The US Airline community as represented by ATA has for a long period of time - specifically since 9/11 been an oligopoly who has disdained consumers in favor of their own goals and objectives.
However Consumers are finally getting their day in the sun - if not in court.
On Tuesday NY Judge threw out a challenge to the NY State law enacted post the debacle of last winter with passengers imprisoned on aircraft at JFK and other places. http://www.boston.com/business/globe/articles/2007/12/21/court_rejects_airlines_suit_to_block_ny_law_on_passenger_rights/
The US airlines have been woefully inadequate in their following even the basic guidelines (note not law) as agreed with the US DoT. http://airconsumer.ost.dot.gov/publications/flyrights.htm
However - now we see the States stepping in to mandate tougher consumer protection.
In Europe a similar effort was mounted by all airlines but in 2004 new regulations that are far more strict were enacted.
http://ec.europa.eu/transport/air_portal/passenger_rights/doc/2006_flyer_be_informed/2006_be_informed_flyer_en.pdf These apply no matter if you are flying on a first class ticket or short LCC hop. Even charter airlines - notorious for their lack of consumer services are all identically covered. Impact? Better behavior and no huge financial impact on the airlines.
So US Airlines and ATA - get over it... join the rest of the world.
21 December 2007
T2 Podcast 208 Predictions
Listen to Managing Partner Timothy O'Neil-Dunne
http://iagblog.podomatic.com/entry/eg/2007-12-21T10_05_45-08_00
2008 Predictions... a lively conversation
http://iagblog.podomatic.com/entry/eg/2007-12-21T10_05_45-08_00
2008 Predictions... a lively conversation
20 December 2007
Paying the Piper... a comment on the US Financial Sector Meltdown
For once I am going to stray outside - actually pretty far outside - our normal area of expertise and talk about the US economy. I have no expertise in this area but my personal frustration and that of my colleagues has reached the point of not being able to remain silent.
The current meltdown in the US Financial Sector has been driven by the usual and predictably explainable factors. However we cannot avoid the responsibility of understanding that the current US Administration's policies of mortgaging the future through a number of "must-have- instant-gratification" moves has failed. Funding a war with amounts of money that are simply untenable has beaten the US economy to a pulp. The Administration's policy of hoping (yes it was that - just a hope) that the domestic economy would be the engine to drive a need for less tax and no worries about the value of the dollar has clearly failed. So now those of us who are subject to the dictates of the US Administration are now going to pay ... and pay ... and pay.
But there is an even worse price. The very economic factors (namely a free market) lauded by the Bush Administration means that the more fiscally conservative and financially stable (read smarter and rich) nations of the world are now picking up the bargain basement opportunities right across the US economy.
For me personally the one that brought it home was the announcement by Singapore Inc's Tamasek Holdings taking a large share in Merril Lynch.
I am not advocating a return to restrictive practices of currency controls and restraints on trade - far from it. I am just stating that the US Administration and the Weany Congress have but a few months - not years - to figure out what to do about the War. Clearly common sense and Body bags are not enough to convince anyone that the War is morally and factually wrong and should be terminated. So now the economic argument might ring true.
The economic value of holding on to Iraq has been washed away. The right of that country to self determination - should be granted and let the Iraqis take that responsibility for themselves. If that includes their own civil war - then now is the time to let them do that. But let's just stop funding one man's stupidity and an Administration's Folly. Enough is Enough.
So now it must be a decision that is based on what is best of the worst situation rather than doing what was once a seemingly noble deed - however flawed.
Let's hope for all concerned that America's next Administration and the current Congress are able to grapple with the real issues rather than the "spin" of what makes no sense.
The American Economy is on Life Support. Having it being funded by China, Singapore, UAE as well as larger smart commercial organizations should be an embarrassment.
One final thought: Ignorance is no excuse.
The current meltdown in the US Financial Sector has been driven by the usual and predictably explainable factors. However we cannot avoid the responsibility of understanding that the current US Administration's policies of mortgaging the future through a number of "must-have- instant-gratification" moves has failed. Funding a war with amounts of money that are simply untenable has beaten the US economy to a pulp. The Administration's policy of hoping (yes it was that - just a hope) that the domestic economy would be the engine to drive a need for less tax and no worries about the value of the dollar has clearly failed. So now those of us who are subject to the dictates of the US Administration are now going to pay ... and pay ... and pay.
But there is an even worse price. The very economic factors (namely a free market) lauded by the Bush Administration means that the more fiscally conservative and financially stable (read smarter and rich) nations of the world are now picking up the bargain basement opportunities right across the US economy.
For me personally the one that brought it home was the announcement by Singapore Inc's Tamasek Holdings taking a large share in Merril Lynch.
I am not advocating a return to restrictive practices of currency controls and restraints on trade - far from it. I am just stating that the US Administration and the Weany Congress have but a few months - not years - to figure out what to do about the War. Clearly common sense and Body bags are not enough to convince anyone that the War is morally and factually wrong and should be terminated. So now the economic argument might ring true.
The economic value of holding on to Iraq has been washed away. The right of that country to self determination - should be granted and let the Iraqis take that responsibility for themselves. If that includes their own civil war - then now is the time to let them do that. But let's just stop funding one man's stupidity and an Administration's Folly. Enough is Enough.
So now it must be a decision that is based on what is best of the worst situation rather than doing what was once a seemingly noble deed - however flawed.
Let's hope for all concerned that America's next Administration and the current Congress are able to grapple with the real issues rather than the "spin" of what makes no sense.
The American Economy is on Life Support. Having it being funded by China, Singapore, UAE as well as larger smart commercial organizations should be an embarrassment.
One final thought: Ignorance is no excuse.
19 December 2007
US Travel - Flat at best in 2008
We are seeing more signs of slowing in the economy. Unlike GWB the team at T2 does not believe that everything in the garden is rosy. We firmly believe that there is a real recession and it will bite hard for at least the first 2 quarters of 2008. Recovery won’t happen until after the election in November. Uncertainty is the watchword.
We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.
We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.
Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.
International NON-US market will be more robust but will also feel some of the same heat. More on that later
Cheers
Timothy
We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.
We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.
Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.
International NON-US market will be more robust but will also feel some of the same heat. More on that later
Cheers
Timothy
18 December 2007
Only a few more hours to go; Will the Italian Government Postpone the Alitalia decision again?
OK so today is D day for Alitalia well at least its scheduled that way.
There are 2 front runners (AF/KL and AirOne investors) and a dark horse (local Italian investors) and several - well others (SQ, perhaps) - waiting in the wings.
Most people are betting on AF to win. But we have a slightly contrarian view that this may not actually happen even if the Prodi Government chooses AF or even AirOne. How so?
Remember a little earlier this year that the European Commission ruled on a small case of RyanAir and Aer Lingus? Don't think that Mr O'Leary has forgotten this little sleight. There is a strong possibility - no make that a certainty - that who ever wins will see a challenge filed by Ryanair amongst others.
The EC is going to have a pretty hard time approving an airline merger given the concentration argument it used against FR+EI. Further there is still a simmering dispute on the question of how much State Aid will need to be paid back.
Folks this one may yet run for months. Even with Alitalia losing altitude all the time.
Happy punting....
There are 2 front runners (AF/KL and AirOne investors) and a dark horse (local Italian investors) and several - well others (SQ, perhaps) - waiting in the wings.
Most people are betting on AF to win. But we have a slightly contrarian view that this may not actually happen even if the Prodi Government chooses AF or even AirOne. How so?
Remember a little earlier this year that the European Commission ruled on a small case of RyanAir and Aer Lingus? Don't think that Mr O'Leary has forgotten this little sleight. There is a strong possibility - no make that a certainty - that who ever wins will see a challenge filed by Ryanair amongst others.
The EC is going to have a pretty hard time approving an airline merger given the concentration argument it used against FR+EI. Further there is still a simmering dispute on the question of how much State Aid will need to be paid back.
Folks this one may yet run for months. Even with Alitalia losing altitude all the time.
Happy punting....
17 December 2007
T2 Podcast on 2007 - The year in Review
Addison and I had a good banter today on the 2007 Year in Review.
If you would like to listen in - please click here.
Cheers
Timothy
http://iagblog.podomatic.com/entry/eg/2007-12-17T11_40_49-08_00
If you would like to listen in - please click here.
Cheers
Timothy
http://iagblog.podomatic.com/entry/eg/2007-12-17T11_40_49-08_00
16 December 2007
Amadeus gets into the consulting business
Sheez, not only do we have to contend with all the new consulting agencies springing up but now we have to compete with Amadeus. Those nice people can even bring you a video to show you how nice they really are. http://www.amadeus.com/airlines/x79170.html
I think this was made by the same group that did those nice 20 year anniversary personalized emails called Thank you!
Oh well... lets see if they are any good. If anyone uses their services please drop me a line and let me know what you think of it. timothyo@t2impact.com
Cheers
T
I think this was made by the same group that did those nice 20 year anniversary personalized emails called Thank you!
Oh well... lets see if they are any good. If anyone uses their services please drop me a line and let me know what you think of it. timothyo@t2impact.com
Cheers
T
15 December 2007
For many airlines in search of new revenue opportunities – the alliance game has played out and the incremental revenues are becoming less and less attractive. Consider the basic mathematics. For new partners joining an Alliance – they tend to be smaller and with an in inferior product than the established carriers. So the lager airlines are unlikely to gain much from a new partner joining. The new joinee tends to get greater reach and the benefit from the larger airline.
Of the alliances – the Star group probably has the most structure and is the most mature. But they are now struggling with the fundemental flaws of the concept. Consider Singapore Airlines. They have been very reluctant to put their code onto any other airlines' flight. Indeed if you look at the actual SQ codeshares – the number is very small. On the other hand many carriers want to place their code on SQ because of its “superior” product. In the past I have used Lufthansa as an example of where the Alliance concept is broken. Perhaps now SQ is a better example. If I was a SQ frequent flyer I don’t think I would be happy to be flying on say LOT.
Now lets consider the new (well not new lets call it a rebirth) of the bilateral arrangement which has (usually) hard equity in a formal JV. Recently we have seen two good examples of this:
Air France/KLM Group joint venture with Delta for servicing Transatlantic passengers including from London’s Heathrow. Another example is the recent Lufthansa investment in jetBlue. Both these arrangements return real value in the near term that can be both quantified and tracked in real time.
In our opinion the future of Alliances is not rosy. Those guys who work there are going to be working overtime trying to justify their existence. Not just to their bosses but well each airline.
Example are: Fees that keep rising, more complications, advertising that is ineffective, endless meetings that produce no results… I think you get the picture.
On the other hand consider a partnership with mutual investment or a big parent owning a smaller player. Sound good? Well maybe. The recent past of mutual investment didn’t work out… remember BA and US Airways, SQ and Virgin, The Quality Alliance: SwissAir, Virgin and Delta… lots of not so good stories.
However at the end of the day – airlines like to be married. They are a bit like humans. Maybe polygamy is not such a good thing. Just sleeping together or even getting engaged even married is a better solution for a relationship. Interlining is just being good friends.
Of the alliances – the Star group probably has the most structure and is the most mature. But they are now struggling with the fundemental flaws of the concept. Consider Singapore Airlines. They have been very reluctant to put their code onto any other airlines' flight. Indeed if you look at the actual SQ codeshares – the number is very small. On the other hand many carriers want to place their code on SQ because of its “superior” product. In the past I have used Lufthansa as an example of where the Alliance concept is broken. Perhaps now SQ is a better example. If I was a SQ frequent flyer I don’t think I would be happy to be flying on say LOT.
Now lets consider the new (well not new lets call it a rebirth) of the bilateral arrangement which has (usually) hard equity in a formal JV. Recently we have seen two good examples of this:
Air France/KLM Group joint venture with Delta for servicing Transatlantic passengers including from London’s Heathrow. Another example is the recent Lufthansa investment in jetBlue. Both these arrangements return real value in the near term that can be both quantified and tracked in real time.
In our opinion the future of Alliances is not rosy. Those guys who work there are going to be working overtime trying to justify their existence. Not just to their bosses but well each airline.
Example are: Fees that keep rising, more complications, advertising that is ineffective, endless meetings that produce no results… I think you get the picture.
On the other hand consider a partnership with mutual investment or a big parent owning a smaller player. Sound good? Well maybe. The recent past of mutual investment didn’t work out… remember BA and US Airways, SQ and Virgin, The Quality Alliance: SwissAir, Virgin and Delta… lots of not so good stories.
However at the end of the day – airlines like to be married. They are a bit like humans. Maybe polygamy is not such a good thing. Just sleeping together or even getting engaged even married is a better solution for a relationship. Interlining is just being good friends.
14 December 2007
USA finally gets ADS from China
The USA has finally qualified for ADS making the world’s second largest market inbound open to the world’s fastest growing source market. Getting ADS – Approved Destination Status – was never a sure thing. The politics are very complex as can be imagined. Also the USA is not the first. Many countries already have mature ADS agreements with China and have seen the benefits rise enormously. Why is ADS important? As the China market opens up to new travelers seeking new experiences the USA would be number 1 on their list of places to go. For many the first trip is important as travel begets more travel. China is fast becoming a consumerist society driven by their burgeoning individual middle class wealth. Their lack of other major expenses (housing and education plus costs of children) drives a bigger disposable portion of their salaries.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
USA finally gets ADS from China
The USA has finally qualified for ADS making the world’s second largest market inbound open to the world’s fastest growing source market. Getting ADS – Approved Destination Status – was never a sure thing. The politics are very complex as can be imagined. Also the USA is not the first. Many countries already have mature ADS agreements with China and have seen the benefits rise enormously. Why is ADS important? As the China market opens up to new travelers seeking new experiences the USA would be number 1 on their list of places to go. For many the first trip is important as travel begets more travel. China is fast becoming a consumerist society driven by their burgeoning individual middle class wealth. Their lack of other major expenses (housing and education plus costs of children) drives a bigger disposable portion of their salaries.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.
The big keep getting bigger - EU Giants In Travel
The big keep getting bigger.
The sea change that occurred over the last 18 months in Europe in distribution is now starting to bear fruit. The two powerhouses of TUI and Thomas Cook (daughter company of the old Karstadt Quelle) have now been admitted to the UK’s FTSE (Footsie) 100 top shares. (This is the UK equivalent of the Dow Jones index). This may seem to be a big achievement but in reality it simply acknowledges that the world’s second largest commercial market after financial services is Travel. Further it acknowledges that the concentration of the distribution system into fewer hands is a global trend. Congrats to both companies. Let the battle commence. At December 12th close, Thomas Cook Group had the 96th largest market capitalization of UK listed companies; TUI Travel was 88th.
The sea change that occurred over the last 18 months in Europe in distribution is now starting to bear fruit. The two powerhouses of TUI and Thomas Cook (daughter company of the old Karstadt Quelle) have now been admitted to the UK’s FTSE (Footsie) 100 top shares. (This is the UK equivalent of the Dow Jones index). This may seem to be a big achievement but in reality it simply acknowledges that the world’s second largest commercial market after financial services is Travel. Further it acknowledges that the concentration of the distribution system into fewer hands is a global trend. Congrats to both companies. Let the battle commence. At December 12th close, Thomas Cook Group had the 96th largest market capitalization of UK listed companies; TUI Travel was 88th.
Alitalia - it aint over yet folks
Well they postponed again - but now there is a reason. LH is back interested. SQ is denying everything and even BA is having a look.
The price just went a little higher. However will it go really high? Not in our opinion.
Stay tuned.
The price just went a little higher. However will it go really high? Not in our opinion.
Stay tuned.
Lufthansa rides into rescue jetBlue's damsel in distress
As if further proof was needed - the world is a crazy mixed up place. So LH is spending some of its cashpile to buy into jetblue and create a local USA footprint. jetblue needed a big strategic change given its current malaise and this is a good match. If for no other reason than it stirs things up a bit.
So this is a good win for LH - with the dollar at an all time low - this is costing LH very little.
This is bad for UAL as it means that LH (who has a real service issue with UAL's product) can have alternative and put its code on a number of flights from JFK hub, as well as the other interconnecting points - DEN, BOS, IAD, etc etc.
It is a shot to Virgin that they cannot have it both ways - on the periphery of Star, and eating their cake domestically in the USA.
It is a competitive response to the tie ups of US and European airlines - if you like there are now 2 layers of alliance. Super Partners (AF and DL, KL and NW, LH and B6 etc), and Alliance partners. Frankly we believe that the general alliance market as reached its sell by date. These tighter relationships will make for better service levels.
We predict more of these in the near future
This is a good move
So this is a good win for LH - with the dollar at an all time low - this is costing LH very little.
This is bad for UAL as it means that LH (who has a real service issue with UAL's product) can have alternative and put its code on a number of flights from JFK hub, as well as the other interconnecting points - DEN, BOS, IAD, etc etc.
It is a shot to Virgin that they cannot have it both ways - on the periphery of Star, and eating their cake domestically in the USA.
It is a competitive response to the tie ups of US and European airlines - if you like there are now 2 layers of alliance. Super Partners (AF and DL, KL and NW, LH and B6 etc), and Alliance partners. Frankly we believe that the general alliance market as reached its sell by date. These tighter relationships will make for better service levels.
We predict more of these in the near future
This is a good move
12 December 2007
2008 The year of the Spaceship says Virgin Glactic
Well sorry folks I dont have the $200K for the seat - nor the $3 million for the satellite launch cost lying around in my pocket - but it seems that others do. Virgin Galactic is making is plans sound much more realistic wth the maiden flght of SS2 (Spaceship 2) the pre-production version of the in flight vehicle and its carrier - WK2 - White Knight 2 scheduled in July 2008.
The company now has $30 million in fully paid tickets and deposits and 100 of its around 200 "signed customers" have experienced the SS2 flight profile in a centrifuge. That's a pretty big WOW. So go and sign up... and if you can save a space for me. Window seat please
Thanks
The company now has $30 million in fully paid tickets and deposits and 100 of its around 200 "signed customers" have experienced the SS2 flight profile in a centrifuge. That's a pretty big WOW. So go and sign up... and if you can save a space for me. Window seat please
Thanks
10 December 2007
Sabre Opening Up to LCCs
The battle ground for the love of LCCs and HVCs has just become a little more interesting. As regular readers know we are strong believers in the emergence of Hybrid (HVC) airlines. Thus far the game has been some what interesting. But recently we have seen Amadeus making a big play for LCCs while at the same time Sabre has been sitting on the sidelines. Now Sabre has come out with all guns blazing.
Will this be enough? It will depend signficantly on the costs. So the battle is now joined. Galileo - where are you in all this?
To see the Sabre press release go here: http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1085638&highlight=
Cheers
Timothy
Will this be enough? It will depend signficantly on the costs. So the battle is now joined. Galileo - where are you in all this?
To see the Sabre press release go here: http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1085638&highlight=
Cheers
Timothy
08 December 2007
Roundup
Forgive the lack of writing dear readers… pressure of real work and – well also some time out has caused the absence from the blogosphere.
So here is a quick round up of some happenings and a few comments:
The 2 sick carriers of Europe could possibly be entering their final moments. Olympic needs to – well just be left to die. Alitalia will enter into a very tense few weeks as the auction (#2 for those who are counting) enters its final moments. From our experience point of view we know what it takes to recover orderly from bankruptcy – our experience with Varig and cleaning up the mess was invaluable. It isn’t easy but its possible. Clearly the scale of the problems at both these carriers will take many months even years to cleanup. BUT it can be done.
Heathrow is still a third world airport. For all you fans of London’s gateway – I can assure you that LHR is still no better. Recently I have been able to avail myself of its charms in three different modes: Arrival, Transfer and departure. In ALL 3 situations (T4, T4-T1 and T2 respectively) the experience was thoroughly awful. Contrast this with MUC (Transfer) STN (arrival) TXL (Arrival and Departure) It is nothing short of a national disgrace. T5 however does look REALLY ready.
Air Berlin – not bad! I had an opportunity to try its services. Air Berlin is not really an LCC. We have written before that it is indeed a new generation of HVC – Hybrid Value Carriers. Recently I have flown on almost the entire inventory of the airline’s narrow body fleet – F100s, B733, B738, A320. They are now a very large carrier. It is creaking in some areas but they do seem to be bringing cohesion pretty quickly to their operating units. Interestingly when I flew on one sector (TXL-STN) the listed carrier was LTU!
Tiger vs Jetstar. I was privileged to host a panel at the recent WebinTravel conference in Singapore late last month. (Note to the Boot – you missed a cracker show). In the continuing theme of LCCs that are not really LCCs I had both CEOs of Jetstar Asia and Tiger Airways. We had too little time but there are a few things I learned.
1. Tamesek Holdings is letting these guys duke it out in the market without any help from SQ. Whether this condition is allowed to stay remains interesting and an open verdict
2. Both airlines are determined to follow different paths. Jetstar is reverting more and more to its traditional parentage (nee Qantas). Tiger will seem to remain more like Ryanair and the purest LCC model.
3. Both airlines are reluctant – unlike Ryanair – to release figures like average fares or percentage of fares under a certain number. Interestingly we had an audience question (the composition was actually a good mix with just under 300 people) – What is your price definition of a LCC sector fare? Answer – SG$100 – only 1 or 2 hands went up. Less than SG$50 and everyone raised their hands.
4. Tiger and Jetstar will have a hard time in Korea as they progress there. It will be a local blood bath when next year Domestic LCCs are allowed – all of whom must operate for 2 years before the market opens up to international LCC activity.
5. Open Skies in Asean is coming slowly. But the largely Singaporean audience was highly enthusiastic about the Feb launch of 4 LCC frequencies on the SIN-KL Sector. Full deregulation however wont happen until Dec 2008. Then open season on one of the last regulated commuter city pairs will be a model for the rest of Asia. All Asean markets (intra region and domestic) are supposed to be deregulated fully at that time. However we think this will not be fully implemented.
More later and talk soon…
So here is a quick round up of some happenings and a few comments:
The 2 sick carriers of Europe could possibly be entering their final moments. Olympic needs to – well just be left to die. Alitalia will enter into a very tense few weeks as the auction (#2 for those who are counting) enters its final moments. From our experience point of view we know what it takes to recover orderly from bankruptcy – our experience with Varig and cleaning up the mess was invaluable. It isn’t easy but its possible. Clearly the scale of the problems at both these carriers will take many months even years to cleanup. BUT it can be done.
Heathrow is still a third world airport. For all you fans of London’s gateway – I can assure you that LHR is still no better. Recently I have been able to avail myself of its charms in three different modes: Arrival, Transfer and departure. In ALL 3 situations (T4, T4-T1 and T2 respectively) the experience was thoroughly awful. Contrast this with MUC (Transfer) STN (arrival) TXL (Arrival and Departure) It is nothing short of a national disgrace. T5 however does look REALLY ready.
Air Berlin – not bad! I had an opportunity to try its services. Air Berlin is not really an LCC. We have written before that it is indeed a new generation of HVC – Hybrid Value Carriers. Recently I have flown on almost the entire inventory of the airline’s narrow body fleet – F100s, B733, B738, A320. They are now a very large carrier. It is creaking in some areas but they do seem to be bringing cohesion pretty quickly to their operating units. Interestingly when I flew on one sector (TXL-STN) the listed carrier was LTU!
Tiger vs Jetstar. I was privileged to host a panel at the recent WebinTravel conference in Singapore late last month. (Note to the Boot – you missed a cracker show). In the continuing theme of LCCs that are not really LCCs I had both CEOs of Jetstar Asia and Tiger Airways. We had too little time but there are a few things I learned.
1. Tamesek Holdings is letting these guys duke it out in the market without any help from SQ. Whether this condition is allowed to stay remains interesting and an open verdict
2. Both airlines are determined to follow different paths. Jetstar is reverting more and more to its traditional parentage (nee Qantas). Tiger will seem to remain more like Ryanair and the purest LCC model.
3. Both airlines are reluctant – unlike Ryanair – to release figures like average fares or percentage of fares under a certain number. Interestingly we had an audience question (the composition was actually a good mix with just under 300 people) – What is your price definition of a LCC sector fare? Answer – SG$100 – only 1 or 2 hands went up. Less than SG$50 and everyone raised their hands.
4. Tiger and Jetstar will have a hard time in Korea as they progress there. It will be a local blood bath when next year Domestic LCCs are allowed – all of whom must operate for 2 years before the market opens up to international LCC activity.
5. Open Skies in Asean is coming slowly. But the largely Singaporean audience was highly enthusiastic about the Feb launch of 4 LCC frequencies on the SIN-KL Sector. Full deregulation however wont happen until Dec 2008. Then open season on one of the last regulated commuter city pairs will be a model for the rest of Asia. All Asean markets (intra region and domestic) are supposed to be deregulated fully at that time. However we think this will not be fully implemented.
More later and talk soon…
07 December 2007
Extra Extra - Frequent Flyer Mileage Devalued....
Its been on the cards for ages... no longer subtle - the airlines are now going to devalue the currency.
With high load factors we have been seeing the stealth devalution. No availability at the cheaper rates (which used to be the regular rates). Premium charges needed. Extra or Surcharges for certain categories. etc etc
Well now its the full montey. Additional 10% at least has been imposed by CO on its premium traffic First Class and Business First frequent flyer tickets
The end of civilization as we know it....
With high load factors we have been seeing the stealth devalution. No availability at the cheaper rates (which used to be the regular rates). Premium charges needed. Extra or Surcharges for certain categories. etc etc
Well now its the full montey. Additional 10% at least has been imposed by CO on its premium traffic First Class and Business First frequent flyer tickets
The end of civilization as we know it....
01 December 2007
BTC Appeals to stop abusive EU CRS regs
This is attached as a direct copy from the email sent by BTC- Business Travel Coalition:
Parliament Must Close the Dangerous Parent Carrier Loophole
By Kevin Mitchell
Two stories, just days apart, from Brussels this November are leaving industry observers scratching their heads, wondering whether a thoughtful and coordinated travel distribution policy is beyond the European Commission’s grasp and resolved that Parliament must act decisively to close a deliberately-created loophole in the Commission’s recently proposed computer reservation system rules. This dangerous loophole is threatening to harm European travelers.
On the one hand, the Consumer Protection Commissioner announced stinging survey results, concluding that more than half of Europe’s travel web sites, including those run by some of Europe’s leading airlines, are engaged in misleading advertising and other unfair practices. The offending web sites are being given four months to get their acts together or face forced closure. Here the Commission is taking strong and decisive measures on behalf of abused consumers.
On the other hand, the Commission announced a curious new Computer Reservations System (CRS) Code of Conduct, which was supposed to ensure that consumers continue to get comprehensive and accurate fare and related information via their online or offline travel agency equipped with a CRS. Instead of achieving this goal, however, the Commission has deliberately opened a giant loophole in the coverage of these rules, so that the all-important “parent carrier” provisions will not apply to the three airline owners of Amadeus, Europe’s largest CRS. Here the Commission is taking weak and deceptive measures on behalf of abusive owner airlines and leaving consumers standing under a worthless CRS rules umbrella.
So as one part of the Commission gives a red light to airline web site abuse, the other gives a green light to airline CRS abuse. And to make the irony complete, the Transportation Commissioner justified liberalizing the CRS code because of the rise of Internet web sites as a competitive force! Perhaps the Consumer Protection and Transportation commissioners ought to meet for lunch.
As the Commission’s CRS rules review progressed during 2007, the abandonment of consumer interests accelerated. At a conference panel discussion that I moderated in London last winter, a senior EC transportation official stated that listening to consumer views would be the most important factor in deciding how to reform the rules. When groups representing millions of consumers weighed in forcefully that protections had to be retained to deal with the real-world threat of airline ownership, the Commission responded by closing its ears and cynically devising a loophole that would undermine their interests. In justifying that loophole, the Commission suggested that the rules were simply a matter of business-to-business concern -- marginalizing the consumer stake in this important policy matter.
Any casual follower of air travel distribution knows the checkered history of CRS regulation and how consumers have been negatively impacted by abusive airline practices. In the movie version of this business, the villains are dominant airlines that have predictably used their ownership of reservation systems to engage in exclusionary activities that undermine comparison shopping and the free flow of critical data. The heroes, when they show up for work, are regulators who on behalf of consumers lay down respected and enforced codes of conduct that demand marketplace fairness in the presence of airline ownership. That’s why strong CRS rules that address current industry conditions have been worth fighting for in Europe and why the regulator’s misguided attempts to play games with them on behalf of other industry participants have been vigorously opposed by independent airlines, corporate travel buyers, travel agencies, CRSs, consume r groups, travel industry associations, even the United Nations! The Consumer Protection Commissioner’s warning shots fired over the websites in November are important, but they only address the small part of the iceberg poking above the water. Lurking right below the surface is the rest of an enormous problem -- one in which consumers are at the mercy of airlines with the means and the incentive to restrict full content to the system they own and to manipulate data and functionality in ways that cement their market dominance. The stakes in the CRS debate are about much more than being misled by a couple of euros in a website bait-and-switch; they’re about hundreds of euros lost to consumers every time low-priced options are deliberately suppressed and about the airlines’ use of the reservation system they own to squeeze the breath out of anyone who would dare to compete with them.
The parent carrier rules were designed to stop these abuses from happening and over many years they’ve generally done a remarkably good job of keeping the market in balance without creating unnecessary burdens on marketplace participants. Undermining these rules by creating a loophole exempting Air France, Iberia and Lufthansa -- the owners of Amadeus, Europe’s largest CRS -- makes no sense at all. Airlines and distribution systems have always been a toxic combination, and unless regulators are willing to take the more intrusive step of banning ownership outright, a regulatory regime -- with teeth -- is required.
The results of a CRS Customer Referendum were recently released by the International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations are experts in the travel industry and represent thousands of corporations and millions of customers of the air and rail transportation systems in Europe.
This group, articulating the consumer voice, proposed solutions to close the loophole. For example, it has proposed that a 5 percent airline ownership stake in a CRS should be established for determining parent carrier status. Alternatively, they would ask for confirmation that Air France, Iberia and Lufthansa are presently parent carriers of Amadeus and an affirmation that the status of these airlines as parent carriers should be subjected to written and oral industry consultation prior to any future proposed change. These are fair, sensible approaches that would go far toward eliminating the needless consumer anxiety the Commission has injected into the process.
The shame of it is that the Commission’s proposed CRS rules are on their face an example of near-perfect “better regulation” -- it’s the undermining the Commission is doing behind its back that makes these rules a near-complete disaster. Instead of getting high praise, the Commission is getting harsh criticism -- and from virtually all corners of Europe. If the parent carrier loophole were fixed by making it unambiguously clear that Amadeus' three airline owners were covered, then the text of the proposed rules would actually be deemed to be responsive to consumer needs.
The European Parliament will next have the opportunity to review and amend the proposal. Deference should not be given to the Commission on the parent carrier issue; deference should be given to consumers whose important interests have been subordinated. Parliament has an excellent opportunity to correct the fatal flaw by taking these proposed rules out of the museum and putting them into practice where they are needed. If Parliament closes the loophole, five years of industry and government work could be brought to a powerful and successful conclusion, with grateful European consumers reaping the benefits of more choice and lower airfares.
…
Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. Mitchell is founder and chairman.
Parliament Must Close the Dangerous Parent Carrier Loophole
By Kevin Mitchell
Two stories, just days apart, from Brussels this November are leaving industry observers scratching their heads, wondering whether a thoughtful and coordinated travel distribution policy is beyond the European Commission’s grasp and resolved that Parliament must act decisively to close a deliberately-created loophole in the Commission’s recently proposed computer reservation system rules. This dangerous loophole is threatening to harm European travelers.
On the one hand, the Consumer Protection Commissioner announced stinging survey results, concluding that more than half of Europe’s travel web sites, including those run by some of Europe’s leading airlines, are engaged in misleading advertising and other unfair practices. The offending web sites are being given four months to get their acts together or face forced closure. Here the Commission is taking strong and decisive measures on behalf of abused consumers.
On the other hand, the Commission announced a curious new Computer Reservations System (CRS) Code of Conduct, which was supposed to ensure that consumers continue to get comprehensive and accurate fare and related information via their online or offline travel agency equipped with a CRS. Instead of achieving this goal, however, the Commission has deliberately opened a giant loophole in the coverage of these rules, so that the all-important “parent carrier” provisions will not apply to the three airline owners of Amadeus, Europe’s largest CRS. Here the Commission is taking weak and deceptive measures on behalf of abusive owner airlines and leaving consumers standing under a worthless CRS rules umbrella.
So as one part of the Commission gives a red light to airline web site abuse, the other gives a green light to airline CRS abuse. And to make the irony complete, the Transportation Commissioner justified liberalizing the CRS code because of the rise of Internet web sites as a competitive force! Perhaps the Consumer Protection and Transportation commissioners ought to meet for lunch.
As the Commission’s CRS rules review progressed during 2007, the abandonment of consumer interests accelerated. At a conference panel discussion that I moderated in London last winter, a senior EC transportation official stated that listening to consumer views would be the most important factor in deciding how to reform the rules. When groups representing millions of consumers weighed in forcefully that protections had to be retained to deal with the real-world threat of airline ownership, the Commission responded by closing its ears and cynically devising a loophole that would undermine their interests. In justifying that loophole, the Commission suggested that the rules were simply a matter of business-to-business concern -- marginalizing the consumer stake in this important policy matter.
Any casual follower of air travel distribution knows the checkered history of CRS regulation and how consumers have been negatively impacted by abusive airline practices. In the movie version of this business, the villains are dominant airlines that have predictably used their ownership of reservation systems to engage in exclusionary activities that undermine comparison shopping and the free flow of critical data. The heroes, when they show up for work, are regulators who on behalf of consumers lay down respected and enforced codes of conduct that demand marketplace fairness in the presence of airline ownership. That’s why strong CRS rules that address current industry conditions have been worth fighting for in Europe and why the regulator’s misguided attempts to play games with them on behalf of other industry participants have been vigorously opposed by independent airlines, corporate travel buyers, travel agencies, CRSs, consume r groups, travel industry associations, even the United Nations! The Consumer Protection Commissioner’s warning shots fired over the websites in November are important, but they only address the small part of the iceberg poking above the water. Lurking right below the surface is the rest of an enormous problem -- one in which consumers are at the mercy of airlines with the means and the incentive to restrict full content to the system they own and to manipulate data and functionality in ways that cement their market dominance. The stakes in the CRS debate are about much more than being misled by a couple of euros in a website bait-and-switch; they’re about hundreds of euros lost to consumers every time low-priced options are deliberately suppressed and about the airlines’ use of the reservation system they own to squeeze the breath out of anyone who would dare to compete with them.
The parent carrier rules were designed to stop these abuses from happening and over many years they’ve generally done a remarkably good job of keeping the market in balance without creating unnecessary burdens on marketplace participants. Undermining these rules by creating a loophole exempting Air France, Iberia and Lufthansa -- the owners of Amadeus, Europe’s largest CRS -- makes no sense at all. Airlines and distribution systems have always been a toxic combination, and unless regulators are willing to take the more intrusive step of banning ownership outright, a regulatory regime -- with teeth -- is required.
The results of a CRS Customer Referendum were recently released by the International Airline Passengers’ Association, Advantage Focus Partnership, Belgium Association of Travel Management, Business Travel Coalition, Finnish Business Travel Association, Institute of Travel Management, Scottish Passenger Agents’ Association and Travel Management Alliance. These organizations are experts in the travel industry and represent thousands of corporations and millions of customers of the air and rail transportation systems in Europe.
This group, articulating the consumer voice, proposed solutions to close the loophole. For example, it has proposed that a 5 percent airline ownership stake in a CRS should be established for determining parent carrier status. Alternatively, they would ask for confirmation that Air France, Iberia and Lufthansa are presently parent carriers of Amadeus and an affirmation that the status of these airlines as parent carriers should be subjected to written and oral industry consultation prior to any future proposed change. These are fair, sensible approaches that would go far toward eliminating the needless consumer anxiety the Commission has injected into the process.
The shame of it is that the Commission’s proposed CRS rules are on their face an example of near-perfect “better regulation” -- it’s the undermining the Commission is doing behind its back that makes these rules a near-complete disaster. Instead of getting high praise, the Commission is getting harsh criticism -- and from virtually all corners of Europe. If the parent carrier loophole were fixed by making it unambiguously clear that Amadeus' three airline owners were covered, then the text of the proposed rules would actually be deemed to be responsive to consumer needs.
The European Parliament will next have the opportunity to review and amend the proposal. Deference should not be given to the Commission on the parent carrier issue; deference should be given to consumers whose important interests have been subordinated. Parliament has an excellent opportunity to correct the fatal flaw by taking these proposed rules out of the museum and putting them into practice where they are needed. If Parliament closes the loophole, five years of industry and government work could be brought to a powerful and successful conclusion, with grateful European consumers reaping the benefits of more choice and lower airfares.
…
Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that customers can influence issues of strategic importance to them. Mitchell is founder and chairman.
28 November 2007
TSA takes over Airline Industry Background Checks from FAA
Sacre Bleu...
Well I guess someone has to do it. But if we are to judge the TSA by its effectiveness IE because there has not been another attack and 'Cos Bush tells us so, then this is a good move.
However if you judge this by the very sloppy work we see every day at the customer facing end then I would say we have a lot to worry about.
But then the TSA has to justify its HUGE budger overruns. This amounts to many thousands of dollars per US taxpayer. Some days I just miss Karl Rove's explanations via GWB's mouth.
UGH
T
Well I guess someone has to do it. But if we are to judge the TSA by its effectiveness IE because there has not been another attack and 'Cos Bush tells us so, then this is a good move.
However if you judge this by the very sloppy work we see every day at the customer facing end then I would say we have a lot to worry about.
But then the TSA has to justify its HUGE budger overruns. This amounts to many thousands of dollars per US taxpayer. Some days I just miss Karl Rove's explanations via GWB's mouth.
UGH
T
JD Power's OTA study shows declines
Survey by California based J D Power and Associates Independent Travel Web Site Satisfaction Study, now in its third year, measures the satisfaction of travellers who book airline, hotel or car rental reservations through eight major independent travel websites: Cheaptickets.com, Expedia.com, Hotels.com, Hotwire.com, Orbitz.com, Priceline.com and Travelocity.com.
A decline - not by that much but a noticeable trend across the board shows dissatisfaction with the genre.
Let’s see what the study on supplier sites shows. Our thinking is that we are reaching a point of diminished marginal returns and (gasp) perhaps saturation. With Henry's (Forrester) study showing declines in traffic - we are clearly on a trend line here. This is true for the US market but will take quite some time to feed out to the EMEA and Asia Pac markets.
Cheers
Timothy
A decline - not by that much but a noticeable trend across the board shows dissatisfaction with the genre.
Let’s see what the study on supplier sites shows. Our thinking is that we are reaching a point of diminished marginal returns and (gasp) perhaps saturation. With Henry's (Forrester) study showing declines in traffic - we are clearly on a trend line here. This is true for the US market but will take quite some time to feed out to the EMEA and Asia Pac markets.
Cheers
Timothy
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