Oh Best Beloved (I am feeling rather Kipling like today)... a good segue into exhorting you to vote for Kiva in the American Express Member's Projects final.
Yoi now have 3 days to vote. In fact if you already voted for another project - you can still change your vote since only the last one counts.
So if you are an American Express Card holder - even if you are not and still want to vote please go here and VOTE. It wont cost you anything but could help Kiva land a BIG prize.
http://www.membersproject.com/
Your votes so far have already moved Kiva up from #4 to #3. so one more push for the Gipper.
MANY thanks and Cheers
The Professor is eternally grateful.
10 October 2008
Heads up - The Professor is on the Road thru Halloween
Dear All
I shall be out of the office and on the road for the next 2 weeks.
Europe next week and then Asia the following week - back to the USA or maybe even Mexico.
In the mean time I will endeavor to blog on any stories that are of relevance.
I am soliciting anyone who would like to be a guest blogger at any time - please contact me directly and I will be happy to post your story.
Cheers
The Professor
I shall be out of the office and on the road for the next 2 weeks.
Europe next week and then Asia the following week - back to the USA or maybe even Mexico.
In the mean time I will endeavor to blog on any stories that are of relevance.
I am soliciting anyone who would like to be a guest blogger at any time - please contact me directly and I will be happy to post your story.
Cheers
The Professor
LeisureLogix - back in stealth mode?
Oh Best Beloved..........
I received an email this morning from Chicke Fitzgerald of LeisureLogix in response to one of my comments which was picked up by 4Hoteliers.
Here is the original article - well actually how it appeared in 4Hoteliers.com :
http://www.4hoteliers.com/4hots_nshw.php?mwi=5049
and then Chicke's response.
http://distribution-solutionz.blogspot.com/
Comments are always welcome!
Best of luck today
Cheers
I received an email this morning from Chicke Fitzgerald of LeisureLogix in response to one of my comments which was picked up by 4Hoteliers.
Here is the original article - well actually how it appeared in 4Hoteliers.com :
http://www.4hoteliers.com/4hots_nshw.php?mwi=5049
and then Chicke's response.
http://distribution-solutionz.blogspot.com/
Comments are always welcome!
Best of luck today
Cheers
09 October 2008
Latest Amadeus says... Technology more important than GDS rebates
In the early 1990s there was a great TV show intended for kids but with great satirical overtones called "Dinosaurs". It aired for 3 seasons on the US ABC network. It was very American humour but the satire was global.
It played to contemporary themes of overbearing corporations who would not tell the truth to their customers or their workers as seen through the eyes of a drone worker Earl Sinclair. Earl worked for the WeSaySo Corporation.
Sometimes Amadeus reminds me of the this company.
Their latest pronouncement comes from Australia. Speaking to Oz Travel Trade rag "Travel Today", Amadeus Australia managing director Tim Russell said GDS rebates - incentives given to agency chains to offset transactional charges - were slowly becoming less of a deciding factor than the functionality of the systems.
OK - so I have to call him on this one. Hogwash.
Actually on 2 counts.
Firstly cash is always more important that technology and functionality. However this notion hides a multitude of assumed sins which I wont bore you with now.
Secondly the hidden message is that Incentives are going away slowly but surely and Tim is actually preparing the market for this eventuality. The airlines HATE the fact that the GDS's are paying these fees basically from their pocket. Full Content GDS contracts were supposed to get past this problem but so far they have failed to achieve that. GDS revenues keep rising even amidst falling transaction counts and incentive fees also keep rising. But there is a point where the balance is lost. I think we are there and some airlines are already achieving savings through aggressive GDS bypass.
Ironically it is technology that is becoming the differentiator in all this. Why? Because distribution technology based on GDS bypass technology now exists that can be delivered at a lower price point than GDS's can compete at. So Tim Russell's statement is technically true even though it is not what he meant. Be careful what you wish for - Tim - it may actually happen that Agencies decide that Technology is important but that GDS based technology does not fit the bill any more.
Cheers
It played to contemporary themes of overbearing corporations who would not tell the truth to their customers or their workers as seen through the eyes of a drone worker Earl Sinclair. Earl worked for the WeSaySo Corporation.
Sometimes Amadeus reminds me of the this company.
Their latest pronouncement comes from Australia. Speaking to Oz Travel Trade rag "Travel Today", Amadeus Australia managing director Tim Russell said GDS rebates - incentives given to agency chains to offset transactional charges - were slowly becoming less of a deciding factor than the functionality of the systems.
OK - so I have to call him on this one. Hogwash.
Actually on 2 counts.
Firstly cash is always more important that technology and functionality. However this notion hides a multitude of assumed sins which I wont bore you with now.
Secondly the hidden message is that Incentives are going away slowly but surely and Tim is actually preparing the market for this eventuality. The airlines HATE the fact that the GDS's are paying these fees basically from their pocket. Full Content GDS contracts were supposed to get past this problem but so far they have failed to achieve that. GDS revenues keep rising even amidst falling transaction counts and incentive fees also keep rising. But there is a point where the balance is lost. I think we are there and some airlines are already achieving savings through aggressive GDS bypass.
Ironically it is technology that is becoming the differentiator in all this. Why? Because distribution technology based on GDS bypass technology now exists that can be delivered at a lower price point than GDS's can compete at. So Tim Russell's statement is technically true even though it is not what he meant. Be careful what you wish for - Tim - it may actually happen that Agencies decide that Technology is important but that GDS based technology does not fit the bill any more.
Cheers
S&P downgrades Southwest to BBB+
Ouch,
Southwest the last US airline with an A anything rating just got downgraded by S&P.
Clearly the ratings agencies are not taking any chances and have themselves turned bearish on everyone. Southwest just happened to be caught in the stampede.
Nothing wrong with WN - just the same as everyone else. ... or is there?
I have to say I am a little concerned at their load factors for September. With everyone cutting capacity WN needs to be either more aggressive in launching new markets or cutting. it has to do one or the other or both. Doing neither is not an option.
Southwest the last US airline with an A anything rating just got downgraded by S&P.
Clearly the ratings agencies are not taking any chances and have themselves turned bearish on everyone. Southwest just happened to be caught in the stampede.
Nothing wrong with WN - just the same as everyone else. ... or is there?
I have to say I am a little concerned at their load factors for September. With everyone cutting capacity WN needs to be either more aggressive in launching new markets or cutting. it has to do one or the other or both. Doing neither is not an option.
OAG revises its forecasts - we say its worse
Following the 3rd quarter and September results from the US majors - OAG has revised its numbers downwards. Basing this new figure on flights filed through the end of the year - OAG is showing a slowing trend worldwide - it says not as bad as originally feared. I say baloney - its worse. Here are OAG's details.
The global picture has improved slightly, with the winter schedules showing a 5.2% decline in capacity and a 6.1% decline in the number of flights. OAG’s earlier analysis in August showed a 7% drop for both measures. The latest figures reveal that the world’s airlines will offer 46.3 million fewer seats for October, November and December 2008 and 451,000 fewer flights.
The US domestic market will account for 21.4 million of the cutback in available seats, or 46% of the global decline and a staggering 59% of the global drop in frequencies with 265,000 fewer flights.
The OAG analysis takes into account all future schedules filed by the airlines to date, to provide a comprehensive snapshot of planned airline activity for October to December 2008 with comparisons tracking back 10 years.
Flights and capacity within Europe are also showing worsening cutbacks. Figures for intra-Europe flights are now 5% lower than for Q4 2007 (forecast at -2.7% in August), and seat capacity is now 5.6% lower compared with the previous analysis drop of 2.8% a couple of months ago.
Earlier indications for Asia are not as bad as feared, although still worse than the global figure with a 6.5% fall in capacity and a 7.1% drop in the number of flights.
The effect of what is happening within the US and Europe is seen by the shift on transatlantic and transpacific routes. In August, OAG figures showed that both were showing some growth. The latest figures reveal a capacity reduction of 2.9% for transatlantic capacity, reversing the earlier schedule analysis of 2% growth and a drop of 3.1% on transpacific routes compared with the previous nominal rise of 0.2% year on year.
The impact of capacity cutbacks on the world’s airports remains high. OAG’s analysis reveals that 219 of the world’s airports are losing scheduled air service altogether, compared to the August figure of 275. Of these, 33 are in the US (15% of the global total); 94 (43%) are in the Asia Pacific region and 45 (21%) are in Europe.
So in looking at Septembers actual numbers load factors are way off. We are also seeing something that OAG would not be able to report on - dynamic cancellations. We are seeing a lot of those. So far for 2008 the first half of the year saw ad hoc cancellations at twice the 2007 rate.
So we estimate the total US capacity will be cut by a level of about 10% domestically vs the OAG's numbers which are just over 5%. Hmmm - whose right? Let's see how the numbers stack up at the end of the year.
One thing is pretty sure - we are going to see US domestic airline capacity cuts in January at a further level than we have now. We are estimating that the cuts could be as much as a further 5 points. if fuel stays down at this level - the US airlines may choose to keep the capacity in the air in order to stimulate more activity and ancillary revenue. So far we are seeing dramatic cut backs in all forms of oil usage - including a significant cut in petrol and kerosene usage. The speed with which the inventories built back up after Ike has been amazing. Consumers are learning new tricks - like conservation.
So as far as the market for airline products is concerned - we are not quite at the bottom yet.
Cheers
The global picture has improved slightly, with the winter schedules showing a 5.2% decline in capacity and a 6.1% decline in the number of flights. OAG’s earlier analysis in August showed a 7% drop for both measures. The latest figures reveal that the world’s airlines will offer 46.3 million fewer seats for October, November and December 2008 and 451,000 fewer flights.
The US domestic market will account for 21.4 million of the cutback in available seats, or 46% of the global decline and a staggering 59% of the global drop in frequencies with 265,000 fewer flights.
The OAG analysis takes into account all future schedules filed by the airlines to date, to provide a comprehensive snapshot of planned airline activity for October to December 2008 with comparisons tracking back 10 years.
Flights and capacity within Europe are also showing worsening cutbacks. Figures for intra-Europe flights are now 5% lower than for Q4 2007 (forecast at -2.7% in August), and seat capacity is now 5.6% lower compared with the previous analysis drop of 2.8% a couple of months ago.
Earlier indications for Asia are not as bad as feared, although still worse than the global figure with a 6.5% fall in capacity and a 7.1% drop in the number of flights.
The effect of what is happening within the US and Europe is seen by the shift on transatlantic and transpacific routes. In August, OAG figures showed that both were showing some growth. The latest figures reveal a capacity reduction of 2.9% for transatlantic capacity, reversing the earlier schedule analysis of 2% growth and a drop of 3.1% on transpacific routes compared with the previous nominal rise of 0.2% year on year.
The impact of capacity cutbacks on the world’s airports remains high. OAG’s analysis reveals that 219 of the world’s airports are losing scheduled air service altogether, compared to the August figure of 275. Of these, 33 are in the US (15% of the global total); 94 (43%) are in the Asia Pacific region and 45 (21%) are in Europe.
So in looking at Septembers actual numbers load factors are way off. We are also seeing something that OAG would not be able to report on - dynamic cancellations. We are seeing a lot of those. So far for 2008 the first half of the year saw ad hoc cancellations at twice the 2007 rate.
So we estimate the total US capacity will be cut by a level of about 10% domestically vs the OAG's numbers which are just over 5%. Hmmm - whose right? Let's see how the numbers stack up at the end of the year.
One thing is pretty sure - we are going to see US domestic airline capacity cuts in January at a further level than we have now. We are estimating that the cuts could be as much as a further 5 points. if fuel stays down at this level - the US airlines may choose to keep the capacity in the air in order to stimulate more activity and ancillary revenue. So far we are seeing dramatic cut backs in all forms of oil usage - including a significant cut in petrol and kerosene usage. The speed with which the inventories built back up after Ike has been amazing. Consumers are learning new tricks - like conservation.
So as far as the market for airline products is concerned - we are not quite at the bottom yet.
Cheers
So you didnt get the invite to Google's Travelfest in NYC?
Well actually neither did I, but yesterday on October 8th about a 100 of your closest friendly Travel Marketeers did at the TravelThink 2008 event in New York. Google put on a full court press including Tim Armstrong, president of the Americas for Google.
The Professor knew the event was happening but was looking for someone to give me the inside scoop - so far only little bits and pieces. A little dickie birdy did give me some insight so here goes:
Google of course wants the travel industry to do well. It has a significant revenue stream that is sourced from the Travel Industry. Like many other consumer facing businesses Google has captured the cold hard marketing dollars like has never been seen. One wag I spoke to thinks that Google makes more money from the Travel Industry than Microsoft does. Now there's a thought. I of course have no way to validate it.They presented some statistics from Jupiter (hmmm they don't seem to be too pally with PCW and Forrester).
According to the Google sponsored study by Jupiter 94% of travel executives said online advertising would provide the strongest return on investment compared to other media in the next 12 months. Some 20% of travel advertisers will spend more than $10 million on online marketing. Folks that's probably several billions of dollars all headed Google's way. Latest stats from the IAB - the Interactive Advertising Bureau - in their report released Tuesday showed that tracked leisure travel-related ad dollars during the first six months were essentially slightly down, dropping from $687 million to $667 million, or from 7% to 6% of total spending. However in our analysis we think this under- represents the category as a whole and that the number is much higher and doesnt cover specialist sites as well as the generalists. It is also not covering the business sectors.
So banish that idea called Troogle from your minds - this is about ensuring that Google continues to capture the lion's share of your ad and marketing dollars. Travel is a VERY BIG category for Google's revenue. When travel falls - then Google's revenues dive at the same time. However don't feel sorry for them just yet - there is still a fundamental shift of revenue from traditional media to Google's pockets so the sector is still growing. And what it cant get directly it will try and get in cooperation with Yahoo in their new ad deal.
So chaps you are essentially shifting cash to one of the world's most profitable companies.
That said there were some interesting things that came out of the meetings...
Google and DoubleClick (its recent purchase) which has dumped even more revenue streams to Sergey's and Larry's fuel fund for their 767, are looking to bring together more interesting elements of search. One of their latest revelations is the focus on behavioral targeting or BT as they call it. "(DoubleClick) understands conversions through display and we know about conversions through search," said Tim Clark. Add in Yahoo once the DOJ rubber stamps it and you have a lot of information on the way people behave. Google is positively Orwellian in what it knows about us.
Among the software (read ways to get you to part with more money) that Google is rolling out to help travel advertisers is a tool that suggests appropriate keywords based on spikes in certain search terms. By spotting a rising search term early such as "staycation," a travel company can develop marketing programs suited to emerging industry trends. Just don't tell Aer Lingus that or they might understand what the word means...
Another new tool that those nice people at Google think could benefit travel marketers especially OTAs and cross product sellers is something that seeks to cross-match surges around certain search terms with terms used on a company's site to come up with new keywords. The technology could yield 50 to 100 new keywords may not have recognized before to generate conversions, said Penry Price (sorry for the previous typo but apparently I am not the only one to make the mistake in print - again apologies) - N. American head of ad sales at the Search Giant. Given the learned behavior of the consumer to input more words into the search string this will likely drive up the cost of under utilized key words. It is also a threat to the add on SEO players.
We see Google trying to capture the link from the broadcast media - particularly TV - to search. We foresee a time when Google will actually predict search traffic based on its knowledge of broadcast programming and ad scheduling and jack up keyword pricing just prior to that time. (If they don't already do it).
Call me paranoid but while its a great tool - Google does seem to have a lock on the whole revenue stream side and its becoming bigger and stronger all the time.
And we used to think Microsoft was the evil empire....
Cheers
The Professor knew the event was happening but was looking for someone to give me the inside scoop - so far only little bits and pieces. A little dickie birdy did give me some insight so here goes:
Google of course wants the travel industry to do well. It has a significant revenue stream that is sourced from the Travel Industry. Like many other consumer facing businesses Google has captured the cold hard marketing dollars like has never been seen. One wag I spoke to thinks that Google makes more money from the Travel Industry than Microsoft does. Now there's a thought. I of course have no way to validate it.They presented some statistics from Jupiter (hmmm they don't seem to be too pally with PCW and Forrester).
According to the Google sponsored study by Jupiter 94% of travel executives said online advertising would provide the strongest return on investment compared to other media in the next 12 months. Some 20% of travel advertisers will spend more than $10 million on online marketing. Folks that's probably several billions of dollars all headed Google's way. Latest stats from the IAB - the Interactive Advertising Bureau - in their report released Tuesday showed that tracked leisure travel-related ad dollars during the first six months were essentially slightly down, dropping from $687 million to $667 million, or from 7% to 6% of total spending. However in our analysis we think this under- represents the category as a whole and that the number is much higher and doesnt cover specialist sites as well as the generalists. It is also not covering the business sectors.
So banish that idea called Troogle from your minds - this is about ensuring that Google continues to capture the lion's share of your ad and marketing dollars. Travel is a VERY BIG category for Google's revenue. When travel falls - then Google's revenues dive at the same time. However don't feel sorry for them just yet - there is still a fundamental shift of revenue from traditional media to Google's pockets so the sector is still growing. And what it cant get directly it will try and get in cooperation with Yahoo in their new ad deal.
So chaps you are essentially shifting cash to one of the world's most profitable companies.
That said there were some interesting things that came out of the meetings...
Google and DoubleClick (its recent purchase) which has dumped even more revenue streams to Sergey's and Larry's fuel fund for their 767, are looking to bring together more interesting elements of search. One of their latest revelations is the focus on behavioral targeting or BT as they call it. "(DoubleClick) understands conversions through display and we know about conversions through search," said Tim Clark. Add in Yahoo once the DOJ rubber stamps it and you have a lot of information on the way people behave. Google is positively Orwellian in what it knows about us.
Among the software (read ways to get you to part with more money) that Google is rolling out to help travel advertisers is a tool that suggests appropriate keywords based on spikes in certain search terms. By spotting a rising search term early such as "staycation," a travel company can develop marketing programs suited to emerging industry trends. Just don't tell Aer Lingus that or they might understand what the word means...
Another new tool that those nice people at Google think could benefit travel marketers especially OTAs and cross product sellers is something that seeks to cross-match surges around certain search terms with terms used on a company's site to come up with new keywords. The technology could yield 50 to 100 new keywords may not have recognized before to generate conversions, said Penry Price (sorry for the previous typo but apparently I am not the only one to make the mistake in print - again apologies) - N. American head of ad sales at the Search Giant. Given the learned behavior of the consumer to input more words into the search string this will likely drive up the cost of under utilized key words. It is also a threat to the add on SEO players.
We see Google trying to capture the link from the broadcast media - particularly TV - to search. We foresee a time when Google will actually predict search traffic based on its knowledge of broadcast programming and ad scheduling and jack up keyword pricing just prior to that time. (If they don't already do it).
Call me paranoid but while its a great tool - Google does seem to have a lock on the whole revenue stream side and its becoming bigger and stronger all the time.
And we used to think Microsoft was the evil empire....
Cheers
08 October 2008
Realignment is a Euphemism for ??? AF Yanks LHR-LAX
Ah those heady days in March when oil was leaping and bounding and Heathrow was opening up.
Fast forward... global slump, oil in free fall and AF is yanking the much ballyhooed LHR-LAX flight.
"We need the plane elsewhere".
Well the truth is it didn't work. Loads and yields were not up to snuff.
So plan B...
The 777 will be deployed to LHR-JFK giving the DL-AF-KL-NW alliance 3 Nonstops between NYC and LHR.
If this is the decision for the big twin - can the SEA-LHR route be far behind?
What is clear that there is now excess capacity on the Transatlantic routes. Even the cutting back at LGW is not taking up the necessary slack. There will need to be more reductions.
Hmmm so much for Open Skies?
Will this bolster the case for BAAABI?
Time will tell
Cheers
Fast forward... global slump, oil in free fall and AF is yanking the much ballyhooed LHR-LAX flight.
"We need the plane elsewhere".
Well the truth is it didn't work. Loads and yields were not up to snuff.
So plan B...
The 777 will be deployed to LHR-JFK giving the DL-AF-KL-NW alliance 3 Nonstops between NYC and LHR.
If this is the decision for the big twin - can the SEA-LHR route be far behind?
What is clear that there is now excess capacity on the Transatlantic routes. Even the cutting back at LGW is not taking up the necessary slack. There will need to be more reductions.
Hmmm so much for Open Skies?
Will this bolster the case for BAAABI?
Time will tell
Cheers
No more bets on which airline is next....
Paddy Power has now officially withdrawn the betting on the next airline to go bankrupt.
After some media noise (all noise is good noise as far as they are concerned), Paddy's withdrew the bets saying the bet had “run its course”
Dang it I was about to put a boat load down on several carriers..........
Cheers
After some media noise (all noise is good noise as far as they are concerned), Paddy's withdrew the bets saying the bet had “run its course”
Dang it I was about to put a boat load down on several carriers..........
Cheers
07 October 2008
The Party's Getting Started - TAM is the Star!
Yes friends the new Star of Latin America is TAM. TAM has been unanimously voted in as the next airline to join the Star Alliance. Not really a surprise but it fills a hole nicely.
So what's next - Oneworld is likely to want to get closer to LAN and then there is TACA still sitting out there, currently they have code shares etc with Iberia, Avianca and United. The odd one out at the moment is Skyteam who doesn't have anyone south of Aeromexico.
Let's Salsa!
So what's next - Oneworld is likely to want to get closer to LAN and then there is TACA still sitting out there, currently they have code shares etc with Iberia, Avianca and United. The odd one out at the moment is Skyteam who doesn't have anyone south of Aeromexico.
Let's Salsa!
So you want to be in Airlines? Good Idea?
Recently I have had the pleasure of working with a new tool to analyze airline data from the US Dept of Transport thanks to the nice folks at IAG.
So I decided to take a look at how good the performance was for the major US carriers:
It is not pretty. There is a sea of red ink. And this doesn't include the soon to be historically bad 2008.
In a 10 year study we showed that ALL US Majors actually had a negative return of 2.39%. In fact for the target group only in 4 of the 10 years did they collectively return a profit.
No prizes for guessing who the standout was - Southwest was the only carrier to report a consistent profit during the entire survey period.
I am going to be running the database through its paces in the coming weeks - however for now I can see that the business does not look healthy. It is interesting to draw analogies between the financial markets and the airline markets.
The DoT data presented here comes from IAG’s (www.iag-inc.com) new online service where users can mine numerous databases dating back to 1998. The data is easily accessed and manipulated using Excel pivot tables. Running millions of records takes a few seconds. IAG offers full access to subscribers but also offers customs runs for people who don’t need full access.
If you are interested in looking at some of the results - send me an email and I will send you the recap 10 year picture for the US Majors.
Cheers
Timothy
Fire Questions at the Professor and Other Notables
OK - Shameless plug time (been doing a lot of that lately).
WIT - web in Travel is on October 21-22 in Singapore. This is the 4th year for the show - it is a great congregation of non-commercial comment and analysis with a great cast and audience.
This year - I shall be doing double duty as a moderator and a panelist. Plus I get to do a stint as a debater. And if you stay for the party - I hope to suitably embarrass myself in public.
For more details - please go to www.webintravel.com.
Tim Hughes - who writes one of the better blogs and one of the few that I read everyday will be firing questions so if you want to come along and join him in a form of twisted fun - please feel free.
http://tims-boot.blogspot.com/2008/10/ever-wanted-to-ask-questions-of.html
Siew Hoon let's me read the comment forms after the events and they are indicative of the quality she puts into the show's organization and selection of talent.
So if you want to be inspired and challenged this is the place to come (even if its all the way to Singapore!). There are two other shows going on at the same time HSMAI and ITB Asia so you can really benefit. If you are going to be in Asia or if there is one event set you want to attend then this is a must be place.
Cheers
WIT - web in Travel is on October 21-22 in Singapore. This is the 4th year for the show - it is a great congregation of non-commercial comment and analysis with a great cast and audience.
This year - I shall be doing double duty as a moderator and a panelist. Plus I get to do a stint as a debater. And if you stay for the party - I hope to suitably embarrass myself in public.
For more details - please go to www.webintravel.com.
Tim Hughes - who writes one of the better blogs and one of the few that I read everyday will be firing questions so if you want to come along and join him in a form of twisted fun - please feel free.
http://tims-boot.blogspot.com/2008/10/ever-wanted-to-ask-questions-of.html
Siew Hoon let's me read the comment forms after the events and they are indicative of the quality she puts into the show's organization and selection of talent.
So if you want to be inspired and challenged this is the place to come (even if its all the way to Singapore!). There are two other shows going on at the same time HSMAI and ITB Asia so you can really benefit. If you are going to be in Asia or if there is one event set you want to attend then this is a must be place.
Cheers
American Introduces A la Carte Pricing
In their exhaustive and never ending search to lower YOUR travel costs - American is happily going to move to a la carte pricing. Thus you too will save money and the airline will be happy to help you pay for all those extras your previously enjoyed at NO CHARGE.
The success of the Tango/Tango Plus model at Air Canada and the extra yields that have come from the LCC's unbundled the cost of the airline ticket is driving AA to this remarkable decision.
So here is the formula:
Full Service Network Carriers - all frills = UPC - Unbundled Pricing Carrier.
Now all airlines can have the same nomenclature and peace is restored to the world.
So no more LCCs FSCs, Network or Legacy carriers, Hybrid (HVCs) or any other type of airline - now everyone is UPC.
Here are 2 articles from yesterday's newspapers on the subject:
http://seattlepi.nwsource.com/business/1310ap_airlines_unbundling.html
http://seattlepi.nwsource.com/business/381854_airfare06.html
(Only read one - they are really the same).
Now there are of course issues here.
1. Government is being hit with a withdrawal of taxes. In the case of United it will be moving $52.5 million of potential tax receipts away from the ATFF.
2. Good luck getting a refund on these new charges
3. Good luck in understanding. One of the articles talks about credit being given for AC illustrating what the customer can do.
So I beg to differ on the issue of ease of understanding. For AC's transparency i submit a display Vancouver to Toronto. For how difficult it is compared to someoneelse's I submit Southwest's display LAX-Houston Hobby.
Same dates - as an experiment try this yourself at home. time yourself on how long it takes you to find the lowest fare on the page and the most expensive fare on the page for each carrier (IN COACH!!!).
It isn't easy... There is a famous quote by the Revenue Management guy at Air Canada who was heard bemoaning his worst problem was there were not enough letters in the alphabet!
So go figure...
This is going to be more obfuscation on airline pricing and more customer confusion, less government revenues and the GDS's dont have a prayer in keeping up.
Result - unhappy campers all round and more loss of airline brand equity.
Just the Professor's humble opinion.
Cheers
06 October 2008
Fuel Surcharges - part of the ticket or not?
It seems the airlines want their cake and eat it too.
Good case in point is the UK where the airlines are upsetting the Corp Travel people with their imposition of the fuel surcharge process. We have known for some time that this is a problem yet it is really only now starting to appear as a major issue.
http://www.abtn.co.uk/Confusion_over_status_of_fuel_surcharges
It seems the airlines want to treat the fuel surcharge as part of a ticket for the purposes of the rule of the ticket or in general to collect the cash and then not refund it. But not to collect or pay tax on it that is due IF it is part of the ticket.
Now perhaps will someone in the tax authorities please think about this and decide for the airlines who are clearly not thinking straight on this issue.
I have tried to find any rules on the subject of refunds of these fees and surcharges and cannot find any.
Cheers
Good case in point is the UK where the airlines are upsetting the Corp Travel people with their imposition of the fuel surcharge process. We have known for some time that this is a problem yet it is really only now starting to appear as a major issue.
http://www.abtn.co.uk/Confusion_over_status_of_fuel_surcharges
It seems the airlines want to treat the fuel surcharge as part of a ticket for the purposes of the rule of the ticket or in general to collect the cash and then not refund it. But not to collect or pay tax on it that is due IF it is part of the ticket.
Now perhaps will someone in the tax authorities please think about this and decide for the airlines who are clearly not thinking straight on this issue.
I have tried to find any rules on the subject of refunds of these fees and surcharges and cannot find any.
Cheers
05 October 2008
Comcast usage caps - usage caps in general are bad
Dearly Beloved,
I live in the USA - land of the free etc. Well apparently not so free any more. Comcast the largest provider of cable internet in the country (I think) recently introduced new policy that limits the amount of bandwidth that any user can take advantage of. Claiming that the average usage is only 2-3 GB a month they have set a new limit of 250 GB a month.
So you say no problem right? Actually you should be scared and you should be concerned that the limiting of usage becomes a big issue.
On their website - they claim that this is really not going to hurt. So I downloaded their recommended (freeware I might add) tool to see how much I was using:
http://www.shaplus.com/bandwidth-meter/index.htm
In the space of 10 mins I was using more than 3MB a minute. (I like listening to Pandora). Sending and receiving emails etc is one thing but usage of the web and watching webcasts and downloading documents is a common activity. I understand that AOL and others especially in UK have already imposed limits. This is getting ugly.
Anyway - I think I will be OK - but - you might want to consider how much you actually use. Remember I am not hosting a server or anything like that so this is plain vanilla activity.
You have been warned - this isn't exactly comcastic.
Cheers
I live in the USA - land of the free etc. Well apparently not so free any more. Comcast the largest provider of cable internet in the country (I think) recently introduced new policy that limits the amount of bandwidth that any user can take advantage of. Claiming that the average usage is only 2-3 GB a month they have set a new limit of 250 GB a month.
So you say no problem right? Actually you should be scared and you should be concerned that the limiting of usage becomes a big issue.
On their website - they claim that this is really not going to hurt. So I downloaded their recommended (freeware I might add) tool to see how much I was using:
http://www.shaplus.com/bandwidth-meter/index.htm
In the space of 10 mins I was using more than 3MB a minute. (I like listening to Pandora). Sending and receiving emails etc is one thing but usage of the web and watching webcasts and downloading documents is a common activity. I understand that AOL and others especially in UK have already imposed limits. This is getting ugly.
Anyway - I think I will be OK - but - you might want to consider how much you actually use. Remember I am not hosting a server or anything like that so this is plain vanilla activity.
You have been warned - this isn't exactly comcastic.
Cheers
Big Trouble in Little Iceland Impact will be felt far
Surprisingly in recent years one of the most active players in aviation finance has come from Iceland. Two groups Avion and Fons Eignarhaldsfelag or their friends /proxies jumped onto the world stage. A third - the former Government controlled national Carrier Icelandair now FL group was already well established.
Avion owned XL Airways Group until it divested in 2006. The currently own a number of freight and shipping companies including Air Atlanta Icelandic one of the largest ACMI providers in the world.
The other group made some interesting investments. It made money of our a holding in EasyJet at one time challenging Stelios for the largest single block. Once they dumped this holding they invested into American buying near the top of the AMR value only to see that price plummet. Today they own interests in Sterling (DK), Astreus (UK) and Iceland Express.
These guys are players and have a role in the world aviation market. The meltdown of Stocks that accelerated into a rout over the weekend also hit the Icelandic banks with the government essentially agreeing to bail out the big 3 players who are all heavily invested in these 3 companies.
The ripple out effect will be felt far beyond the borders of little old Iceland.
I could decipher more but its pretty complicated. All of it is not pretty.
Avion owned XL Airways Group until it divested in 2006. The currently own a number of freight and shipping companies including Air Atlanta Icelandic one of the largest ACMI providers in the world.
The other group made some interesting investments. It made money of our a holding in EasyJet at one time challenging Stelios for the largest single block. Once they dumped this holding they invested into American buying near the top of the AMR value only to see that price plummet. Today they own interests in Sterling (DK), Astreus (UK) and Iceland Express.
These guys are players and have a role in the world aviation market. The meltdown of Stocks that accelerated into a rout over the weekend also hit the Icelandic banks with the government essentially agreeing to bail out the big 3 players who are all heavily invested in these 3 companies.
The ripple out effect will be felt far beyond the borders of little old Iceland.
I could decipher more but its pretty complicated. All of it is not pretty.
Help us raise $1.5 Million - no money down! VOTE!
For once - this is a good part of the no-money down idea.
All you have to do is VOTE. That's right - you don't even have to pay a penny.
I expect a good number of the US and European readers of the Professor's Blog carry some color version of the Amex card.
Some of you might have even glanced at the "Member's Projects" section.
Now I am appealing to you to vote for Kiva which has made it to the top 5 in this year's final which will be chosen on October 14th 2008
I am a huge fan of direct aid to individual's vs some of the more bureaucratic charities who are well intentioned but not always the most efficient and effective form of giving. Kiva meets my personal goals in this respect. So please vote for them:
Here is the link you need to follow:
http://track.kiva.org/y.z?l=http%3A%2F%2Fwww.membersproject.com%2Fproject%2Fview%2FP6KQEI&e=205345&j=183807659&t=h&p=2
Currently it is running number 4 out of the top 5, we need it to go higher.
All of the top 5 are worthy causes - this one I feel is the best option. PLEASE VOTE FOR IT. If every visitor to The Professor's Blog was to vote - I think it would raise the profile by at least one place. So go for it!
Many thanks to you all
Cheers
All you have to do is VOTE. That's right - you don't even have to pay a penny.
I expect a good number of the US and European readers of the Professor's Blog carry some color version of the Amex card.
Some of you might have even glanced at the "Member's Projects" section.
Now I am appealing to you to vote for Kiva which has made it to the top 5 in this year's final which will be chosen on October 14th 2008
I am a huge fan of direct aid to individual's vs some of the more bureaucratic charities who are well intentioned but not always the most efficient and effective form of giving. Kiva meets my personal goals in this respect. So please vote for them:
Here is the link you need to follow:
http://track.kiva.org/y.z?l=http%3A%2F%2Fwww.membersproject.com%2Fproject%2Fview%2FP6KQEI&e=205345&j=183807659&t=h&p=2
Currently it is running number 4 out of the top 5, we need it to go higher.
All of the top 5 are worthy causes - this one I feel is the best option. PLEASE VOTE FOR IT. If every visitor to The Professor's Blog was to vote - I think it would raise the profile by at least one place. So go for it!
Many thanks to you all
Cheers
Ryanair numbers - still staggering - 56 million Pax
Ryanair's Load Factor for September dropped a point to 84% while its new annual rolling total rose to 56 million for the year. By our estimate - that puts the Irish carrier about on par with JAL and ahead of Northwest in terms of passengers carried.
Given the downturn in world traffic we estimate that that following the mergers, consolidations and cutbacks by the end of the year - Ryanair will be at number 6 or 7 in global terms of passengers. By the end of 2009 - this could mean that they will surpass United Airlines and make it into the top 5.
Not bad for a few lads and ladies from the Emerald Isle.
Given the downturn in world traffic we estimate that that following the mergers, consolidations and cutbacks by the end of the year - Ryanair will be at number 6 or 7 in global terms of passengers. By the end of 2009 - this could mean that they will surpass United Airlines and make it into the top 5.
Not bad for a few lads and ladies from the Emerald Isle.
Hoon moves back to Government, Mandy moves back to the UK
Geoffrey Hoon - probably more famous as HM Government's Defense Chief is moving back into running things that fly by taking on the Transport Portfolio. He was the Brown Administration's Chief Whip.
At the same time Peter Mandelson - he of the diary and frequent embarrassment to Blair fame - moves back to the UK from the EC where he was European trade commissioner - his new role will be as secretary for business, enterprise and regulatory reform.
At the same time Peter Mandelson - he of the diary and frequent embarrassment to Blair fame - moves back to the UK from the EC where he was European trade commissioner - his new role will be as secretary for business, enterprise and regulatory reform.
What to do with an Old Virgin....
... Atlantic Seat cover that is.
So now I have your attention - Virgin Atlantic - ever the innovator has recently launched with Worn Again Stores a line of bags. As in handbags.
http://www.wornagain.co.uk/collections/wornagain-virgin-accessories
So for all of you who have ever flown above 6,000 meters and know what one does when sitting comfortably - this line of fashion accessories is for you.
Someone has a very bizarre sense of humour. However this product line is real and it is part of VS's aim to reduce landfill destined waste by 50% through 2012.
More "air" power to them....
So now I have your attention - Virgin Atlantic - ever the innovator has recently launched with Worn Again Stores a line of bags. As in handbags.
http://www.wornagain.co.uk/collections/wornagain-virgin-accessories
So for all of you who have ever flown above 6,000 meters and know what one does when sitting comfortably - this line of fashion accessories is for you.
Someone has a very bizarre sense of humour. However this product line is real and it is part of VS's aim to reduce landfill destined waste by 50% through 2012.
More "air" power to them....
Boeing Strike Claims Another Victim - V OZ Launch
V Australia has announced it is delaying launch of its operations due to the late delivery of aircraft. The 777s destined for the new airline are not quite ready to make it across the Pacific and are stuck down the line at the Everett plant.
The strike is not going anywhere fast.
The strike's impact (Boeing is one of the largest exporters in the USA by dollar value) is going to start showing up in the US balance of payments deficit at a time of year when imports often rise due to the pre-Christmas import of goods from China.
The strike is not going anywhere fast.
The strike's impact (Boeing is one of the largest exporters in the USA by dollar value) is going to start showing up in the US balance of payments deficit at a time of year when imports often rise due to the pre-Christmas import of goods from China.
British Airways: "Oh Where has my Premium guy gone?
He's gone to Washington to see the Bailout Queen.....
BA's September traffic was off significantly in September. Passenger traffic, as measured in RPKs, fell 4.8% in September compared to the same month in 2007. This included an 8.6% fall in premium traffic and a 4.1% decline in its non-premium traffic.
Ouch....
The continues the trend for BA of traffic falls that started at the beginning of the year. BA's troubles reflect the general malaise that is impacting the whole market.
BA says it is targeting break even for the year in operating revenue.
BA's September traffic was off significantly in September. Passenger traffic, as measured in RPKs, fell 4.8% in September compared to the same month in 2007. This included an 8.6% fall in premium traffic and a 4.1% decline in its non-premium traffic.
Ouch....
The continues the trend for BA of traffic falls that started at the beginning of the year. BA's troubles reflect the general malaise that is impacting the whole market.
BA says it is targeting break even for the year in operating revenue.
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