21 November 2009

The Right Stuff - US Pilots

I fly - a lot. I know many of you do too. Our whole livelihood in the Travel industry is dependent frequently on a few folks. The life of a pilot used to be glamorous - perhaps not quite so any more - but its still a great job.

I have always felt that there is a correlation between the task and the enjoyment resulting in a better performance the more you enjoy a job. I always used to use Pilots as an example of that.

Recently I came across a site with an view on airline financials. Bob Herbst runs Airline Financials. Its a great site for information on airlines. It is done with a lot of care and an eye on demystifying much of the jargon in airline investing. I highly recommend the site www.airlinefinancials.com.

However on the site he writes a commentary which I found gave me pause for thought.

I encourage you to read it. It gave me a slightly better and more open view of the value of a pilot. The site is very useful... book mark it.


EU Ruling on Flight Delays Compensation Makes US Rules Look Decidedly Inadequate.

The decision last week to mandate that any delay of 3 hours or more is the same as a flight cancellation was a victory for consumer protection and an abject lesson for those willing to understand it.

Formally on November 19th, European Court of Justice in Luxembourg decided that passengers who are forced to wait three hours or more will be compensated 600 euros, the same as if their flight had been cancelled.

There is a lot of documentation on this but there are three critical factors that we should pay attention to:

1. The scope of compensation was broadened to cover delays as well as cancellation. Just as an aside here - this may have a negative effect in that if an airline deems that a flight delay is beyond the threshold then the decision to cancel will be taken early and passengers could be left compensated but stranded - just a thought).

2. The delay time has dropped from 5 hours to three hours

3. The definition of what could be compensated - IE the reasons behind the delay was made less precise with the impact that other traditional "reasons" now become "excuses".

All this makes the US scheme even the proposed Bill of Passenger Rights look decidedly weak.

In my humble opinion the US should enact a clear set of rules along with penalties to force compliance by the airlines in the delivery of their product. At the moment the whole contract process is decidedly one-sided. The airlines can decide what they want to do to modify their part of the contract yet the consumer has little or no ability to do so. That to me is unfair.

And no - for once I am not picking on the airlines - I just fundamentally believe that the contract between two parties should be fair and equal. Currently this is not the case based on arcane rules that stem from the propeller era when the product was a lot less reliable. This is no longer the case and the travelling public in the USA deserve a clear set of rules.

And what do you think?


Dynamic Packaging Protection - UK Battle

When is a package not a package?

This is at the core of the argument now being hotly debated in the UK. At the centre of the battle is the case of CAA v Travel Republic and Kane Pirie (TR's Managing Director).

The case was brought by the UK's regulatory body the CAA (Civil Aviation Authority) who is the official regulator for a number of things in the UK including Passenger Safety and the bonding of sellers of products (typically Tour Operators) through its ATOL licensing scheme.

The pursuit of Travel Republic is seen as a test case for the CAA in enforcing its recently broader based view that virtually all holiday sales of flights plus accommodation require ATOL cover. Dynamic packaging has been around for a while - some might say it rose to prominence about 5 years ago but the practice of bundling products has been around for years. The CAA and the bonding process in general has been viewed as inadequate especially following the very high profile collapse of the XL group in 2008. So why now and why pursue Travel Republic?

The answer lies in the contested issue of whether regulations cover the sale of "all" travel products. Further with concentration in the intermediary channels - there is a need for the CAA to get tougher. But there is another reason. The CAA's bond pool has been sorely tested by the recent demise of many retailers and wholesalers. Some have indicated that the bond pool may indeed be under water. The CAA has tried in recent years to broaden the pool by offering smaller retailers reduced rate schemes. Of course the real target are the Online Travel Agencies particularly Expedia. So it is a market dynamic issue that pits the traditional wholesalers (now largely concentrated among a few players) vs the OTAs and the consolidators. Also at stake is a possible advantage commercially in how the VAT is treated.

The case was filed in a lower court - Westminster Magistrates and was moved to Stratford before district judge Nicholas Evans - and TR/Pirie were both charged with 20 counts each of breaching the 1995 regulations. it was clear at the time that the case would ultimately end up in a higher court maybe even all the way to Europe's highest court.

Well Round 1 went to Travel Republic on November 11th.

The following day a number of comments were published by the UK's TTG. Check here to read them.

No one really denies Travel Republic has the best intentions at heart despite the stream of vitriol from the Government's QC who compared Pirie personally to Bernie Madoff. However this is a case that will run and run.

Ultimately we can speculate that if TR is successful - then the government will have to mandate a new scheme for consumer protection. However the government seems to have already jumped the gun by raising the APD much higher. While ostensibly a fee related to Aviation uses it is regarded more as a straight revenue tax to help HM Government pay its somewhat large (and growing) total revenue shortfall.

But caveat emptor is always the case. Should the Government win in the ultimate battle - then the face of consumer protection across Europe will change.

Gotta love those lawyers!


High Look2Book Rates? Pegasus Says STOP!

As Pegasus follows Sabre down the outsource the data center route to HP/EDS, they are trying to find solutions to some of their more pressing issues. It is clear that they are getting creamed with lots of searches aka looks. Quoting CEO Mike Kistner in the Beat this week:

"These systems were built to manage a look-to-book ratio in the 10 to 50 looks for every revenue producing transaction, and we have seen it as high as a half million to one. It just can't sustain that," Kistner attested.

Well The Professor wants to take Kistner and everyone else who is moaning about it to task on this subject.


Search is what it is. We as an industry have to find a way around this problem. While not belittling the issue - we have to figure out a solution to enabling search. As long as we treat this as a problem rather than a way to better serve the consumer - it will be the industry's Achilles Heel. But it can be and must be solved.

Frankly the problem sits in the architecture of the business and the commercial models around it. Constraining business by charging for looks has hardly served the GDS market well. So too will it be for Pegasus. The Search Genie is long out of the bottle. He must be served.

Tsk Tsk. Time to get real and SOLVE the problem not try and legislate it away


20 November 2009

OMG Twts Decl in Oct!

First reported last week by Comscore, Twitter traffic is headed downwards. Now Nielsen is confirming the trend. However by some very big numbers:

According to data provided to eMarketer by Nielsen, traffic to Twitter.com was down a dramatic 27.8% between September and October 2009, falling to 18.9 million unique visitors.

Could this be the end of Twitter - hardly - but it does confirm that there is a solid pattern into technology usage.

Once abandoned technology is seldom if ever re-adopted. If you dont believe me come and have a look in my garage.

Interestingly Facebook continues to power ahead


What's Missing In All This? Reflections from the PhocusWright 2009 Conference

Typically a PhocusWright conference is looking forward to a future better world. Innovation etc etc.

We see people coming up with a compelling story but not necessarily a compelling history. One question Philip Wolf was constantly asking a question to which he never got a satisfactory answer - When/how/will a new brand/competitor emerge?

So in the Professor's inimitable style - I want to ask the question why this is the case or more importantly why not.

Over the next few days I shall be posting some insight on public and some private observations.

The show this year was a bit more upbeat than last year when the world was collapsing in total fear. The meteoric rise in Expedia's stock and now the market cap for PCLN being over $2Bn more than Expedia has shaken the traditional views. The market is as one analyst put it "more of a voting machine than a weighing machine"

It has now been effectively 15 years of innovation driven from the web. Perhaps now is a good time to reflect as clearly suppliers and almost everyone associated with the travel value chain are beginning to show.

But one of the stars of the Show has to be Marvin the Dinosaur. Not to mention a reference to dogs!


UK Traffic Numbers - Really Not Good

Despite a weak sterling which should have encouraged international inbound traffic... the UK numbers both in and outbound look pretty bad.

The number of visits abroad by UK travelers slumped by 14 per cent or 9.8 million to 60.8 million in the year to September.
Inbound travel to the UK was down by nine per cent or three million to 29.9 million in the same 12 month period.

A 24% drop in business travel to the UK in the year to September contributed to a continuing fall in total arrivals.



18 November 2009

Old Varig RIP

Oh this is a sad one.

In Brazil, the judicial administrator of Flex just asked to be able to resign, since without operating, the purpose of this creation (to “hold” the old VARIG debt became senseless

With just one plane, a $2 billion debt load and the hopes of so many former Varig workers (for their pensions) riding... it would never work.

So finally they flew their last flight and Old Varig/Nordeste and Rio Sul are no more.


16 November 2009

BA Unions to Willie - Un-Merry Christmas

BA Unions specifically UNITE/Cabin Crew - have started to ballot their members about Christmas strike action. Willie and the Boys are not going to have a Merry Christmas and - even worse - nor will their customers it would appear. I spoke to many BA staff yesterday - about 20 on the ground and a further number Cabin Crew as I wandered around T5. The sentiment was very much against the management. The word "bitter" was brought to mind. I also spoke to a station leader who confirmed that the station was almost 100% for voting for strike action.

It would appear that BA is on a collision course with its staff and the customer as usual will suffer. With BA having slimmed down significantly over the last 24 months - one can only imagine that the ability of "management" staff to step in has been almost eliminated.

Perhaps time to look at alternates for the Xmas break

This is going to end in tears for a lot of people.

15 November 2009

Improvement? Yes - But What Degree?S

So ARC has pushed out its Oct figures and they confirm that there are some better news along the way.

Rather than try and figure out who is telling the truth here - I went to the source. I am presenting here ARC's figures for October.

As I noted before the precipitous drop in bookings last year in September and October could only mean that this year would not be quite so bad. Indeed the Y/Y comparisons 2009 vs 2008 might look good. However - when compared with 2007 it doesn't look so hot.

So I present here 3 separate charts from the same source:

Total US bookings for the month
YTD cumulative figures
$ Value of all transactions.

The numbers I believe speak for themselves.