead up to a chance to pitch in front of a live audience during WIT's 5th anniversary session.

May the best idea win!


The Professor Returns

Dear Readers

I hope you will forgive my silence over the last 3 weeks. I took some urgent time due to the passing of my mother who made it to the grand old age of 98.

I hope to return to regular posting in the coming days.

Thanks for your understanding and all the notes of condolences.