15 August 2009

Cheeky Bahrain Air to Scupper GF’s Strategy

Bahrain Air is the little airline that could. While pursuing a relatively conservative strategy – it has been slowly gaining market share and winning customers with its brand of LCC with charm. I have flown them several times equally with Gulf Air. I find the carrier to be solid and quite competent.

Now that GF finally has a new leader (and a very competent one too) in Samer Majali (ex RJ), the airline can now get away from its bloated and occasionally corrupt past. However the bold strategy of being the carrier of choice to Iraq seems to be back firing a little with Bahrain Air matching GF’s service by flying to 2 new cities in Iraq.


US Travel Weekly Steps Into Trust Battle

Travel Weekly (US)’s corporate parent Northstar Media has stepped into the fray of trust with a provocative email entitled “Can you trust Consumer Reviews”.

It is extolling a platform for Travel Industry peers to create their own reviews (on TW’s environment of course). So while I agree that Consumer input on sites such as Trip Advisor has been subject to Fraud and other general nefarious bad things – they are just that – consumer thoughts. However does that make them any the less valuable? Further are Agent or Travel Industry reviews any more reliable and trust worthy?

Frankly I have always felt that the Travel Industry ability to sugar coat things in sickly syrupy bad PR was an art form. The infamous Ocean View (standing on the wardrobe when the tide was high and in the middle of a tidal wave) embellishment should give the world no more credibility than a disgruntled guest or a self promoting supplier.

Indeed neither sectors are immune from self interest. However the idea that Agents are better at expressing quality measurements than consumers doesn’t hold a lot of value.

This brings me to my core belief is that there has to be some merging of “Professional” mode opinion with the “Consumer” IE user opinion. However how to merge the 2 cannot be easily brought together in harmony.

When someone sorts this out – it could be useful, very useful.


Is Twitter More Important Than Facebook?

There has been quite a lot of discussion about the importance of Twitter. As regulars know I am not a fan of Twitter or rather its (ab)uses.

It seems that marketers are flocking to Twitter and eMarketer has done a piece on extolling the way Marketers are embracing Twitter over Facebook:


Interesting. I am not sure that the marketers who are going after other channels in an effort to interact with their customers are doing the users – or themselves – any real benefit and good.

But you be the judge! The consumer will be the ultimate decider. I worry personally that the consumer has actually had enough of too many choices and too much noise aimed in his direction.


13 August 2009

Delta now the US biggest airline but...

Southwest actually is the biggest single brand based on May stats.

So when will the merger actually count?

We are all waiting!

Pilot Unions Scupper WN/F9 Deal

You have to admire the way unions seem to shoot themselves in the foot.

I think most of us had hoped and believe that this sort of union behavior was a think of the past. Apparently not so. Thus the US bankruptcy court ruled yesterday as the WN bid included a requirement for the 2 pilot unions to agree.

So here is the bottom line. F9's pilots (700 of them) and WN's pilot's (6,000) of them could not agree on the seniority issue. Thus the bid failed. Thus F9 ends up with a value of 108 million from Republic Airlines Group vs the much larger cash bid from WN.

I think it's high time that someone tackled the seniority problem with a set of rules that makes sense. The simple answer would be merge them based on suitable dates. However a bad merger could result which was the situation at the Pan Am/National merger. So the best answer is to put in a single set of rules that is based on COMPETENCY and hours in the cockpit rather than the date of hire.

And to the two pilot unions. Shame on you both.

However there is a little bit of silver lining in this. Frontier stays independent (which was my preference if anyone was asking) and the team at F9 stay intact and will continue to keep prices in check! So perhaps the real winner will be the consumer. Zut Alors!


France/Germany "Officially" No Recession

Results from the respective economic authorities show that two of the leading economies of Europe are no longer in recession.

The UK is also showing some signs of life. The property market had one of its best months in June - particularly in the upper end properties and in the East Anglia region.

For the US - the results are looking like we could be at the bottom.

Asia doesn't look quite so rosy with both India and China still stuck in the doldrums. Australia is looking a little better.

However I caution anyone to turn to this as evidence that the travel market is on the way up. Remember we have lost a lot of actual traffic and too the yields look awful.

For the month of August we should see a flat result. September's results should be interesting as this was he first real month in the USA when traffic tanked.

There are still some basket cases - Las Vegas would be a good example.

Stay tuned!

It Really Is All About Trust

Brands are about Trust but Trust is not all about Brands.

People Trust Friends - some of the time - but not all of the time.

The assumption that friends trust other friends all the time and therefore by extension their "relationships" on social networks result in the cachet of Trust being bestowed on the circle/network is patently false. However there seems to be a lot of people who both believe in this notion and are now relying on it.

The difficulty is debunking this theory. Finding a way to understand Trust and its Impact should be something everyone takes care in - not just the frontline people.

If there is someone out there with empirical (and repeatable) technology or process who can prove me wrong ... please do. I really do want to believe. I just find it goes against my grain.


12 August 2009

Interesting Airline Stories

Here are a few airline tidbits I picked up....

AirTran delivered on its promise to wire(less) up its whole fleet by the end of July. So there you go! Of course no guarantees that the things actually work!

Delta was quietly recommended to work with JAL by the Japanese regulator as a way out of its predicament and get more traffic and less costs. Hmmm not so sure its OneWorld partners would be so keen - particularly AA. With NW - DL now has fully put itself back into the Japanese market.

F9 to become WN? I think that while it would have been a good idea to be owned by Republic, WN is a better bet longer term. Does this make WN a full service airline? I think so....

V Australia has to do something with those planes - so off to Fiji. Rather than bleeding more cash - V has decided to extend the existing model for the Virgin Blue group and head to Fiji with one of its shiny new 777s. Virgin Oz has some challenges ahead. Lets hope that they don't become too much of a distraction. They are having to fight a lot of battles on a lot of fronts.

And finally under the category of "What were they thinking" CO is being investigated (or is it Expressjet) for holding its passengers hostage and blaming the airport and the TSA. The right course of action would have been for the Captain to just let people off the plane and take action. He has the authority and moral responsibility. So sorry - the company was wrong and the captain was wrong. Not to mention the fact that the TSA should have by now got a policy to handle this. So boos all round. BTW - Chris Elliott had some good ideas. Next time declare an emergency. Then see how fast people forget stupid rules....


WSJ Calls Dutchman Hendrik Noorderhaven "Robin Hood"

I have written in the past about EUclaim and the model for the US market in passenger rights.

Now it seems that Hendrik is getting some kudos from WSJs Middle Seat Column.


I fully agree!

No all we need is US based legislation to match that of the EU and we will see lots of companies like this operating.


US Agency Transactions Still Suck, But....

There may be some cause for limited optimism.

The latest ARC figures today show a marked improvement over the last few months of activity.

Specifically Transactions were off less than 1% from last year's numbers and yield was off only 17% vs last year. Year to Date figures are 7% and 26% respectively.

Let's not leap to conclusions. Despite the opinion among leading economists that the Recession has bottomed out, we may just be bubbling along the bottom.

I am not yet convinced but I am heartened by these numbers


The Big US East Coast Switcheroo

Well the dust is clearing on the giant switch of airport slot assets on the US East Coast. It started yesterday with Continental and Air Tran doing a relatively small switch. AirTran AP reported planned to swap some Newark landing slots with Continental Airlines’ slots in Washington and New York, effective 25-Oct-09 AirTran would give Continental ten slots, gate and Jetway access at Newark in exchange for six Continental slots at Washington and four slots at LaGuardia.

Then the US Airways Delta swap was announced today.

As the Professor understands it, newly engrossed Delta acquires 125 slot pairs at LGA, US Airways acquires 42 slot pairs at DCA with international rights to Brazil and Japan both to be served from Charlotte. It is likely that cash will also change hands but that was not fully clear yet.

What is interesting is that the basis for this is swapping Regional and Commuter slots for mainline service slots in all the respective markets.

When the smoke clears it will mean a lot more nonstop services on the West Coast. It will also change the competitive landscape.

In my mind the winners here are US Airways in Washington market (who will be able to provide nonstop service in many markets particularly in the long haul arena now that West Coast services are possible from DCA). Correspondingly UAL will face increased competition despite having seen off several players who have attempted to boost services from the area - for example the spectacular collapse of Independence Air.

For New York - Delta will become a formidible competitor to Continental its cross town rival.

Is there a loser in all this?

In my opinion there are several losers. American will see its fall from top dog go even further, I have already given an opinion on UAL and CO. But perhaps the biggest loser(s) will be the small communities who currently receive nonstop service from both LGA and DCA airports.

Is this good?

Well lets see what Transportation Secretary LaHood has to say. For sure the disadvantaged will be clamoring for some mitigation.


11 August 2009

Mesa's Go! Suffering in Hawaii

Go! the object of much ire last year when the venerable Aloha went out of business doesn't seem to be making much headway. Compared to its parent - the airline is suffering even more than the rest of the group. Thus it can be inferred that either the market in Hawaii has become ultra competitive hurting yields, or that they are losing passengers, or that people would much rather fly in larger equipment than in CRJs. Perhaps even a combination of all 3.

The competition from a newly invigorated Island Air, Mokelene and the powerhouse of Hawaiian might be too much for the little airline.

Anyway - here are the headline results. This doesn't augur well - given the damage done to Aloha - it is increasingly obvious that this loss represents a significant amount of the loss for the whole Mesa Group.

Anyhow - you be the judge

• Revenue: USD8.7 million, -44.1% year-on-year;
• Operating costs: USD12.3 million, -46.8%;
• Operating profit (loss): (USD3.5 million), compared to a loss of USD7.4 million in the previous corresponding period.


Do Friends REALLY Want To Share Everything?

I find it an interesting paradox that many people love Facebook for its ability to connect. Yet at the same time there is a whole load of people – I would GUESS that it is the majority – who are just not comfortable with sharing everything. Yet with Facebook and other Social Media tools, both the choice and the ability to allow a depth of nuance of what is allowable eludes the user.

A close family member refuses to share her Facebook access with me because she fears that I will have access into her own personal world of her friends and relationships. I have no desire to pry yet there are many different other family members (connected to both of us) who wish to connect and be connected to other family members yet are at the brick wall of this decision.

I liken this dilemma to that of the original Web 1.0 Travel products where access was the value and the trade off of access was the poor User Experience. Ditto today with Social Media, the trade off is loss of anonymity with access to a broader community of “friends”. One has to ask is this sustainable? I think not. As the tools proliferate around Facebook and in the interior of Facebook so too will the willingness to share be a trade off of being exploited. I am really getting upset with some of the intrusive “suggestions” that Facebook sends to me.

And no I don’t think Friends do really want to share everything to everybody equally. The technology is not up to it and the management is definitely not.

Friends don’t let Friends use Facebook indiscriminately!


Ancillary Revenue Mania - By EasyJet

OK so this is about the worst case of Ancillary Revenue highway robbery I have seen so far.

Sign up for the Easyjet text service (to tell you about the conditions of your flight and the likely delays etc etc). You can sign up for 2 different versions.

Frankly this is not a good thing in my opinion. Creative but man it sucks!!!!

Mesa's Results Provide Insight Into Yield

Mesa Group's results should give no one any cause for celebration.

The results are a peak into the current ills of the US airline market. While their fuel costs plummeted 65% for the quarter (53% for the year to date), their gross yields have dropped a jaw dropping 28%.

This shows that despite holding onto passengers and only seeing a 5% slide in pax numbers their total results show that the situation with yields are in fact worsening not getting better. With its dependence on ACMI operations Mesa is still very dependent on the legacy carriers that it serves (DL, CO, US and UA). Their independent operation in Hawaii is probably still a drain on resources with its former partner Mokulele eating part of its lunch in the Hawaiian Islands - things cannot be that good.

So be warned we are going to be in for some more horrible results for a while yet.


10 August 2009

No Secret Any More - AC Cans Polaris PSS

The slow painful lack of progress with the Air Canada Reservations Project known as Polaris has come to a dead stop with AC writing off C$67 million. More importantly the depth of the work left to do was an astonishing C$40 million. This clearly indicates that the project was no where near done. Even if you discount a large amount of money for implementation, there is a clear indication that this project had some significant hills to climb to reach an "implementable" solution. Sadly ITA software is left without its anchor customer for what is a significant amount of their future revenue expectation.

And the big winner in all this?


Once again carrying all before it - Amadeus is fast becoming the only game in town for large scale reservations systems PSS. ....Well maybe not.... Amadeus has many problems of its own with the UAL implementation not making any visible progress. There are now some pretty good alternatives for large scale legacy airlines.

Mature solutions are from: Mercator (the core system of Emirates and several other airlines), itself an adaptation of the old Swissair Atrraxis system.
SabreSonic (as deployed at AA and many other carriers) the latest iteration of the venerable system from Sabre.
Horizon (although I am sure that I will get flamed by SITA who think its a brand new system)
EDS-Shares - Continental, Virgin Atlantic and US Airways are the biggest users.

There are some good solutions at the lower level of LCC and simple carrier level - such as Navitaire New Skies and Results or TikSystems (Amadeus's newest best friend).

Still trying to make headway are Unisys's Air Core, and IBS's solution.

The market for PSSs remains in churn with some big contracts still up for grabs. Lufthansa's exit from the market has left a hole. The cooperation between UA and CO should be interesting and we will be keeping an eye on this. They might yet decide to go to something different away from Altea. For sure there are a lot of people making trips to Chicago and Houston!

Actually there is one certified winner in this. IBM who managed to stay behind the scenes and retain the value of their relationship with AC. Couple this with the recent outsourcing of many of QF's IT functions to the Software and Services Giant and the boys in Armonk must be smiling.

For the rest - stay tuned.

Is Google The New Evil Face of IT?

It sometimes bothers me to think that Google has so much power and information on all of us. The benign image we have of Google being all good should have (by now) been debunked.

So it seems that others are beginning to notice that whenever Google doesn't get its own way - it becomes a jihad to crush the competition. Interestingly Microsoft has been the target of regulators not for actually doing anything (ok just a little) really bad but rather the potential for damage. If that is the criteria then Google is the new evil empire.

Just lately the latest person to fall foul of Google seems to be Apple - its one time best friend.

Check out this article:


And what does this mean for Travel? Quite a lot. While Apple has never made a big splash in Travel - Google has and makes a very large chunk of money out of the sector.

So if you thought Microsoft was bad... just think how much power Google has and has yet to exercise.

Food for thought no?


Disclaimer here: I am a one time MS employee and I hold stocks in all 3 companies.

09 August 2009

Tell It Like It Is Gerry!

I don't read as often or as widely as I would like. However one of my favorite commentators is Gerry McGovern. A true internet pioneer he writes a weekly piece that I try (but am not always successful) to read.

This week's letter is a doozy. So I am just going to replicate it verbatim because it is really good:

Here is the link:


And an apology to Gerry for doing this without his permission but after you read it I hope you will agree with me. The arrogance of "personalization" knows no bounds.


The piece is entitled:

Nobody cares about your website

Your customers couldn’t care less about your new look, your new design or whether your dog has just had kittens.

“Hi Gerry,” the Air New Zealand marketing email started off. I remember many years ago when I was a young employee at a company that had just bought its first computer. We got this word processor with an amazing feature called mail merge. We could now send lots of automated individual letters to people who owed us money. The letters went something like this:

Dear (NAME),
You owe us (AMOUNT). Pay up by tomorrow or we’ll break your legs.
Yours sincerely

We sat around and marvelled at the ability to produce so many letters automatically and how people would feel that they were receiving individually penned missives. Those letters worked so well.

I don’t think it works quite as well today. When I receive an automated marketing email addressing me by my first name, I don’t go weak at the knees: “Oh, the software knows my first name! It knows my name!” Has anyone tested to see whether these so-called personalization techniques are more likely to alienate a customer than impress them?

Anyway, back to the Air New Zealand marketing email that I don’t remember signing up to. (I’ve had pretty good experiences flying with Air New Zealand by the way.) “Welcome to the second edition of our new look monthly email.” Two fatal mistakes in the first sentence. Welcome? Hello? What’s with the welcome? I don’t want your welcome. If I want anything from you it’s your deals, and hot deals at that. When you think of your customer, imagine Tony Soprano. Nothing personal, just business. Cut the crap. Get straight to the point.

So Air New Zealand has got a new look monthly email! Stop the presses!!! Has anyone phoned CNN? This is big news. A new look monthly email! Release the press releases! What a story. I can’t wait to tell all my friends.
“Lads, lads, listen. Have I got news for you.”
“You won’t believe it.”
“Come on, tell us.”
“You won’t believe it.”
“Come on, come on.”
“Air New Zealand has a new look monthly email.”
“You’re not serious!”
“I am.”
“You’re joking.”
“Never been more serious in my life.”
“Nah, you’re joking.”

News like that makes our day. It really does. And you’d be amazed at the amount of websites that want to give you this sort of hard news. Why, I was at the Starwood Preferred Guest website recently wanting to check what they offered in Athens when I was confronted with content that told me that the site was “redesigned and ready to help you plan your adventures. Take a few minutes to customize your account profile to ensure you take advantage of all that our new site has to offer.”

And you know what, I didn’t take those few minutes. That sounded like a real pain to me. I just wanted to quickly check availability and see if there were any good deals. I had zero interest in designs, redesigns, bee-designs, knee-designs or we-designs. (Which are what most redesigns really are; done more because of internal egos than because of external needs.)

I just wanted the website to work. How thoughtless, cruel and uncaring of me. But then I’m only a customer.

It Only Took Them A Year Or Two But.....

Finally it seems that the esteemed powers that be in Washington DC pay attention to the Professor's Blog. OK so that is what I would prefer to believe other than to think that independently the US Senior Congressman from Minnesota and Chairman of the US House of Representatives Transportation Committee came up with this idea on his own.

And what is the idea? TAXES: IE That the process by which ancillary revenue is charged to the customer by the airlines was actually lowering the amount of potential revenue that the US government received for things like the FAA. (Oh yes and paying back some of its recently increased obligations). I say potential because this has not been proved.

Here is the article from CNN Money/Dow Jones:(Courtesy of BTC).


When I first raised this issue in 2007, I received a few nasty notes from some airlines who disagreed with me and when I once raised the issue at an airline forum I was almost booed off the stage for suggesting such a thing.

However I think it is inevitable. Taxation is coming to Ancillary Revenue. Some countries have been able to impose VAT type taxes on fees. This will only extend. For the US the situation is simple. Ancillary Revenues are either aviation revenue in which case the purvey of the Federal Government or they are sales revenue in which case they are subject to state taxes. They cannot be neither. (Sorry for the poor use of English here). Thus in my view they are subject to Tax.

The difficulty for everyone - and this is a fair warning - is that it will be treated differently by separate taxation jurisdictions. Thus the complexity of the airline product pricing is about to get VERY complicated.

Be prepared. If you are not ready for this - there will be great amounts of difficulty. Particularity this will affect airlines and those who set independent prices for air fare products such as Consolidators and other travel intermediaries. Ditto their suppliers and providers of solutions that must create, monitor and report this revenue/taxation.

Now you have been warned! If you would like to know what to do about it - send me a note.