Sabre adopts T2's definition of Hybrid Value Carriers

Finally recognition!

Sabre's airline solutions team has acknowledged something that we have been saying for a very long time - the basic LCC model has evolved and there is a new kid on the block the HVC - Hybrid Value Carrier.

The core premise is that many other studies in LCCs have blinded concluded that the LCC model was rapidly growing and very large. From our analysis we believe the number of "purist" LCCs is actually quite small. Southwest for example is no longer a true LCC. Neither is EasyJet nor Virgin Blue.

T2 will shortly be publishing our annual LCC study. This year will be more focused on the business model and its evolution.

If you are interested in obtaining a copy of the last year's study based on Travel Trade and the LCCs or you would like a preview of this year's - please give me a ping on email. timothyo@t2impact.com

Cheers

Timothy

Sabre and LH - No Full Content Fees in DE and CH

Sabre and Lufthansa have engaged in a little - "let's play pat-a-cake" at Amadeus expense.

In inking a new full content deal - the two have thrown the entire German travel marketplace upside down. So now there are NO fees for Sabre agents booking LH segments whereas Amadeus agents will have to pay the 4.90 Euro (plus VAT) fee for each segment. Hmmm this one is going to court that's for sure.

Here is the full PR blurb

Cheers

Timothy


News Release



Sabre: No surcharge for Lufthansa and SWISS full content fares
Sabre Travel Network expands agreement with Lufthansa and SWISS

LONDON, United Kingdom, 7 May 2008 - Sabre Travel Network today announced that Sabre agents in Germany, Austria and Switzerland who choose to participate in the Lufthansa and SWISS Preferred Fares programs will be able to access and sell all fares and inventory without a fee.

“This is fantastic news for our agency customers who have told us they want to continue booking via the GDS because it's the most efficient and productive way of working,” said Martin Cowley, Senior Vice President for Sabre Travel Network in EMEA.

Commenting on the announcement, Thierry Antinori, Executive Vice President Marketing and Sales, Lufthansa Passenger Airlines said: “Sabre is an important distribution channel and an efficient marketplace for all Lufthansa fares. Thanks to the extension of our agreement, we can now offer our Preferred Fares without any additional fees to participating travel agencies using Sabre.”

Harry Hohmeister, SWISS Chief Network & Distribution Officer said: “Sabre is a key partner in our distribution structure. And for our travel agency partners, Sabre offers a highly efficient means of booking all SWISS and Lufthansa flights and fares. Our extended agreement with Sabre will sharpen SWISS's competitive edge and provide all the travel agencies that use Sabre with access to all SWISS and Lufthansa fares without additional fees.”

Today's announcement between Sabre, Lufthansa and SWISS also gives Sabre subscribers around the world continued access to all published fares and inventory.

“It's our standing philosophy to find solutions that meet the needs of everyone in the industry and today's announcement with Lufthansa and SWISS reinforces our ability to deliver this while highlighting the continued value of the GDS,” said Cowley.

“We're confident today's announcement will be well received by the industry, delivering benefits to our existing agents and new customers we hope to attract as part of our continued expansion in Europe,” he said.

eTicketing hassles - Sabre offers vMCO

Sabre has come out with a virtual MCO as a partial solution to the hassles of the eTicketing mandates.

For more details read the press release.

http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1139643&highlight=

Will this solve the issues? No - but its a very useful solution for airlines and agencies in this somewhat iffy enforced move.

Cheers

Timothy

eTicketing hassles - Sabre offers vMCO

Sabre has come out with a virtual MCO as a partial solution to the hassles of the eTicketing mandates.

For more details read the press release.

http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1139643&highlight=

Will this solve the issues? No - but its a very useful solution for airlines and agencies in this somewhat iffy enforced move.

Cheers

Timothy

EDS and Microsoft in bed together?

Here is an interesting item that deserves some attention. Air Transport World reports via its ATW Online site a 4 part agreement between EDS and MS.

Citing Jim Dullum the veteran head of the EDS Travel and Transportation unit, ATW reported four key components in the new agreement. The first is that EDS will have access to MS resources dedicated ..."to the building and design and completion of our flight ops systems." The second is that Microsoft will set up a 24/7 help desk to support EDS. The third is "a go-to-market component" under which Microsoft actively will market and sell EDS reservations and flight operations products. Finally, the companies have adopted a commercial arrangement "that gets away from standard software licensing fees. . ."so as our business improves, so does what we pay Microsoft," the EDS spokesman was cited as saying.

This signals a second run at the market. Previously MS was involved in the design and build of Navitaire's "New Skies" Reservation System. For reference from MS go here: http://download.microsoft.com/download/4/c/6/4c600ca6-a041-4aab-9ad4-e74f3089ffec/GEMS14686/Navitaire_Solution_Brief.doc

As the players involved in the Airline IT market struggle to come to terms with a shifting environment and a now very powerful Amadeus, I believe we shall see more similar announcements such as this.

In the mean time - this will perhaps breathe life into the EDS Travel unit which previously has signaled its intention to sunset the old Swissair system ATRAXIS. EDS is also looking to retain Sabre as a customer who is being notably quiet on the subject of what it will do for a next gen Res system. Will EDS try and bring all 3 of its supported systems (SHARES, ATRAXIS and SABRE) into one common set? That would be interesting.

Cheers

Timothy

BAA - How to make a bad situation worse LHR new carry-on policy

If you thought BAA was just the text book example of how not to do things - think again. They have instituted a new policy at LHR which is bound to drive even more passengers away.

After the debacle at T5 and the previous collapse of the baggage system (actually on going) at T4, one thing you would not want to do is to increase the amount of bags going through the baggage system. Well guess again.

As of this week BAA has implemented a NEW policy of draconian proportions in carry-on bags.

BRAVO BAA! No this is not the UK Dept. of Transportation, No this is not the airlines, YES this IS BAA.

It doesn't matter if you are an economy or premium traveler. What works everywhere else in the world - is no longer allowed at LHR.

If you don't believe me - I do have some nice pictures.

Cheers

Timothy

Aloha - I am not dead yet. The Cargo Airline gets a reprieve

Aloha refuses to die gracefully. The original buyer of the cargo operation - Saltchuk (based in Seattle) has reached agreement to acquire the cargo assets.

I am sure this will run and run some more.

Cheers

Timothy

The Professor is in Dubai

I shall be at Arabian Travel Mart this week. May 7-9th. If you want to meet - give me a ping on email. timothyo@t2impact.com

Alas this means not many posts this week.

Cheers

Timothy

Who said paper tickets are dead? IATA that's who!

So the final countdown has begun. IATA has decreed May 30th will be the last day for using paper tickets. I remain a little skeptical about the whole process. The BTC group are agitating strongly against the deadline and I think with some merit.

There are a number of major problems with ET (Electronic Ticketing). It is not as simplistic as IATA and others would have us believe. Further there is still this nagging feeling that ET is – well too complex. Perhaps we need to consider pure ticketless as a better way forward.

Frankly I don’t believe the IATA statistics that 98%+ of all the BSPs are already issuing all ET. I have this vision of some very unhappy accountants at Travel Agencies (and airlines revenue management departments) in some countries who are desperately figuring out how to get those last people to use ET. And then there will be all those users out there.

Frankly I think it is all a sinister plot. If you are a conspiracy theorist – this is just another form of ancillary revenue. The number of tickets returned under ET is significantly less than was the case under paper tickets. I saw a statistic from 2000 where the number (in the USA) was 2% of all paper tickets were never used but 5% of all electronic tickets were not used and not returned for some value. 3% gross revenue boost is a better number than most airlines make in yields. All for doing nothing!

Still ET is better than paper.

Cheers

Whither BMI

Another lively podcast moderated by Addison:

http://iagblog.podOmatic.com/entry/eg/2008-05-02T14_32_19-07_00

Couple of points to note.

I am a firm believer that Sir Michael Bishop has a few cards yet to play. If LH thinks this is a done deal then they are sadly mistaken. In the podcast we debate the possibilities. I encourage you to listen. If you wish to comment please feel free.

Regards

Timothy

Its May Day - do you know where your economy is?

So this is supposed to be the day when all workers (I presume that means all the readers of this blog at least) are enjoying the fruits of their sweat and toil.

But as uncertainty clouds everything - here is a survey published today of the state of at least one country- the USA. Remember this is the country that takes the LEAST amount of holidays, i have put in bold the relevant statistic:

Price of Gas, Groceries, Home Heating and Taxes Impacting Budgets

COLUMBUS, OH – 5/1/08 – Thunderstorms remain on the radar for the U.S. economy and consumers continue to feel the pinch. According to the latest American Pulse™ Survey of 4,055 respondents, 61.7% are dining out less, 57.3% are driving less, 47.4% are attending fewer movies, 46.1% are forgoing department stores for discount retailers and 45.3% are cutting back on their vacation budget to cope with the current economic environment.

What is impacting consumer budgets the most (percent of those saying “very much”)?
• 67.9% say gas prices
• 47.2% say groceries
• 46.8% say home heating and cooling costs
• 36.1% say taxes
One way consumers appear to be coping with pressures on the family budget is by learning a new shopping skill – haggling for price. According to the survey, half of Americans (50.3%) report having negotiated for better prices on products other than a home or vehicle in light of the current economic situation. Americans say they haggle the most for better costs on tires/batteries/auto repair (38.6%), followed by appliances (37.3%) and electronics (37.2%).

Gol - Problems mount on Varig and Fuel issues

Call it a little hubris, but the chaps at Gol have stumbled of late on Varig and the market realities.

On Varig - they have changed the model at least 5 times since acquiring the former Brazilian Star. Into London, Into Paris, a Hub in Madrid,etc etc. International route development takes time. Clearly not a lot of patience from the former bus drivers at Gol.

They need to settle down and to let the business run itself for a while.

So We Change Partners..

A new 3 way is being proposed. BA/AA/CO. This far more appropriate than the proposed mergers in our view and is the appropriate response by all 3 players.

Digging beneath the surface - it is interesting to see who wins here. Actually all 3 do.

BA and AA get further into bed. The likelihood is that the US DoT will finally allow the transatlantic version of the Code Shares to take place as a result.

AA gets a long sought after link to CO and protects its base. Fortress Texas! AA has benefited for many years from the withdrawal of DL from the Dallas hub. This has left fares high.

CO probably gets the most immediate value with incremental revenue which should outweigh the loss of the Skyteam business.

BA's shares rose this morning 5% on the news.

Aloha converts to Chapter 11. Cargo shuts down. State in chaos

Sadly despite best efforts from a number of entities, Aloha's lead creditor GMAC refuse to fund any more time for the carrier and it ran out of cash. The airline has been put out of business and the management and owners as debtors converted the filing to Chapter 7 on Monday night.

Aloha will now cease to exist.

Regionals and ACMI operators starting to look a little thin.

The surprise bid by Skywest for ExpressJet over the weekend - and the subsequent speed with which it was rejected is likely to be a harbinger of more upheaval in the market.

ExpressJet has been struggling since former parent CO cut back on its hours. Running a lite operation on its own was perhaps not the smartest move but they are still trying. Best of luck to them. I think they are going to need it. That said their value jumped on Friday and has stayed up on Monday and Tuesday. It means someone is in the hunt.

Republic is looking less than its normal robust self. With warning bells being sounded. Previously it looked like the Commuter ACMI operator could do no wrong. Now some of the aircraft asset owners are getting jittery.

Frankly as we have written before the current ACMI Pay for Play models are going to change which makes the whole sector look less appetizing.

And then there is Mesa. Will someone please put this puppy out of its misery!

Nationwide shuts down. Fuel claims first African Airline in the crisis

This is a post from our sister blog. Sorry - I posted it wrong!

Confirmed - Nationwide has shut down
Efforts will be mounted to restart Nationwide which has a large labor force but prospects look bleak at this point.

The South African HVC was unable to compete with the LCCs in its market - 1Time, Mango and Kulula. Despite making a good run. The delay in resolving the BEE (Black Economic Empowerment) element at a time when cashflow was critical finally crushed the carrier.

Of the 3 LCCs - we believe that Fly Mango (supported by Government funds) with the Orange Planes and Kulula with the lime green ones are well positioned with BEE concluded. 1Time with the red planes is also BEE as required by the aviation charter. However without the support of the ZA government, it has found itself hard pressed with a gas guzzler of a fleet. Still strict adherence to the LCC model is sustaining them.


Labels: 1Time, Comair, Kulula, Mango

Fuel Claims Another Victim - Nationwide South Africa Stops Flying
According to reports coming from South Africa - Nationwide Airlines the low cost airline serving Domestic South Africa main markets, Lusaka in Zambia and a 4x a week JNB-LGW service has stopped flying from mid day today.

As yes these reports are not officially confirmed but you cannot reach their call center.

With a largely old fleet the airline has been severely impacted by the fuel price surge. Last year one of their older planes had an interesting mishap when an engine seperated from the aircraft just after takeoff. The airline was grounded for some time until checks were made.

There have been numerous airlines that have shut down in the last 12 months. Fuel cost has been the largest culprit.

UK's Airlines will lose under new Taxation Scheme

The old adage in the UK travel industry used to be - "Punters will walk across the street for a quid". For lay or not Brit-speak folks - a Consumer would rather save a pound and walk to another high street travel agency.

Well it seems that the UK's Chancellor of the Exchequer despite having been previously the Minister of Transport had not heard that saying.

Alistair Darling (like his leader a rather dour Scotsman), has significantly elevated the UK Air Duty. Much to the outcry of the industry, the new duty penalizes long haul. Ostensibly for reasons of applying a green tax. However he may come to regret his format.

The tax can only be imposed on the first sector. Therefore the departure tax for a flight connection into Europe could easily save a UK family of 4 up to GBP200 per trip. Thus for example a BA based holiday for 4 to Australia will be 200 pounds more expensive than for the same flight booked via Air France or Lufthansa.

Talk about pound foolish!

At a time when BA's whole business model is under threat because of the appalling infrastructure issues at its main base LHR (on which we have commented frequently). This will just add to BA's woes. It will however badly impact also BMI and Virgin.

Clearly the UK government has no clue about how the airline business works.

Have a nice day.

US Airways + United = Insanity

Just say no.

There is no justification of such a merger other than pure desperation. It would be a waste of paint.

Full Stop.

Cheers!

Continental follows Delta in exit from Certified Tours for inhouse Vacation Packages

Earlier this year, Delta Airlines announced its intention to terminate its long term agreement with Certified Tours for in-house Vacation and Tour services. Now Continental is following suit.

Certified actually was founded by Delta staffers and for many years enjoyed a very close relationship with the airline. In recent years that relationship drifted somewhat. Now too it would seem that Continental feels the same way.

The importance of Vacation packaging - especially Dynamic - has been a hot topic for the US and other markets. We believe that, critically speaking, the technology supporting the Tour Operating has not kept pace with the consumer demand for self service. All Tour Operators need to review their technology needs and provide solutions that are easier for the consumer as ultimate user.

While the profitability of Vacation Packages sustains many intermediary businesses, we believe that this will come under pressure in the coming year as Airlines and other suppliers seek to lower costs again.

Hurray! Someone is listening. CO rejects UA and US.

Larry Kellner and the Houston Oilers are to be congratulated - no urge to merge this time around.

Staying independent is now a prudent course. Merging with a bigger United or a sick US Airways might lead to Houston losing another home team.

Let's hope AMR seems this the same way and doesn't pursue either of the ugly sisters.

The WSJ is speculating that AMR will attempt to persuade CO to jump from Skyteam to OneWorld. CO was careful to leave that door very publicly open. Of course Star would benefit enormously if they dumped at least one of the two sick US airlines and replaced them with CO. With two transatlantic hubs (EWR and IAH) CO is a better bet than either UAL or US for Star.

Interesting... curiouser and curiouser.