04 March 2010

BA Tries New Cost Measures

A great piece in the Beat this week on BA's new compensation program in the USA indicates a different tack by BA in its way to try and reform its business.

Having essentially rolled over on the issue of GDS fees - it is going after - let's call them softer targets. There is a lot of fodder in the battle with the Flight Attendants - who probably have lost the hearts and minds of the consumers. BA in my opinion now has the ascendancy in that battle. So now it is going after a revised compensation plan against the agency community. This time the US TMCs.

Given the importance of the business market to BA's bottom line (particularly after the disastrous 2009) this might be a risky strategy. Given the spring shoots now appearing in the USA - it would seem unwise to stifle the growth and upset this group of people. But perhaps it feels emboldened by the pending BAAAIB alliance approval and the resulting synergies - particularly in the business market to the UK. Given the relatively small footprint by Star on the UK - US market and the paucity of Skyteam flights (just 2 767s a day between LHR and JFK) perhaps they can throw their weight around.

However I do hope someone from the DoT is paying attention. The reduction/absence of competition on the Transatlantic run does seem to allow behavior like this.

This is my opinion and take it for what its worth


Jetstar Follows Ryanair Model - Attacks Airports

Jetstar which is the low cost airline of the Qantas Group (heck it even says so now on some of its planes like the A330s) has taken a leaf out of the Ryanair playbook in picking on airports.

After its very public spat with Darwin last year - it has now picked on a smaller airport - Rockhampton. Pulling out its big PR guns - the airline is now pulling flights and denouncing the airport pretty much as the devil incarnate.

What is rather funny in all this - as soon as it announced the decision to pull back on the Brisbane to Rockhampton route - its flights were immediately replaced by Tiger Oz. Oh yes and by QantasLink...

Go figure


IATA finally acknowledges LCC market

Acknowledging that that there is actually a low cost airline model - IATA has (begrudgingly) started to include LCC statistics in its reporting. Don't believe me? I quote directly from IATA's stats:

"As IATA member airlines carry 93% of international traffic measured by RPKs, this change does not make a large difference in the statistics" IATA Jan 2009 Report. I think I bed to differ. The LCC model has a profound effect on airline statistics.

Interestingly IATA seems to only capture those pure LCC airlines. They so far admit that there is only 7% of total traffic being LCC. And this is where there is a pretty fundamental failure of the IATA statistical model. It measures that notional value RPK (RPMs). IE Revenue Passenger Miles. If for no other reason than everyone else uses passengers as a measure of total traffic it is high time that IATA woke up and started publishing some real data on passenger numbers.

IATA claims that LCC traffic is only "7%" of total traffic. Given that the vast majority of LCC passengers are short haul and only a smattering of long haul traffic this is starting to distort the figures. Let me illustrate this.

The total traffic worldwide (using ACI data) is estimated at 4.5 billion passengers these are actual landings and take offs. This number tends to be inflated as it includes and counts each passenger twice. One take off and one landing. So in my opinion there are actually around 2.2 billion actual worldwide passengers. (PSJs - for Passenger Segment Journeys). If we look at just one group - the ELFAA - European Low Fares Airlines Association which comprises: Vueling | easyJet | flybe | Jet2.com | Norwegian | Ryanair | Sky Europe | Sterling | Sverige Flyg | transavia.com | Wizz Air

They carried 162 million pax last year. And this is not all (but it is most) EU carriers. If we were to add back in MENA, Africa, Asia Pac, USA and Latam carriers the numbers would swell by at least double. (WN alone is now more than 100 million pax). So you can see the share of market pax worldwide by true LCCs is higher than the 7% shown using the RPK model.

Interestingly if we look at an apple to orange comparison - according to IATA's numbers total traffic (in RPKs) was down nearly 11% for Europe in 2009. But for ELFAA airlines (passengers flown) it was up 8.7%. Interestingly IATA claims that the impact of LCCs mitigated the annual fall in traffic by one full percentage point. IE LCC growth saved the world from a full percentage drop of 1 %.

For the long term - you have to make the assumption there is a move towards hybrid value carriers - where airlines move away from pure legacy full network service carriers and pure LCC models to hybrids of all types. An apple to apple comparison of say United Airlines revenue models looks remarkably similar to say Easyjet these days.

Now I am sure that some people may pick at my numbers but - the analysis is sound I believe.


03 March 2010

Boomers Need Glasses and....

Interesting study out of eMarketer on Smartphone and Mobile Internet usage by Boomers.

Now as I am a (relatively young) boomer despite the pipe and the tweed jacket, I can attest to the real issue which is our fingers are not quite that adept at using the touch screen and we need glasses to read those damn small screens.

Frankly I think there is another influence at work. We are really tired of having to adopt new technology and also its shaky performance. And here hangs a tale that should get all tech bods sitting up and paying attention.

We are now so assailed by "new" functions and capabilities - we have adopted a culture where function exceeds form. We really do need a reset and get back some of the form that is more comfortable to us older types. Just because something is cool and new - doesn't mean we should take it.

I am by no means a Luddite but I do find it tiresome having to learn SO MANY NEW interfaces to applications and devices. I really wish that someone one give me tools that are LESS explicit and more automatic. AND were reliable and trustworthy.

In this research I read that I am not alone. Indeed because of what I do in my day job I have to learn new things every day. (I am told that should keep Alzheimers away!) So I use a lot of new devices and tools and learn new interfaces almost daily. And here is a secret - I have a good crew of people who can help me to learn them and remember the stupid ass codes that my old feeble mind forgets.

So here is an appeal to those hoping to get me excited about a new device. THINK first. Think of my usability issues. Try and find ways to simplify my life rather than adding complexity to it.

On behalf of the Woodstock generation - I thank you.

Peace Man..............

The Long March Back to 3 Class Seating

Tim Hughes wrote an interesting piece not so long ago on the death and rebirth of first class.

It seems he is spot on. The latest carrier to offer premium economy (with a touch of leg room extra) is CO. Their announcement further aligns them with their new best friend UA.

It does seem to be that the first class is going to die a slow death. A relic of a bygone era. Rather like Concorde.

Still I can say I have flown a couple of times in a decent first class. Its a really great experience. Did I enjoy paying the 4X price for the short duration of the trip? No!

And neither does anyone else. (with few exceptions and you know who you are).


01 March 2010

Is The Asia Crisis Over Yet?

Good news emanating from Asia this week.

Singapore is usually a pretty stable proxy for the whole region. It is typically imune from the fluctuations that can be dramatic in some of the other markets like Bali or Hong Kong.

After a dramatic drop off in visitors and time spent that began in the latter half of 2008 and reached its lowest point in the first quarter 2009, the market has slowly inch by inch crawled back. In January 2010 - the market occupancy rose above that of a year earlier. While not fully back to the same level of occupancy enjoyed before - the Singapore Government must be happy with the results. Correspondingly SQ must also be happy to see the back of 2009.

While yields are not fully restored yet - we are seeing rises there too.

This is good news all round


28 February 2010

Farewell Cruisematch 2000

I note with a twinge of sadness the passing of Cruisematch 2000. In its time it was revolutionary. Founded in the early 1980s by Pete Arnette (Forgive me if I spelt his name wrong) who started this after leaving Pan Am where he was the Air Sea guy.

Originally a multi-cruiseline engine it was purchased and absorbed into RCCL and became the external reservations system.

Originally an IBM System/38 it went through several iterations.

However effective April 2010 it will lose its Green Screen capability and emerge phoenix like in a next generation mode with much more capability.


OneWorld, A New Force?

OneWorld has come back from the brink of extinction that so nearly doomed its existence. Now aggression has returned to the team.

So having retained JAL - the team has plugged a hole in their environment by signing Kingfisher as the Indian airline. This leaves as a foregone conclusion that Jet Airways will now partner with Skyteam or risk being left out in the cold. In turn this means that there will be a falling into the ranks by many of the unaligned carriers.

The likely independents are the stalwart holdouts - Emirates and Virgin.

So what's next - I think we will see a fair degree of activity with the Alliances over the next 12 months. With Transpacific and Transatlantic alliances being formed and BA/QF immunity on the Kangaroo route seeing renewal last year - there will be some added complications emerging but things should settle down into a regular pattern. Ultimately I believe that Alliances will reduce the competition. I remain hopeful that independent players will pick up the slack.


Your Are Not Wrong - The US Airline Industry Is Slimmer

I have been pondering doing a post on the subject of the decline in the airline employment in the USA.

No need ETN did it for me....

So click the link and read the impact.

Since the peak of 2000 employment has fallen by 170,000 or about 25%. That is a lot of people who were directly employed by the US airlines. However while this number should send shivers down the spine of every union rep - there are some places where there are some bright spots.

Outsourcing has risen. So there are a lot more staffers who work for external corporations. But who has hired more than any other entity in the US Transportation System?

Why the TSA of course. They have a federally mandated employment of 43,000 screeners. That translates into about about 7-8K of additional support staff. Yet the staff turnover is still very high.

So if you have been outsourced. Get yourself insourced and go and work for the TSA?


When Code Share Falls Apart

I had an interesting time this weekend trying to get home. But while there is a story here about the value of persistence - I am really trying to look at the way the alliance between Delta and Air France/KLM should work.

I made a big mistake - failed to book the right day on my flight. OK - it happens. Accepting my fate - i got up at the crack of very early and took my car to the airport in London. (If you want a good tip - DON'T even THINK about trying to use the tube/underground on the weekends in London). But I digress...

So lets start with the process of checking in. I have a DL code share flight number and a DL ticket. So I get the usual email - time to check in. I click on the link. Eventually DL's website sends me to KLM UK. Air France who will operate the flight doesn't want to check me in. I input the data (after calling AF to get the code share correct AF PNR RLOC) nope doesn't work. But it does then send me BACK to Delta with a link... and the process starts all over again. (BTW I copied each web page to prove my point).

I called AF back - no you cannot check in - go to the airport early!

I get to LHR (they said 3 hours before the flight but I was one of the first at 1 hour before departure). I use the automated check in but check with the AF/KL sales rep to see if the frequent flyer number made it into the record. (It doesnt print on the AF Boarding pass nor does it give my status - the Frequent Flyer's nightmare - lack of recognition!) Her comment - I hate these code shares - it confuses us and not to mention the passengers. So I make it through security and board the flight. (Imagine the following is spoken in a very heavy French accent). "Ladies and Gentlemen - Air France regrets to tell you that there is a slight delay of 2 hours due to bad weather in Paris." OK so that means I will miss my connection in CDG for Seattle. So your intrepid traveller heads up the aisle to speak to the purser.

"Absolutement NON! If you want to leave the aircraft then I am sorry but you will have to pay for a new ticket. It will be very expensive. And besides - all flights in CDG are delayed by the same amount." I can assure you - there is no need.

Back to my seat - I pull out my laptop and log onto the network (thank god for 3G dongles... I can surf on the aircraft). So i now have better information than the agent. So yes there are seats available. Back up the aisle to speak to the purser and the agent...

But saith the Professor... "I have a Delta ticket".

"Then it is up to you..."

So I grab my carry on and head up with aisle. I speak to the gate agent (Cobalt) Well I guess. But you are on your own.

I deboard the aircraft - am officially offloaded. So now I have to go all the way through the airport to the Skyteam checkin terminal transfer desk in T4. Its about a mile walk from Gate 25 to there.

Same story (now on its third retelling) "No you can't do that!" ....But I have a Delta ticket....

"Oh yes then you can!"

The Cobalt agent works hard and gets me on the right flight. I end up getting home. And as for the flight from CDG to SEA? AF306 was canceled! I would have been stranded in Paris along with a heck of a lot of other folks.

I think that there is a lot of integration to do. The way Skyteam works is frankly very poor. Star Alliance has had a lot more time to get this right. Their UA+LH interconnection works a lot better.

What is clear - AF's legendary (and not good) customer service is still no better than it ever was. AF is misleading customers with their bad advice. The Cobalt team at LHR really did pull out the stops to get me fixed. I am indebted to them for solving the problem for me.

However - without insisting on the changes to my flight - I would not be back in the good ol' USA.

Moral of the story - avoid booking on AF if you can. Your DL Elite card is worthless to the AF staff. A DL ticket seems to work a lot better. Oh yes and they have a LOT of work yet to do to integrate their operations.

So much for seamless service! Check out this ad in LHR Terminal 4.