Has Diller lost his touch?

Did Barry Diller and his team miss out on one of the best opportunities to address their issues in a BIG way?

Either someone is asleep at the switch or my judgement is failing me (both are possible!)

So why do I think that Diller should have made the run at Sabre?

Lets agree on the fact that it would make the absolute powerhouse worldwide. Creating a gameover effect across the board. It would probably pass regulatory inspection in the US but would have a hard time in EU. The cost of the 10% buyback is about $6.5 billion+ Sabre will go for less than $5 Billion. The resulting company would not create too big a problem for the technology and reduce the COGS in several areas. It would improve the faltering supply chain relationships and perhaps even make a kinder gentler face. In the newly married Michelle Peluso http://svc.travelocity.com/about/press/0,,TRAVELOCITY%7CBIO_CEO,00.html
it would have a first rate marketing exec. Even Sam could become useful. So a stronger footprint in OTA and a strong supply chain in Sabre plus good footprints in the Hotel and Air channels. This makes a lot of sence. But then nothing is ever this easy.

I suspect it is just bad timing. If this opportunity had presented itself 2 years ago - I am sure that EXP would have jumped at the chance. But now Diller, Dara and Co are running scared. Sure stockholders will get a boost but frankly - the bigger bet would have been to grab significant revenue growth and power across the globe. Can Expedia do it cheaper on their own? Probably but i still think it would have been a better use of the cash pile than resorting to a stock buy back.

Two Thumbs down

Cheers

Timothy

Could Google be the Airlines' newest best friend?

Google quietly slips in checkout for free in 2007.

· We just found out that Google Checkout is free through 2007 compared to the original campaign of through 2006, https://checkout.google.com/seller/freetransactions.html. This is a big deal in our opinion. Google is spending aggressively on gaining traction with its Checkout product and we think the offering has the possibility of disrupting eBay's off-platform PayPal business as well as the general ecommerce market. Google is now effectively paying all credit card fees for partners for a full year. We think Checkout is becoming Google's Internet Explorer, if you will, and we think it is time to start paying close attention. · A knee-jerk reaction would be to trade Google lower because this IE-like initiative will cost them in processing fees and in terms of consumer incentives, $10 off $30, etc. All else being equal, we would be aggressive buyers of Google into any ST weakness around what is going on at Checkout. We think, if it works, it is potentially very disruptive to competition and materially beneficial to Google's core Adwords business.

What does this mean for airlines?

This is ABSOLUTLEY something that we should all pay attention to. For airlines this would represent the biggest cost reduction in their current hit list of controllable distribution cost targets. This is a BIG DEAL. I can only imagine that at least ONE airline will sign up for this early and get the benefit of the deal extended beyond 2007 and beyond. The airline have to do something to show they are attacking their costs. Doing this deal could cut 2-3 % off the cost of processing. IF the airlines are smart. Are they?

Only time will tell

BA outsources baggage handling at LHR

Well there are good times and there are bad times for doing this. However in your own home market just to make a point with the unions - some times this is just plain INSANE.

So here is the rule. If you check in 2 hours earlier than your flight time - then you cannot check your bag.

This is one of those REALLY stupid rules that can be misinterpreted. Fortunately being a Gold Card holder on BA - i was able to "persuade" the nice check in lady to allow my bag to go through. Needless to say I was not terribly impressed.

On the positive side at least this trip to DMO did not actually have contamination.

Expedia's buyback

Good or bad?

Well its good for the stock and good for the stock sellers. HOWEVER Expedia has been delivering a steady stream of mediocre news for over 2 years now. So is everything OK in the Kingdom of Barry?

Dara and Co clearly have a lot to answer for after presiding over a lacklustre 2 years. The business has made a number of missteps. Specifically in the USA it has failed to keep up with the changing nature of a supply constrained marketplace. In International, failure to to tap into the LCC marketplace has stymied its attempts at a dominant position in Europe. Finally the technology platform roll out has been - frankly - bungled.

This has allowed traditional players in Europe like TUI and Thomas Cook enough breathing space to regroup and represent a credible set of alternatives. The powering ahead of Priceline and (again) First Choice has shown that others can be more nimble and execute better than EXP. Finally no real growth initiatives in a business that demands it have been shown during this time.

Therefore in my humble opinion - Stock Buybacks are always a symptom of deep rooted trouble. Expedia is buying time and using some of the cash pile - unwisely in my opinion. It shows that they have run out of reasonable ways to use the cash for the benefit of the business itself. Once the buy back is completed - then what will Expedia do? It had better be good.

Go for it O'Leary! Let Ryanair buy Aer Lingus

I am not a huge fan of Michael O'Leary personally. I don’t know the chap and cannot pretend to understand the way a mild mannered accountant turned into the PR monster that he seems to have become. But the haughty voices should pipe down.

I do think the Irish Government and the Labor unions should just put up or shut up about letting Ryanair takeover the Irish national airline. It is high time the airlines and government interests were severed. But the government of the Republic of Ireland cannot have its cake and eat it too. Let the market decide. So if the unions and the government want a cozy deal then write the law accordingly and take the wrath of Brussels and the Iron Lady Neelie Kroes. Since that is not going to happen either Dermot Manion better find a white knight and soon or embrace the best chance Ireland has of having a seat at the big boys table.

I firmly believed that Ryanair would be the last airline to adopt the HVC - Hybrid Value Carrier model. The outstanding job of making an airline consistently profitable via the LCC model has been pursued with relentless passion by O'Leary and Co. But the opportunity in front of them with the potential acquisition of EI makes perfect sense. If this is truly going to be Michael's swansong before he kicks himself upstairs then more power to him. I believe it will be great for the industry and great for the traveling public. Well OK so the customer service will suck but what do you expect for 99 cents.

Let's stop the whining and see real change and value come to the market.

Cheers

Timothy

The great unwashed - the coming luddite rebellion

Travel 2.0 is here screams PhocusWright. Who what where??? In fact it isn’t here and nowhere near here.

What we have is in truth a fragmentation of the market that continues to fragment rather than improving the lot of the consumer. Travel 1.0 did a great job in automating the simple stuff - point to point even "dynamic packaging" which is in reality dynamic pricing is also pretty stable and usable. However step outside of the realm of anything normal and you end up in what used to be known politely as Hushunga. Travel 1.1 and 1.2 are not much better than Travel 1.0

From the perspective of the user - the service to know if I can get the lower fare with full information - it really doesn’t exist. Consider the following scenario.

I can see on Orbitz whether or not a flight has a seat map that I can use. IE SEATS AVAILABLE. However if I use the seat map on Orbitz I get crap results even if I am a 1K or Premier Exec member. On United.com I cannot see what the good seats are until AFTER I after I have purchased. So it results in a phone call to Res. Oh yes and where is that famous new whopi dido IBE they signed up for in 2004 from Datalex?

I fly a lot of international flights. Well guess what - that is a diabolical experience. I am really unsure which is worse - the call wait, the awful announcements and stupid Audiotex navigation or the complicated UI/UE. Really they all suck. Yet this is the primary interface for selling your product to the consumer. HEY AIRLINE ARE YOU PAYING ATTENTION???

The Luddites are not happy. Consider the large and oft ignored high end and just plain unsure users. As you see adoption of online tapering off - we are now in saturation mode. IE the players are playing steal from each other or share shift rather than channel shift.

Yes friends AIRLINE AND TRAVEL WEBSITES all suck. Well most of them anyway.

So let’s hope that the powers that be are now going to pay attention and fix it. Make no mistake it’s going to be very hard. I don’t think we are going to see the solutions coming online for quite some time. At least another 3 years. In the mean time go with simple (if you want my advice). Think Southwest and Alaska. For multi-site shopping I love www.skyscanner.net. But they are all pretty bad or more likely incomplete.

Can we do better... yes. Lets at least try

Thanks

Timothy

That giant sucking sound is Google

OK so we cannot possibly let the new atronomical number from Google pass without a comment. It is now clear that the number is fueled in significant part by the Travel Industry. So all that keyword bidding for Hawaii (especially Europe and Asia as they come on line) ... yes thanks to all of the meta search engines... yes its all that cash being sucked up by the Google Vacuum cleaner.

I remember a time when we used to laugh that there was never going to be a problem with the internet as the real estate was limitless. Wrong picture. The directory proved to be the choke point.

Not that I begrudge them the business model. Far from it. Google has proved itself a worthy successor to the Microsoft mantle. The gotta have it and cant live without it stuff of the 80s and 90s is now Google space.

But it is now time to develop an alternative. As we reach maturity in the market for online travel - where the channel is no longer the relevant issue - it takes smarts to find better ways to mine and nurture customers.

So for disruption we can only look in 2 places - innovation and the government. Will the Government launch a probe into monopoly practices at Google. It you think that there was a case for the Microsoft and AT&T probes then surely there is one for Google. But - well the Bush Administration is a little preoccupied with another matter so they wont do it. On the other hand Mr Spitzer in NYC might be very tempted to take a look. Especially given his aspirations for 2008.

In the mean time lets just keep shovelling the cash into the Google machine. Sergey and his partner can then fix the old Qantas 767 up nicely and maybe even invest in Space Wire. Or perhaps do some good with the cash.

Cheers

Timothy

SPLIT SPLIT SPLIT

It was the late 90s and the seats were filling up. Every bus company from Everett to Tacoma had loaned buses to the Richest Company on the planet. Yes it was time for the annual Microsoft Company meeting. The Kingdome was resonating with the sound of a chant and the accompanying stomping of feet, a cacophony of noise that rose from stands and up to the roof… SPLIT SPLIT SPLIT…
For the faithful it was about splitting the stock so it could continue its almost inexorable climb to those same rafters.

Well now those same faithful need to start the same chant, but this time with a different slant. SPLIT SPLIT SPLIT.

I am advocating one or even two totally different meanings – but both with the same end result - rebuilding stockholders equity.

Microsoft has become too big, too fat and just like its software very bloated. For any of you brave enough to evaluate Office 2007 you will understand. I don’t advocate that the Justice department should step in and demand that the company be split up for anti trust, no I believe that the largest block of shareholders – current and former employees – should demand that their stock be given its head and allowed to move upwards again. With Bill retiring now is time for his biggest baby to be free.

The way to do that is not by giving away the cash. No rather let’s see the company reinvest that cash in competition and innovation – Just like Bill and Steve say they are.

So here is my proposition:

Microsoft will be split into 5 separate businesses.

Enterprise software
Operating Systems and Tools
Office Software
Consumer Products
Online Services

Each of these would be given its own mandate to go and conquer. These would be truly Baby Bills. Each of these businesses would be able to generate in excess of $1Bn worth of revenue a year. Better yet they could start competing with each other. The benefits would be enormous. Re-galvanizing the markets – forcing the spotlight onto Larry Elison and his empire. Retaining talent. Giving smaller companies a chance to innovate and compete.

Finally Bill – time to step down. SPLIT SPLIT SPLIT and focus on the challenge of changing the face of philanthropy. No one cares really any more if you are a better architect or chairman. But they and millions of people round the world do care that the Bill and Melinda Gates foundation does stand for something truly unique. Change the way the world works. You have started there.

It is time for a change. Let’s see what that next generation of smart folk can do. In just the same way as Microsoft came into being – so it should exit. Fast and with dramatic effect. The new resulting Microsofts I firmly believe will change the way we do business. Peter Drucker once commented that Automation was probably the biggest loss making business in the commercial history of the world. But the change it has wrought on our lives and social fabric can not be calculated. Time for a change. Change is good. SPLIT SPLIT SPLIT…


Timothy J O'Neil-DunneManaging Partner - T2Impact Ltd

Does every bad penny come back up again?

In the category of what goes down must come up - check out www.cfares.com . Yes Vijid is at it again. Not content to blow some investors money - (Think excambria) he is back again trying to sell software to the gullible Travel Industry.

Far be it for me to say whether he is good or bad and we don’t impugn or condone that behavior - but from the positions I have sat and watched his behavior before - this is another potential train wreck. Do I have a grudge against Mr Jafri - actually I do. I watched him tie up a project I worked on in knots with a frivolous lawsuit (subsequently dismissed) that caused the principals in my project lose interest and cost them time and money focusing on his time wasting effort to derail our project in favor of his own.

Great anecdotal stories on his relationship with certain company based in Texas. But if I look at this I have to say that the model is flawed and unfortunately it goes straight into the bin. So whether the technology works or not is immaterial. Getting people to pony up subscriptions on the come for an untried and unproven product (by that I mean in the market place making consistent revenues for years at a time) I thought was, well, 90s. But if you can believe him that 1500 gullible souls have allegedly paid up subscriptions and Garage Ventures some extra cash - well I am sure this wont last long. But I have been proven wrong before (OK So Rakesh is still at Worldspan and I have eaten a hat but September isn’t over yet!). My proven point? This industry has the greatest percentage of unsmart people. I just hope that we can continue to be at least the one eyed man in this land of the seemingly blind.

Cheers
T

Business Fares - Fooee Don't Pay Retail

So who pays retail in business fares... well to some extent we all do. In a headline entitled: BUSINESS FARE SURVEY RESULTS MISLEADING Kevin Mitchell and the BTC challenged the Amex Annual fare study as being unrepresentative of the state of the market. Well if we are all paying retail then we are all 100% mad. But that is not the case (unless you are trying to get a room in New York this fall!!!) http://www.businesstravelcoalition.com/statements/5_yrs_later.doc

Kevin's point is valid - people don’t pay full retail. Amex's point is that fares are going up. They are both right. The real issue underneath all of this is one of my favorite topics - the creation and display of a true market fare. There is no decent benchmark for this in "official" terms but if you want to go and see it - go to the Orbitz Matrix and its right in front of you.

You would think that someone had figured this one out by now. But the game we all play - as consumers - is to find a best fare option. No one fare is the true lowest fare. The intersection of your need to go (desire) the fares available (shopping) the flexibility and the other people who want to go... coupled with the watching of the fares by the competitors and the desire for the airlines (and American Express) to sell the most at the overall highest price will always be sport. Herein lies another interesting debate. Does the simple solution of Southwest or the highly complex displays of Air Canada make it easier or harder on the consumer? Frankly if you try to confuse me - I will run away. (aka click away). So give me a straight story that is believable and I am much happier –I will trust you and buy from you. Somehow I don’t think I am that different from the vast majority of the buying public.

Oh yes and despite "being in the biz" I still have to buy a ticket about 90% of the time. And yes its hard and yes it is an unnecessarily complex transaction. But do we have a choice at present? No. Should we.... YES!

Long term if its too hard the consumer will go elsewhere. If you make it too hard and put too many barriers to purchase he will buy elsewhere OR a different product. Your $300 fare on the weekend can just as easily go to buying a lawnmower or a nice suit. Put that in your Revenue Management System!

Cheers
Timothy

The Economist does it again

Fly True

Purple Crocodiles and Air Travel

In the Netherlands there is a new term that has passed into the vernacular.
It's called the "Purple Crocodile" after a well publicized event when an
officious public service employee refused to hand back a child's stuffed
animal because of "policy". Now both Dutch politicians and judges are
adopting different methods to eliminate "Purple Crocodiles" from the legal
and administrative system. IE an aggressive push to eradicate nonsensical
rules from the everyday life of its citizens.

(OK so you don't think we are telling the truth! Click here )

I am sure that in our industry we can think of many of them. WOW where do we start in Airline pricing?

Timothy

Boeing is not Ford - some musings

So Alan Mulally has decided to jump ship to take on one of the biggest and
sickest companies in the world. I am sure he is going to get a bucket (make
that a backhoe's worth) of cash.

So interesting to speculate on why he made the jump and why now. Given the
stellar amount of sales by Boeing's salespersons over the last 3 years
particularly the 787 - it seems unlikely that the same achievement can be
replicated beyond what is on the books now - so quit at the top of your
game. Or could it be something more sinister - like an impending delay for
the 787's very aggressive delivery schedule. Some could be very cynical and
argue that perhaps Boeing's salespersons fudged delivery dates in order to
keep out the competing Airbus A350.

With Boeing's production lines now based on a moving line system and being
managed by former Toyota folks - it seems that turnabout is fair play that
they should get an aircraft salesman to run what was once the world's
largest car Marque.

While the US car industry and Ford's troubles are well documented and so
obvious a monkey could fix them, I am going to be very skeptical that an
Airplane driver sales guy can fix them. I just hope that Alan M has the
smarts to hire in some good people and then work at slashing the bloated
payroll that dogs Ford and others of its ilk. I hope he realizes that the
much vaunted second turnaround at Chrysler has never really happened.
Mercedes while trying to follow the US model of buying as many Marques as
they could realized that actually buying a dog leaves you with - well a dog.
Nevertheless they decided to see if they could build their own dog with
someone else's brand - SMART move guys.

So do we have a lesson here that applies to Travel? Yes. several:

1. Size isn't everything (so don't believe the UK Renault ads!)
2. It is very easy to screw up a brand and you can do it very quickly too.
3. Listen to your customers. And KEEP listening - day in and day out
4. Watch your overhead
5. Compromise costs money
6. As Mims says - staying in your comfort zone never begets winners

However I still think that the lesson I want to take away from watching the
shenanigans in the Auto Industry is that TIME COSTS MONEY. In a closed
market you can delay - particularly when your competitor is already on the
ropes. The car industry is way more competitive. Remember that the consumer
always has one other choice. He can choose NOT to buy that shiny new car.
For us who are providing services to our industry of choice - we have to
remember that and be humble. The decision can always be to wait or not to do
it at all. Let's make sure that we do the right things right, all the time.

Oh yes and my prediction - if Alan M is still at the helm of Ford in 3 years
I will make a donation to charity in his name.

Timothy

In case anyone missed it

Assessing VCs continued interest in niche online travel segment

Venture capitalists have sustained their interest and investment in niche
offerings... - (8/28/2006)

Venture capitalists have sustained their interest and investment in niche
offerings, focusing on segments such as luxury vacations and short-term
rental homes.

According to wsj.com, while websites such as Expedia and Travelocity Inc.
are pulling in the bulk of online travel sales, "venture capitalists are
placing their newest bets on niche markets such as luxury vacations and
short-term rental homes".

"A boatload of venture capital has sailed into the online travel market
recently, with start-ups including LeisureLink Inc., Viator Inc., Luxury
Link LLC and Gusto LLC raising more than $40 million this summer alone," the
report says.

Among the ventures highlighted, LeisureLink is an electronic marketplace for
booking vacation rental properties. "We source inventory from both the
vacation rental and timeshare industry, giving the broadest possible
selection of premium inventory for our customers," states Kelly Tompkins,
president and founder, LeisureLink Inc. on the homepage of the site,
leisurelink.com.

It connects owners of substantial inventories of vacation rental properties
with broad distribution networks, including traditional GDS and online
travel agencies. In May this year, LeisureLinkannounced the closing of its
five million dollar "Series B" round of venture capital from Mission
Ventures and Clearstone Venture Partners.

In June this year, Viator (www.viator.com), the world's largest online
resource for tours and activities, raised an additional $4 million through
its current investors, Carlyle Venture Partners, the US venture and growth
capital arm of Washington D.C.-based The Carlyle Group, and Sydney-based
Technology Venture Partners. This financing follows the $6 million raised
from the same investors in November 2005.

Allan Thygesen, managing director of Carlyle Venture Partners and a member
of the Viator board had then commented, "The online travel sector is poised
for continued growth, specifically in two key areas that bode well for
Viator -- global markets yet to capitalise on the retail power of the
internet for purchasing travel, and the advance-purchase activities arena.
With more than 3,500 affiliates around the world and the ability to complete
transactions in multiple currencies, Viator is seizing a largely untapped
market opportunity as the preferred global resource for consumers to
research and book trip activities before they travel."

Unlike many destination sites that aggregate content from various sources,
Viator is not a paid listing or advertising site. Viator's activities are
provided by reputable local operators, hand-selected by the company's
in-house travel experts, who routinely review and validate these activities
for quality of experience, overall value and superior service.

Among others, founded in 1997, Luxury Link is an online luxury travel
resource. Showcasing more than 1000 extraordinary hotels and resorts,
cruises, tours and villas in more than 60 countries, Luxury Link provides
access to exclusive offers and insider tips for the sophisticated traveler.

Timothy O'Neil-Dunne

On the Demise of Connexion by Boeing

This is going to be really sad. Connexion had its plug pulled yesterday. Frankly this is to be expected that the model left a lot to be desired. What ultimately killed it?

Well here is my take on the reasons for its failure…

1. Not enough users. Too rosy a picture of users flocking to the service. In all I can say that I only had conversations with a total of 10 people in flight in use. Given who we all know and their personal travel patterns that is a very low number. 2. Differentiated content was lacking. The video was really lame.
3. Lack of commitment by Boeing. Boeing should not have been in the comms business. So this is their bloody nose for trying.
4. Lack of support by the airline I. We all know that net access is a drug. So give us the drug for free so we get addicted then smack us hard for fees afterwards.
5. Lack of support by the airlines II. None of the US airlines supported it so it really withered on the vine.
6.Skype. Surprisingly good service on Skype meant that if you were going to use the VoiP why would you pay for it? Voice was part of the business model
7. Pipes are cheap so why the cost?

Implications?

Those of you (me included) who dread cell phone conversations on board planes can probably rest easier. The airlines are going to take a fresh look at the technology and see if it warrants the demand. We all know that the reception will be crap anyway. If they couldn’t make Telephones on planes work why will cell phones.

Broadband vendors might rethink their ability to hook into airline systems. Email may be good enough.

Personally I am very disappointed that the service will be discontinued. I really enjoyed it – better than much of the lame content on board a plane anyway. For really long haul flights (think 777-LR and A340-500) it should be offered as a service anyway to prevent us from going mad.

Besides – down time is good
Timothy

The New Big Brother

I am not a fan of really big companies. But we have to accept that we live in a world where Amadeus is the big fish. Just because it is not a big fish in the US market should not blind us to how important they are in the rest of the
Cheers
Timothy

Strong performance for Amadeus in Asia Pacific

Amadeus financial results for six months ending on 30 June 2006 showed strong performance for the company. Total bookings grew by 5.5% to 263.9m. Online bookings, from all providers, grew by 22.7% and now represent 13.9% of the total. Amadeus retains its leadership position in travel agency air reservations with 30.5% of the worldwide market share, up 1.3 percentage points year-on-year. Total revenues grew by 12.7% to EUR 1,381.6m.

Asia Pacific continues to demonstrate strong growth in travel agency bookings, online and e-ticketing. Travel agency bookings in the region grew by eight percent to over 25 million. Asia Pacific also saw a significant uptake in e-ticketing with nearly four million e-tickets issued in the first six months of 2006, up nearly 30%. Online bookings processed by Amadeus in the region grew by 56% to nearly 700,000.

Jose Antonio Tazon, President and CEO, Amadeus, comments: “Amadeus’ strong financial performance is testament to our investment in technology for the travel industry. We are proud to manage one of the largest and most advanced civil data centres in the world, which we believe is a key differentiator in our evolving industry and we will continue to invest €300 million each year in our technological infrastructure and development.”

“We continue to drive the transition of our GDS system architecture to open systems based on Unix and Linux, which will deliver two fundamental benefits to our customers. It will keep costs under control as transaction volumes increase exponentially: each day, our datacentre already processes 310 million customer queries. Second, open technology is already allowing us to bring new services and solutions to the market more quickly. As the outsourcing partner for some of the biggest names in travel our time-to-market is their time-to-market.”

Business Highlights

To date, Amadeus has secured content agreements with over 100 airlines across the globe for travel agents and corporations. The most recent ones include US Airways, Copa Airlines, KLM, Maxjet, Paramount Airways and Vueling. Currently 59 airlines in the European market have signed up to the Amadeus Full Content Option, which assures travel agencies that schedules, fares, last seat availability and associated inventory available through Amadeus will be the same as content offered in the following channels:

· Any internet website, including the airline’s own website

· The airline’s own reservation system

· Any other GDS

In July, Amadeus announced a global technology agreement with Eurostar, high-speed passenger train service linking the UK with the Continent. For the first time, users can compare and book real-time Eurostar for routes on the same display as the airlines. In addition, Deutsche Bahn`s fares and availability will also be available on the airline display thanks to a global agreement with Amadeus and AccesRail, allowing agents to choose between rail and short-haul air.

Hotel content

So far this year, Amadeus has added 4,000 new hotels to its system, taking the total number of hotels bookable in Amadeus to over 61,000. The company continued its campaign to guarantee rate parity with other distribution channels by signing 37 leading hotel brands to Amadeus’ Best Available Rate programme.

Leisure travel

In March 2006, Amadeus partnered ACE Hong Kong to offer online travel insurance products through travel agencies in Hong Kong. The collaboration will make the leading insurance provider, the first in Hong Kong to offer travel insurance products through Amadeus.

The Amadeus Leisure platform was launched in France as a tour package solution for travel agents. Selectour is the launch partner, the largest French independent travel agency network covering over 550 travel agencies employing 1,600 travel agents, with over 1,800 points-of-sale in France. In the near future, Amadeus will make its Leisure Platform available to the entire French leisure agency network.

Amadeus added two new cruise lines in the first half of this year – Oceania and MSC Cruises – taking its cruise offering to over 18 cruises lines, the highest of all GDSs. eCruise solution was launched in the US, with plans to expand to other global markets soon. Amadeus continued the rapid uptake of its cruise solution with bookings growth of 200% compared with the same period in 2005.

Travel agencies

At the beginning of the year, Amadeus announced the launch of Amadeus Call Centre Solution to help travel management companies, travel agencies and airlines manage business and leisure call centres more efficiently, cutting call-centre costs by up to 30%.

During the first six months of the year, Amadeus announced the signature of two new global technology partnerships with ITP and Uniglobe. Amadeus will provide common technology platforms for both organisations. Using a common IT platform allows an organisation to deliver a global standard of service more reliably and efficiently, which is becoming more and more important to corporations looking for a travel management partner. Amadeus also extended its partnership with Thomas Cook for another four years, with a global deal to add Egypt, Germany, France, Belgium, Austria, Hungary, Poland, UK, India and Sri Lanka to the list of markets where the companies work together.

Advanced low-fare search technology and full content agreements with leading airlines continue to make Amadeus a partner of choice for online travel agencies in Europe. In May, the company began a long-term agreement to provide Expedia with the distribution technology and travel content it needs to offer more flights, better prices and more destinations. And after one year of successful partnership the company announced plans to continue to support Terminal A on their international expansion plans through Amadeus’ technology platform. Amadeus has similar agreements with the top four online travel agencies in Spain and nearly all of Europe’s leading online travel agencies.

Airlines

Amadeus Altea Customer Management Solution: South African Airways and Pulkovo cut over to the Altea Customer Management Solution (CMS) during the first half of the year, transferring their sales and reservation, inventory management and departure control facilities to Amadeus.

EgyptAir and Etihad Airways became the 27th and 28th airlines to select Amadeus Altea CMS to improve customer service and gain agility to quickly adapt to changing market forces.

Electronic Ticketing: British Airways implemented electronic ticket interline links through Amadeus e-Ticket Server (ETS) with 40 airlines, including all of its oneworld partners and most recently, Austrian Airlines, bmi, Kenya Airways, LOT Polish Airlines, Sri Lankan and Singapore Airlines. Over the next two years, Amadeus will help British Airways to implement e-ticket interlining with an additional 80 new interline partners. Amadeus e-Ticket Server, a hosted solution built on flexible open technology, allows airlines to outsource their full distribution and interlining e-ticketing operations.

Other technology for airlines: British Airways migrated to Amadeus Codeshare, which allows airlines to fully host all codeshare messaging needs in the Amadeus system without maintaining a separate and additional system to communicate between different airlines` inventory systems. British Airways can now support ten partner airlines including Aer Lingus, American Airlines, Cathay Pacific, Finnair, Iberia, Japan Airlines, KLM Royal Dutch Airlines, LAN Airlines, SN Brussels and Qantas.

Travel Intelligence: 31 airlines around the globe are currently using Amadeus Revenue Integrity to improve yield, forecasting and load factors. This solution helps an airline ensure it is filling planes with paying customers instead of empty seats. Airlines using Amadeus Revenue Integrity have reduced of no-shows from 13% to 4% within days of starting to use the solution.

Distribution: Airlines around the world continue to place their trust in Amadeus for the provision of electronic ticketing solutions. Currently 138 airlines and 134 markets can issue e-tickets through Amadeus.

Online solutions: Kenya Airways implemented Amadeus e-Retail Solution, the best-in-class online booking engine for airlines, and one of the main components of the Amadeus e-Travel Airline Suite. This has been instrumental in supporting the airline’s strategy to increase their profitability levels and customer loyalty.

Airline bookings made through the Amadeus e-Travel Airline Suite increased by 28% during the first half of 2006, compared with the same period of 2005. 70 airlines currently use the Amadeus e-Travel Airline Suite, including Qantas, Air France, and Iberia.

Low cost carrier solutions: Amadeus announced a pilot scheme with a new solution to revolutionise the low cost airline market by providing comprehensive, up-to-the-minute fare and flight information access for the first time to travel agents and corporate customers. The solution, called Ticketless Access, is being piloted by Sterling, a leading Scandinavian low-cost carrier.

Xtra Airways successfully implemented Results Customer Management Solution by Amadeus, the hosting, reservation, fares and pricing, inventory and departure control solution designed specifically for the ready-to-market needs of low-cost carriers.

Partnerships: Amadeus partnered with DOB Systems, a leading provider of market intelligence solutions to the airline industry, to deliver a fully portfolio of data analysis solutions for airlines.

Amadeus also partnered with Constraint Technologies (CTI), a leading provider of optimisation technology to the airline industry, to bring airlines a fully integrated solution comprising CTI`s powerful crew and flight operations optimisation solutions and Amadeus` new generation customer management solutions offering.

Corporations

Amadeus processed 98% more passenger name reckons through resellers in the first half of 2006 than in the same period last year. This is testament to its strategic relationships with global travel management companies. Carlson Wagonlit has expanded its global agreement to resell Amadeus e-Travel Management and BCD Travel signed a similar reseller agreement for the US. Amadeus has also signed an agreement to provide the corporate customers of etc group, a full-service meeting and travel management company, with an exclusive new online travel booking solution built on Amadeus e-Travel Management technology.

The flagship corporate self-booking tool, Amadeus e-Travel Management was upgraded twice in the first six months of the year; the solution now provides wider choice, more flexibility, increased cost savings and improved presentation of onscreen data for a smoother, more-informed and faster booking process.

Amadeus announced the development of direct connects between e-Travel Management and Avis and Europcar, combining the best of the direct connect model with the back-up of the travel management company. Amadeus also added the Madrid-Barcelona Puente Aereo air shuttle, SAS Travelpass cards, and Finnair multifly.ecards, for all ticketless travel on Finnair e-ticket routes in Europe.

Amadeus’ corporate travel management division gained the Cybertrust Security Management Programme (SMP) Certification.

Opodo

Opodo began the year by launching its own branded website in Italy, www.opodo.it, bringing the number of European markets in which it now operates in to nine. The site continues to go from strength to strength and has recently been voted the best online travel site in Italy by Computer Bild Magazine. The Nordic market has experienced exceptionally strong growth, with sales up 60% year to date on the previous year.

Enhancements continue to be made to the hotel service with sales up 50% year on year. A new insurance deal was entered into with AIG and in air sales Opodo has maintained its number two position across Europe. In May the company launched its own bespoke Dynamic Packaging Solution across its UK, French, German and Italian sites.

Karavel, the French tour operating business, has expanded to include regional departures and new destinations with sales up 30% year-on-year while Vivacances has increased sales by 80% year-to-date compared with the same period last year.

Reader response to an article in Eyefortravel.com

Timothy J O'Neil-Dunne
Managing Partner
T2Impact Ltd, Global Travel eBusiness

I have to take issue with David Burns on the basis of his supposition. Far from the case where the suppliers margins are tightening – they are indeed expanding. For proof you need look no further than the FT or the Wall Street Journal.

Airline profit margins are running at close to some of their highest in years, at least they are the best since 2000. Yields are up across the board in Hospitality and Airlines. Almost everywhere you look there is a another report of health in the finances of the major players. This significant reversal in fortune is driven not by the cost of fuel but by the shortage of supply. Fundamental economic forces that have reduced the availability of supply in the for example US market (New Orleans) coupled with a strong increase in demand for travel products leading to raising of margins. Ignoring the likes of Ryanair and other smarter (financially speaking) suppliers, British Airways and even United Airlines are reporting “very nice thank you” profits.

Where I will agree (but for different reasons) is the need to control costs and reduce or cap fees by the industry. If (which is in our opinion only temporary) the TMCs are enjoying higher margins it will be short lived.

At T2Impact we see that there is a shift away from the traditional intermediary market towards a more balanced mix of supplier direct with Intermediary channels both online and offline, this is clear. The impact, our analysis has shown, results in an effective cap on the fees that can be charged by an intermediary (on or offline, Touchless or Full Service) to either a leisure or corporate based consumer. However a new conflict is emerging; the Suppliers globally are on a mission to move the cost of the distribution system to the intermediaries and users. So far they seem to be quite successful. The big squeeze for any intermediary will be how to accommodate this shift. That my friends will not be accomplished by marginally tweaking the current model. Radical change is in order.

Spot the similarity...

Continental Airlines and Expedia Sign New Five-Year Partnership Agreement
HOUSTON and BELLEVUE, Wash., May 15 /-- Continental Airlines (NYSE:CAL) ,
the world's sixth-largest airline and Expedia, Inc. (NASDAQ:EXPE) , the
world's largest online travel company, today announced a new five-year
strategic partnership under which Continental's full range of products and
services, including all fares and inventory, will be marketed through
Expedia.com(R) and its affiliate sites, available to travelers anytime,
anywhere.

Sabre Holdings and Continental Airlines Sign New Five-Year, Full Content Agreements
SOUTHLAKE, Texas and HOUSTON, May 15 /- Sabre Holdings (NYSE:TSG) and
Continental Airlines (NYSE:CAL) today announced that Continental has signed
new five-year, full content agreements with Sabre Travel Network and
Travelocity.

If it looks like a duck and walks like a duck then perhaps it is a duck.

Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd