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.
22 November 2007
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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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
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