07 November 2009

So How About Them Bloggers?

With apologies to anyone who is a Dodgers fan...

I was probably a little late to the Blogsphere - but as I approach 1500 blog entries - I think I have been getting used to it.

But what about other Bloggers? Is there something that tends to bind us Bloggers together. Until about 18 months ago - I had regarded it as a solitary exercise. Since then I have started to collaborate with other Bloggers and Tweeters.

You can see some of my efforts on The Beat, 4Hoteliers and Tnooz amongst others.

So it was very interesting to see how Bloggers see themselves. I hope you wont find this piece too self serving. I think its interesting.

Check out the report as part of Technorati's annual state of the Blogsphere.

Have fun with it


Try Not To Be So Subtle

Ancillary Revenue is all about how you can persuade customers to part with extra money after they have already made the decision to buy your base product.

Bangkok Airways bills itself as Asia's Boutique Airline. And it does a nice job. I have flown on them several times to and from Thailand.

They are converting their fleet from Boeing 717s to Airbus A319s. Additionally they have ATRs for the shorter haul flights.

So on boarding I was impressed with a little sign on the front of the cabin. Look carefully and you will see the word "SELL" on the panel to the right as you enter aircraft.

The cabin crew denied knowing what it meant. But I think they might just have been embarrassed. They need not be...

If its effective - then do it.


05 November 2009

Psst Want Free inflight Wifi?

Then you will need to be my friend (or any number of other GoGo Inflight Wifi users).

Right now all the Flying Wifi players are trying to get adoption and traction.

Go on try it... so far i have seen it is both very cool and very practical. And the performance on the 4 times i have used it is very acceptable.

If you want some free wifi - contact me seperately via email and I will mail out an invite to you



New Age Direct Distribution aka IMD

Dear Reader….

So what is this thing Direct Distribution that seems to have created a bit of a buzz – what does it really mean?

While I would love to do a full primer on the subject – and perhaps I will one day – there are some important distinctions that both suppliers and intermediaries need to consider. So here are some - well lets just call them Cliff Notes For Distribution Dummies. And a special thanks to Professor CG for suggesting this article.

Firstly if I had to chose a term I would not have selected Direct Distribution. The environment has been opened and we are now in the new age of open distribution. Thus I would have preferred to use the alternative term - Independent Managed Distribution. And no this is not a semantic. The reason is that for me the big missing tool in all of this has been a supplier managed tool that allows the inventory owners and their distribution partners (up to “n” tiers) to work together. I have always said (and I have squillions of diagrams with the concept in it) that we need is a DCM – a Distribution Channel Manager - that sits within the Supplier’s environment or is a controllable hosted tool. In the main for airlines this capability went with the GDSs when there was the schism of Church (airlines) and State (GDSs). It should have properly stayed inside the Airlines house. The GDS have used this capability (or lack thereof) to obfuscate the issue.

Since that time, it has been used as a lever by the GDSs to control distribution and force it down the GDS pipe alone. While successful for some airlines – this has proved to be unsustainable. As witnessed by the LCCs bailing out of GDSs.

Secondly we need to be clear that not everything goes through airline.com. What smart airlines have been doing is building a set of DCM tools either directly into the PSS or via independent solutions such as Farelogix. The complexity of the fragmentation of distribution that is VERY real (and has been so for many years) demands a suite of distribution tools. These tools can no longer be one size fits everything. They must acknowledge that distribution via intermediaries is NOT A BAD THING. Thus a critical component of IMD is the tools to integrate supplier product into the workflow and environments of the intermediaries.

Sadly in my opinion, the PSS vendors who also are GDS vendors have a conflict here. Where these PSS vendors are failing to service their customers is in bolting on the legacy GDS commercial terms into the PSS agreement, and the lock in technology that accompanies it. I have personally reviewed several airline contracts that show at least one vendor (who is quite big in this space) is doing just that. More the fool the airline(s) who have or will have signed that contract.

Thirdly IMD has two parts to it. The reseller/intermediary has to have the tools in place on their side. The distribution model has moved from a ubiquitous single multilateral model with GDSs stuck in the middle to a more technology and (commercially realistic) based bilateral model between the airline and its intermediary partners - via any channel and any medium. Thus the Intermediaries now have an obligation and have to step up and make sure that they have access to all content. This cannot be just another bolt on – the Intermediaries need to have better ways to manage the relationships they have with their suppliers. The old single size multilateral market model cannot be exclusive. Content is and never has been full via the GDSs. One only needs to look at private fares to realize this fundamental truth.

Over the coming months as PCAs come up for renewal – I expect this debate to grow in intensity. I for one am not waiting for the next coming. My team and I have developed methodologies and tools to address this need for IMD. While this may be a shameless plug for my own consulting business, I think it is critically important that the suppliers and intermediaries work hard at developing IMD solutions that are the differentiators in their respective businesses. You’ll be sorry if you rely on the old ways and the old tools. You have been warned.


Heartfelt Apologies vs. Kudos

Acknowledging that the SabreSonic CSS cutover had been less than stellar – despite my earlier congrats – Westjet offered its apologies for a number of snafus with the cutover. It probably still has a way to go.

Still this is a pretty fast install. Sometimes its better to just do it rather than wait.


Remember Remember the 5th of November

This is a common rhyme in Britain to describe the events surrounding the Guy Fawkes plot to blow up the houses of Parliament.

So I thought I would relate the cautionary tale of a flight I took recently to Australia on Qantas.

My fellow blogger Tim Hughes has been quite critical of QF’s inflight service and product. I have found them OK – and in general better than their partner BA in service. So I was quite surprised to find out that QF and the Australian Federal Police think that I may be a threat to the security of the airline and its passengers.

I am an airplane nerd. I love taking pictures particularly out of the window because it gives an interesting view. On this flight there was a phenomenon of a rainbow as can be seen in these pictures. So I happened to take a lot of them. I was also seated near but not next to the emergency exit. Someone – presumably a QF employee regarded this as a security threat. The Aussie Fed Police launched an investigation. And voila – I am now probably now on a watchlist somewhere. If they could only see my passport – they would see that I have a squillion visas from such strange places as Saudi Arabia, Russia, China and India as well as other weird places such as Brazil and Australia. Clearly I represent a threat!

So remember this Guy Fawkes day – be careful what you take pictures of. They might get you in trouble


04 November 2009

Despite Fee Cuts OTAs Still Face Defections

As an analyst - I spend a lot of time explaining the travel market place to Financial and Wall Street types.

One of the common perceptions amongst the general public (is that an archaic term yet) is that everyone is an expert in travel to some form of degree. Everyone is opinionated that is for sure.

As experts one question I always ask an external analyst is how they do their own booking. The vast majority always state that they book the majority of their travel particularly airlines on the airline.com website or via the call center. (The latter is for International reservations).

The OTAs are pretty much in the same situation as meta and regular search companies if offering a service that provides context to the search and selection process of a trip. In my own case - and it would seem there are many who do the same thing - I always look in the generic places first (at least 1 OTA and meta search site) but rarely do I book via that OTA. The only time I do is if I find a lower rate (without any corresponding loss of value).

PhocusWright has done a study on conversions. Here is the interesting part of their release:

"The fee cuts have not eliminated the defection of OTA air shoppers to airline Web sites. Despite the removal of most service fees on airline tickets, OTAs still lose over half of their air shoppers to supplier Web site for booking. This signals that there is more to the switching behavior than just the fee element. OTAs lose more bookings to air suppliers than they do car or hotel shoppers."

While much of this is obvious - the very facts speak volumes. Car and Hotel shopping is a dark art and the car.com and hotel.com sites are still not doing as good a job as the airline.com sites. Air Shoppers are commodity buyers.

I think its safe to say that the opaque models don't stay opaque very long. Suppliers know this and are acting accordingly. OTAs who managed to show some value here are losing that advantage.

Bottom line - chaps the search process is changing and the OTAs better wise up and do a better job of showing value or they will continue to lose share of conversions.


03 November 2009

Alliances - Face Heightened Scrutiny

The good old days of carte blanche acceptance of Alliances may be coming to an end.

The Oneworld proposal seems stuck in no man's land. It was supposed to be given the green light (with changes of course) last week, but so far nada.

On both sides of the Atlantic - the regulators are watching much harder. The last approval (Continental + Star) was given the all clear by the DoT over the objections of the DoJ. It wont be that easy next time round. On the EU side - the regulators sent a 400 page document to the participants. Probably this will mean that there needs to be slots to be surrendered at LHR which seems to be over Willie's dead body.

This is a song that is going to be sung for quite a while yet.


02 November 2009

A Public Service From The Professor

Dear All

I am a great believer in transparency. And was doing some research on several things - including CEOs.

I found this wonderful site - you might want to look at:


It's CEOs email addresses - for the UK only.

well its interesting to see how transparent people are.

Enjoy it!


BA to UK TMCs: Time To Rethink Those Cheques

BA has decided (clearly this must have taken a few months to come to the conclusion) that the premium and business traffic is down and going to stay down for a long time. With their planes configured for a larger premium traffic share - they are probably wringing their hands over the loss of this valuable and higher yield business.

But what to do about it? Earlier this year the airline opened up the tier system to discount tickets. Now the shoe is about to drop on the Biz Travel Agents

In a conversation with the UK's TTG-Business Trade Magazine, Scott Davies, BA’s head of TMC relations, told ttgbusiness.com he had finished a period of careful consideration regarding SMAs and would be informing agencies about how the agreements will work in the future.

Davies said: “BA’s sales and marketing agreements for TMCs have followed a similar structure for the best part of ten years. The market has changed dramatically in recent times and we recognised the need to re-evaluate our approach.

“We consulted with key trade partners during the summer regarding the most mutually beneficial approach to take and we have opted for two key changes.”

He said BA would firstly update the activities TMCs need to complete to trigger payment, which will make the agreements more relevant to today’s market. ttgbusiness.com understand this means TMCs will have to work harder for their SMA.

The airline had “re-visited” its fixed and variable payments within the agreements, said Davies. “This is key as variable payments provide TMCs with a more interesting upside as the market begins to recover.”

He said updates to SMEs would take effect in the New Year.

My team has been on the phone to a few TMCs in the UK and so far no response as the issue is very sensitive. Given BA's footprint in the UK no one is making any statements. However smaller TMCs are saying that so far they have not been contacted - that will likely mean they will lose out. However that is speculation on my part. I believe it will be the bigger players with footprints that straddle the Atlantic who will get the best dea;s but the guaranteed payments are likely to go in favor of a pure variable incentive model albeit at a lower number than before with some high thresholds. Small and Mid size players will find this hard to achieve.

Other airlines are likely to step into the breach and provide some level of value to the players. With the Transatlantic market now very competitive, BA needs to tread very carefully.

Could it be that old cosy (and some might say unhealthy) relationship between GBTA and BA moves to a new and more financially conservative basis? Inquiring minds want to know.


The Winter Of Discontent - Unions Unhappy

Three big Union stories over the last few days. Most of them unconnected but perhaps there is a thread of a change on the labour front.

Amongst airlines - both Hawaiian and British Airways face union trouble probably around Christmas time. For both carriers this is not the time. For Hawaii a disruption at HA will be devastating given the amount of traffic that is now on that airline.

Amongst the airframers - the impact of the decision by Boeing to open up a second line in South Carolina seems on the surface to be simply a cost issue. With Boeing stating that SC is 40% cheaper than Washington state (my home state btw) it is hard to see how Boeing could not have made this call. The union leadership in Washington should head the lesson of California. The labour market there was priced so high that ultimately it became too expensive for the manufacturers to remain in the region and operate profitably. Storied names like Douglas, Convair, etc etc have progressively left the market for cheaper locales or in most cases just headed into the twilight.

And let's not forget Airbus - they have a strong currency problem - the rise of the Euro means that essentially Airbus is now 40% more expensive. That means that Boeing should be able to take advantage of that. So if that is the case why does the A320 consistently outsell the 737NG?

What is needed is for a more honest and open dialogue between management and workers in these critical areas. Otherwise it becomes a game of who has the largest toy.

Sad really - lets hope they all kiss and make up.


01 November 2009

New Poll On Professor's Blog

I am going to ask you all to post your votes on American Airlines new aim for a 100% direct distribution model.

I have given you four possible options.

Yes - emphatic response
No - also an emphatic response
? - Not sure - think time will tell
I really cannot decide right now

Think carefully and all the best on your voting


Poll Results on Twitter

So here you go final results on Twitter are as follows:

I am a Luddite (60%)
I find it useful (18%)
I am a sneek peeker (12%)
I am a manic Tweeter (9%)

So this represents you as readers. FYI the Results represent about 1% of readers.

Cheers and thanks for participating

Shock Horror – Online Spend Passes TV

So what does this do for me?

I have a very good friend who is a media maven. Having worked in Advertising world in the 1970s and 1980s, we often get together to discuss how Media has changed with the onset of the Web as the pervasive method of human interaction – entertainment, information and communication. So it was inevitable that Online spend would one day overtake the traditional media stronghold of TV. However none of us could have predicted the speed. In the UK – one of the largest TV markets in the world – it has already happened. Full Article

So my friend and I were discussing the way we used to do things and comparing it with the validity of the methodology of ad spending today. Frankly I am glad that I am not in that game fully any more. I have been unhappy with what to me has become in effect a derivative market possibly as sleazy as the financial instruments that got us into the GFC. We both lamented that the manipulation of scant pieces of data into business cases for ad spends has now reached – I would personally say – fraud proportions.

It seems that the “hucksters” didn’t die out when the era of “Mad Money” passed, they have reincarnated themselves as SEO, SEM or tool specialists. Now I am not saying that everyone is bad, but I am saying the ability for an objective evaluation of how to spend ones scarce Ad and Marketing budget is getting harder. The tools are suspect and the results still quite abstract in a large number of cases that purport otherwise.

As an aside – it would seem that the honest approach of brands to delivery of the promise is also something that seems to have been lost. So – while this is a bit of a stretch – I found Gerry McGovern’s article a few weeks back on the delivery against the brand promise quite interesting in the same context as the Ad spend debate above. Either we are all drinking a lot of Cool Aid or we need to have our heads examined.

I remain perplexed as to what to do about this. I don’t want to suspend my beliefs for a flawed metric. And I really don’t want to keep shoveling cash (mine and clients) into the Google machine.


Why and How TMCs Hate LCCs.

As an observer of the Travel Industry I have watched the different sections of the value chain behave in different ways. Of late I have been thinking about the whole value chain and in what ways different parts of it are affected by fragmentation of content and differentiation of customer needs and providers capabilities. In looking at the corporate market it has somewhat worried me that the typical TMC has shunned the LCC market. It seems that even when the LCC footprint is pretty significant (the top two branded airlines on the planet are both LCCs – WN and FR) TMCs have shunned them and vice versa. I am not going to debate who shunned who first but it is still a pretty interesting view.

It seems to me that TMCs have done a remarkable job in deflecting the basic need to provide the corporate customer with the full product as a neutral provider in exchange for operational efficiency and service excellence.

This is an interesting concept but this blinding flash of inspiration came from one of my fellow Professor’s who wishes to remain anonymous. But that is a pretty fundamental view that on reflection I now whole heartedly agree with.

So how do they do this? Firstly their almost unhealthy relationship with the GDSs and tying themselves to the legacy model has resulted in a shunning of LCC products. The focus on “saving money” sends them into deep activity on intra product as opposed to inter product (to wit – getting the best price on the itinerary booked vs checking first whether the trip is necessary and secondly what is the most efficient way to address the needs that drove the trip request in the first place).

Then the lack of attempt at providing a service proposition to LCCs by the TMCs seems to be a significant failing on their part. Being passive while airlines such as Jetstar says let the customer book direct only seems to indicate an unwillingness to embrace the LCCs and help the customer to make a decision about the most efficient way to get from A to B. I am sure there will be TMCs who will say that this is not true and that the real problem is the unwillingness of the LCC to play ball with the TMCs. Well I think that argument is academic. The issue is the fact that little is done by the TMCs.

The promotion of operational excellence is almost tied to the concept that the legacy airlines have in differentiating their products when in reality it really is a commodity. TMCs don’t want to stray outside of the box because it means that they would have to do more work and pay for something. So the legacy TMC model doesn’t endear itself to the servicing of LCCs. Even though the customer would ultimately save money by using the LCC more frequently. One could also say that TMCs are too operationally focused - just like legacy airlines are.

So chaps – the continued shunning of each other (TMCs and LCCs) is set to stay. But given the amount of possible market share that LCCs command – this cannot continue. The mature US based TMCs now have only a few pockets of pure LCC activity. However Europe has a very large LCC footprint where in quite a few cases the ONLY option is an LCC. The TMCs (and their attendant service partners) therefore must change their position or risk seeing themselves disintermediated as a result.

Recent efforts by Travelport and others to bring LCCs to the GDS environment have only shown that the GDS model is increasingly flawed. With AA now moving to a 100% pure direct model - can the TMCs ignore the LCCs any longer. That does not require an answer.

Food for thought?