Changes In India - Sabre buys Travelguru

Sabre's subsidiary Travelocity yesterday purchased Travelguru one of the big 4 India OTA sites. The product has been re-branded with Travelocity like visuals. A thank you to Professor Naveen for this one.

This leaves the other players as potential targets for Expedia and Orbitz/Blackstone.

The big Kahuna is Makemytrip who has managed to maintain a two part business model - domestic sales and then inbound sales. Cleartrip and Yatra make up the other candidates. There are a squillion other players but these are the ones that matter.

It will be interesting to see whether the buying frenzy starts or if the likely purchasers sit on the side lines. Expedia's local efforts have been somewhat lost - their supplier relations muscle is driven from outside India sales. Orbitz has no real market footprint. Of course there are other reasons for getting a local footprint - Travel is still a footprint product so the media companies are very likely to be watching the developments closely.

The dynamics of the Indian market have changed in the past year or so with first the fuel prices and now the recession biting hard into the local airlines. Deccan has disappeared, Jet absorbed a smaller competitor and the unthinkable - Jet and Kingfisher are cooperating extensively. The National airlines too have merged under a single Air India brand but the bloated overmanning and waste continues. Air India even had to ban overweight flight attendants! Thus the proliferation of airlines has rationalized somewhat and the OTAs in my opinion need to do the same.

That said - if they could monetize the whole thing well - the transaction volumes at the big 4 OTAs in the market are very healthy. Like so many things today - it is the yields that suck!

Cheers

Flight Attendants Sizewize at Air India Effective

Air India has first grounded and now fired 10 FFAs.

Its rules on size/weight that is applied to its Flight Attendants have been upheld by the Indian High Court in Delhi.

So after refusing a ground assignment - the National Airline of India fired the 10.

So clearly they are trying to make sure that their flights are as fuel efficient as possible and not carrying unnecessary surplus weight.

Could there be other airlines who have similar rules but have not enforced them? When oil was $148 pbl that was an issue. At $50 pbl not so much

Cheers

India and China - 2 New Basket Cases?

Both India and China are suffering from the affects of the global recession. India remains down after suffering from the high price of oil during the summer. China on the other hand is suffering from some mis-steps that have been both self inflected and some external problems.

For China now the consolidation appears to be under way with a contraction from the current big 6 down to perhaps 4 or even 3 major carriers. The first to succumb from the urge to merge is the oft engaged China Eastern and Shanghai airlines. Interestingly the architects of the failed SQ marriage appear to have been given the boot with the New Chairman of China Eastern being the former Chairman of China Southern and the new President being from CNAC.

For India the consolidation process is now being felt in the domestic market. Indian Ministry of Civil Aviation reported November's domestic traffic highlights as follows: Total - Passenger numbers: 3.0 million, -21.7% year-on-year fall 2008 from 2009. With Kingfisher and Jet now coordinating activities they form the most powerful block in Indian Aviation's domestic market with over 50% of the market. Here are the rest of the results for November 2008:

Jet Airways (including Jetlite): 802,000, Down (for mainline -33.1%);
Kingfisher + Deccan: 746,000, Down (for Kingfisher -33.1%);
Air India: 539,000, Down -10.0%; (including Indian Airlines)
IndiGo: 441,000, +16.7%; a surprising growth spurt puts them into 4th place ahead of
SpiceJet: 325,000, -19.6%;
Paramount: 71,000, +121.9%;
Go Air: 70,000, -59.1%;
MDLR: 7,000, n/a;

So traffic is definitely going down there.

This will reshape the market and poses a challenge for the OTAs in the market. However alliances are not that stable. So can we rely on Jet and Kingfisher (with their chairman and their reported strong egos) staying friends? That remains to be seen.

Cheers