22 May 2010

Mass Customization and Ancillary Revenue

I am definitely between positions on the announcement by ATPCO of their "ATPCo bundled services product". The cabal supporting this consists of 27 Airlines and 6 Pricing Systems. The focus of the announcement is to talk about the "OC" optional services fare filing capabilities. FULL TEXT OF THE MAY 11th RELEASE BELOW. "Travel Agencies, Travel Management Companies, and GDSs Announce Support for Standards to Enable Shopping, Sale of Ancillary Products Across Distribution Channels."

A notable hold out is American Airlines who feels that the standards will interfere with their ability to individualize the relationship with their customers. AA's Cory Gartner was less than circumspect in his statement to The Beat this week "We are talking about Amazon style, where a customer is coming to us having purchased these things in the past, therefore these are the things that are going to be most profitable for American Airlines to offer because we think customers value these things and will pay for them."

And this is where my dilemma starts. On the one hand I firmly believe that standards are good for the world, but on the other hand I am a fanatic in the belief that suppliers and their customers should be able to define their own relationships. The web has done a great job in developing the abilities of individual relationships between business partners. Driven in part by the use of standards such as XML and HTML. The web enabled open standards and open source software in the process loosening the grip of Microsoft and IBM. But it also enabled the rise of the Google behemoth. Now we need to do things "the Google way". Not necessarily bad but not necessarily good.

Part of me wants to cheer the ATPCo standard. But then this other part of me (yes the older curmudgeonly bit) says - "hmmm seen this before" - and its just another effort to curtail innovation and control the market by those nice people who brought you high costs of distribution. Check out the quotes in the Press Release and indeed the strange bedfellows who combined to endorse the release.

My unease with the cabal of players who are running this are they are saying its a common standard among themselves and enforces the acceptance by the legacy GDS service providers. This represents a closed shop of the usual suspects. Thereby closing out other interested parties who are looking at the dissemination of the data results to the consumer. Specifically stating in The Beat Article:

"The coalition repeated the GDS companies' expectation that they would "provide corporations and travel agencies the ability to shop, book and fulfill airline ancillary services to travelers by late 2010." What remains to be seen, though, is how quickly that would happen and how pervasive it would become."

My unease is that there are many more people involved in search, shop, book and fulfill and itinerary management now as the product categories fragment and as new players emerge to do different/better jobs at serving the consumer.

My challenge is therefore to the "coalition" to show that they are truly open and will publish the standards and make them available - for example under the Open Travel Alliance (OTA) rather than just ATPCo. So that other players who are involved in the travel provision can take advantage of the "standard". At the same time others who chose not to file published or other fare types via ATPCo - such as private fares outside of the Cat 15/25/35 categories - can adopt the same standard. And what about other users such as Tour Operators etc? I think you get my point.

If this is to be a standard then make it truly open so that anyone involved in travel can take advantage of it.

And another point while they mention EMD, the BSPs (in international markets are ignored). As I have written before - the financial fulfillment process of Ancillary Revenues is the Achilles heel.

In the mean time - I think I will continue to cheer on others who are bringing new and better products and services which add value to the whole market and helping build better relationships between business partners, not just the old guard finding more ways to put fences around the existing legacy GDS based "one size fits everything" model.

Anyone willing to take me up on this challenge?


Here is the full text of the Press Release:

Travel Agencies, Travel Management Companies, and GDSs Announce Support for Standards to Enable Shopping, Sale of Ancillary Products Across Distribution Channels

NEW YORK, NY, May 11, 2010 - The industry’s leading travel management companies, online agencies, and global distribution systems (GDSs) today announced their support for plans to implement recently developed, industry-wide technology standards which enable shopping, booking, payment, and reporting of ancillary services. These standards will also facilitate the use of new capabilities that are being developed by the GDSs to help agencies manage the complexity of unbundled offerings, while enabling airlines to differentiate through the sale of ancillary services across all distribution channels. Use of these common and recently launched technology standards will create the opportunity for airlines and agencies to sell ancillary services seamlessly, and corporations to optimize their business travel programs by better anticipating and tracking their full air spend.

American Express Business Travel, BCD Travel, Carlson Wagonlit Travel, Despegar, Expedia, Egencia, HRG, Opodo, Orbitz, Orbitz for Business, Travelocity, Travelocity Business, Amadeus, Sabre Travel Network and Travelport have agreed to support common technology approaches for the merchandising of airline ancillary services.

British Airways, Delta Air Lines, LAN and WestJet support the development of this capability as an option for distributing new products and services. Additionally, Air New Zealand has confirmed that it is mobilizing OC and EMD projects.

By combining ATPCO’s (Airline Tariff Publishing Company) category for optional services “OC” fare filing capabilities with soon-to-be-enabled Electronic Miscellaneous Documents (EMD), airlines will be able to quickly introduce their revenue-building ancillaries to the broadest travel audience through both indirect and direct distribution channels. The group of travel industry buyers also endorses the development of common messaging standards for direct API solutions for those airlines that wish to manage the ancillary data directly with a GDS, enabling the easy and efficient shopping, selling, payment and reporting of ancillaries.

Travel agencies are experts at selling airline products to their customers, and they have keen insight into how these groups want to buy airline products. By using industry technology standards, airlines can quickly deliver the ability to sell ancillary services. Additional capabilities will emerge throughout the year to enable corporations, agencies and airlines to complete the sale and fulfillment of these products within the GDS, enhancing agency efficiency at the point of sale, and integrating into existing back office systems.

Over the past year, many airlines have evolved their business model in an effort to generate incremental revenue by either creating product bundles that differentiate their offerings or by bundling and unbundling various products and services, such as premium seating or baggage fees. Today’s announcement aligns GDSs, online travel agencies and travel management companies around support for the use of recently developed technology standards to help airlines introduce new unbundled fare structures, and demonstrate what is included in bundled fares, while also providing consumers and business travelers full choice and value in their air travel options.

Many capabilities enabling the sales of ancillary services already exist within the GDS environments. Airlines that adopt industry technology standards are expected to plan how to best leverage it this year. The GDSs plan to provide corporations and travel agencies the ability to shop, book and fulfill airline ancillary services to travelers by late 2010.

“It is a great achievement to have all these parties endorse the best way forward for the travel industry. We believe supporting these technology standards will benefit everyone in the travel value chain, from providers to travelers. Airlines will be able to differentiate their ancillary services offer and market it more effectively through travel agencies and to consumers,” said Philippe Chérèque - executive vice president, Commercial for Amadeus.

American Express Business Travel
"When it comes to providing merchandising options to our valuable customers, its critical that we have broad access to such supplier content, that fully integrates into our downstream processes," said Michael Qualantone, vice president/general manager, Global Supplier Relations, American Express Business Travel. "We want proven, reliable and efficient technology to avoid additional cost, processing errors and service disruption."

BCD Travel
Rose Stratford, senior vice president of global supplier relations for BCD Travel, said “We applaud a standardized approach that will enable us to better serve our corporate travelers. It will offer us the opportunity to better manage our traveler needs while providing our clients with the transparency and reporting necessary to manage ancillary fees more efficiently.”

Carlson Wagonlit Travel
Matt Beatty, vice president, Global Supplier Management for Carlson Wagonlit said, “With the GDSs providing quick and easy access to ancillary products and services via common, industry-wide technology standards, we can help our clients and their travelers make better-informed choices to meet their business travel needs while optimizing the efficiency and cost management of corporate travel programs.”

“Delta supports this development of technology that facilitates the potential distribution of new ancillary products and services. We are continuously seeking distribution methods that satisfy the marketplace, and this technology is an option we are considering. It is important that we work with our agency partners to find the best possible solutions for our customers,” said Jim Cron, senior vice president, Global Sales and Distribution for Delta Air Lines

"Despegar.com believes that customers need clear information in order to choose wisely. By setting these standards the travel industry is moving one step forward towards price transparency," said Roberto Souviron, chief executive officer, of Despegar.

"It's important for the industry to come together to solve our common issues," said Rob Greyber, president of Egencia, the corporate division of Expedia Inc. "By adopting these technology standards, we can increase the visibility of ancillary costs to travelers, which is good for airlines & travelers, and keep corporations ability to control spend. Policy controls govern financial accountability at the point of purchase, lessening the audit burden for corporations.

"A concerted effort like this to make these products bookable in the most prominent booking channels sets up all parties for success," said Gary Fritz, president of Expedia Partner Services Group. "These standards pave the way for making a la carte airline products more transparent and accessible to leisure travelers, which in turn will lead to higher adoption rates."

“Following our call for common standards last year, joining this group enables us to continue with our drive in this very important area. It will enhance the way we deliver our products and service changes to our customers so that it works for everyone in the value chain,” Bill Brindle, Business Technology and Distribution Director for HRG.

“Convinced that merchandising and ancillary revenues are an effective way to differentiate and diversify in an industry highly pushed towards commoditization, LAN initiated a couple of years ago an important effort in order to actively participate in these business streams,” said Sergio Mendoza, vice president, Distribution and Revenue Management at LAN. “A multichannel strategy definitely helps us better serve our customers and represents a competitive advantage. On the other hand, standards are necessary in order to simplify and make the multichannel distribution feasible and efficient. We have a huge challenge defining those standards for a business model that is being created as we speak, but that is what makes all this so much fun.”

“To agree on the use of common industry standards in the merchandising of ancillary products is a crucial development for the travel industry. We are proud to be part of a move which will ultimately enhance consumer protection and trust,” Ignacio Martos, chief executive officer of Opodo.

Orbitz/Orbitz for Business
"Orbitz Worldwide has been in discussions with the airlines regarding how to appropriately merchandise their ancillary services for an extended period of time, but finding an efficient technology solution has been a major barrier to progress. Establishing industry standards will result in more productive conversations with our airline partners that will allow us to focus on their business needs rather than technology solutions," said Michael Nelson, president of the Partner Services Group, Orbitz Worldwide, Inc. "The end result will be that our business and leisure customers will have access to the information they need and the products they desire."

Sabre Travel Network
“Everyone wants a healthy travel industry, and it’s clear that ancillary sales have been successful in helping airlines increase revenues,” said Greg Webb, president of Sabre Travel Network. “But this revenue success for airlines has come with a number of challenges for consumers, travel agencies and even the airlines. We intend to solve these issues so the real value of travel can be experienced by everyone.”

“Our top priority is making it easy for consumers to understand the perks and costs of choosing different airlines, and we’ve got several tools on the site today that help,” said Noreen Henry, senior vice president, Partner Marketing for Travelocity. “But, with the increasing number of add-on fees, it’s important to establish a common way for airlines to deliver that information to sites like Travelocity. Having these standards is a necessary step in helping us show consumers all of the possible options and the associated costs.”

Travelocity Business
“In business travel, lack of visibility into ancillary fees is not just a challenge for the traveler, but also the corporation that tracks and manages the total cost of each trip,” said Yannis Karmis, president of Travelocity Business. “A universally-recognized set of programs, delivering an accurate measurement of overall value for selling, tracking and accounting for ancillaries would offer transparency benefitting both airlines and travel meets the requirements of CFOs at all parties.”

Travelport’s mission is to deliver informed choice to business and leisure travelers throughout the world – which means ensuring that each and every search results in a complete and comparable display of competitive travel options,” said Gordon Wilson, deputy chief executive officer of Travelport. “In this context, accelerating the adoption of industry-wide technology standards for airline ancillary services will bring greater transparency and choice to travelers, while enabling airlines to merchandise their products in the way that they want to sell them.”

“WestJet sees the sale of ancillary products via all distribution channels as an important part of its value proposition going forward,” said Catherine Dyer, WestJet vice president, Distribution. “We think it’s important that our valued agency partners have the ability to sell these products to our guests in a way that is efficient and convenient.”

Air New Zealand Amadeus
Mark Street Corporate Communications
Mark.Street@airnz.co.nz +34 91 582 7809
North American Media Contact
Debbie Iannnaci
+1 305-499-6448;

American Express Business Travel BCD Travel
Tracy Paurowski Thad Slaton
+1 212-640-8409 +1 678-441-5292
Tracy.j.paurowski@aexp.com thad.slaton@bcdtravel.com

Carlson Wagonlit Travel Egencia
Kim Derderian Paige Young
+33 (0) 141336044 +1 425-679-4053
kderderian@carlsonwagonlit.fr pyoung@egencia.com

Expedia HRG
Katie Deines Fourcin Sallyanne Heywood
1 425-679-7991 +44 (0) 1256 312624
Katie@expedia.com Sallyanne.heywood@hrgworldwide.com

Orbitz/Orbitz for Business Sabre Travel Network
Brian Hoyt Nancy St. Pierre
+1 312-894-6890

21 May 2010

Is The Travel Recovery Faltering?

April and Early May were not good months for the Travel Industry across the pond. The latter half of the month saw the Ash Clouds from the angry Icelandic Volcano.

But it seems that the surge in bookings we saw from the beginning of the year was not being sustained.

ARC's April numbers - total transactions - show a decline in growth.

But we are not going to see a boost in May either. We have more ash disruptions and BA strikes. But this should not materially affect the bigger picture of travel in the USA market.

So there is something going on. The economy is beginning to feel the heat of the Eurozone crisis. But the Europeans should not be affecting the US point of sale. The high cost of travel across the Atlantic with Eastbound traffic is beginning to bite. Perhaps the US carriers have cut back too much and more capacity needs to be added for the summer. Checking on flight prices across the Atlantic in both directions doesn't give much comfort despite the dramatic fall of the Euro against the dollar.

As I reported earlier the Pow Wow delegates are now trekking their way home probably less enthused than they could be.

Let's see how the Summer 2010 will progress. I am not terribly optimistic that we are going to see that bounce being sustained

And what do you think?


20 May 2010

Does Google Get It Right Always?

Google has been the all conquering hero for some time. But as we have seen of late that gleam is wearing a little thin and with a certain amount of tarnish on it. The recent privacy spat over their "accidental" collection of data is an example. I used to work for a very large company who was also accused of such bad behavior. So I have some empathy for the impact.

After the huge hype for Nexus One phones - the unlocked Android based phone directly from Google - the company decided to shut it's only web store. I recently had the opportunity to play with several Android phones. Its funny that the level of quality on the software of the Android phone was not unlike the way Google handles search. Its almost good. But it takes a degree of effort to get a great result. If you work in software a long time - you realize that users expect perfect results. Yet we never get the perfect answer. Many times we don't even get a great answer. But I really did expect the product to be a lot better than it is. I also got to play with other versions of the Android. WAY BETTER!!!!

This had me thinking what will Google be like if (or rather when) it goes directly into the travel transaction business. ITA has built a very good business in solving search for single vendors and neutral players such as Kayak, Bing and of course Orbitz. One thing is for sure - the nice gentlemanly rules of the club will not be played by Google. Why? because they don't play by the rules as we know them. In fact Google's whole business ethic is about breaking the rules. Good thing or bad thing?

So the one thing that worries me more than anything else is that quality will be a casualty. But stick with me here a moment. Perhaps Google took a look at the quality of travel content and decided that actually it matched Google's loose approach to quality. Lately I have become involved in search. I think search is going to have a profound effect on travel and the way it is managed and handled. We are still very early in search in travel. This will be a long road. There is so much more to be learned about search. Mostly that the ability of the content to be searched can - at best - be described as embryonic. Travel content (or more accurately components of travel products) don't lend themselves well to search. So we tend to simplify and abstract the minimum level of data in order to serve up search results which if we are truly honest are pretty crappy. Oh yes and of course few if anyone (on the true supply side) really wants to let the product be searched effectively.

To answer my own question - I believe that Google just may be correct about travel.

But it doesn't mean that it is right. Nor does it mean that Google's way is the right way.

But we are about to find out how much fun it will be to try. And my exhortation to everyone else - particularly the existing players in the business - is we had better get serious about search. If not we will be saying that Google has become the evil empire.


19 May 2010

"No Harm, No Foul" Says Google

In the continuing noise over Google's collection of data "accidentally" Google's CEO Eric Schmidt posed a question: "Who was harmed? Name the person," Mr Schmidt said at the company's annual Zeitgeist conference in Watford, UK. (BBC Quote).

So let me extend the analogy, if someone spies on another person either through a keyhole or via an internet camera - is that a crime. If the other person didn't know then what the harm?

So let's be clear Mr Schmidt - collecting data was NOT accidental. Someone did it deliberately. And their rights were abused. In some countries that is regard as an offense. In some countries it is not. In all countries it is an abuse.

In the US, advocacy group the Consumer Watchdog (according to John M Simpson, of the group) has written to the FTC (US Federal Trade Commission) saying it should investigate Google.

"Google has demonstrated a history of pushing the envelope and then apologizing when its overreach is discovered, given its recent record of privacy abuses, there is absolutely no reason to trust anything the Internet giant claims about its data collection policies."

War driving is fun but you don't store the information.

'Nuf said?

17 May 2010

Do Airlines or GDSs Cheat on Displays?

I love finding things that don't work or fail to work as billed. I have been recently working on a project with regards to competition and compliance. I went back and had a good look at the current European Union CRS Regulations.

I was working with one of my team - Professor Sonja - and she noticed that some airlines fail to comply with the letter of the regulations. But as to whether they are technically in default or manipulating the system - I will let you be the judge.

So here is the rule:

Point 10 from the Regulations Annex states:

Where air carriers operate under code-share arrangements, each of the air carriers concerned — not more than two —
shall be allowed to have a separate display using its individual carrier-designator code. Where more than two air carriers
are involved, the designation of the two carriers shall be a matter for the carrier actually operating the flight.

if you look at the 2 examples above you will see that in fact in the display (from Sabre) that indeed there are three instances of the same physical flights shown. However on one of the combinations a specific flight does not show any classes of service. OK so is that within the law? Now look carefully at the two different sets. In set one (yellow) you will see that the flight times are off by 5 mins. So the first flight on the combo might not be the actual same flight. Actually we checked with both the airline res and the airport and they are. In the second option (green) the equipment is different (777 vs 332).

This was a specific case we stumbled upon by accident but I firmly believe there are a large number of these instances where the GDS displays show more than the designated 2 options. It would seem that someone needs to go and check the correct compliance with the pertaining regulations.



PS before anyone starts on at me about the schedules being out of sync and this is an isolated example - I can show many more from different dates and times. Some airlines are worse than others.

Google - "accidental data collection"

Google issued a giant mea culpa for "accidentally" collecting data about websites people were visiting.

Politely Balderdash....

Last time I checked - collecting data of any sort requires a conscious decision. There was no accident about the process. A Google engineer (inhouse or contractor) designed the system to collect data. The supervisor reviewed the code. The hardware for the storage of data had to be purchased and approved. The device had to be set up to collect data. The data had to be stored somewhere. So data was collected in 30 markets.... I think you get my point. I don't think by any stretch of the imagination you could call the collection of data "accidental".

Now the question is will Google take any advantage of the meta data (ie data about data) that it collected. Will it also notify all those people it collected data from that it did just that - collected data of a private nature.

These are questions that will fuel the fire of Google's practices. For some time - Google's practices have worried me. I don’t want to slam them for everything that they do but I think we should all be on the look out to ensure that this sort of thing does not occur again. Google as the world's largest data touch point service has more information on each of us that it can correlate together, than anyone else. What it knows about us is pretty scary. Combining that with travel pattern information would give it power that no other supplier in the travel vertical has ever had. The potential for misuse of data - actively or accidentally just boggles the mind.