So here we are the last day of 2007 – and so what are our predictions for 2008.
We have already given a podcast on the subject – but here are some of the more detailed items we believe will occur in 2008.
CAUTION – we have been frequently correct in our predictions however we have frequently been premature in our predictions. So think of the timelines when considering our views.
1. Economy. The US economy will continue to suck during 2008. We have a long time to wait until the outcome of the election. Then after that it will still take some time to emerge. I don’t think its going to matter who wins with regard to the general ATT market sector. Other economies will continue to be business as usual. One possible disruption could occur in Asia driven by China’s actions.
2. Open Skies. Initial euphoria will be replaced by some of the cold hard realities that the US-LHR market is not that robust enough to support all the new service. There will be at least one carrier who downsizes their expectations on the routes into LHR from the USA. REMEMBER that the slots that are being replaced with Transatlantic also happen to be some of the most cross-feed flights. Thus the reduction of feeders into the LHR will result have a knock on result. The surplus capacity on the routes will result in some pretty good deals. Future waves of new flights across the pond will not occur until end of 2008 probably 2009 season.
3. Mergers and Consolidation. We will see a lot of merger interest particularly in the USA carriers. Depending on the make up of the USA Congress (clear mandate or not) will determine whether the 25% rule for foreign ownership of a US carrier is allowed. We believe that unless one party sweeps Both Houses and the Presidency that this rule will remain intact. We do believe Southwest will attempt to grow via an acquisition. Westjet and AirTran both look likely candidates. Should that occur we should see also an AC foray across the border. United is looking very inviting. Elsewhere – we do believe that some more European consolidation will occur but with the big event being AF/KL’s acquisition of AZ – nothing will come close unless SK and LH finally stop the dance and merge. AF/KL is going to be a very big player. More than most people understand. Air Berlin might add another player but in general we believe the LCC market is healthy.
4. Amadeus and Travelport will both go IPO – they will likely be the big Equity events during the mid part of the year.
5. The GDS model will continue its transformation. Although the Travel Agent base will continue its unit decline. More and more players will be seeking direct relationships. We expect to see further splintering of the options in distribution
6. Commission cuts and fee increases. Lots of these.
7. ETS – Emissions Trading will be a hot topic but not a big impact in 2008 – that comes in 2009.
8. Far out predictions:
a. One major player will exit
b. One model will undergo radical transformation
c. One major player will eat another
d. Private Equity action will be at the lower pace than 2007
31 December 2007
29 December 2007
2007 - The Year In Review
The year in review
This year 2007 has been yet another period that confirms the old French adage Plus ça change, plus c'est la même chose
So here are Plaudits and Brickbats for well the Aviation, Travel and Tourism Industry.
r Fuel – price thereof. UGH…. Proves that what goes up – must keep going up. Biggest impact has been the actual lack of impact. The global economy has learned to accommodate rising oil prices.
r Slime Green – Cloaking one selves in Green has become a popular past time. So far the industry has done very little actual work to mitigate the effects of Climate Change. The goal has to be the REDUCTION not just the amelioration of Climate Change gases and effects. We advocate the following:
1. Zero footprint. Leave no footprint after you leave.
2. Reduce all your energy consumption (replace light bulbs etc etc)
3. Reduce your energy footprint – use less devices and use them more efficiently
4. Carbon offset more than you use.
r The decline of the greenback. The dollar took a huge tumble. Well someone finally figured out that the Bush strategy of mortgaging the future wasn’t going to work. Blame all round for the subprime mess. Did we learn anything? Yes – a castle is not a home.
a US Airlines – the patient recovered enough to take a walk and in fact even run a little in 2007. However they are catching a cold from the overall US economy. Stay the course chaps – be wise.
a A380/787/A350XWB – new planes! The A380 finally entered service. Airbus launched the A350 formally and Boeing while stumbling on delivery looks like it has racked up 800 orders for the 787.
a Money – Part 1 – New Money – the Arab states, China and other Asian markets are flexing their economic power and buying into the US depressed economy. There will be a HUGE impact in 2008.
a Money – Part 2 – Private Equity – while credit dried up in the latter parts of the year – we still saw a blistering pace of PE deals. Blackstone for Travelport acquiring Worldspan, Harrahs, Closing Sabre, MidWest Airlines, etc etc. Adam Aaron joined Apollo and set about building a very nice Cruise Portfolio. Instead of 2 now there are 3?
a Money – Part 3 – Acquisitions – Airline Consolidation – didn’t really happen – but its coming – well maybe. Air France bought VLM, Lufthansa bought into jetBlue and Air France looks like its going to win Alitalia. Vanguard was acquired by Enterprise. Finally a home for the much travelled Alamo and National brands. The end of Wayne Huizinga’s travel dream.
a OpenSkies – Its going to be ugly at London Heathrow on March 30th with all the new airlines and the opening of T5. EU Open Skies has actually focused all the attention on LHR but it applies across the board. We are going to see a significant battle for market share into and out of the UK mostly transatlantic. However Open Skies also applies to Singapore and other markets. Asean nations are accelerating their own Open Skies and we will see free competition SIN-KUL by the end of 2008. Other markets across Asia will also become free and open.
r Commissions and remuneration – the move to consumer paid distribution continues. GDS distribution is well and truly changed. There are no easy deals for distributers. Cruise commissions – long regarded as being best for the few remaining Travel Agencies out there are now being subject to death by a thousand cuts. The latest being the removal of commissions for Cruise based Air. And lets not talk about Fees!!!!
a Ancillary Revenue – looks good to me – lets unbundle and charge for everything. Would you like to pay for that barf bag or not?
2 Industry Giants left the industry – Gerald Grinstein retired after successfully piloting Delta out of bankruptcy. And only took his salary. Way to go Jerry! You are a scholar and a Gentlemen. Now of only some of your former peers had been not so greedy…. Bob Dickerson after 35+ years retired from Carnival. Obituaries – Bill Misunas, Warren Avis you will be missed.
This year 2007 has been yet another period that confirms the old French adage Plus ça change, plus c'est la même chose
So here are Plaudits and Brickbats for well the Aviation, Travel and Tourism Industry.
r Fuel – price thereof. UGH…. Proves that what goes up – must keep going up. Biggest impact has been the actual lack of impact. The global economy has learned to accommodate rising oil prices.
r Slime Green – Cloaking one selves in Green has become a popular past time. So far the industry has done very little actual work to mitigate the effects of Climate Change. The goal has to be the REDUCTION not just the amelioration of Climate Change gases and effects. We advocate the following:
1. Zero footprint. Leave no footprint after you leave.
2. Reduce all your energy consumption (replace light bulbs etc etc)
3. Reduce your energy footprint – use less devices and use them more efficiently
4. Carbon offset more than you use.
r The decline of the greenback. The dollar took a huge tumble. Well someone finally figured out that the Bush strategy of mortgaging the future wasn’t going to work. Blame all round for the subprime mess. Did we learn anything? Yes – a castle is not a home.
a US Airlines – the patient recovered enough to take a walk and in fact even run a little in 2007. However they are catching a cold from the overall US economy. Stay the course chaps – be wise.
a A380/787/A350XWB – new planes! The A380 finally entered service. Airbus launched the A350 formally and Boeing while stumbling on delivery looks like it has racked up 800 orders for the 787.
a Money – Part 1 – New Money – the Arab states, China and other Asian markets are flexing their economic power and buying into the US depressed economy. There will be a HUGE impact in 2008.
a Money – Part 2 – Private Equity – while credit dried up in the latter parts of the year – we still saw a blistering pace of PE deals. Blackstone for Travelport acquiring Worldspan, Harrahs, Closing Sabre, MidWest Airlines, etc etc. Adam Aaron joined Apollo and set about building a very nice Cruise Portfolio. Instead of 2 now there are 3?
a Money – Part 3 – Acquisitions – Airline Consolidation – didn’t really happen – but its coming – well maybe. Air France bought VLM, Lufthansa bought into jetBlue and Air France looks like its going to win Alitalia. Vanguard was acquired by Enterprise. Finally a home for the much travelled Alamo and National brands. The end of Wayne Huizinga’s travel dream.
a OpenSkies – Its going to be ugly at London Heathrow on March 30th with all the new airlines and the opening of T5. EU Open Skies has actually focused all the attention on LHR but it applies across the board. We are going to see a significant battle for market share into and out of the UK mostly transatlantic. However Open Skies also applies to Singapore and other markets. Asean nations are accelerating their own Open Skies and we will see free competition SIN-KUL by the end of 2008. Other markets across Asia will also become free and open.
r Commissions and remuneration – the move to consumer paid distribution continues. GDS distribution is well and truly changed. There are no easy deals for distributers. Cruise commissions – long regarded as being best for the few remaining Travel Agencies out there are now being subject to death by a thousand cuts. The latest being the removal of commissions for Cruise based Air. And lets not talk about Fees!!!!
a Ancillary Revenue – looks good to me – lets unbundle and charge for everything. Would you like to pay for that barf bag or not?
2 Industry Giants left the industry – Gerald Grinstein retired after successfully piloting Delta out of bankruptcy. And only took his salary. Way to go Jerry! You are a scholar and a Gentlemen. Now of only some of your former peers had been not so greedy…. Bob Dickerson after 35+ years retired from Carnival. Obituaries – Bill Misunas, Warren Avis you will be missed.
28 December 2007
First Salvo Fired in New Transatlantic Fare ware
Air France and Delta have launched the first assault on LHR with their first fare promotion effective March 30th 2008. $222 OW based on RT LAX-LHR.
As noted previously we anticipate a pretty hefty fare war for Coach passengers beginning March 30th.
With 4 Carrier groupings offering new Nonstop flights from LHR (NW-KL, CO, US and DL-AF)this is going to be a great boon for travellers to Europe next year.
So mark you calendars. Seats are now available for sale and will likely be common rated along the West Coast from flights to LHR. The ripple effect will be significant. Yields will be trashed.
Cheers
Timothy
As noted previously we anticipate a pretty hefty fare war for Coach passengers beginning March 30th.
With 4 Carrier groupings offering new Nonstop flights from LHR (NW-KL, CO, US and DL-AF)this is going to be a great boon for travellers to Europe next year.
So mark you calendars. Seats are now available for sale and will likely be common rated along the West Coast from flights to LHR. The ripple effect will be significant. Yields will be trashed.
Cheers
Timothy
Who was naughty at UK Airports? Slot Abuse!
You just have to love the Internet... there is so much fun filled facts available.
From Airport Coordination Ltd (ACL) who run the slot committee at LHR and other BAA managed airports - they have complied with UK and EU law regarding he abuse of slot times.
5 Airlines ran afoul of the regulations. Surprisingly Easyjet and Ryanair were slapped with the initial largest fine GBP 20K each for transgressions at LGW and Stansted respectively in a very short period of time - 3 weeks in 2007. Smaller airlines ThomsonFly (now TUIFly), Flybe and Thomas Cook Airlines (soon to be Air Berlin) were each hit with a GBP 1,000 fine for transgressions at different airports.
The latest fine was for October 2007 so we can assume that there will be more next quarter.
There should be some consideration for the fact that the two LCCs are the largest players at their respective airports - but the fines will definitely make people sit up and pay attention. It would be interesting to see if the USA applied this rule especially at JFK and other slot restricted airports.
I can just hear Michael O'Leary getting a copy of his fine. I bet he wont be quite so naughty next time.
From Airport Coordination Ltd (ACL) who run the slot committee at LHR and other BAA managed airports - they have complied with UK and EU law regarding he abuse of slot times.
5 Airlines ran afoul of the regulations. Surprisingly Easyjet and Ryanair were slapped with the initial largest fine GBP 20K each for transgressions at LGW and Stansted respectively in a very short period of time - 3 weeks in 2007. Smaller airlines ThomsonFly (now TUIFly), Flybe and Thomas Cook Airlines (soon to be Air Berlin) were each hit with a GBP 1,000 fine for transgressions at different airports.
The latest fine was for October 2007 so we can assume that there will be more next quarter.
There should be some consideration for the fact that the two LCCs are the largest players at their respective airports - but the fines will definitely make people sit up and pay attention. It would be interesting to see if the USA applied this rule especially at JFK and other slot restricted airports.
I can just hear Michael O'Leary getting a copy of his fine. I bet he wont be quite so naughty next time.
27 December 2007
Ready for 2008 LHR Passenger Changes?
Here is the official LHR Change Schedule for 2008.
So if you are travelling in, through, near or on a LHR transiting carrier - better make a note of these changes:
New Words for 2008
Troogle -
"n1" Google's cash sucking sound from the Aviation, Travel and Tourism Sector.
"n2" Previously a secret search project inside Google now just their cash register.
"v3" as in "I am troogled by this..." Getting into trouble with Google and loosing certain privileges.
KALF
"v1" as in "I used to have a reasonable competitive niche until Air France/KLM came in and bought my competitor - now I am in deep Hushanga."
O'Leary
"v1 - usually past tense" as in - "I got a great deal on Ryanair only to pay more than twice the amount of fares, taxes and fees for Baggage Handling, Check-in and a measly cup of coffee."
Slime-Green
"n1" the new color pseudo eco friendly brands like to paint themselves in to make them sound and look like they are really helping the planet. Can also be a verb.
Bushed
"v1" usually past tense - the state used to describe any situation that occurs to American or other nationalities after they encounter a problem directly related to the current lame duck administration of G. W. Bush. ... as in "my vacation to Europe was great except the prices really bushed me". See also former words like "Roved and Libied"
Cheneyed
"v1" usually past tense - the state you feel when you realized you have been shot.
Wolfowitz
"v1" meaning mislead - synonym. As in "Wow I was really wolfowitzed that time."
"n2" meaning I am in total control here and do not interfere in my activities. Usually used to describe the actions of a person who does not like interference. As in "He is being a real Paul Wolfowitz with the board".
Tilton
"n1" This decades version of Gekko as in Gordon.
Googleplex-
"n1" The massive Google corporate campus that is making 1 Microsoft Way look like a subdivision.
Tamaseked
"v1" To be acquired by Singapore.
More words available on request to timothyo@t2impact.com (c) T2impact Ltd 2007.
"n1" Google's cash sucking sound from the Aviation, Travel and Tourism Sector.
"n2" Previously a secret search project inside Google now just their cash register.
"v3" as in "I am troogled by this..." Getting into trouble with Google and loosing certain privileges.
KALF
"v1" as in "I used to have a reasonable competitive niche until Air France/KLM came in and bought my competitor - now I am in deep Hushanga."
O'Leary
"v1 - usually past tense" as in - "I got a great deal on Ryanair only to pay more than twice the amount of fares, taxes and fees for Baggage Handling, Check-in and a measly cup of coffee."
Slime-Green
"n1" the new color pseudo eco friendly brands like to paint themselves in to make them sound and look like they are really helping the planet. Can also be a verb.
Bushed
"v1" usually past tense - the state used to describe any situation that occurs to American or other nationalities after they encounter a problem directly related to the current lame duck administration of G. W. Bush. ... as in "my vacation to Europe was great except the prices really bushed me". See also former words like "Roved and Libied"
Cheneyed
"v1" usually past tense - the state you feel when you realized you have been shot.
Wolfowitz
"v1" meaning mislead - synonym. As in "Wow I was really wolfowitzed that time."
"n2" meaning I am in total control here and do not interfere in my activities. Usually used to describe the actions of a person who does not like interference. As in "He is being a real Paul Wolfowitz with the board".
Tilton
"n1" This decades version of Gekko as in Gordon.
Googleplex-
"n1" The massive Google corporate campus that is making 1 Microsoft Way look like a subdivision.
Tamaseked
"v1" To be acquired by Singapore.
More words available on request to timothyo@t2impact.com (c) T2impact Ltd 2007.
"Sir Francis Drake - Sire! The French Have Captured The CIty What Are We To Do?"
It bad enough that the major UK airports are now run by a Spanish Construction company, now comes news that the French have captured effectively control of London City Airport by acquiring 50% of all the slots there. Air France/KLM Group have swooped in an acquired VLM Airlines (Belgium operator) who with a fleet of F50s and a single BAe 146 was the largest single carrier at LCY.
Over the past few years as UK road and public transportation has degraded, the Docklands development has improved and of course LHR has become more of an embarrassment than an airport - LCY has slowly grown. It is now handling over 2.5 Million passengers on a single runway with no aircraft larger than an AVRO 100 currently servicing the place.
AF/KL was already almost joint #1 at the airport having acquired Irish player CityJet in 1997 and through its upcoming codeshare relationship with the #3 player at LCY - Scot Airways (the former Suckling Airways).
Shut out!
BA acquired a nice footprint at LCY when it acquired CityFlyer and then subsequently sold off most of the business to Flybe. However its ambitions are now well and truly thwarted after BA was unable to prevent the Franco-Dutch juggernaut from picking up VLM. BA will have to make do with very few slots and pickings at LCY.
So sorry Willie.
Over the past few years as UK road and public transportation has degraded, the Docklands development has improved and of course LHR has become more of an embarrassment than an airport - LCY has slowly grown. It is now handling over 2.5 Million passengers on a single runway with no aircraft larger than an AVRO 100 currently servicing the place.
AF/KL was already almost joint #1 at the airport having acquired Irish player CityJet in 1997 and through its upcoming codeshare relationship with the #3 player at LCY - Scot Airways (the former Suckling Airways).
Shut out!
BA acquired a nice footprint at LCY when it acquired CityFlyer and then subsequently sold off most of the business to Flybe. However its ambitions are now well and truly thwarted after BA was unable to prevent the Franco-Dutch juggernaut from picking up VLM. BA will have to make do with very few slots and pickings at LCY.
So sorry Willie.
26 December 2007
In case you missed it... AZ Board Recommends AF/KL; Approves Slot Sell-off
This is a wonderful case of DUH!
The Alitalia Board (who have proved themselves to be both largely incompetent and ineffectual) has recommended Air-France KLM Group as the recommended bidder from the remaining 3 duly qualified combatants. (A/KL, AirOne Consortia and an independent financial team from Italy).
They held off announcing their decision. Government sources told the Financial Times earlier this week that Air France-KLM was the preferred option but that threats of protest action by unions over Christmas had led to a postponement of a formal decision. Please note that it is not the board who will make the decision but the Government in who will win the bidding for the 49.9% Government share.
Over the Christmas Holiday, the ailing Italian airline also sold off 3 slot pairs at LHR for a record price. One slot pair each went to US Airways and Continental for $60 Million each. A minor slot pair went (as reported in the FT) for $20 million to BA. With Ryanair now the largest carrier from Italy to the UK - the AZ Slot pairs at LHR are no longer as meaningful. This will bolster the airline's balance sheet.
Once the smoke clears a little more we will write another posting on the latest of the slot pair trading that is still on-going at LHR.
Cheers
The Alitalia Board (who have proved themselves to be both largely incompetent and ineffectual) has recommended Air-France KLM Group as the recommended bidder from the remaining 3 duly qualified combatants. (A/KL, AirOne Consortia and an independent financial team from Italy).
They held off announcing their decision. Government sources told the Financial Times earlier this week that Air France-KLM was the preferred option but that threats of protest action by unions over Christmas had led to a postponement of a formal decision. Please note that it is not the board who will make the decision but the Government in who will win the bidding for the 49.9% Government share.
Over the Christmas Holiday, the ailing Italian airline also sold off 3 slot pairs at LHR for a record price. One slot pair each went to US Airways and Continental for $60 Million each. A minor slot pair went (as reported in the FT) for $20 million to BA. With Ryanair now the largest carrier from Italy to the UK - the AZ Slot pairs at LHR are no longer as meaningful. This will bolster the airline's balance sheet.
Once the smoke clears a little more we will write another posting on the latest of the slot pair trading that is still on-going at LHR.
Cheers
Maxjet RIP - Does this mean Premium Niche is dead?
Maxjet after struggling for the last month to find new sources of credit to keep the airline afloat succumbed on Christmas Eve and grounded all flights.
Our assessment...
Not enough capital, too much competition and not a good enough product. The official reasons were "Anemic Credit Market" and "Skyrocketing Fuel Costs". We believe that the management must also take some blame for not focusing on developing a core market fast enough and also misjudging the consumer in what they want.
Under capitalizing the airline meant that normal features that business folk want (eg InSeat power was not offered). For flights on the routes they flew - STN-JFK, LAS, LAX and IAD the business person was mostly king yet the product did not match up. I flew Maxjet LAX-STN and the service product was at best mediocre. The focus on inflight amenities such as video and food rather than the core product did not make the investor community feel good.
So what finally killed Maxjet?
AA's 2 nonstops a day JFK-STN and the credit crunch. Basically they ran out of money.
Let this be a lesson to Silverjet, L'avion and to EOS. You need to have a better product in order to compete. Business folk can accommodate a clunky old 767-200 if they get what they want to do business. With massive competition coming in March of 2008 from the US airlines coming into LHR - the survivors better start looking for making their product a little better.
Sadly the purple planes will grace the skies no more.
Our assessment...
Not enough capital, too much competition and not a good enough product. The official reasons were "Anemic Credit Market" and "Skyrocketing Fuel Costs". We believe that the management must also take some blame for not focusing on developing a core market fast enough and also misjudging the consumer in what they want.
Under capitalizing the airline meant that normal features that business folk want (eg InSeat power was not offered). For flights on the routes they flew - STN-JFK, LAS, LAX and IAD the business person was mostly king yet the product did not match up. I flew Maxjet LAX-STN and the service product was at best mediocre. The focus on inflight amenities such as video and food rather than the core product did not make the investor community feel good.
So what finally killed Maxjet?
AA's 2 nonstops a day JFK-STN and the credit crunch. Basically they ran out of money.
Let this be a lesson to Silverjet, L'avion and to EOS. You need to have a better product in order to compete. Business folk can accommodate a clunky old 767-200 if they get what they want to do business. With massive competition coming in March of 2008 from the US airlines coming into LHR - the survivors better start looking for making their product a little better.
Sadly the purple planes will grace the skies no more.
25 December 2007
Did the Rabbi steal Christmas - You be the judge
Last year (December 2006) Rabbi Elazar Bogomilsky got his 10 minutes of fame for asking for equal time for a Menorah to be displayed at SEATAC during the holiday season. The result? The Port of Seattle removed all Christmas trees from the airport in a story that reverberated round the web mostly for its absurdity.
This year - 2007 - we have a very imaginative (not) display of unidentified trees and snow making. With nary a religious nor festive symbol or icon in sight.
So congrats to the Port of Seattle for being overly PC. Congrats to the Rabbi for ensuring that Seattle will NEVER have a festive icon or remotely religious symbol of any kind in its airport.
Next year we will have scenes from the Grinch and a permanent display of Jim Carey to guide us through our holiday (non-festive) season.
And so for everyone - Merry Christmas from all of us at T2. No matter what your religion, or preferences are - you are always welcome with us. Revel in your individuality and lets enjoy our differences rather than hiding them!
Cheers and to all a good night!
Timothy
Selling America by the Dollar - Saudis think BIG very BIG
OK so this is a paraphrase of the 5th Genesis Album for those of you old enough to remember when Peter Gabriel fronted the band!
The Saudi Government has established the largest Sovereign Fund ever created. http://www.ft.com/cms/s/0/412752ae-afa4-11dc-b874-0000779fd2ac.html?nclick_check=1
According to the FT the new Saudi fund will dwarf even the very large $1.8 Trillion fund being set up by Abu Dhabi.
So thanks to Geo Bush and Co, America is now going to be old piece by piece. Whether or not this helps the US economy is yet to be seen, however entities from Europe to Asia and the Middle East see big bargains in the US economy.
Some of this will undoubtedly be in the Aviation Travel and Tourism Sectors. So far we have seen very little impact with perhaps only the traditional players making any noises - for example like Lufthansa's investment in jetBlue. However this will undoubtedly change.
Stay tuned folks this is going to be an interesting season
The Saudi Government has established the largest Sovereign Fund ever created. http://www.ft.com/cms/s/0/412752ae-afa4-11dc-b874-0000779fd2ac.html?nclick_check=1
According to the FT the new Saudi fund will dwarf even the very large $1.8 Trillion fund being set up by Abu Dhabi.
So thanks to Geo Bush and Co, America is now going to be old piece by piece. Whether or not this helps the US economy is yet to be seen, however entities from Europe to Asia and the Middle East see big bargains in the US economy.
Some of this will undoubtedly be in the Aviation Travel and Tourism Sectors. So far we have seen very little impact with perhaps only the traditional players making any noises - for example like Lufthansa's investment in jetBlue. However this will undoubtedly change.
Stay tuned folks this is going to be an interesting season
24 December 2007
Merry Christmas
To all our readers friends and associated persons....
Wishing you all holiday cheer and happiness this season
Peace to you all
Cheers
The T2Impact Team
Wishing you all holiday cheer and happiness this season
Peace to you all
Cheers
The T2Impact Team
21 December 2007
US Airlines - Grow up and stop complaining
The US Airline community as represented by ATA has for a long period of time - specifically since 9/11 been an oligopoly who has disdained consumers in favor of their own goals and objectives.
However Consumers are finally getting their day in the sun - if not in court.
On Tuesday NY Judge threw out a challenge to the NY State law enacted post the debacle of last winter with passengers imprisoned on aircraft at JFK and other places. http://www.boston.com/business/globe/articles/2007/12/21/court_rejects_airlines_suit_to_block_ny_law_on_passenger_rights/
The US airlines have been woefully inadequate in their following even the basic guidelines (note not law) as agreed with the US DoT. http://airconsumer.ost.dot.gov/publications/flyrights.htm
However - now we see the States stepping in to mandate tougher consumer protection.
In Europe a similar effort was mounted by all airlines but in 2004 new regulations that are far more strict were enacted.
http://ec.europa.eu/transport/air_portal/passenger_rights/doc/2006_flyer_be_informed/2006_be_informed_flyer_en.pdf These apply no matter if you are flying on a first class ticket or short LCC hop. Even charter airlines - notorious for their lack of consumer services are all identically covered. Impact? Better behavior and no huge financial impact on the airlines.
So US Airlines and ATA - get over it... join the rest of the world.
However Consumers are finally getting their day in the sun - if not in court.
On Tuesday NY Judge threw out a challenge to the NY State law enacted post the debacle of last winter with passengers imprisoned on aircraft at JFK and other places. http://www.boston.com/business/globe/articles/2007/12/21/court_rejects_airlines_suit_to_block_ny_law_on_passenger_rights/
The US airlines have been woefully inadequate in their following even the basic guidelines (note not law) as agreed with the US DoT. http://airconsumer.ost.dot.gov/publications/flyrights.htm
However - now we see the States stepping in to mandate tougher consumer protection.
In Europe a similar effort was mounted by all airlines but in 2004 new regulations that are far more strict were enacted.
http://ec.europa.eu/transport/air_portal/passenger_rights/doc/2006_flyer_be_informed/2006_be_informed_flyer_en.pdf These apply no matter if you are flying on a first class ticket or short LCC hop. Even charter airlines - notorious for their lack of consumer services are all identically covered. Impact? Better behavior and no huge financial impact on the airlines.
So US Airlines and ATA - get over it... join the rest of the world.
T2 Podcast 208 Predictions
Listen to Managing Partner Timothy O'Neil-Dunne
http://iagblog.podomatic.com/entry/eg/2007-12-21T10_05_45-08_00
2008 Predictions... a lively conversation
http://iagblog.podomatic.com/entry/eg/2007-12-21T10_05_45-08_00
2008 Predictions... a lively conversation
20 December 2007
Paying the Piper... a comment on the US Financial Sector Meltdown
For once I am going to stray outside - actually pretty far outside - our normal area of expertise and talk about the US economy. I have no expertise in this area but my personal frustration and that of my colleagues has reached the point of not being able to remain silent.
The current meltdown in the US Financial Sector has been driven by the usual and predictably explainable factors. However we cannot avoid the responsibility of understanding that the current US Administration's policies of mortgaging the future through a number of "must-have- instant-gratification" moves has failed. Funding a war with amounts of money that are simply untenable has beaten the US economy to a pulp. The Administration's policy of hoping (yes it was that - just a hope) that the domestic economy would be the engine to drive a need for less tax and no worries about the value of the dollar has clearly failed. So now those of us who are subject to the dictates of the US Administration are now going to pay ... and pay ... and pay.
But there is an even worse price. The very economic factors (namely a free market) lauded by the Bush Administration means that the more fiscally conservative and financially stable (read smarter and rich) nations of the world are now picking up the bargain basement opportunities right across the US economy.
For me personally the one that brought it home was the announcement by Singapore Inc's Tamasek Holdings taking a large share in Merril Lynch.
I am not advocating a return to restrictive practices of currency controls and restraints on trade - far from it. I am just stating that the US Administration and the Weany Congress have but a few months - not years - to figure out what to do about the War. Clearly common sense and Body bags are not enough to convince anyone that the War is morally and factually wrong and should be terminated. So now the economic argument might ring true.
The economic value of holding on to Iraq has been washed away. The right of that country to self determination - should be granted and let the Iraqis take that responsibility for themselves. If that includes their own civil war - then now is the time to let them do that. But let's just stop funding one man's stupidity and an Administration's Folly. Enough is Enough.
So now it must be a decision that is based on what is best of the worst situation rather than doing what was once a seemingly noble deed - however flawed.
Let's hope for all concerned that America's next Administration and the current Congress are able to grapple with the real issues rather than the "spin" of what makes no sense.
The American Economy is on Life Support. Having it being funded by China, Singapore, UAE as well as larger smart commercial organizations should be an embarrassment.
One final thought: Ignorance is no excuse.
The current meltdown in the US Financial Sector has been driven by the usual and predictably explainable factors. However we cannot avoid the responsibility of understanding that the current US Administration's policies of mortgaging the future through a number of "must-have- instant-gratification" moves has failed. Funding a war with amounts of money that are simply untenable has beaten the US economy to a pulp. The Administration's policy of hoping (yes it was that - just a hope) that the domestic economy would be the engine to drive a need for less tax and no worries about the value of the dollar has clearly failed. So now those of us who are subject to the dictates of the US Administration are now going to pay ... and pay ... and pay.
But there is an even worse price. The very economic factors (namely a free market) lauded by the Bush Administration means that the more fiscally conservative and financially stable (read smarter and rich) nations of the world are now picking up the bargain basement opportunities right across the US economy.
For me personally the one that brought it home was the announcement by Singapore Inc's Tamasek Holdings taking a large share in Merril Lynch.
I am not advocating a return to restrictive practices of currency controls and restraints on trade - far from it. I am just stating that the US Administration and the Weany Congress have but a few months - not years - to figure out what to do about the War. Clearly common sense and Body bags are not enough to convince anyone that the War is morally and factually wrong and should be terminated. So now the economic argument might ring true.
The economic value of holding on to Iraq has been washed away. The right of that country to self determination - should be granted and let the Iraqis take that responsibility for themselves. If that includes their own civil war - then now is the time to let them do that. But let's just stop funding one man's stupidity and an Administration's Folly. Enough is Enough.
So now it must be a decision that is based on what is best of the worst situation rather than doing what was once a seemingly noble deed - however flawed.
Let's hope for all concerned that America's next Administration and the current Congress are able to grapple with the real issues rather than the "spin" of what makes no sense.
The American Economy is on Life Support. Having it being funded by China, Singapore, UAE as well as larger smart commercial organizations should be an embarrassment.
One final thought: Ignorance is no excuse.
19 December 2007
US Travel - Flat at best in 2008
We are seeing more signs of slowing in the economy. Unlike GWB the team at T2 does not believe that everything in the garden is rosy. We firmly believe that there is a real recession and it will bite hard for at least the first 2 quarters of 2008. Recovery won’t happen until after the election in November. Uncertainty is the watchword.
We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.
We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.
Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.
International NON-US market will be more robust but will also feel some of the same heat. More on that later
Cheers
Timothy
We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.
We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.
Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.
International NON-US market will be more robust but will also feel some of the same heat. More on that later
Cheers
Timothy
18 December 2007
Only a few more hours to go; Will the Italian Government Postpone the Alitalia decision again?
OK so today is D day for Alitalia well at least its scheduled that way.
There are 2 front runners (AF/KL and AirOne investors) and a dark horse (local Italian investors) and several - well others (SQ, perhaps) - waiting in the wings.
Most people are betting on AF to win. But we have a slightly contrarian view that this may not actually happen even if the Prodi Government chooses AF or even AirOne. How so?
Remember a little earlier this year that the European Commission ruled on a small case of RyanAir and Aer Lingus? Don't think that Mr O'Leary has forgotten this little sleight. There is a strong possibility - no make that a certainty - that who ever wins will see a challenge filed by Ryanair amongst others.
The EC is going to have a pretty hard time approving an airline merger given the concentration argument it used against FR+EI. Further there is still a simmering dispute on the question of how much State Aid will need to be paid back.
Folks this one may yet run for months. Even with Alitalia losing altitude all the time.
Happy punting....
There are 2 front runners (AF/KL and AirOne investors) and a dark horse (local Italian investors) and several - well others (SQ, perhaps) - waiting in the wings.
Most people are betting on AF to win. But we have a slightly contrarian view that this may not actually happen even if the Prodi Government chooses AF or even AirOne. How so?
Remember a little earlier this year that the European Commission ruled on a small case of RyanAir and Aer Lingus? Don't think that Mr O'Leary has forgotten this little sleight. There is a strong possibility - no make that a certainty - that who ever wins will see a challenge filed by Ryanair amongst others.
The EC is going to have a pretty hard time approving an airline merger given the concentration argument it used against FR+EI. Further there is still a simmering dispute on the question of how much State Aid will need to be paid back.
Folks this one may yet run for months. Even with Alitalia losing altitude all the time.
Happy punting....
17 December 2007
T2 Podcast on 2007 - The year in Review
Addison and I had a good banter today on the 2007 Year in Review.
If you would like to listen in - please click here.
Cheers
Timothy
http://iagblog.podomatic.com/entry/eg/2007-12-17T11_40_49-08_00
If you would like to listen in - please click here.
Cheers
Timothy
http://iagblog.podomatic.com/entry/eg/2007-12-17T11_40_49-08_00
16 December 2007
Amadeus gets into the consulting business
Sheez, not only do we have to contend with all the new consulting agencies springing up but now we have to compete with Amadeus. Those nice people can even bring you a video to show you how nice they really are. http://www.amadeus.com/airlines/x79170.html
I think this was made by the same group that did those nice 20 year anniversary personalized emails called Thank you!
Oh well... lets see if they are any good. If anyone uses their services please drop me a line and let me know what you think of it. timothyo@t2impact.com
Cheers
T
I think this was made by the same group that did those nice 20 year anniversary personalized emails called Thank you!
Oh well... lets see if they are any good. If anyone uses their services please drop me a line and let me know what you think of it. timothyo@t2impact.com
Cheers
T
15 December 2007
For many airlines in search of new revenue opportunities – the alliance game has played out and the incremental revenues are becoming less and less attractive. Consider the basic mathematics. For new partners joining an Alliance – they tend to be smaller and with an in inferior product than the established carriers. So the lager airlines are unlikely to gain much from a new partner joining. The new joinee tends to get greater reach and the benefit from the larger airline.
Of the alliances – the Star group probably has the most structure and is the most mature. But they are now struggling with the fundemental flaws of the concept. Consider Singapore Airlines. They have been very reluctant to put their code onto any other airlines' flight. Indeed if you look at the actual SQ codeshares – the number is very small. On the other hand many carriers want to place their code on SQ because of its “superior” product. In the past I have used Lufthansa as an example of where the Alliance concept is broken. Perhaps now SQ is a better example. If I was a SQ frequent flyer I don’t think I would be happy to be flying on say LOT.
Now lets consider the new (well not new lets call it a rebirth) of the bilateral arrangement which has (usually) hard equity in a formal JV. Recently we have seen two good examples of this:
Air France/KLM Group joint venture with Delta for servicing Transatlantic passengers including from London’s Heathrow. Another example is the recent Lufthansa investment in jetBlue. Both these arrangements return real value in the near term that can be both quantified and tracked in real time.
In our opinion the future of Alliances is not rosy. Those guys who work there are going to be working overtime trying to justify their existence. Not just to their bosses but well each airline.
Example are: Fees that keep rising, more complications, advertising that is ineffective, endless meetings that produce no results… I think you get the picture.
On the other hand consider a partnership with mutual investment or a big parent owning a smaller player. Sound good? Well maybe. The recent past of mutual investment didn’t work out… remember BA and US Airways, SQ and Virgin, The Quality Alliance: SwissAir, Virgin and Delta… lots of not so good stories.
However at the end of the day – airlines like to be married. They are a bit like humans. Maybe polygamy is not such a good thing. Just sleeping together or even getting engaged even married is a better solution for a relationship. Interlining is just being good friends.
Of the alliances – the Star group probably has the most structure and is the most mature. But they are now struggling with the fundemental flaws of the concept. Consider Singapore Airlines. They have been very reluctant to put their code onto any other airlines' flight. Indeed if you look at the actual SQ codeshares – the number is very small. On the other hand many carriers want to place their code on SQ because of its “superior” product. In the past I have used Lufthansa as an example of where the Alliance concept is broken. Perhaps now SQ is a better example. If I was a SQ frequent flyer I don’t think I would be happy to be flying on say LOT.
Now lets consider the new (well not new lets call it a rebirth) of the bilateral arrangement which has (usually) hard equity in a formal JV. Recently we have seen two good examples of this:
Air France/KLM Group joint venture with Delta for servicing Transatlantic passengers including from London’s Heathrow. Another example is the recent Lufthansa investment in jetBlue. Both these arrangements return real value in the near term that can be both quantified and tracked in real time.
In our opinion the future of Alliances is not rosy. Those guys who work there are going to be working overtime trying to justify their existence. Not just to their bosses but well each airline.
Example are: Fees that keep rising, more complications, advertising that is ineffective, endless meetings that produce no results… I think you get the picture.
On the other hand consider a partnership with mutual investment or a big parent owning a smaller player. Sound good? Well maybe. The recent past of mutual investment didn’t work out… remember BA and US Airways, SQ and Virgin, The Quality Alliance: SwissAir, Virgin and Delta… lots of not so good stories.
However at the end of the day – airlines like to be married. They are a bit like humans. Maybe polygamy is not such a good thing. Just sleeping together or even getting engaged even married is a better solution for a relationship. Interlining is just being good friends.
14 December 2007
USA finally gets ADS from China
The USA has finally qualified for ADS making the world’s second largest market inbound open to the world’s fastest growing source market. Getting ADS – Approved Destination Status – was never a sure thing. The politics are very complex as can be imagined. Also the USA is not the first. Many countries already have mature ADS agreements with China and have seen the benefits rise enormously. Why is ADS important? As the China market opens up to new travelers seeking new experiences the USA would be number 1 on their list of places to go. For many the first trip is important as travel begets more travel. China is fast becoming a consumerist society driven by their burgeoning individual middle class wealth. Their lack of other major expenses (housing and education plus costs of children) drives a bigger disposable portion of their salaries.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
USA finally gets ADS from China
The USA has finally qualified for ADS making the world’s second largest market inbound open to the world’s fastest growing source market. Getting ADS – Approved Destination Status – was never a sure thing. The politics are very complex as can be imagined. Also the USA is not the first. Many countries already have mature ADS agreements with China and have seen the benefits rise enormously. Why is ADS important? As the China market opens up to new travelers seeking new experiences the USA would be number 1 on their list of places to go. For many the first trip is important as travel begets more travel. China is fast becoming a consumerist society driven by their burgeoning individual middle class wealth. Their lack of other major expenses (housing and education plus costs of children) drives a bigger disposable portion of their salaries.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
The big keep getting bigger - EU Giants In Travel
The big keep getting bigger.
The sea change that occurred over the last 18 months in Europe in distribution is now starting to bear fruit. The two powerhouses of TUI and Thomas Cook (daughter company of the old Karstadt Quelle) have now been admitted to the UK’s FTSE (Footsie) 100 top shares. (This is the UK equivalent of the Dow Jones index). This may seem to be a big achievement but in reality it simply acknowledges that the world’s second largest commercial market after financial services is Travel. Further it acknowledges that the concentration of the distribution system into fewer hands is a global trend. Congrats to both companies. Let the battle commence. At December 12th close, Thomas Cook Group had the 96th largest market capitalization of UK listed companies; TUI Travel was 88th.
The sea change that occurred over the last 18 months in Europe in distribution is now starting to bear fruit. The two powerhouses of TUI and Thomas Cook (daughter company of the old Karstadt Quelle) have now been admitted to the UK’s FTSE (Footsie) 100 top shares. (This is the UK equivalent of the Dow Jones index). This may seem to be a big achievement but in reality it simply acknowledges that the world’s second largest commercial market after financial services is Travel. Further it acknowledges that the concentration of the distribution system into fewer hands is a global trend. Congrats to both companies. Let the battle commence. At December 12th close, Thomas Cook Group had the 96th largest market capitalization of UK listed companies; TUI Travel was 88th.
Alitalia - it aint over yet folks
Well they postponed again - but now there is a reason. LH is back interested. SQ is denying everything and even BA is having a look.
The price just went a little higher. However will it go really high? Not in our opinion.
Stay tuned.
The price just went a little higher. However will it go really high? Not in our opinion.
Stay tuned.
Lufthansa rides into rescue jetBlue's damsel in distress
As if further proof was needed - the world is a crazy mixed up place. So LH is spending some of its cashpile to buy into jetblue and create a local USA footprint. jetblue needed a big strategic change given its current malaise and this is a good match. If for no other reason than it stirs things up a bit.
So this is a good win for LH - with the dollar at an all time low - this is costing LH very little.
This is bad for UAL as it means that LH (who has a real service issue with UAL's product) can have alternative and put its code on a number of flights from JFK hub, as well as the other interconnecting points - DEN, BOS, IAD, etc etc.
It is a shot to Virgin that they cannot have it both ways - on the periphery of Star, and eating their cake domestically in the USA.
It is a competitive response to the tie ups of US and European airlines - if you like there are now 2 layers of alliance. Super Partners (AF and DL, KL and NW, LH and B6 etc), and Alliance partners. Frankly we believe that the general alliance market as reached its sell by date. These tighter relationships will make for better service levels.
We predict more of these in the near future
This is a good move
So this is a good win for LH - with the dollar at an all time low - this is costing LH very little.
This is bad for UAL as it means that LH (who has a real service issue with UAL's product) can have alternative and put its code on a number of flights from JFK hub, as well as the other interconnecting points - DEN, BOS, IAD, etc etc.
It is a shot to Virgin that they cannot have it both ways - on the periphery of Star, and eating their cake domestically in the USA.
It is a competitive response to the tie ups of US and European airlines - if you like there are now 2 layers of alliance. Super Partners (AF and DL, KL and NW, LH and B6 etc), and Alliance partners. Frankly we believe that the general alliance market as reached its sell by date. These tighter relationships will make for better service levels.
We predict more of these in the near future
This is a good move
12 December 2007
2008 The year of the Spaceship says Virgin Glactic
Well sorry folks I dont have the $200K for the seat - nor the $3 million for the satellite launch cost lying around in my pocket - but it seems that others do. Virgin Galactic is making is plans sound much more realistic wth the maiden flght of SS2 (Spaceship 2) the pre-production version of the in flight vehicle and its carrier - WK2 - White Knight 2 scheduled in July 2008.
The company now has $30 million in fully paid tickets and deposits and 100 of its around 200 "signed customers" have experienced the SS2 flight profile in a centrifuge. That's a pretty big WOW. So go and sign up... and if you can save a space for me. Window seat please
Thanks
The company now has $30 million in fully paid tickets and deposits and 100 of its around 200 "signed customers" have experienced the SS2 flight profile in a centrifuge. That's a pretty big WOW. So go and sign up... and if you can save a space for me. Window seat please
Thanks
10 December 2007
Sabre Opening Up to LCCs
The battle ground for the love of LCCs and HVCs has just become a little more interesting. As regular readers know we are strong believers in the emergence of Hybrid (HVC) airlines. Thus far the game has been some what interesting. But recently we have seen Amadeus making a big play for LCCs while at the same time Sabre has been sitting on the sidelines. Now Sabre has come out with all guns blazing.
Will this be enough? It will depend signficantly on the costs. So the battle is now joined. Galileo - where are you in all this?
To see the Sabre press release go here: http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1085638&highlight=
Cheers
Timothy
Will this be enough? It will depend signficantly on the costs. So the battle is now joined. Galileo - where are you in all this?
To see the Sabre press release go here: http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1085638&highlight=
Cheers
Timothy
08 December 2007
Roundup
Forgive the lack of writing dear readers… pressure of real work and – well also some time out has caused the absence from the blogosphere.
So here is a quick round up of some happenings and a few comments:
The 2 sick carriers of Europe could possibly be entering their final moments. Olympic needs to – well just be left to die. Alitalia will enter into a very tense few weeks as the auction (#2 for those who are counting) enters its final moments. From our experience point of view we know what it takes to recover orderly from bankruptcy – our experience with Varig and cleaning up the mess was invaluable. It isn’t easy but its possible. Clearly the scale of the problems at both these carriers will take many months even years to cleanup. BUT it can be done.
Heathrow is still a third world airport. For all you fans of London’s gateway – I can assure you that LHR is still no better. Recently I have been able to avail myself of its charms in three different modes: Arrival, Transfer and departure. In ALL 3 situations (T4, T4-T1 and T2 respectively) the experience was thoroughly awful. Contrast this with MUC (Transfer) STN (arrival) TXL (Arrival and Departure) It is nothing short of a national disgrace. T5 however does look REALLY ready.
Air Berlin – not bad! I had an opportunity to try its services. Air Berlin is not really an LCC. We have written before that it is indeed a new generation of HVC – Hybrid Value Carriers. Recently I have flown on almost the entire inventory of the airline’s narrow body fleet – F100s, B733, B738, A320. They are now a very large carrier. It is creaking in some areas but they do seem to be bringing cohesion pretty quickly to their operating units. Interestingly when I flew on one sector (TXL-STN) the listed carrier was LTU!
Tiger vs Jetstar. I was privileged to host a panel at the recent WebinTravel conference in Singapore late last month. (Note to the Boot – you missed a cracker show). In the continuing theme of LCCs that are not really LCCs I had both CEOs of Jetstar Asia and Tiger Airways. We had too little time but there are a few things I learned.
1. Tamesek Holdings is letting these guys duke it out in the market without any help from SQ. Whether this condition is allowed to stay remains interesting and an open verdict
2. Both airlines are determined to follow different paths. Jetstar is reverting more and more to its traditional parentage (nee Qantas). Tiger will seem to remain more like Ryanair and the purest LCC model.
3. Both airlines are reluctant – unlike Ryanair – to release figures like average fares or percentage of fares under a certain number. Interestingly we had an audience question (the composition was actually a good mix with just under 300 people) – What is your price definition of a LCC sector fare? Answer – SG$100 – only 1 or 2 hands went up. Less than SG$50 and everyone raised their hands.
4. Tiger and Jetstar will have a hard time in Korea as they progress there. It will be a local blood bath when next year Domestic LCCs are allowed – all of whom must operate for 2 years before the market opens up to international LCC activity.
5. Open Skies in Asean is coming slowly. But the largely Singaporean audience was highly enthusiastic about the Feb launch of 4 LCC frequencies on the SIN-KL Sector. Full deregulation however wont happen until Dec 2008. Then open season on one of the last regulated commuter city pairs will be a model for the rest of Asia. All Asean markets (intra region and domestic) are supposed to be deregulated fully at that time. However we think this will not be fully implemented.
More later and talk soon…
So here is a quick round up of some happenings and a few comments:
The 2 sick carriers of Europe could possibly be entering their final moments. Olympic needs to – well just be left to die. Alitalia will enter into a very tense few weeks as the auction (#2 for those who are counting) enters its final moments. From our experience point of view we know what it takes to recover orderly from bankruptcy – our experience with Varig and cleaning up the mess was invaluable. It isn’t easy but its possible. Clearly the scale of the problems at both these carriers will take many months even years to cleanup. BUT it can be done.
Heathrow is still a third world airport. For all you fans of London’s gateway – I can assure you that LHR is still no better. Recently I have been able to avail myself of its charms in three different modes: Arrival, Transfer and departure. In ALL 3 situations (T4, T4-T1 and T2 respectively) the experience was thoroughly awful. Contrast this with MUC (Transfer) STN (arrival) TXL (Arrival and Departure) It is nothing short of a national disgrace. T5 however does look REALLY ready.
Air Berlin – not bad! I had an opportunity to try its services. Air Berlin is not really an LCC. We have written before that it is indeed a new generation of HVC – Hybrid Value Carriers. Recently I have flown on almost the entire inventory of the airline’s narrow body fleet – F100s, B733, B738, A320. They are now a very large carrier. It is creaking in some areas but they do seem to be bringing cohesion pretty quickly to their operating units. Interestingly when I flew on one sector (TXL-STN) the listed carrier was LTU!
Tiger vs Jetstar. I was privileged to host a panel at the recent WebinTravel conference in Singapore late last month. (Note to the Boot – you missed a cracker show). In the continuing theme of LCCs that are not really LCCs I had both CEOs of Jetstar Asia and Tiger Airways. We had too little time but there are a few things I learned.
1. Tamesek Holdings is letting these guys duke it out in the market without any help from SQ. Whether this condition is allowed to stay remains interesting and an open verdict
2. Both airlines are determined to follow different paths. Jetstar is reverting more and more to its traditional parentage (nee Qantas). Tiger will seem to remain more like Ryanair and the purest LCC model.
3. Both airlines are reluctant – unlike Ryanair – to release figures like average fares or percentage of fares under a certain number. Interestingly we had an audience question (the composition was actually a good mix with just under 300 people) – What is your price definition of a LCC sector fare? Answer – SG$100 – only 1 or 2 hands went up. Less than SG$50 and everyone raised their hands.
4. Tiger and Jetstar will have a hard time in Korea as they progress there. It will be a local blood bath when next year Domestic LCCs are allowed – all of whom must operate for 2 years before the market opens up to international LCC activity.
5. Open Skies in Asean is coming slowly. But the largely Singaporean audience was highly enthusiastic about the Feb launch of 4 LCC frequencies on the SIN-KL Sector. Full deregulation however wont happen until Dec 2008. Then open season on one of the last regulated commuter city pairs will be a model for the rest of Asia. All Asean markets (intra region and domestic) are supposed to be deregulated fully at that time. However we think this will not be fully implemented.
More later and talk soon…
07 December 2007
Extra Extra - Frequent Flyer Mileage Devalued....
Its been on the cards for ages... no longer subtle - the airlines are now going to devalue the currency.
With high load factors we have been seeing the stealth devalution. No availability at the cheaper rates (which used to be the regular rates). Premium charges needed. Extra or Surcharges for certain categories. etc etc
Well now its the full montey. Additional 10% at least has been imposed by CO on its premium traffic First Class and Business First frequent flyer tickets
The end of civilization as we know it....
With high load factors we have been seeing the stealth devalution. No availability at the cheaper rates (which used to be the regular rates). Premium charges needed. Extra or Surcharges for certain categories. etc etc
Well now its the full montey. Additional 10% at least has been imposed by CO on its premium traffic First Class and Business First frequent flyer tickets
The end of civilization as we know it....
01 December 2007
BTC Appeals to stop abusive EU CRS regs
This is attached as a direct copy from the email sent by BTC- Business Travel Coalition:
Parliament Must Close the Dangerous Parent Carrier Loophole
By Kevin Mitchell
Two stories, just days apart, from Brussels this November are leaving industry observers scratching their heads, wondering whether a thoughtful and coordinated travel distribution policy is beyond the European Commission’s grasp and resolved that Parliament must act decisively to close a deliberately-created loophole in the Commission’s recently proposed computer reservation system rules. This dangerous loophole is threatening to harm European travelers.
On the one hand, the Consumer Protection Commissioner announced stinging survey results, concluding that more than half of Europe’s travel web sites, including those run by some of Europe’s leading airlines, are engaged in misleading advertising and other unfair practices. The offending web sites are being given four months to get their acts together or face forced closure. Here the Commission is taking strong and decisive measures on behalf of abused consumers.
On the other hand, the Commission announced a curious new Computer Reservations System (CRS) Code of Conduct, which was supposed to ensure that consumers continue to get comprehensive and accurate fare and related information via their online or offline travel agency equipped with a CRS. Instead of achieving this goal, however, the Commission has deliberately opened a giant loophole in the coverage of these rules, so that the all-important “parent carrier” provisions will not apply to the three airline owners of Amadeus, Europe’s largest CRS. Here the Commission is taking weak and deceptive measures on behalf of abusive owner airlines and leaving consumers standing under a worthless CRS rules umbrella.
So as one part of the Commission gives a red light to airline web site abuse, the other gives a green light to airline CRS abuse. And to make the irony complete, the Transportation Commissioner justified liberalizing the CRS code because of the rise of Internet web sites as a competitive force! Perhaps the Consumer Protection and Transportation commissioners ought to meet for lunch.
As the Commission’s CRS rules review progressed during 2007, the abandonment of consumer interests accelerated. At a conference panel discussion that I moderated in London last winter, a senior EC transportation official stated that listening to consumer views would be the most important factor in deciding how to reform the rules. When groups representing millions of consumers weighed in forcefully that protections had to be retained to deal with the real-world threat of airline ownership, the Commission responded by closing its ears and cynically devising a loophole that would undermine their interests. In justifying that loophole, the Commission suggested that the rules were simply a matter of business-to-business concern -- marginalizing the consumer stake in this important policy matter.
Any casual follower of air travel distribution knows the checkered history of CRS regulation and how consumers have been negatively impacted by abusive airline practices. In the movie version of this business, the villains are dominant airlines that have predictably used their ownership of reservation systems to engage in exclusionary activities that undermine comparison shopping and the free flow of critical data. The heroes, when they show up for work, are regulators who on behalf of consumers lay down respected and enforced codes of conduct that demand marketplace fairness in the presence of airline ownership. That’s why strong CRS rules that address current industry conditions have been worth fighting for in Europe and why the regulator’s misguided attempts to play games with them on behalf of other industry participants have been vigorously opposed by independent airlines, corporate travel buyers, travel agencies, CRSs, consume r groups, travel industry associations, even the United Nations! The Consumer Protection Commissioner’s warning shots fired over the websites in November are important, but they only address the small part of the iceberg poking above the water. Lurking right below the surface is the rest of an enormous problem -- one in which consumers are at the mercy of airlines with the means and the incentive to restrict full content to the system they own and to manipulate data and functionality in ways that cement their market dominance. The stakes in the CRS debate are about much more than being misled by a couple of euros in a website bait-and-switch; they’re about hundreds of euros lost to consumers every time low-priced options are deliberately suppressed and about the airlines’ use of the reservation system they own to squeeze the breath out of anyone who would dare to compete with them.
The parent carrier rules were designed to stop these abuses from happening and over many years they’ve generally done a remarkably good job of keeping the market in balance without creating unnecessary burdens on marketplace participants. Undermining these rules by creating a loophole exempting Air France, Iberia and Lufthansa -- the owners of Amadeus, Europe’s largest CRS -- makes no sense at all. Airlines and distribution systems have always been a toxic combination, and unless regulators are willing to take the more intrusive step of banning ownership outright, a regulatory regime -- with teeth -- is required.
The results of a CRS Customer Referendum were recently released by the International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations are experts in the travel industry and represent thousands of corporations and millions of customers of the air and rail transportation systems in Europe.
This group, articulating the consumer voice, proposed solutions to close the loophole. For example, it has proposed that a 5 percent airline ownership stake in a CRS should be established for determining parent carrier status. Alternatively, they would ask for confirmation that Air France, Iberia and Lufthansa are presently parent carriers of Amadeus and an affirmation that the status of these airlines as parent carriers should be subjected to written and oral industry consultation prior to any future proposed change. These are fair, sensible approaches that would go far toward eliminating the needless consumer anxiety the Commission has injected into the process.
The shame of it is that the Commission’s proposed CRS rules are on their face an example of near-perfect “better regulation” -- it’s the undermining the Commission is doing behind its back that makes these rules a near-complete disaster. Instead of getting high praise, the Commission is getting harsh criticism -- and from virtually all corners of Europe. If the parent carrier loophole were fixed by making it unambiguously clear that Amadeus' three airline owners were covered, then the text of the proposed rules would actually be deemed to be responsive to consumer needs.
The European Parliament will next have the opportunity to review and amend the proposal. Deference should not be given to the Commission on the parent carrier issue; deference should be given to consumers whose important interests have been subordinated. Parliament has an excellent opportunity to correct the fatal flaw by taking these proposed rules out of the museum and putting them into practice where they are needed. If Parliament closes the loophole, five years of industry and government work could be brought to a powerful and successful conclusion, with grateful European consumers reaping the benefits of more choice and lower airfares.
…
Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. Mitchell is founder and chairman.
Parliament Must Close the Dangerous Parent Carrier Loophole
By Kevin Mitchell
Two stories, just days apart, from Brussels this November are leaving industry observers scratching their heads, wondering whether a thoughtful and coordinated travel distribution policy is beyond the European Commission’s grasp and resolved that Parliament must act decisively to close a deliberately-created loophole in the Commission’s recently proposed computer reservation system rules. This dangerous loophole is threatening to harm European travelers.
On the one hand, the Consumer Protection Commissioner announced stinging survey results, concluding that more than half of Europe’s travel web sites, including those run by some of Europe’s leading airlines, are engaged in misleading advertising and other unfair practices. The offending web sites are being given four months to get their acts together or face forced closure. Here the Commission is taking strong and decisive measures on behalf of abused consumers.
On the other hand, the Commission announced a curious new Computer Reservations System (CRS) Code of Conduct, which was supposed to ensure that consumers continue to get comprehensive and accurate fare and related information via their online or offline travel agency equipped with a CRS. Instead of achieving this goal, however, the Commission has deliberately opened a giant loophole in the coverage of these rules, so that the all-important “parent carrier” provisions will not apply to the three airline owners of Amadeus, Europe’s largest CRS. Here the Commission is taking weak and deceptive measures on behalf of abusive owner airlines and leaving consumers standing under a worthless CRS rules umbrella.
So as one part of the Commission gives a red light to airline web site abuse, the other gives a green light to airline CRS abuse. And to make the irony complete, the Transportation Commissioner justified liberalizing the CRS code because of the rise of Internet web sites as a competitive force! Perhaps the Consumer Protection and Transportation commissioners ought to meet for lunch.
As the Commission’s CRS rules review progressed during 2007, the abandonment of consumer interests accelerated. At a conference panel discussion that I moderated in London last winter, a senior EC transportation official stated that listening to consumer views would be the most important factor in deciding how to reform the rules. When groups representing millions of consumers weighed in forcefully that protections had to be retained to deal with the real-world threat of airline ownership, the Commission responded by closing its ears and cynically devising a loophole that would undermine their interests. In justifying that loophole, the Commission suggested that the rules were simply a matter of business-to-business concern -- marginalizing the consumer stake in this important policy matter.
Any casual follower of air travel distribution knows the checkered history of CRS regulation and how consumers have been negatively impacted by abusive airline practices. In the movie version of this business, the villains are dominant airlines that have predictably used their ownership of reservation systems to engage in exclusionary activities that undermine comparison shopping and the free flow of critical data. The heroes, when they show up for work, are regulators who on behalf of consumers lay down respected and enforced codes of conduct that demand marketplace fairness in the presence of airline ownership. That’s why strong CRS rules that address current industry conditions have been worth fighting for in Europe and why the regulator’s misguided attempts to play games with them on behalf of other industry participants have been vigorously opposed by independent airlines, corporate travel buyers, travel agencies, CRSs, consume r groups, travel industry associations, even the United Nations! The Consumer Protection Commissioner’s warning shots fired over the websites in November are important, but they only address the small part of the iceberg poking above the water. Lurking right below the surface is the rest of an enormous problem -- one in which consumers are at the mercy of airlines with the means and the incentive to restrict full content to the system they own and to manipulate data and functionality in ways that cement their market dominance. The stakes in the CRS debate are about much more than being misled by a couple of euros in a website bait-and-switch; they’re about hundreds of euros lost to consumers every time low-priced options are deliberately suppressed and about the airlines’ use of the reservation system they own to squeeze the breath out of anyone who would dare to compete with them.
The parent carrier rules were designed to stop these abuses from happening and over many years they’ve generally done a remarkably good job of keeping the market in balance without creating unnecessary burdens on marketplace participants. Undermining these rules by creating a loophole exempting Air France, Iberia and Lufthansa -- the owners of Amadeus, Europe’s largest CRS -- makes no sense at all. Airlines and distribution systems have always been a toxic combination, and unless regulators are willing to take the more intrusive step of banning ownership outright, a regulatory regime -- with teeth -- is required.
The results of a CRS Customer Referendum were recently released by the International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations are experts in the travel industry and represent thousands of corporations and millions of customers of the air and rail transportation systems in Europe.
This group, articulating the consumer voice, proposed solutions to close the loophole. For example, it has proposed that a 5 percent airline ownership stake in a CRS should be established for determining parent carrier status. Alternatively, they would ask for confirmation that Air France, Iberia and Lufthansa are presently parent carriers of Amadeus and an affirmation that the status of these airlines as parent carriers should be subjected to written and oral industry consultation prior to any future proposed change. These are fair, sensible approaches that would go far toward eliminating the needless consumer anxiety the Commission has injected into the process.
The shame of it is that the Commission’s proposed CRS rules are on their face an example of near-perfect “better regulation” -- it’s the undermining the Commission is doing behind its back that makes these rules a near-complete disaster. Instead of getting high praise, the Commission is getting harsh criticism -- and from virtually all corners of Europe. If the parent carrier loophole were fixed by making it unambiguously clear that Amadeus' three airline owners were covered, then the text of the proposed rules would actually be deemed to be responsive to consumer needs.
The European Parliament will next have the opportunity to review and amend the proposal. Deference should not be given to the Commission on the parent carrier issue; deference should be given to consumers whose important interests have been subordinated. Parliament has an excellent opportunity to correct the fatal flaw by taking these proposed rules out of the museum and putting them into practice where they are needed. If Parliament closes the loophole, five years of industry and government work could be brought to a powerful and successful conclusion, with grateful European consumers reaping the benefits of more choice and lower airfares.
…
Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. Mitchell is founder and chairman.
28 November 2007
TSA takes over Airline Industry Background Checks from FAA
Sacre Bleu...
Well I guess someone has to do it. But if we are to judge the TSA by its effectiveness IE because there has not been another attack and 'Cos Bush tells us so, then this is a good move.
However if you judge this by the very sloppy work we see every day at the customer facing end then I would say we have a lot to worry about.
But then the TSA has to justify its HUGE budger overruns. This amounts to many thousands of dollars per US taxpayer. Some days I just miss Karl Rove's explanations via GWB's mouth.
UGH
T
Well I guess someone has to do it. But if we are to judge the TSA by its effectiveness IE because there has not been another attack and 'Cos Bush tells us so, then this is a good move.
However if you judge this by the very sloppy work we see every day at the customer facing end then I would say we have a lot to worry about.
But then the TSA has to justify its HUGE budger overruns. This amounts to many thousands of dollars per US taxpayer. Some days I just miss Karl Rove's explanations via GWB's mouth.
UGH
T
JD Power's OTA study shows declines
Survey by California based J D Power and Associates Independent Travel Web Site Satisfaction Study, now in its third year, measures the satisfaction of travellers who book airline, hotel or car rental reservations through eight major independent travel websites: Cheaptickets.com, Expedia.com, Hotels.com, Hotwire.com, Orbitz.com, Priceline.com and Travelocity.com.
A decline - not by that much but a noticeable trend across the board shows dissatisfaction with the genre.
Let’s see what the study on supplier sites shows. Our thinking is that we are reaching a point of diminished marginal returns and (gasp) perhaps saturation. With Henry's (Forrester) study showing declines in traffic - we are clearly on a trend line here. This is true for the US market but will take quite some time to feed out to the EMEA and Asia Pac markets.
Cheers
Timothy
A decline - not by that much but a noticeable trend across the board shows dissatisfaction with the genre.
Let’s see what the study on supplier sites shows. Our thinking is that we are reaching a point of diminished marginal returns and (gasp) perhaps saturation. With Henry's (Forrester) study showing declines in traffic - we are clearly on a trend line here. This is true for the US market but will take quite some time to feed out to the EMEA and Asia Pac markets.
Cheers
Timothy
26 November 2007
The World's Worst Airports
No lesser authority thant Foreign Policy magazine has weighed in on the subject of the worst airport.
You can read the full text of the article here: http://www.foreignpolicy.com/story/cms.php?story_id=4032
If you are impatient like me.. here is the list:
Dakar
Delhi - Indira Gandhi
Moscow - Mineralnye Vody Airport
Baghdad International (is there a domestic??)
Paris - Charles de Gaulle
I of course want to add my favorite airport to the list .. London Heathrow.
You choose.
You can read the full text of the article here: http://www.foreignpolicy.com/story/cms.php?story_id=4032
If you are impatient like me.. here is the list:
Dakar
Delhi - Indira Gandhi
Moscow - Mineralnye Vody Airport
Baghdad International (is there a domestic??)
Paris - Charles de Gaulle
I of course want to add my favorite airport to the list .. London Heathrow.
You choose.
Last Gasp Attempt Seems to Fail, TPG's Bid for Iberia Not To Be
Despite a last valiant attempt by TPG to get BA to exercise its option and raise its shares in Iberia - the effort seems to have led to nothing. BA is reported in the British Newspapers of having let its option to raise its stake in the former national Spanish Airline expire.
This all but kills off the TPG effort and clears the way for a locally funded effort to succeed thus avoiding a confrontation with the EU competition authority. Perhaps after the Alitalia mess is cleared up - then BA may think again.
This all but kills off the TPG effort and clears the way for a locally funded effort to succeed thus avoiding a confrontation with the EU competition authority. Perhaps after the Alitalia mess is cleared up - then BA may think again.
22 November 2007
Now will we see SQ flying to alternative LON Airports?
The UK and Singapore governments have now signed their much heralded fully open skies agreement that comes into effect coincidently on the same day as the free'er skies between the UK and the USA.
Based on this i believe we shall see SQ flying to LGW (as CX used to and as EK does today) as well as possibly STN if they decide to get into the bulk game using a high capacity A380 as has been mooted for EK's Emirates Express service. Moving at least one flight to another airport will allow SQ to service the LHRJFK market that they have long coveted.
Based on this i believe we shall see SQ flying to LGW (as CX used to and as EK does today) as well as possibly STN if they decide to get into the bulk game using a high capacity A380 as has been mooted for EK's Emirates Express service. Moving at least one flight to another airport will allow SQ to service the LHRJFK market that they have long coveted.
Government to press ahead with 3rd Runway at LHR
Heathrow's slow decline into a third world airport may come to an arresting end by 2020. This news comes none too soon as the airport faces competition from all corners.
Logically there is no where for the airport to expand than by wiping out the community of Sipson and over 700 homes. So the battle lines are now being drawn. The environmentalists and those whose homes are going to be affected versus the Airlines, the Government, and the TUC representing the direct 180,000 jobs at the airport.
But let's consider what will be the case by 2020. FRA may well have 5 runways by then. Munich will have 4 possibly more. AMS will have 6, CDG 6 etc, etc. That's not all - Jebel Ali in Dubai will be in full swing with modern facilities on a much larger area footprint than poor old Spanish owned LHR even with its new terminal 5 and proposed terminal 6. (No I didnt forget the new replacemen for T2).
However NOT doing it would in the words of BAA "If nothing changes, Heathrow's status as a world class airport will be gradually eroded - jobs will be lost and the economy will suffer. London and the UK's nations and regions alike are reliant on the good international connections that the Heathrow hub provides. "
From a point of reference however I cannot support the notion that air and noise pollution wont increase. That is BS.
Logically there is no where for the airport to expand than by wiping out the community of Sipson and over 700 homes. So the battle lines are now being drawn. The environmentalists and those whose homes are going to be affected versus the Airlines, the Government, and the TUC representing the direct 180,000 jobs at the airport.
But let's consider what will be the case by 2020. FRA may well have 5 runways by then. Munich will have 4 possibly more. AMS will have 6, CDG 6 etc, etc. That's not all - Jebel Ali in Dubai will be in full swing with modern facilities on a much larger area footprint than poor old Spanish owned LHR even with its new terminal 5 and proposed terminal 6. (No I didnt forget the new replacemen for T2).
However NOT doing it would in the words of BAA "If nothing changes, Heathrow's status as a world class airport will be gradually eroded - jobs will be lost and the economy will suffer. London and the UK's nations and regions alike are reliant on the good international connections that the Heathrow hub provides. "
From a point of reference however I cannot support the notion that air and noise pollution wont increase. That is BS.
UK Operators Cheer as Englnd exits EURO2008
In somewhat perverse logic the UK Tour Operators are cheering the fact that England lost 2-3 to Croatia in football yesterday.
Clearing the way to have people book their holidays early and not be "distracted" by the boys in White making any progress or loosing at the various hurdles - it only goes to show that Women rule in English households.
It is a dark day in the pubs across the Sceptred Isle.
Clearing the way to have people book their holidays early and not be "distracted" by the boys in White making any progress or loosing at the various hurdles - it only goes to show that Women rule in English households.
It is a dark day in the pubs across the Sceptred Isle.
20 November 2007
Affiliate Marketing gone... Mad?
As an avid watcher of the contortions that various airlines go through to get you to be both loyal and a frequent purchaser of any old stuff... it is interesting to note what has been going on at the airlines lately.
As we all know Airlines are like lemmings. They do things often to replicate each other. So on the principal that any idea is a good idea if someone says so, then let’s look at some of the recent examples:
BA emiles store.
Following on from others BA has finally stepped into this arena. The first major player was probably Ryanair and therefore all the airlines thought they were made initially. However we see more often than not that Ryanair has become an airline to watch for innovation. With their stated goal of PAYING for passengers to fly on their planes - they do a very good - if somewhat simple job of merchandising as much as they can to their customers. So what of BA and the others?
I suggest you go and check out several of them:
Delta - Medallion Marketplace: http://www.delta.com/skymiles/use_miles/redemption_partners/medallion_marketplace/index.jsp
American Express - Rewards http://www.shopamex.com/
BA Miles estore. - http://www.ba.com/
as we have seen in recent years there has been a trend towards moving customers away from some of the best deals in the house towards spending the miles elsewhere. Given the current programs what we are seeing is a clear move to offload the miles "overhang". For an airline - miles are earned cheap and can be sold essentially at a profit to other. Thus the popularity of such programs.
However we should all be clear that there is another more sinister trend underneath this. That is that the miles are being devalued and a new higher price currency is replacing it. We have already seen the move away from the gold standard of a single price for a ticket. Now there are 2 sometimes even 4 values for a ticket online. Peak vs. off peak and promotional mile redemption rates. The exchange rate also now shows up in different forms. The popular exchange rate has been for quite some time 10,000 miles = $100 dollars of value. No more. Just look at the exchange rates and you will see what we mean. For example Amex offered recently (through December 11th 2007) 30% off miles required for a program. However the new mileage rate is actually quite higher than the old standard so this is not as much of a deal as it appears.
So you have been warned. For more information - check out Randy Petersen's web flyer (yes he of the unruly hair). http://www.webflyer.com/
Cheers
As we all know Airlines are like lemmings. They do things often to replicate each other. So on the principal that any idea is a good idea if someone says so, then let’s look at some of the recent examples:
BA emiles store.
Following on from others BA has finally stepped into this arena. The first major player was probably Ryanair and therefore all the airlines thought they were made initially. However we see more often than not that Ryanair has become an airline to watch for innovation. With their stated goal of PAYING for passengers to fly on their planes - they do a very good - if somewhat simple job of merchandising as much as they can to their customers. So what of BA and the others?
I suggest you go and check out several of them:
Delta - Medallion Marketplace: http://www.delta.com/skymiles/use_miles/redemption_partners/medallion_marketplace/index.jsp
American Express - Rewards http://www.shopamex.com/
BA Miles estore. - http://www.ba.com/
as we have seen in recent years there has been a trend towards moving customers away from some of the best deals in the house towards spending the miles elsewhere. Given the current programs what we are seeing is a clear move to offload the miles "overhang". For an airline - miles are earned cheap and can be sold essentially at a profit to other. Thus the popularity of such programs.
However we should all be clear that there is another more sinister trend underneath this. That is that the miles are being devalued and a new higher price currency is replacing it. We have already seen the move away from the gold standard of a single price for a ticket. Now there are 2 sometimes even 4 values for a ticket online. Peak vs. off peak and promotional mile redemption rates. The exchange rate also now shows up in different forms. The popular exchange rate has been for quite some time 10,000 miles = $100 dollars of value. No more. Just look at the exchange rates and you will see what we mean. For example Amex offered recently (through December 11th 2007) 30% off miles required for a program. However the new mileage rate is actually quite higher than the old standard so this is not as much of a deal as it appears.
So you have been warned. For more information - check out Randy Petersen's web flyer (yes he of the unruly hair). http://www.webflyer.com/
Cheers
19 November 2007
Ouch... nasty accident to brand new A340-600
One of the longest aircraft on the planet suffered a nasty mishap last week.
10 people were injured 3 in the cockpit seriously. Lets hope they recover soon
17 November 2007
Musings from PhocusWright 2007 - The Long Tail
Perhaps a kinder gentler PCW this year at the Omni Resort in Orlando.
Sure there was the usual Philipalooza extravaganza and some nice touches - as usual a great show. BUT the bigger news perhaps is the maturity of the market if this is reflected by the attendees and the content.
On Center Stage - the usual suspects. Michelle Peluso was back in great form now that Sabre is private (under TPG). Lots of buzz on long tail businesses which perhaps suggests that there is game over in the head of the market.
So stands out?
The airlines - conspicuous by their absence. The (what we call) Reverse Yield Management sites - Farecast et al, put on a great panel.
Google - is now the 8000 lb gorilla and becomes the center point of almost every conversation.
Social Media is real, is impactful and is a key ingredient in Travel Distribution now. BTW great party they threw!
OTAs have matured - now it’s about the consumer. Kudos to Michelle for pushing the consumer experience. I have a bet with Rod Cuthbert of Viator as to which of the big 2 will be in the ascendency in 2009. I am backing Travelocity because of Michelle. He is taking the safe way with Expedia.
Investment - LOTS of news here. Hudson Crossing (in whom PCW's Chair has a stake) was out in force. The Libra party had to transfer back to the bar for waking up the golfing neighbors on their floor. Lots of people both seeking and offering capital assistance. Chimney Rock is the new player here; finally an investment bank with some industry professionals. Good to see my old friends Mims Wright and Susan Black have re-united there.
Shock and Horror with the sell out by Libgo to Ozzies Flight Center. Heads will role.
Travelport dropped the hammer and is letting over 1100 people go. Lots of new consultants on the street in the coming months. Flo will be acting CMO and commuting to London. Come May she will be headed to the beach and good for her.
A kinder gentler Philip this year. I understand attendance was down but at those rates phew!!!!
The resort clearly had logistical issues running out of restaurant food on Wednesday night. But all in all another good effort. Next year we can expect that every attendee will be a mobile walking electronic billboard with Philip selling prime time ads on certain people. Terry Jones for example will have premium rates more akin to the back page of the New York Times.
So till next year
Cheers!
Timothy
Sure there was the usual Philipalooza extravaganza and some nice touches - as usual a great show. BUT the bigger news perhaps is the maturity of the market if this is reflected by the attendees and the content.
On Center Stage - the usual suspects. Michelle Peluso was back in great form now that Sabre is private (under TPG). Lots of buzz on long tail businesses which perhaps suggests that there is game over in the head of the market.
So stands out?
The airlines - conspicuous by their absence. The (what we call) Reverse Yield Management sites - Farecast et al, put on a great panel.
Google - is now the 8000 lb gorilla and becomes the center point of almost every conversation.
Social Media is real, is impactful and is a key ingredient in Travel Distribution now. BTW great party they threw!
OTAs have matured - now it’s about the consumer. Kudos to Michelle for pushing the consumer experience. I have a bet with Rod Cuthbert of Viator as to which of the big 2 will be in the ascendency in 2009. I am backing Travelocity because of Michelle. He is taking the safe way with Expedia.
Investment - LOTS of news here. Hudson Crossing (in whom PCW's Chair has a stake) was out in force. The Libra party had to transfer back to the bar for waking up the golfing neighbors on their floor. Lots of people both seeking and offering capital assistance. Chimney Rock is the new player here; finally an investment bank with some industry professionals. Good to see my old friends Mims Wright and Susan Black have re-united there.
Shock and Horror with the sell out by Libgo to Ozzies Flight Center. Heads will role.
Travelport dropped the hammer and is letting over 1100 people go. Lots of new consultants on the street in the coming months. Flo will be acting CMO and commuting to London. Come May she will be headed to the beach and good for her.
A kinder gentler Philip this year. I understand attendance was down but at those rates phew!!!!
The resort clearly had logistical issues running out of restaurant food on Wednesday night. But all in all another good effort. Next year we can expect that every attendee will be a mobile walking electronic billboard with Philip selling prime time ads on certain people. Terry Jones for example will have premium rates more akin to the back page of the New York Times.
So till next year
Cheers!
Timothy
12 November 2007
New ECAC GDS/CRS Rules due this week. Industry Response
The new ECAC rules are due to be announced this week. There is much anticipation of the content. In advance of this - various travel groups have come together to create a manifesto of sorts. Here is the entire press release from one of the parties - the BTC:
PRESS STATEMENT
Travel Groups Transmit Results of Customer Referendum on Reservation System Rules
Consumer choice in air and rail travel at risk
Brussels, Belgium, 13 November 2007--Europe’s business travel industry today transmitted the results of a Customer Referendum to European Commission Vice-President Jacques Barrot concerning revisions to the “Code of Conduct,” rules that govern the computerized reservations system (CRS) industry in Europe. The Referendum is signed by International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations represent thousands of corporations and millions of customers of the air and rail transportation system in Europe.
The Code has protected consumers against well-documented, anti-competitive behavior in the airline and travel distribution marketplaces when airlines own even a small percentage of a CRS. The Code currently applies to airlines that are considered “Parent Carriers” by virtue of either an ownership stake in or effective control of a CRS. History has proven that even a small percentage of airline ownership in a CRS provides an irresistible economic incentive for abuse. These abuses include privileging the “family-owned” CRS with exclusive and timely-loaded airfare content, practices that eliminate healthy CRS competition and solidify dangerous airline-owner dominance. Airline ownership of CRSs provides further incentives to undermine comparison shopping between air and rail travel options. Without applicable rules, consumers throughout Europe would be denied access to all choices and end up paying higher prices for travel .
As evidenced by numerous Commission communications, and its indifference to the repeated urging of a vast assemblage of concerned industry stakeholders for timely clarification, the Commission appears intent on redefining what constitutes a Parent Carrier and rendering the ownership test obsolete. This market-distorting development would turn the regulatory clock back 20 years before the Code was in effect and unsuspecting consumers paid supra premium prices for air travel, when for example, airfare offerings were manipulated by CRS owning airlines to hide competitors’ lower prices. Scores of millions of European consumers and hundreds of thousands of small and medium size enterprises who use smaller travel agencies are particularly vulnerable. (See analysis at http://tinyurl.com/2jaewc)
The Customer Referendum, first introduced during a Customer Hearing in Brussels on 20 September 2007, resulted in a call for (1) a threshold of a 5% ownership stake by an airline in a CRS for the purpose of establishing the status of Parent Carrier; (2) confirmation by the Commission that Air France, Iberia and Lufthansa are presently Parent Carriers of Amadeus; and (3) affirmation that the status of Air France, Iberia and Lufthansa as Parent Carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change. The Referendum follows.
EU CRS CUSTOMER REFERENDUM
WHEREAS, airline ownership of Computer Reservation Systems is the raison d’etre for adopting and maintaining a CRS Code of Conduct; and
WHEREAS, the undersigned travel industry associations have firmly committed themselves to achieving reasonable reform of the existing EC CRS Code of Conduct, while maintaining in force those core protections that effectively protect consumers from abusive conduct that has historically and inevitably resulted from even small levels of airline ownership of CRSs; and
WHEREAS, serious and ongoing concerns remain that the European Commission is improperly and unilaterally undermining airline “ownership” as an independent means of conferring “parent carrier” status under the Code; and
WHEREAS, the European Commission’s reinterpretation of “parent carrier” criteria would dramatically break with long-settled precedent, contravene industry expectations and ignore the plain language of the Code without properly submitting the change to industry participants for consultation; and
WHEREAS, CRS airline ownership continues to present a real world problem the Code must address in that Amadeus, Europe’s largest CRS, continues be over 46% owned by Air France, Iberia and Lufthansa -- major European airlines that have both the means and the incentive to abuse this ownership position in both the aviation and the distribution markets in the absence of core protections;
THEREFORE, BE IT RESOLVED THAT:
1.The revised Code of Conduct shall contain a recital that shall unambiguously state, “Whereas, air carriers which own or effectively control a CRS system, alone or jointly, can derive unfair advantages in the marketplace from such a position.” The revised Code of Conduct shall include a definition of “parent carrier” that will include an airline ownership threshold of five percent (5%) of the equity, held directly or indirectly, in a CRS company; and
2. The European Commission shall confirm in writing that Air France, Iberia and Lufthansa are presently “parent carriers” of Amadeus under the CRS Code of Conduct; and
3. The status of Air France, Iberia and Lufthansa as parent carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change; in addition, such consultation shall consider all inappropriate influencing factors throughout the distribution chain; and
4.The European Commission in any revised Code of Conduct shall retain the following core protections: mandatory participation and the bans against commission tying, display bias, and functionality discrimination; and
5. All rules other than the core protections shall be eliminated from the revised CRS Code of Conduct; however, the prerequisite for this elimination are the Commission’s enactment of Resolutions 1, 2, 3 and 4 above.
We the undersigned commit ourselves to this Referendum and urge the European Commission to enact them and thereby seize this historic opportunity to achieve Better Regulation in travel distribution.
International Airline Passengers’ Association - http://www.iapa.com/index.cfm/travel/home.welcomeAdvantage Focus Partnership - http://www.sunwaystravel.co.uk/focus-partnership.aspBelgium Association of Travel Management - http://www.batm.be/Business Travel Coalition - http://businesstravelcoalition.com/Finnish Business Travel Association - http://www.fbta.net/Institute of Travel Management - http://www.itm.org.uk/Scottish Passenger Agents’ Association - http://www.spaa.org/Travel Management Alliance - http://www.tmallc.com/new/
CONTACT: Kevin Mitchell 610.341.1850 editor@btcnewswire.com
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PRESS STATEMENT
Travel Groups Transmit Results of Customer Referendum on Reservation System Rules
Consumer choice in air and rail travel at risk
Brussels, Belgium, 13 November 2007--Europe’s business travel industry today transmitted the results of a Customer Referendum to European Commission Vice-President Jacques Barrot concerning revisions to the “Code of Conduct,” rules that govern the computerized reservations system (CRS) industry in Europe. The Referendum is signed by International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations represent thousands of corporations and millions of customers of the air and rail transportation system in Europe.
The Code has protected consumers against well-documented, anti-competitive behavior in the airline and travel distribution marketplaces when airlines own even a small percentage of a CRS. The Code currently applies to airlines that are considered “Parent Carriers” by virtue of either an ownership stake in or effective control of a CRS. History has proven that even a small percentage of airline ownership in a CRS provides an irresistible economic incentive for abuse. These abuses include privileging the “family-owned” CRS with exclusive and timely-loaded airfare content, practices that eliminate healthy CRS competition and solidify dangerous airline-owner dominance. Airline ownership of CRSs provides further incentives to undermine comparison shopping between air and rail travel options. Without applicable rules, consumers throughout Europe would be denied access to all choices and end up paying higher prices for travel .
As evidenced by numerous Commission communications, and its indifference to the repeated urging of a vast assemblage of concerned industry stakeholders for timely clarification, the Commission appears intent on redefining what constitutes a Parent Carrier and rendering the ownership test obsolete. This market-distorting development would turn the regulatory clock back 20 years before the Code was in effect and unsuspecting consumers paid supra premium prices for air travel, when for example, airfare offerings were manipulated by CRS owning airlines to hide competitors’ lower prices. Scores of millions of European consumers and hundreds of thousands of small and medium size enterprises who use smaller travel agencies are particularly vulnerable. (See analysis at http://tinyurl.com/2jaewc)
The Customer Referendum, first introduced during a Customer Hearing in Brussels on 20 September 2007, resulted in a call for (1) a threshold of a 5% ownership stake by an airline in a CRS for the purpose of establishing the status of Parent Carrier; (2) confirmation by the Commission that Air France, Iberia and Lufthansa are presently Parent Carriers of Amadeus; and (3) affirmation that the status of Air France, Iberia and Lufthansa as Parent Carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change. The Referendum follows.
EU CRS CUSTOMER REFERENDUM
WHEREAS, airline ownership of Computer Reservation Systems is the raison d’etre for adopting and maintaining a CRS Code of Conduct; and
WHEREAS, the undersigned travel industry associations have firmly committed themselves to achieving reasonable reform of the existing EC CRS Code of Conduct, while maintaining in force those core protections that effectively protect consumers from abusive conduct that has historically and inevitably resulted from even small levels of airline ownership of CRSs; and
WHEREAS, serious and ongoing concerns remain that the European Commission is improperly and unilaterally undermining airline “ownership” as an independent means of conferring “parent carrier” status under the Code; and
WHEREAS, the European Commission’s reinterpretation of “parent carrier” criteria would dramatically break with long-settled precedent, contravene industry expectations and ignore the plain language of the Code without properly submitting the change to industry participants for consultation; and
WHEREAS, CRS airline ownership continues to present a real world problem the Code must address in that Amadeus, Europe’s largest CRS, continues be over 46% owned by Air France, Iberia and Lufthansa -- major European airlines that have both the means and the incentive to abuse this ownership position in both the aviation and the distribution markets in the absence of core protections;
THEREFORE, BE IT RESOLVED THAT:
1.The revised Code of Conduct shall contain a recital that shall unambiguously state, “Whereas, air carriers which own or effectively control a CRS system, alone or jointly, can derive unfair advantages in the marketplace from such a position.” The revised Code of Conduct shall include a definition of “parent carrier” that will include an airline ownership threshold of five percent (5%) of the equity, held directly or indirectly, in a CRS company; and
2. The European Commission shall confirm in writing that Air France, Iberia and Lufthansa are presently “parent carriers” of Amadeus under the CRS Code of Conduct; and
3. The status of Air France, Iberia and Lufthansa as parent carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change; in addition, such consultation shall consider all inappropriate influencing factors throughout the distribution chain; and
4.The European Commission in any revised Code of Conduct shall retain the following core protections: mandatory participation and the bans against commission tying, display bias, and functionality discrimination; and
5. All rules other than the core protections shall be eliminated from the revised CRS Code of Conduct; however, the prerequisite for this elimination are the Commission’s enactment of Resolutions 1, 2, 3 and 4 above.
We the undersigned commit ourselves to this Referendum and urge the European Commission to enact them and thereby seize this historic opportunity to achieve Better Regulation in travel distribution.
International Airline Passengers’ Association - http://www.iapa.com/index.cfm/travel/home.welcomeAdvantage Focus Partnership - http://www.sunwaystravel.co.uk/focus-partnership.aspBelgium Association of Travel Management - http://www.batm.be/Business Travel Coalition - http://businesstravelcoalition.com/Finnish Business Travel Association - http://www.fbta.net/Institute of Travel Management - http://www.itm.org.uk/Scottish Passenger Agents’ Association - http://www.spaa.org/Travel Management Alliance - http://www.tmallc.com/new/
CONTACT: Kevin Mitchell 610.341.1850 editor@btcnewswire.com
--
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New ECAC GDS/CRS Rules due this week. Industry Response
The new ECAC rules are due to be announced this week. There is much anticipation of the content. In advance of this - various travel groups have come together to create a manifesto of sorts. Here is the entire press release from one of the parties - the BTC:
PRESS STATEMENT
Travel Groups Transmit Results of Customer Referendum on Reservation System Rules
Consumer choice in air and rail travel at risk
Brussels, Belgium, 13 November 2007--Europe’s business travel industry today transmitted the results of a Customer Referendum to European Commission Vice-President Jacques Barrot concerning revisions to the “Code of Conduct,” rules that govern the computerized reservations system (CRS) industry in Europe. The Referendum is signed by International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations represent thousands of corporations and millions of customers of the air and rail transportation system in Europe.
The Code has protected consumers against well-documented, anti-competitive behavior in the airline and travel distribution marketplaces when airlines own even a small percentage of a CRS. The Code currently applies to airlines that are considered “Parent Carriers” by virtue of either an ownership stake in or effective control of a CRS. History has proven that even a small percentage of airline ownership in a CRS provides an irresistible economic incentive for abuse. These abuses include privileging the “family-owned” CRS with exclusive and timely-loaded airfare content, practices that eliminate healthy CRS competition and solidify dangerous airline-owner dominance. Airline ownership of CRSs provides further incentives to undermine comparison shopping between air and rail travel options. Without applicable rules, consumers throughout Europe would be denied access to all choices and end up paying higher prices for travel .
As evidenced by numerous Commission communications, and its indifference to the repeated urging of a vast assemblage of concerned industry stakeholders for timely clarification, the Commission appears intent on redefining what constitutes a Parent Carrier and rendering the ownership test obsolete. This market-distorting development would turn the regulatory clock back 20 years before the Code was in effect and unsuspecting consumers paid supra premium prices for air travel, when for example, airfare offerings were manipulated by CRS owning airlines to hide competitors’ lower prices. Scores of millions of European consumers and hundreds of thousands of small and medium size enterprises who use smaller travel agencies are particularly vulnerable. (See analysis at http://tinyurl.com/2jaewc)
The Customer Referendum, first introduced during a Customer Hearing in Brussels on 20 September 2007, resulted in a call for (1) a threshold of a 5% ownership stake by an airline in a CRS for the purpose of establishing the status of Parent Carrier; (2) confirmation by the Commission that Air France, Iberia and Lufthansa are presently Parent Carriers of Amadeus; and (3) affirmation that the status of Air France, Iberia and Lufthansa as Parent Carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change. The Referendum follows.
EU CRS CUSTOMER REFERENDUM
WHEREAS, airline ownership of Computer Reservation Systems is the raison d’etre for adopting and maintaining a CRS Code of Conduct; and
WHEREAS, the undersigned travel industry associations have firmly committed themselves to achieving reasonable reform of the existing EC CRS Code of Conduct, while maintaining in force those core protections that effectively protect consumers from abusive conduct that has historically and inevitably resulted from even small levels of airline ownership of CRSs; and
WHEREAS, serious and ongoing concerns remain that the European Commission is improperly and unilaterally undermining airline “ownership” as an independent means of conferring “parent carrier” status under the Code; and
WHEREAS, the European Commission’s reinterpretation of “parent carrier” criteria would dramatically break with long-settled precedent, contravene industry expectations and ignore the plain language of the Code without properly submitting the change to industry participants for consultation; and
WHEREAS, CRS airline ownership continues to present a real world problem the Code must address in that Amadeus, Europe’s largest CRS, continues be over 46% owned by Air France, Iberia and Lufthansa -- major European airlines that have both the means and the incentive to abuse this ownership position in both the aviation and the distribution markets in the absence of core protections;
THEREFORE, BE IT RESOLVED THAT:
1.The revised Code of Conduct shall contain a recital that shall unambiguously state, “Whereas, air carriers which own or effectively control a CRS system, alone or jointly, can derive unfair advantages in the marketplace from such a position.” The revised Code of Conduct shall include a definition of “parent carrier” that will include an airline ownership threshold of five percent (5%) of the equity, held directly or indirectly, in a CRS company; and
2. The European Commission shall confirm in writing that Air France, Iberia and Lufthansa are presently “parent carriers” of Amadeus under the CRS Code of Conduct; and
3. The status of Air France, Iberia and Lufthansa as parent carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change; in addition, such consultation shall consider all inappropriate influencing factors throughout the distribution chain; and
4.The European Commission in any revised Code of Conduct shall retain the following core protections: mandatory participation and the bans against commission tying, display bias, and functionality discrimination; and
5. All rules other than the core protections shall be eliminated from the revised CRS Code of Conduct; however, the prerequisite for this elimination are the Commission’s enactment of Resolutions 1, 2, 3 and 4 above.
We the undersigned commit ourselves to this Referendum and urge the European Commission to enact them and thereby seize this historic opportunity to achieve Better Regulation in travel distribution.
International Airline Passengers’ Association - http://www.iapa.com/index.cfm/travel/home.welcomeAdvantage Focus Partnership - http://www.sunwaystravel.co.uk/focus-partnership.aspBelgium Association of Travel Management - http://www.batm.be/Business Travel Coalition - http://businesstravelcoalition.com/Finnish Business Travel Association - http://www.fbta.net/Institute of Travel Management - http://www.itm.org.uk/Scottish Passenger Agents’ Association - http://www.spaa.org/Travel Management Alliance - http://www.tmallc.com/new/
CONTACT: Kevin Mitchell 610.341.1850 editor@btcnewswire.com
--
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You are subscribed to the following list:
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PRESS STATEMENT
Travel Groups Transmit Results of Customer Referendum on Reservation System Rules
Consumer choice in air and rail travel at risk
Brussels, Belgium, 13 November 2007--Europe’s business travel industry today transmitted the results of a Customer Referendum to European Commission Vice-President Jacques Barrot concerning revisions to the “Code of Conduct,” rules that govern the computerized reservations system (CRS) industry in Europe. The Referendum is signed by International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations represent thousands of corporations and millions of customers of the air and rail transportation system in Europe.
The Code has protected consumers against well-documented, anti-competitive behavior in the airline and travel distribution marketplaces when airlines own even a small percentage of a CRS. The Code currently applies to airlines that are considered “Parent Carriers” by virtue of either an ownership stake in or effective control of a CRS. History has proven that even a small percentage of airline ownership in a CRS provides an irresistible economic incentive for abuse. These abuses include privileging the “family-owned” CRS with exclusive and timely-loaded airfare content, practices that eliminate healthy CRS competition and solidify dangerous airline-owner dominance. Airline ownership of CRSs provides further incentives to undermine comparison shopping between air and rail travel options. Without applicable rules, consumers throughout Europe would be denied access to all choices and end up paying higher prices for travel .
As evidenced by numerous Commission communications, and its indifference to the repeated urging of a vast assemblage of concerned industry stakeholders for timely clarification, the Commission appears intent on redefining what constitutes a Parent Carrier and rendering the ownership test obsolete. This market-distorting development would turn the regulatory clock back 20 years before the Code was in effect and unsuspecting consumers paid supra premium prices for air travel, when for example, airfare offerings were manipulated by CRS owning airlines to hide competitors’ lower prices. Scores of millions of European consumers and hundreds of thousands of small and medium size enterprises who use smaller travel agencies are particularly vulnerable. (See analysis at http://tinyurl.com/2jaewc)
The Customer Referendum, first introduced during a Customer Hearing in Brussels on 20 September 2007, resulted in a call for (1) a threshold of a 5% ownership stake by an airline in a CRS for the purpose of establishing the status of Parent Carrier; (2) confirmation by the Commission that Air France, Iberia and Lufthansa are presently Parent Carriers of Amadeus; and (3) affirmation that the status of Air France, Iberia and Lufthansa as Parent Carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change. The Referendum follows.
EU CRS CUSTOMER REFERENDUM
WHEREAS, airline ownership of Computer Reservation Systems is the raison d’etre for adopting and maintaining a CRS Code of Conduct; and
WHEREAS, the undersigned travel industry associations have firmly committed themselves to achieving reasonable reform of the existing EC CRS Code of Conduct, while maintaining in force those core protections that effectively protect consumers from abusive conduct that has historically and inevitably resulted from even small levels of airline ownership of CRSs; and
WHEREAS, serious and ongoing concerns remain that the European Commission is improperly and unilaterally undermining airline “ownership” as an independent means of conferring “parent carrier” status under the Code; and
WHEREAS, the European Commission’s reinterpretation of “parent carrier” criteria would dramatically break with long-settled precedent, contravene industry expectations and ignore the plain language of the Code without properly submitting the change to industry participants for consultation; and
WHEREAS, CRS airline ownership continues to present a real world problem the Code must address in that Amadeus, Europe’s largest CRS, continues be over 46% owned by Air France, Iberia and Lufthansa -- major European airlines that have both the means and the incentive to abuse this ownership position in both the aviation and the distribution markets in the absence of core protections;
THEREFORE, BE IT RESOLVED THAT:
1.The revised Code of Conduct shall contain a recital that shall unambiguously state, “Whereas, air carriers which own or effectively control a CRS system, alone or jointly, can derive unfair advantages in the marketplace from such a position.” The revised Code of Conduct shall include a definition of “parent carrier” that will include an airline ownership threshold of five percent (5%) of the equity, held directly or indirectly, in a CRS company; and
2. The European Commission shall confirm in writing that Air France, Iberia and Lufthansa are presently “parent carriers” of Amadeus under the CRS Code of Conduct; and
3. The status of Air France, Iberia and Lufthansa as parent carriers of Amadeus shall be subjected to written and oral industry consultation prior to any proposed change; in addition, such consultation shall consider all inappropriate influencing factors throughout the distribution chain; and
4.The European Commission in any revised Code of Conduct shall retain the following core protections: mandatory participation and the bans against commission tying, display bias, and functionality discrimination; and
5. All rules other than the core protections shall be eliminated from the revised CRS Code of Conduct; however, the prerequisite for this elimination are the Commission’s enactment of Resolutions 1, 2, 3 and 4 above.
We the undersigned commit ourselves to this Referendum and urge the European Commission to enact them and thereby seize this historic opportunity to achieve Better Regulation in travel distribution.
International Airline Passengers’ Association - http://www.iapa.com/index.cfm/travel/home.welcomeAdvantage Focus Partnership - http://www.sunwaystravel.co.uk/focus-partnership.aspBelgium Association of Travel Management - http://www.batm.be/Business Travel Coalition - http://businesstravelcoalition.com/Finnish Business Travel Association - http://www.fbta.net/Institute of Travel Management - http://www.itm.org.uk/Scottish Passenger Agents’ Association - http://www.spaa.org/Travel Management Alliance - http://www.tmallc.com/new/
CONTACT: Kevin Mitchell 610.341.1850 editor@btcnewswire.com
--
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11 November 2007
Diller's Empire starts to unravel, Marriage to Malone on the rocks?
In a story initially put out by the WSJ and then syndicated and picked up by such papers as the Seattle Times - titled:
Can This Marriage Be Saved?
Barry Diller and John Malone made a fortune
together. Now they may be headed for a split
There has been quite a lot of speculation about how the House that Diller built has lost much of its luster. Now it could be that Barry and John are going to split. John wants out and the two could be said to be negotiating a split.
Stay tuned but the likely outcome is a lot more pruning of the tree and someone's ego is going to get bruised.
Even as Expedia powers ahead with good results - the yield declines are not making the stock rise much despite the massive buy backs. True it is up nearly 100% on the full 12 months. We shall see....
together. Now they may be headed for a split
There has been quite a lot of speculation about how the House that Diller built has lost much of its luster. Now it could be that Barry and John are going to split. John wants out and the two could be said to be negotiating a split.
Stay tuned but the likely outcome is a lot more pruning of the tree and someone's ego is going to get bruised.
Even as Expedia powers ahead with good results - the yield declines are not making the stock rise much despite the massive buy backs. True it is up nearly 100% on the full 12 months. We shall see....
Libgo sells itself cheaply. $149 million to Flight Centre
One the largest and most venerable of US Travel institutions has been sold to the Australian mega chain - FlightCentre. First reported at Travel Weekly AU.
Itself a subject of a protracted ownership battle, TW - OZ is reporting that FlightCentre has been able to pick up both Liberty Travel (122 offices primarily in the NE USA) plus the Gogo Tours operation (22 centers around the USA) fr a very low $149 million.
This acquistion vaults FC into the top tier of US operations and the combined organization comes in at Number 10 of the largest US Travel outlets.
Itself a subject of a protracted ownership battle, TW - OZ is reporting that FlightCentre has been able to pick up both Liberty Travel (122 offices primarily in the NE USA) plus the Gogo Tours operation (22 centers around the USA) fr a very low $149 million.
This acquistion vaults FC into the top tier of US operations and the combined organization comes in at Number 10 of the largest US Travel outlets.
CanadaeConnect Conference YVR Nov 7-9
I have just returned from this excellent conference. I moderated a panel on Evolution vs Revolution. For the first time in many years, I was able to catch up directly with what is going on in the great white north. I can assure you that innovation is alive and well up there. http://www.canadaeconnect.com/
A couple of brief highlights:
Canada really does have a good handle on the Public Private Partnership model in Tourism. The Team at Tourism Canada are pushing the envelope in getting the whole market involved. Check out http://www.canada.travel/
Canada is still lagging behind the US market in adoption of online but they are tracking nicely and this is not a bad thing.
The USA could take a large leaf out of the Canada Tourism playbook. Even the "joining of forces" of TIA and TBR is not going to be enough to pull this together. As Canada has shown a strong combination of direct Government funding, focused and sane visitor policies, industry participation and standards is a must not a goal.
A strong currency does not help your tourism quotient. The rise of the Looney is going to hurt the travelers from south of the border. Increased security restraints - mostly on the US side make travel (particularly by Road) a less than positive experience.
Jens and his team over at Tourism Canada should be very proud of their work in putting on one of the best shows in Travel and Tourism in a long time. Great Content, well manage show and 300 very engaged attendees made it work well. If you get the chance to go next year - I recommend it highly.
A couple of brief highlights:
Canada really does have a good handle on the Public Private Partnership model in Tourism. The Team at Tourism Canada are pushing the envelope in getting the whole market involved. Check out http://www.canada.travel/
Canada is still lagging behind the US market in adoption of online but they are tracking nicely and this is not a bad thing.
The USA could take a large leaf out of the Canada Tourism playbook. Even the "joining of forces" of TIA and TBR is not going to be enough to pull this together. As Canada has shown a strong combination of direct Government funding, focused and sane visitor policies, industry participation and standards is a must not a goal.
A strong currency does not help your tourism quotient. The rise of the Looney is going to hurt the travelers from south of the border. Increased security restraints - mostly on the US side make travel (particularly by Road) a less than positive experience.
Jens and his team over at Tourism Canada should be very proud of their work in putting on one of the best shows in Travel and Tourism in a long time. Great Content, well manage show and 300 very engaged attendees made it work well. If you get the chance to go next year - I recommend it highly.
09 November 2007
Southwest goes all corporate
"Exciting Changes at Southwest Airlines!" screams the headline of the WN Email blast to some its customers this week announcing some new corporate initiatives. Still fumbling for a new strategy Southwest continues to push towards the corporate market. (Now being copied by Easyjet).
The highlights from the WN mail are as follows:
Enhanced Boarding – Now when you check in you’ll be assigned a boarding group (A, B, or C) and a position within that group (ex: A32) so there’s no need to wait in line. Simply board the plane when your group is called and find your favorite seat.
The Rapid Rewards A-List – Just fly 16 roundtrips in 12 months and we’ll put you on our A-List where we’ll reserve you the best boarding pass available on all your flights for an entire year, which means you’ll most likely get an A boarding pass.Log into your MySouthwest® account on southwest.com tomorrow to see how close you are to making it on the A-List. Members who qualify for the A-List as of November 8, 2007, will be receiving notification either by postal mail or e-mail within 3 to 5 days.
Freedom Awards – You can now convert two Standard Awards into one Freedom Award. With the exception of a few blackout dates, Freedom Awards are not subject to seat restrictions on Southwest Airlines flights, so if a seat’s available, it’s yours!
Business Select – When you purchase this new fare, you can guarantee that you’ll be among the first to board, and you’ll also get extra Rapid Rewards credit and a free drink to boot!
Simplified Fare Choices – Our fare choices are now even simpler! We’ve done the shopping for you, so it’s easy to find the perfect fare to meet all your travel needs.
Updated Gate Areas – We’re redesigning our gate areas to give you a more comfortable and productive space that will include comfy seats, power stations, a family area in which to enjoy those preflight moments!
Clearly this is the fork in the road for WN and its protege Ryanair.
Cheers
Timothy
The highlights from the WN mail are as follows:
Enhanced Boarding – Now when you check in you’ll be assigned a boarding group (A, B, or C) and a position within that group (ex: A32) so there’s no need to wait in line. Simply board the plane when your group is called and find your favorite seat.
The Rapid Rewards A-List – Just fly 16 roundtrips in 12 months and we’ll put you on our A-List where we’ll reserve you the best boarding pass available on all your flights for an entire year, which means you’ll most likely get an A boarding pass.Log into your MySouthwest® account on southwest.com tomorrow to see how close you are to making it on the A-List. Members who qualify for the A-List as of November 8, 2007, will be receiving notification either by postal mail or e-mail within 3 to 5 days.
Freedom Awards – You can now convert two Standard Awards into one Freedom Award. With the exception of a few blackout dates, Freedom Awards are not subject to seat restrictions on Southwest Airlines flights, so if a seat’s available, it’s yours!
Business Select – When you purchase this new fare, you can guarantee that you’ll be among the first to board, and you’ll also get extra Rapid Rewards credit and a free drink to boot!
Simplified Fare Choices – Our fare choices are now even simpler! We’ve done the shopping for you, so it’s easy to find the perfect fare to meet all your travel needs.
Updated Gate Areas – We’re redesigning our gate areas to give you a more comfortable and productive space that will include comfy seats, power stations, a family area in which to enjoy those preflight moments!
Clearly this is the fork in the road for WN and its protege Ryanair.
Cheers
Timothy
UK Agencies push back on Easyjet Fees
Easyjet's decision to participate in Amadeus andGalileo is meeting resistance from the very people it is suposed to benefit - the TMCs. The fees are (well in our opinion) astronomically high. So too it would appear thinks HRG's Chief ripped the fees and said his company will just have to provide a work around for the carrier access.
So why the high fees? Well the GDSs are not willing to compromise on certain issues - such as the additional fees of pricing (e.g. Amadeus's master pricer/value pricer series products). So the fees have been loaded up to the point where it is not really attractive.
I dont think that there is going to be much take up of this - Easyjet is actually targeting the Corporations not the Agencies (as much) with this announcement. Either way there is going to be trouble and even some unpleasantness.
What do you think?
Let me know
Post comment or timothyo@t2impact.com
So why the high fees? Well the GDSs are not willing to compromise on certain issues - such as the additional fees of pricing (e.g. Amadeus's master pricer/value pricer series products). So the fees have been loaded up to the point where it is not really attractive.
I dont think that there is going to be much take up of this - Easyjet is actually targeting the Corporations not the Agencies (as much) with this announcement. Either way there is going to be trouble and even some unpleasantness.
What do you think?
Let me know
Post comment or timothyo@t2impact.com
07 November 2007
Its Official! EasyJet is not a Full Blown HVC
Throwing out the pure LCC (Low Cost Carrier) model in favor of the HVC (Hybrid Value Carrier) has been on the cards for some time for Stelios's Orange clad heros. Now they big step, they have agreed to go into the GDS - Amadeus and Galileo for sure. Given their reach these make sense. (Sorry Tex!)
Using the model developed for Norwegian Air Shuttle, the GDS will be charging out a fee for this "service" This fee will be listed in the final pricing.
Impact?
So GOOD for Easyjet - they needed to do this for the broader reach. This gives them what they want and at a model that makes sense
VERY RISKY for Amadeus and Travelport. I believe this is a short sighted decision and will ultimately result in many conventional carriers adopting the model. However so far Amadeus has proved adept at surfing over this issue. However the number of Masterpricer transactions will be a big sticking point. I would love to have listened to that conversation. I doubt that Easyjet had good advice on this subject.
SIGH OF RELIEF for the travel agents - they now have less competition but more work and more cost
NEUTRAL for corporations - not sure its a benefit though - its more paper/processing work
BAD for LCC scanning vendors. But not that bad since Ryanair is not going to follow suit.
GREAT for Ryanair.They wasted no time in crowing over this one. Read the great press release:
http://www.ryanair.com/site/EN/news.php?yr=07&month=nov&story=gen-en-051107
For the other competition, expect Air Berlin however and several others (eg German Wings) to follow suit.
Using the model developed for Norwegian Air Shuttle, the GDS will be charging out a fee for this "service" This fee will be listed in the final pricing.
Impact?
So GOOD for Easyjet - they needed to do this for the broader reach. This gives them what they want and at a model that makes sense
VERY RISKY for Amadeus and Travelport. I believe this is a short sighted decision and will ultimately result in many conventional carriers adopting the model. However so far Amadeus has proved adept at surfing over this issue. However the number of Masterpricer transactions will be a big sticking point. I would love to have listened to that conversation. I doubt that Easyjet had good advice on this subject.
SIGH OF RELIEF for the travel agents - they now have less competition but more work and more cost
NEUTRAL for corporations - not sure its a benefit though - its more paper/processing work
BAD for LCC scanning vendors. But not that bad since Ryanair is not going to follow suit.
GREAT for Ryanair.They wasted no time in crowing over this one. Read the great press release:
http://www.ryanair.com/site/EN/news.php?yr=07&month=nov&story=gen-en-051107
For the other competition, expect Air Berlin however and several others (eg German Wings) to follow suit.
05 November 2007
Diller splits up IAC again - Only Match, Ask and Citysearch are left
Diller has decided he needs a few pennies. So he is spinning out 4 of the remaining businesses in IAC (InterActive Corp). So far the Travel businesses (except Timeshare) are all out as Expedia. Soon to follow are:
Moneytree (Lending)
HSN - Home Shopping Network
Ticketmaster
Interval International
This will leave the rump with just 3 players - Match.com, Ask.com (Search) and Citysearch.
Many of these players are now mature enough to stand on their own and return some value to Mr Diller and crew.
Cheers
Timothy
Moneytree (Lending)
HSN - Home Shopping Network
Ticketmaster
Interval International
This will leave the rump with just 3 players - Match.com, Ask.com (Search) and Citysearch.
Many of these players are now mature enough to stand on their own and return some value to Mr Diller and crew.
Cheers
Timothy
03 November 2007
Gol completes commitment for Varig's interim Fleet, Private Equity talk swirls
To celebrate the re-launch of the UK service, (GIG-GRU-LHR) Gol CEO Constantino de Oliveira "Junior" announced that they had secured 14 767-300s and 14 737-800s for the starred but ill-fated former Brazilian national carrier. The new fleet should be fully operational by the end of next year when all the aircraft are refurbished to VRG's specifications. In a very tight market for 767-300s where these planes came from is somewhat of a mystery. There is no one disposing of them at the moment especially with the delay of the replacement craft 787 Dreamliner.
At the same time - rumors are now swirling that with a reduced stock price - down nearly 50% on the year - Gol is looking to take the 30% in public hands back private. Gol has confirmed that it has received private equity interest in assisting in such a move. With Brazil's travel market starting to boom - despite the ongoing air traffic control mess - there is much to be enthusiastic. Whether the original players in Varig's bankruptcy - Mattelin Patterson and Cerberus are among those interested remains to be seen.
At the same time - rumors are now swirling that with a reduced stock price - down nearly 50% on the year - Gol is looking to take the 30% in public hands back private. Gol has confirmed that it has received private equity interest in assisting in such a move. With Brazil's travel market starting to boom - despite the ongoing air traffic control mess - there is much to be enthusiastic. Whether the original players in Varig's bankruptcy - Mattelin Patterson and Cerberus are among those interested remains to be seen.
01 November 2007
US (Mobile Carriers) halting advances in Mobility
Far be it for us to pick on another business sector unless there is a significant impact on ours. Well today I am mad and getting madder about the US Mobile carriers.
What's the problem?
Advances in mobile technology especially in the area of Mobile Data Services is enabled by technology. It is adopted by consumers if they see a benefit. That benefit is driven by usually two factors - Keeping competitive (my phone is cooler) or convenience/functionality. Classic examples are the iPhone for the former and Blackberries for the latter.
Unfortunately this means that we need contracts that are competitive and don't discriminate. Phones last for about a year. In my case I am probably pretty hard on my devices but still - each year I need to change to accommodate both drivers. Not so fast say my providers.... Sign here for a 2 year contract and oh by the way you may not have an equipment upgrade. I pay extra now for that facility so that all the people on my contracts can upgrade and get new phones every year.
Still... I see people with old phones using them because of the two drivers: They are afraid of their contract and they are afraid to change. This makes the US market a laggard in adoption of advanced mobile data systems.
Thanks - AT&T, Sprint Nextel, T-Mobile, Verizon et al for keeping us as Luddites.
What's the problem?
Advances in mobile technology especially in the area of Mobile Data Services is enabled by technology. It is adopted by consumers if they see a benefit. That benefit is driven by usually two factors - Keeping competitive (my phone is cooler) or convenience/functionality. Classic examples are the iPhone for the former and Blackberries for the latter.
Unfortunately this means that we need contracts that are competitive and don't discriminate. Phones last for about a year. In my case I am probably pretty hard on my devices but still - each year I need to change to accommodate both drivers. Not so fast say my providers.... Sign here for a 2 year contract and oh by the way you may not have an equipment upgrade. I pay extra now for that facility so that all the people on my contracts can upgrade and get new phones every year.
Still... I see people with old phones using them because of the two drivers: They are afraid of their contract and they are afraid to change. This makes the US market a laggard in adoption of advanced mobile data systems.
Thanks - AT&T, Sprint Nextel, T-Mobile, Verizon et al for keeping us as Luddites.
31 October 2007
787 Program still not out of the woods - Bair points a finger
The outgoing, recently ousted, Boeing 787 Dreamliner program manager Mike Bair has publically pointed the finger at the much vaunted Global Supply Chain system for delay problems with the new wonder plane. At this week's scheduled quarterly meeting of the Snohomish County EDC, Bair kept a pre-arranged date to give a breakfast address in Everett. He didn't hold any punches.
Much like then head of Boeing Commercial, Alan Mullay's famous comment on Washington State' competitiveness in 2003 (Quote "We suck"), Bair pointed the finger at key players in the supply chain. Afterward, Bair declined specifically to name the suppliers Boeing "won't use again." He said he was referring not just to the six first-tier airframe partners — Alenia of Italy; Mitsubishi, Fuji and Kawasaki of Japan; Spirit of Wichita (spun out from Boeing), Kansas.; Vought of Texas — but also to some of their suppliers in the second tier.
Bair made his comments pointedly at the key global supply chain partners and of course Boeing's own management of it: "That whole production system is built for 1,200 pieces. ... Everything about it was designed for 1,200 parts," he said. "We threw 30,000 at it, " indicating the Chicago based company's misunderstanding of the complexity of the processes.
It has been well understood by industry insiders that Boeing's management process was built around a system of delegation and responsibility of the individual supply chain partners. IE that the partners had to be totally responsible for design, fit and functionality of each of their chunks of the process. Boeing would then have hit teams who would act as fire fighters flying to supply chain hiccoughs and fixing the problems. The idea looks great in the boardroom and on a white board. Not so easy in practice as Airbus has learned throughout the years.
So who are the guilty parties? While we have no definitive information, we can speculate through process of elimination. Sources inside Boeing have indicated that there has been a lot of activity of Boeing engineers making European trips. With the Japanese partners being well show cased by Boeing we can only imagine that there has been less than satisfactory performance from other of the vendors.
So what is the impact on the 787 program and Boeing for the future?
Immediately we anticipate that Boeing managers will be taking a hands on role in resolving some of the issues at the problem partner/suppliers. At this stage they cannot bring the production facility back in house because there is no "in-house" facility to bring it to. With Spirit (Formerly Boeing Wichita) a separate company - there are no production capabilities that could be added without long lead time and factory facilities being created. As for a reason, " ...some of them proved incapable of doing it," Bair said. In the interview after his speech, he expressed frustration that some partners seemed "unwilling, for whatever reason." "They just didn't do what we thought they could do," Bair said. "Who knows why?"
For the long term future his will impact the 737 Replacement narrow body designed for launch and in-service by approximately 2015. Some news reporters regarded this as a boost for the Puget Sound (Seattle) region. Not so fast. For a 2015 date, selection of the manufacturing site would likely be made at least five years earlier. At one point, explaining the reason for the 787's global supply chain, Bair said it was difficult to ask the Japanese to invest money and then build their sections somewhere else than Japan.
So is the supersite concept that he outlined — supplier factories located alongside final assembly — really practical? "I don't think it's outside the realm of what may have to be done," Bair said in the interview afterward. "Toyota builds as many cars here in the U.S. as in Japan." A supersite approach would make the next aircraft assembly operation a bigger prize than the 787 plant, which has not attracted many supplier jobs to Washington. Boeing has spent millions in hiring in ex-Toyota managers as well as sending engineers and managers to Japan to understand a car like production platform for its aircraft.
So we can expect for the next 2 years a lot of PR war of words flying around as Boeing is courted to build the next gen production facility for the 737FG (Future Generation) aircraft. One thing is for certain - it won’t be Renton. I will lay bets on that one. There just isn’t enough space at the current production line for that. Since the sale of land nearby for a shopping mall and office development; only if Paccar (ironically builders of Mack and Peterbilt brand trucks) could be persuaded to move would there be anything like the room for such a supersite. Highly unlikely when there are so many other competing and suitable sites. Plus with many states itching to land the supersite - we can be assured that Texas, Alabama and California would be in the running.
"The right way to do this would be to have all those big parts across the street so you could just roll them in," Bair told his audience. "We'll see on the next airplane programs whether we can accomplish something like that." And who says it has to be in the USA?
Much like then head of Boeing Commercial, Alan Mullay's famous comment on Washington State' competitiveness in 2003 (Quote "We suck"), Bair pointed the finger at key players in the supply chain. Afterward, Bair declined specifically to name the suppliers Boeing "won't use again." He said he was referring not just to the six first-tier airframe partners — Alenia of Italy; Mitsubishi, Fuji and Kawasaki of Japan; Spirit of Wichita (spun out from Boeing), Kansas.; Vought of Texas — but also to some of their suppliers in the second tier.
Bair made his comments pointedly at the key global supply chain partners and of course Boeing's own management of it: "That whole production system is built for 1,200 pieces. ... Everything about it was designed for 1,200 parts," he said. "We threw 30,000 at it, " indicating the Chicago based company's misunderstanding of the complexity of the processes.
It has been well understood by industry insiders that Boeing's management process was built around a system of delegation and responsibility of the individual supply chain partners. IE that the partners had to be totally responsible for design, fit and functionality of each of their chunks of the process. Boeing would then have hit teams who would act as fire fighters flying to supply chain hiccoughs and fixing the problems. The idea looks great in the boardroom and on a white board. Not so easy in practice as Airbus has learned throughout the years.
So who are the guilty parties? While we have no definitive information, we can speculate through process of elimination. Sources inside Boeing have indicated that there has been a lot of activity of Boeing engineers making European trips. With the Japanese partners being well show cased by Boeing we can only imagine that there has been less than satisfactory performance from other of the vendors.
So what is the impact on the 787 program and Boeing for the future?
Immediately we anticipate that Boeing managers will be taking a hands on role in resolving some of the issues at the problem partner/suppliers. At this stage they cannot bring the production facility back in house because there is no "in-house" facility to bring it to. With Spirit (Formerly Boeing Wichita) a separate company - there are no production capabilities that could be added without long lead time and factory facilities being created. As for a reason, " ...some of them proved incapable of doing it," Bair said. In the interview after his speech, he expressed frustration that some partners seemed "unwilling, for whatever reason." "They just didn't do what we thought they could do," Bair said. "Who knows why?"
For the long term future his will impact the 737 Replacement narrow body designed for launch and in-service by approximately 2015. Some news reporters regarded this as a boost for the Puget Sound (Seattle) region. Not so fast. For a 2015 date, selection of the manufacturing site would likely be made at least five years earlier. At one point, explaining the reason for the 787's global supply chain, Bair said it was difficult to ask the Japanese to invest money and then build their sections somewhere else than Japan.
So is the supersite concept that he outlined — supplier factories located alongside final assembly — really practical? "I don't think it's outside the realm of what may have to be done," Bair said in the interview afterward. "Toyota builds as many cars here in the U.S. as in Japan." A supersite approach would make the next aircraft assembly operation a bigger prize than the 787 plant, which has not attracted many supplier jobs to Washington. Boeing has spent millions in hiring in ex-Toyota managers as well as sending engineers and managers to Japan to understand a car like production platform for its aircraft.
So we can expect for the next 2 years a lot of PR war of words flying around as Boeing is courted to build the next gen production facility for the 737FG (Future Generation) aircraft. One thing is for certain - it won’t be Renton. I will lay bets on that one. There just isn’t enough space at the current production line for that. Since the sale of land nearby for a shopping mall and office development; only if Paccar (ironically builders of Mack and Peterbilt brand trucks) could be persuaded to move would there be anything like the room for such a supersite. Highly unlikely when there are so many other competing and suitable sites. Plus with many states itching to land the supersite - we can be assured that Texas, Alabama and California would be in the running.
"The right way to do this would be to have all those big parts across the street so you could just roll them in," Bair told his audience. "We'll see on the next airplane programs whether we can accomplish something like that." And who says it has to be in the USA?
Hertz owes it all to Ryanair?
Well not quite but the numbers are pretty good. Outpacing both domestic and international regular growth by a factor of at least 2 - Hertz cozy relationship with Ryanair goes from strength to strength. So far in their best quarter of the year for Leisure activity - Hertz went as far as to comment on the value of the exclusive relationship between the two companies.
PS Sorry if the image is a bit fuzzy... use your glasses!
AZ - the final drumbeat calling the faithful?
The final round of choices for the perennial life supported Italian Airline seems to be approaching. However the final choices seem to be somewhat mundane. Approved for the final round was AF/KL, LH, SU and Air One. TPG having been unable to persuade their first partner (Mattelin Patterson) or find another one, officially threw in the towel over a week ago. Besides they have several other shiny new projects to worry about.
Now it appears there is only LH and AF/KL in the running with SU a long shot. Call it part of the fallout from the liquidity/mortgage crisis but the numbers don’t look so hot now to the potential suitors.
Realistically AF/KL has to be the lead. Remember there is so much emotion and politics wrapped up in this one - logic and commercial common sense does not really work. At least AF/KL won’t close down the Alitalia brand (even though perhaps they should!).
We just can’t imagine Prodi's somewhat shaky coalition approving a Russian or a German ownership.
We can hear Michael O'Leary's cackle from here......... Cheers Timothy
Now it appears there is only LH and AF/KL in the running with SU a long shot. Call it part of the fallout from the liquidity/mortgage crisis but the numbers don’t look so hot now to the potential suitors.
Realistically AF/KL has to be the lead. Remember there is so much emotion and politics wrapped up in this one - logic and commercial common sense does not really work. At least AF/KL won’t close down the Alitalia brand (even though perhaps they should!).
We just can’t imagine Prodi's somewhat shaky coalition approving a Russian or a German ownership.
We can hear Michael O'Leary's cackle from here......... Cheers Timothy
30 October 2007
American Prevails in first stage of battle with Google over Names
The first stage in the battle between Google and AMR's American Airlines over the use of brand names in Paid Search went to the plaintiff.
Google sued to dismiss the case andthe judge without any comment dismissed the attempt.
However things are going to be hard for AMR going forward. So far not one single suit has been resolved by a judgement in favour of the plaintiff. But then again - the suitors have all been pretty light weight.
Let see what happens. We are predicting nothing more than a messy fight and at least one unhappy result
Cheers
Timothy
Google sued to dismiss the case andthe judge without any comment dismissed the attempt.
However things are going to be hard for AMR going forward. So far not one single suit has been resolved by a judgement in favour of the plaintiff. But then again - the suitors have all been pretty light weight.
Let see what happens. We are predicting nothing more than a messy fight and at least one unhappy result
Cheers
Timothy
Roundup Since I was away last week
Dear Readers... sorry for the silence.
I spent the last weeek exploring the great American West. Driving a UHaul (aka a large 10,000lb capacity truck) between Seattle and Big Sky Montana was an experience. You get a definite appreciation for the size of the American continent. Some of those things you see from the air are hard to make out at ground level. If you want to rent a REALLY great truly ski in ski out in the Largest Ski area in the USA - then send me a ping.
But this has been an interesting week. the A380 finally started shuttling lovers (oops I mean passengers) in First Class Suites playing chess behind closed doors on SQ. But there were lots of other stories:
Kitty Hawk Airlines stopped service - flying priority freight head to head against the logistics mega carriers of UPS and Fedex is a tough battle. It just goes to show its a business of scale. Remember those little old converted prop planes we used to see around the US country side - well most of them are going bye bye - just like the Supplementals before them.
Northwest rounded out the huge profits of the spectacular second quarter.
Merril Lynch dumped their grumpy Goldman Sachs hating CEO (No relation) O'Neal. Imagine living in the same building as your sworn enemy!!!! No truth to the rumour that his payout is in United stock.
Despite all the advice - people still havent booked their Winter Vacations. In the USA - that means you are going to PAY and PAY!!! Alternatively for about the price of a one way ticket in 1st class on SQ - you can rent my condo in Big Sky!
ILFC finally commited to the Airbus A350XWB. There is no truth to the rumour that the XWB stands for Xtra Weight onBoard as a reference to the new size wize for humans in the USA. However they did up the number to 20 from 16 original orders.
SAS Dumped their Q400 Fleets. Imagine reading the story of the 3rd crash landing by SK when you are flying in said aircraft doing 3 take offs and landings to get from BZN-SEA. SK has just had enough
BA lost it 3rd franchise partner in 6 months with GB airways selling out to EasyJet and Loganair (the Trislander carrier) dumped their contract. No truth to the rumour that Kulula will dump BA when they start flying to the UK next year.
And what about those slots at LHR - 4 of them (not part of the GB airways sale) are on offer to the highest bidder. BAA/LHR has allowed EI to transfer its slots for SNN-LHR to the new service to LHR from Belfast. That story will run for a while.
More insight and analysis starting tomorrow.
Cheers
Timothy
I spent the last weeek exploring the great American West. Driving a UHaul (aka a large 10,000lb capacity truck) between Seattle and Big Sky Montana was an experience. You get a definite appreciation for the size of the American continent. Some of those things you see from the air are hard to make out at ground level. If you want to rent a REALLY great truly ski in ski out in the Largest Ski area in the USA - then send me a ping.
But this has been an interesting week. the A380 finally started shuttling lovers (oops I mean passengers) in First Class Suites playing chess behind closed doors on SQ. But there were lots of other stories:
Kitty Hawk Airlines stopped service - flying priority freight head to head against the logistics mega carriers of UPS and Fedex is a tough battle. It just goes to show its a business of scale. Remember those little old converted prop planes we used to see around the US country side - well most of them are going bye bye - just like the Supplementals before them.
Northwest rounded out the huge profits of the spectacular second quarter.
Merril Lynch dumped their grumpy Goldman Sachs hating CEO (No relation) O'Neal. Imagine living in the same building as your sworn enemy!!!! No truth to the rumour that his payout is in United stock.
Despite all the advice - people still havent booked their Winter Vacations. In the USA - that means you are going to PAY and PAY!!! Alternatively for about the price of a one way ticket in 1st class on SQ - you can rent my condo in Big Sky!
ILFC finally commited to the Airbus A350XWB. There is no truth to the rumour that the XWB stands for Xtra Weight onBoard as a reference to the new size wize for humans in the USA. However they did up the number to 20 from 16 original orders.
SAS Dumped their Q400 Fleets. Imagine reading the story of the 3rd crash landing by SK when you are flying in said aircraft doing 3 take offs and landings to get from BZN-SEA. SK has just had enough
BA lost it 3rd franchise partner in 6 months with GB airways selling out to EasyJet and Loganair (the Trislander carrier) dumped their contract. No truth to the rumour that Kulula will dump BA when they start flying to the UK next year.
And what about those slots at LHR - 4 of them (not part of the GB airways sale) are on offer to the highest bidder. BAA/LHR has allowed EI to transfer its slots for SNN-LHR to the new service to LHR from Belfast. That story will run for a while.
More insight and analysis starting tomorrow.
Cheers
Timothy