03 December 2011

AA Lays Out Business As Usual... For Now

As expected American Airlines has petitioned the court in its Chapter 11 pleadings to pay its obligations to the distribution channels.

For now that means its business as usual.

AA is quite far along in building an independent distribution infrastructure that supports direct and indirect distribution services. Rather than relying on a single channel for its revenue management - it is already one of the most diversified of the major network carriers.

It is unlikely that AA is going to change that strategy mid stream. Even with Tom Horton at the controls - the company would be ill advised to place most of its eggs back into the GDS only basket.

The company has invested much time and effort in building a multi-functional and advanced capability network of services. While it still depends 65% (from court filings) on the agency marketplace, the company has built a number of new bridges into the channel.

Many have mistakenly assumed that its drive to Direct Connect was to eliminate the Agency from the mix. Nothing could be farther from the truth. AA has embraced the agency community and is not going to walk away or do anything that will undermine that relationship. However it does not mean that the distribution channel systems can ride on the back of this relationship. AA has made it clear it believes that it needs to control the product offerings and the holistic nature of its pricing.

Many legacy airlines have yet to focus on the issue of consolidated pricing of the air fare products. AA has grasped that nettle and is moving to ensure that it will  deploy the necessary technology to deliver that end. Its new Jetstream reservation system being developed on the HP Agilaire platform will incorporate several ITA Software innovations. Check out the case story of the Boombox implementation.

Anyone who thinks that AA is going to back off from its ultimate goal of controlling its distribution has not understood the animal. In my view the company will emerge stronger and more competitive from Chapter 11. And whatever it takes to ensure that it can deliver its products in a cost efficient manner - it is going to pursue.

After the make nice period is over, we are going to see AA implementing the necessary processes and structures to ensure that it remains competitive. If not why go through this Chapter 11 process.


02 December 2011

The Good Lord Giveth, And He Taketh Away. Travelport Introduces Fees For Agency Subscribers to Green Screens

With declining revenues from airlines and a falling marketshare the legacy GDS model has been under threat from a number of sources of late.

In many markets around the world the agency community has benefited from increased user incentive fees driven higher by competition and by legacy GDSs who fear their model is under fundamental attack.

While some of the GDSs make reasonable amounts of money from the subscribers - in general the model has been to pass on significant cash from the airline segment fees to the agents in the form of these incentives. But this effort has angered the airlines who resent seeing a large part of their distribution fees used in this fashion.

Each of the 3 legacy GDS companies derives its revenue in increasingly different ways. Amadeus for example has offloaded its Hospitality and OTA businesses. Of the 4 lines of traditional revenue only Sabre now plays fully in each:

Airline IT

Travelport divested itself of its GTA Hospitality business to Kuoni early this year leaving it with essentially only the distribution revenue stream.

Travelport now has the lowest yields of all the three companies and has struggled with a very high debt load. It also pays out the highest rates of agency incentives.

For some time Travelport has been hinting that it will be relying increasingly on technology as opposed to paying additional incentives. Read Gordon Wilson's interview here.

At the same time with two failed IPO attempts behind it - there has been a continued rumour that the company is gearing up again for another run at the public markets. Some have said as early as 18 months time if not sooner.

Now Travelport has introduced a new fee structure that includes charging the agents for the use of green screens. (Actually in the case of Travelport these are mostly blue!).

With such a large number of screens still in existance (even with the move to more API/XML based links), the company is clearly hoping to make up for the shortfall in revenues that it has suffered in recent months by slapping a tax on the long suffering agents.

The revenue shortfall that has to be made up comes from another part of the business. My analysis shows that this is to make up for the loss of their few remaining airline IT revenue streams. United Airlines will terminate its hosting agreement at the end of March 2012 and Delta is moving its online fares and pricing to another provider. (Being the only major North American carrier who is not using Google/ITA for online search/shopping, that choice would be rather obvious).

However there is considerable risk in this strategy. Taxing the screen using agents with an annual fee of $300/screen might not seem to be that much. Should agents choose to use this manoeuvre to exit the business (as many are already doing), reduce the number of screens or move to another GDS - in my estimation a loss of between 5-10% of screens would not be unrealistic. However losing that same amount of revenue generating capacity could easily come back and bite Travelport badly. Such a loss of revenue would more than wipe out the advantages of this new agent tax. Especially when considered that the larger agents have negotiation ability and will likely not be hit as hard as the smaller agents.

Travelport may have shot itself in the foot. Taxing the smaller agents in this manner will clearly not win them any favours in the vocal agency communities. As all three Travelport brands have a higher proportion of smaller agencies in their portfolios - this will affect the smaller agents disproportionally in my view.

While there is upside for Travelport in its quest for the IPO gold ring, this is not an automatic win and comes with a very high potential cost. This could end up being a pyrrhic victory for the company.

Time will tell.


29 November 2011

Aussies Face Economic Reality: Staycation - A New Word

From our friends over at Crossman Communications there is a new survey out. They were interested to see how global and local economies are affecting the Great Aussie Summer Vacation which is about to start down under.

And its not a pretty sight. Things are not looking very positive. The mood in the country is not a happy one.

For a summary - read the PR release from the survey results. I was able to get an actual copy of the complete results and compared to other markets in the Asia Pacific region they make for sobering reading.

As a comparison - check out deal site Getflight. Their Australian site (based on Sydney) compared with their Singapore site illustrate just how far your travel dollars will take you. If this doesn't give you travel envy - I don't know what will.

There is a clear lesson here. Those selling travel products have priced themselves out of the market and the Crossman Newspoll provides a dose of reality about how competitive the pricing is in Australia vs the rest of the region.

Tiger and Qantas's woes - in fact the woes of all the airlines in Australia - illustrate the depth and breadth of the problem. With the Australian Dollar at near all time highs the ability of the local population to take advantage of the natural resource powered prosperity boom seems to be very muted. This survey should also give some credence to Alan Joyce's crusade to get lower costs for Qantas mainline brand. The costs have to come down. As the cost of the aircraft are in US dollars (IE relatively lower) - the local controllable costs are the issue for all airlines.

Check out the Aussie Dollar 5 year currency history compared to three other major currencies (Pegged to the US dollar - the Aussie Dollar vs The Euro and the British Pound.

With the Gillard government that is existing on a single vote seat majority in parliament - they should pay attention to keeping their constituents happy. Happiness is a state of mind.

And there is a lesson in this for all of us. (er hmmm US Congress are you paying attention!)


Research in WSEAS and New Plenary Speakers. WSEAS do not give any extension in the conferences. The deadlines are the deadlines on our site and do not change for any reason

Dear Colleagues,

You can upload your papers for the WSEAS/NAUN conferences
(Vouliagmeni Beach, Athens, Greece, March 7-9, 2012
(Sponsored and Supported by Universita degli Studi di Genova, Italy and Technical Univ. of Sofia, Bulgaria)) strictly until DECEMBER 7, 2011

www.wseas.org    www.naun.org  www.europment.org

So, after the great number of papers (that were uploaded for the WSEAS Conferences in  Cambridge (UK) and Harvard until November 25, 2011), you can upload new papers strictly until DECEMBER 7, 2011  for the WSEAS/NAUN Conferences in Vouliagmeni Beach, Athens, Greece,March 7-9, 2012 (Sponsored and Supported by Universita degli Studi di Genova, Italy and Technical Univ. of Sofia, Bulgaria)

Delegates attending WSEAS and NAUN 2012 will be invited to submit an extended version of their paper for publication in the following journals indexed by SCOPUS, Elsevier, IET (IEE), Engineering Village, ACM, AMS, ACS, Zentrablatt, Crossref, PubMed, British Library, Ulrich's Periodicals Directory, Chemical Abstracts Service, EEVL, TUBITAK-ULAKBIM, Thomson-Gale, Cambridge Scientific Abstracts (CSA), EBSCO Database, INTUTE, DEST, DOAJ and DBLP



Sad News: Prof. D.H . Staelin at MIT www.mit.edu that was two times Plenary Speakers in WSEAS passed away in November 10. So after Caro Lucas and Ladislav Kohout, we lose one more great personality that helped WSEAS very much with his Plenary Lectures.

We will not give any extended deadline to any of these conferences and for any reason. For every WSEAS conference we have at least 2 university teams in collaboration.

Announcement of acceptance or rejection for any paper in less than 40 days for any WSEAS Conference and in less than 60 days for any WSEAS Journal and WSEAS Book is strictly prohibited. All papers are sent to 5 independent reviewers by the WSEAS Organizers, Editors etc, but even if the comments of them are available, the WSEAS entities will not announce the result of the reviews before the aforementioned time frames. This policy also applies to any Conference where WSEAS is the main sponsor-organizer or simply a co-sponsor. The submission forms are taken down on the exact date announced in the respective conference pages, at 23:59 Greenwich time, and no extensions is given.

Abstracts, drafts and papers in non-WSEAS format are automatically rejected.

Plenary Speakers cannot upload plenary lectures after the expiration of the deadline.

Lotfi Zadeh, Dimitri Bertsekas, Sunil Das, Bimal K. Bose, Janusz Kacprzyk, Leonid Kazovsky, Rao Kamissety, Ronald Yager, Narsingh Deo, Sidney Burrus, Biswa N. Datta, Mihai Putinar, Stamatios Kartalopoulos, David Staelin, A. Bers, Athanasios Manikas, Wlodzislaw Duch, George Giannakis, Nikos Markatos, Wasfy B Mikhael, Valeri Mladenov, Panos Pardalos, George Tsamasphyros, Tadeusz Kaczorek, Leon Chua, Irwin W. Sandberg, Constantin Udriste, Andris Buikis ,Metin Demiralp , Michael N. Katehakis, Imre J. Rudas, Brian A. Barsky, Dimitris Kazakos, Alexey L Sadovski, Amedeo Andreotti, Ion Carstea, Sudip Misra, Victor-Emil Neagoe, Panos M. Pardalos, Hamid Abachi, Ryszard S. Choras, Hamido Fujita, Miroslav Begovic, Josef Boercsoek, Dumitru Cazacu, Costas G. Helmis, Zhixin Wang, Sankar K. Pal, Ulrich Albrecht, Jim Cunningham, Dorian Cojocaru, Andrzej Ordys, Fumiaki Imado, Milan Stork, Remi Leandre, Kleanthis Psarris, Kinshuk, Moustapha Diaby, Brian McCartin, Patrick Wang, Costin Cepisca, Charles Long, Gabriela Bognar, Angel Kuri-Morales, Jiancheng Guan, and many others .... See:
http://www.worldses.org/ feedback.htm and http://www.wseas.org/reports/

All submitted papers will have opportunities for consideration for the Special Issues or Regular Issues of several journals (some of them belong to ISI category). The selection will be carried out during the review process as well as at the conference presentation stage. Submitted papers must not be under consideration by any other journal or publication. The final decision will be made based on peer review reports by the guest editors and the Editor-in-Chief jointly.

Impact: See also the importance of these conferences can be proved by the impact  of these conferences in previous years: See, please http://www.wseas.org/reports

Other Important Benefits:
1) A very strong and important feature is that the NAUN and WSEAS is going to give you a new username and password WITHOUT EXPIRY DATE for on-line access in the WSEAS Conference proceedings FOR EVER.

2) Rich cultural and social part as usual. The importance of these conferences can be also proved by the impact of these conferences in all the previous years, 1996 -- 2008: See, please http://www.wseas.org/reports/

What did the Previous Plenary and Other Invited Speakers say for the NAUN and WSEAS Conferences:

" I was in the Secretariat Desk of the WSEAS Conference (December 2009, in Tenerife) and
I saw the catalogue of the conference participants. It was amazing the high rejection rate of the papers. I estimate that for every 10 papers, 4 were accepted and 6 were rejected.
That means that the WSEAS Conferences are very prestigious"

Many Thanks
Prof. Dr. Shahram Javadi
Phone Number: 00989123139881
FAX Number: 00982122228397 "


P. Athinaios

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