Disclosure Of Fees and Charges - Ancillary Revenues

Heads up everyone - the bun fight has started.

last month in Washington - Mr Oberstar held hearings on the subject of Airline Fees.

There are several issues - taxes charged, the amount of fees and the type, the manner of charge and exceptions etc etc.

What some want - such as Kevin Mitchell - is a full disclosure and an easy way to buy the products and services equally in all channels. This challenges the core precept that airline pricing is designed to be as complex and obfuscated as possible.

This seems to have been lost in the warring factions.

In my view the way that a product is charged should be at the decision of the person who sells the product subject to things like lying and dishonesty.

At stake is a lot of money but there is clearly a set of influences at work.

So here is my view on the subject. I feel strongly that the consumer should be able to see what he is buying. But in travel he has been lied to for so long as to what the product is and what the price really is as to have been accepted as being clear.

So what do you think?

Cheers

Here It Comes - Spanish Fly

OK so the headline is a bit hokey but BA and Iberia have had their merger blessed. So now we have definitely have airlines in Europe who are part of a cabal and have not airlines who are - well have not players.

The big 3 groupings of legacy carriers are the expected players -

BA (OneWorld)
AF (Skyteam)
LH (Star)

Their partners cover almost all of Europe. However and in my view this is a good thing - the total pie they control is much less than say in the USA. Ryanair, Easyjet Air Berlin and Wizz all represent a sizeable chunk of the EU market. With North America pretty much aligned and Europe the same - there really is little opportunity for choice amongst consumers other than from just 3 group choices.

In my view this is going to finally dawn on the consumer that he has only 3 options plus a few minor ones when ever he is looking to buy airline seats.

did someone say pork?

Cheers

Millenials Turn Away From Facebook

Lately as regular readers of this blog will know - I have been spending time with younger users. Millenials who will represent the next generation of users. Their parents are my generation and some of them are both colleagues and students.

In speaking particularly to teachers I have found that there is a greater awareness of the lack of attention with the distractions available to teens and recent adults. I am not criticizing them in any way. This is a fact of life. This will have a major impact on their interaction with the products and services we create in Travel.

eMarketer cites several studies in a recent piece on defections. What is particularly worrying as to how many just find it boring with generally the high abandonment rates.We are approaching a problem I have long suspected exists. We actually have too many shiny objects to cope with. As a result we lose interest and move onto the next thing. And if we - (in my case as a Boomer) - lose interest quickly just think how difficult it is to maintain the interest of a Millenial?

In my opinion we need to start to engage differently with the emerging user generation(s). That means we have to do a better job of providing access to the services.

Key amongst these will be:

A social component.
Individual content
more implicit interaction (ie a direct opposite to the current explicit interaction required).
Engaging and maintaining interest by constant refreshing.

it is the last one that makes me cringe because keeping things fresh is always hard. For the travel industry - that has been assumed to be fresh content - new products and promotions. But in my view it has to be deeper. Don't please ask me how yet - I am just coming to grips with the issue.

I do know however that if we don't then the abandonment rates for travel products and services on the web will rise. And travel sites will become as yesterday's news as Second Life and Myspace.

Cheers

"Who Do You Love?" Or Trust...

That old Bo Diddly song was stuck in my head the other day. Actually the Geoerge Thorogood version. And I have been thinking more and more about the essence of Trust. It just amazes me in Travel how much consumers are expected to trust and are constantly let down.

And then I read two stories from emarketer. Both related to Trust. The first one related to consumers perspectives with regard to trusting Facebook. Interestingly they were more concerned with the commercialization than the abuse of their personal data.

The second item from the same day by emarketer was on the acceptance of mobile marketing messages. Today we are bombarded with the "year of the mobile" messages from interested parties. Yet the first truly mobile commerce generate - the Millenials are none to happy about being marketed/spammed via their mobile devices.

This doesn't bode well for people expecting to make squillions of dollars by sending messages (unsolicited) to mobiles - smart or dumb.

So dear friends - think very carefully about what you are doing before you go down that path...

Cheers

Apple to Face EU Probe

Seems like its the Government's turn to focus a little this week. It also seems like someone was listening or they are just plain smart. I will take either!

The EU is going to launch a probe into Apple’s iPhone business practices. Specifically they are going to investigate two of the 4 revenue streams and possibly the others as well.

The App Store is one, the other is the interoperability of iPhone and other phone systems. This is likely to extend into the Admob/iPhone dispute.

For a detailed read – go here:

Click here to read full story...

Cheers

What Level of Scrutiny on Google + ITA, (aka Troogle)?

This was not going to be a quick and short post as I could use all my Professor skills to analyze the issue. However in starting to do some research on the subject I went back and visited some of my old posts on the subject. I have long felt that Google was already a monopoly in Travel before the acquisition. Troogle has a hot topic in 2008 and 2009. Then the chatter died down. So I reprint here for your edification and reading pleasure a post I did last year on the subject on what I think the Obama Administration is planning to use as a frame of reference on Google’s activities in travel.

Here are a few salient points.

1. I believe that the review time will take more than Admob. In the case of Admob – there are a large number of different options and it is a nascent business too early in its cycle to say that there will be a single business who can dominate.
2. Travel is a more defined category and the tentacles of the dark side that Google has become stretch far and deep and wide.
3. US law will prevail and US law is very specific in this area of what defines monopoly and how it can impact the transaction. (see below)

But – I want to be clear that I do not necessarily believe that Troogle will be bad for the industry. There are now clear winners and losers who will be impacted by the transaction. The world of GDS dominated distribution for one is probably headed for the sunset. The cost structure of meta-search on both the supply side and the seller side will be seriously impacted to the point where meta search may become irrelevant.

So what do you think? Let me know directly or privately.

Cheers

REPRINT POST August 31st 2009:

[Professor Sabena's Blog] Is Google A Monopoly?

I have this uneasy feeling about Google. The power they wield is significant. Fine if they don't abuse it - or is it? And what if they do actually use their power and abuse it?

I have written columns on this going back to 2006, here are two of my older posts on the subject:

http://t2impact.blogspot.com/2006/10/that-giant-sucking-sound-is-google.html
http://t2impact.blogspot.com/2009/08/is-google-new-evil-face-of-it.html

It seems that the Seattle Times and other Media outlets have started to feel the same way too. Today's editorial was somewhat less than subtle. The Times (a right wing paper in my view since it crushed the old Seattle PI), is calling for Google to be investigated for being in violation of the Sherman Act.

http://seattletimes.nwsource.com/html/editorials/2009766680_edit31google.html

A quote from the Obama Administration assistant attorney general for antitrust, Christine Varney, as saying that Google was America's most obvious antitrust problem — Microsoft was "so last century" she said... ouch.

The editorial called for an investigation of Google under the Sherman Act. Section 2 which says:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony...

That has been the law of the United States since 1890. All it requires (per the Seattle Times) is that the Justice Department pick it up and use it.

Should we accept that Google is being altruistic all the time or is there something more sinister about Google? It seems that Google's hand has to be forced sometimes - hardly the behavior of a good global citizen.

For my own part - I am happy to use the Google search engine but I remain leery of Google's force in the market. It is downright scary the amount of power they have.

So what do you think?

Cheers

--
Posted By Professor Sabena to Professor Sabena's Blog at 8/31/2009 12:36:00 PM

Why Troogle Google?

With the Google + ITA acquisition now public, we can now evaluate how this will impact the world of travel. As I wrote in the 3 part series on search,(INSERT LINKS HERE) I have long felt that search was akin to an unnatural act and one that left the customer un-satisfied. I also opined that failure of the travel industry in its own right to address its deficiencies in search would open the world to Google coming in and changing the way search is addressed. But I regarded that while not necessarily as a bad thing for the consumer – it would change the dynamics of the Travel Industry Sector.

In the 3 part series I wanted to evangelize the concept of natural search. This did not mean that navigation to specific elements of travel was a bad thing, but the overly explicit nature of search in travel has long been too constrained by – in my opinion – a GDS like constrained process.

In my view the convergence of some key factors would drive change in from conventional search to natural search.

• The consumer-facing conventions make it possible
• Loosely coupled technology through mash-ups breaks the bonds of the supply controllers who held sway far too long over travel
• It also makes it far easier to make everything work – less dependency on making sure the tightly choreographed ballet of interlocking pieces actually function. Banish the word “seamlessly”. But don’t drop the word fast.
• Geo-location – mapping is finally ubiquitous.
• The line between mobile and fixed position makes the definition between the two largely irrelevant
• The supply side has better infrastructure and processes (not to mention better technology) to support Natural Search.
• The Cult of Individualism is a natural state and a natural act.

Over time the GDS based model has shown itself to be a false profit for the consumer’s need for access to information. As a result the GDS imposed workflows in search/shop became the highly constrained standard because it was necessary in order to get access to the final mile of the transaction namely the price/book/ticket.

Search and Shop outside of the GDS model suffered from a lack of trust. The various attempts by Meta search companies such as Kayak etc resulted in a permanent time delay of salient information. Thus you, the consumer could never shop in a trusted mode. And suppliers wondered why consumers didn’t have loyalty and trust??? With Troogle there are now several of these elements consistent and the results can be very different and trustworthy. This in my view is what the Google management team meant when they said they were “… building something that the industry has never seen before."

At WIT this year – I will expound on this subject and illustrate what I believe will be a way to address this.

But I think I made it abundantly clear that if Google had a mind to they would use some of their clout (and considerable cash pile) to address the subject and hurry the process along.

Commercially you have to ask why would Google plonk down $700 million in cash for ITA.
• Could it be for their revenue and commercial basis? If that was the case then the transaction would be up there with Sabre’s purchase of GetThere at $757 million at the height of the Internet Boom. So no not that alone – but over time Sabre was able to dominate a sector.
• If it was for the technology alone – I am sure that someone could replicate this for a lot less money. And indeed in my opinion at least one company has.
• Could it be for their Intellectual Property? ITA has a considerable number of important patents that I have previously stated could be very tough for the industry to challenge. Not that they should not be challenged but that the clout of Google and its legal team would make the relative minnows in travel hard to stomp up the cash for a protracted legal challenge.
• Could it be for their Hotel and/or Needlebase technology? Hardly try and play with it. It’s nice but hardly makes a dent in $1-2 million let alone that number of zeros.
• Could it be for their customer base? Very important – but not perhaps in the way you may think. ITA provides assured access backed by both technical and commercial service agreements that ensure that the data they provide is current. With Virgin Atlantic now joining the group of QPX users – the spread of Full Service carriers is broadening considerably. Yes there is a nice value to this one.
• Could it be the value of disintermediating several players in travel? Ah now you are talking. Consider the annual revenues for legacy GDSs and that number is big and very fat and ripe for diverting Google’s way.
• Could it be for eliminating meta search players with better solutions? This is an obvious answer. Yes but not the prime one.
• Could it be for filling the holes in some Machiavellian plan to dominate the Travel Industry? Hmmmm time will tell the answer to that question. Does it match Google’s vision of the world. Absolutely!

But are these enough? The correct answer is of course all of the above, and many more I have not outlined here.

Now the challenge is how to deal with the whole notion of the travel process from ideation through to sale. The world just changed and you and I have to change with it.


Cheers