Obfuscation

I have always felt that part of the basic airline philosophy was that there was "stuff" the airline knew that it would not tell the passengers. Mostly for no reason other than transparency would mean the revelation that an airline is actually a commodity product.

I have to tread carefully here because airlines are customers of my team.

Fundamentally I have felt that the Internet creates near perfect information and this would challenge the airlines' principle of obfuscation. Little did I know that someone would actually make money out of it.

Earlier this week I noted that EUClaims was a star of a UK Channel 4 expose - particularly of BA. Well check out this podcast. The implications of which are somewhat mind boggling. I am not going to editorialize on the rights and wrongs of what this chap does. However it does seem to me that my vision of the near perfect data world and the ability to act on that data may actually come to pass sooner rather than later.

You be the judge

http://iagblog.podomatic.com/entry/2008-10-17T12_58_38-07_00

Cheers

The unthinkable happens in October - WN posts a loss

OK the dust has settled and OMG WN made a loss. The sky will fall.

Clearly the ratings agency had wind of this which is why they lowered ratings recently.



But this is sanguine news for everyone. It shows that everyone is fallible. Last quarter it was Ryanair - this quarter its Southwest. And the cause was the same - fuel hedging.

But the good news is - this can be fixed.

Cheers

Don't Book Fortune Hotels in India

What the Professor is actually telling you NOT to book a hotel.

Sure right.

So exercising my rights of free speech on my own blog - I am saying I will never book this hotel chain nor should anyone else.

Why?

So we are clear - I have asked them before not to post spurious comments which are advertising and clearly against the policy of this blog. They persist in doing so.

Once was a warning twice is blatantly bad behavior.

As this blog is picked up by several other sites this message will be broadcast to several other elements and will likely get a higher ranking than perhaps the hotel chain does.

Insidious attempts at free advertising is just not cricket (DO YOU HEAR THAT

So let this be a lesson. Do not post advertising posing as comments on this site.

First a request - then you get a flame

Thanks for reading

The Battle for Heathrow - in the Blue Corner....

Surprisingly this is making for some strange bedfellows.

For the expansion of LHR (3rd runway and demolition of zillions of homes) is the current Labour Administration.

Against is...

The Mayor of London
Probably the Conservative Party
The Lib Dems
The Unions (in a full page ad in many newspapers yesterday).

As for the building of a new airport to the east - well that one is not so clear.

However I support the full option - new airport in the Thames Estuary.

Cheers

How to explain financial crisis to regular people

I dont normally just forward things but here is a very good description of how you can explain to normal/regular people what just happened to the global banking system

Cheers

http://globaleconomicanalysis.blogspot.com/2008/10/essence-of-rescue-plan-in-comic-form.html

Thanks - well 30% of a million

Dearly Beloved....

Well thanks to all of you who actually voted and those who didnt but wanted to or forgot....

The final tally was that our horse - the Kiva initiative came in 3rd. Not bad as the prize is $300,000

Here is the final tally from Members Projects:

Presenting the Winning Projects


$1.5 million for 1st place goes to:
Alzheimer's Disease: Early Detection Matters and its fulfilling organization, Alzheimer's Association
$500,000 for 2nd place goes to:
Help 100,000 children thrive in the classroom! and its fulfilling organization, DonorsChoose.org
$300,000 for 3rd place goes to:
Loans That Change Lives and its fulfilling organization, Kiva Microfunds

cheers and thanks again

UK Airspace traffic down 8.9% in September

if you have ever seen those really cool videos from Skies over Britain - you will know that the UK Airspace is one of the most busy skies in the world. Not only from the internally generated traffic but all the cross Atlantic traffic usually touches UK airspace.

Anyway - the traffic despite such things as Open Skies and a significant increase in LCC traffic - total traffic is down 2.1% with a significant drop in transatlantic which is down 8.9% according to the UK privatized Air Traffic Control company NATS.

http://www.nats.co.uk/article/216/257/further_slowdown_in_air_traffic.html

Hmmm... these are real data points folks.

Cheers

Amex Cancels Domestic Companion Ticket

American Express has long tried to raise the bar with its personal services to its premium card holders. Since the Green US card was canceled a few years back - they have tried to reposition the Platinum Card as the standard product.

However there are now many different flavors of the card. Debit and Credit. Branded, Co-Branded, special services etc. Its hard to keep up with all the flavors in one country let alone the differences in many others. Of course in the USA market there has been little penetration of a joint bank card version of Amex. However in International Markets there are quite a few examples.

American Express services are not consistent by card color/type. For example a Straightforward Platinum Card does not carry the same privileges as the Delta card does. So you don't get a companion ticket on the Delta Platinum card.

In late 2006 Amex introduced the domestic companion free ticket with much fanfare. However my contacts tell me it was a resounding flop. So few people buy a full fare domestic premium ticket at full wack that it would be a hard thing to do to purchase one, even if they were readily available - which they just were not.

So with little fuss other than a letter to the affected card holders - they have quietly canceled the program.

Cheers

Is this the Zenith of the US Legacy Carriers?

The French have this wonderful expression Plus Ca Change. Roughly translated it means the more things change the more they stay the same. However we could be seeing the end of the US Traditional Full Service Model, it has passed its zenith and we are headed for a different world.

Here is some interesting backup to this supposition from Anna.aero.

http://www.anna.aero/2008/10/10/the-big6-us-legacy-airlines/?utm_source=anna.aero+newsletter&utm_campaign=a43c266e4c-week_63_October_2008_anna_aero_newsletter&utm_medium=email

Frankly it really does show that there is only one way to go - and that is down.

Interestingly they don't make the connection that I think is likely to happen - namely that now is a great time to think about starting an airline.

We have been approached by several players some funded - some not - who are looking to fill in the gaps where the existing players have pulled out or where the service models just are not working economically.

The Western USA for example is taking the brunt of the withdrawal of United's 737 fleet.

So onward and upward - the new UPC airline revolution is with us. Sadly if there was any nostalgia for the the romance of aviation from a bygone era - it is well and truly now dead.

Cheers

Meet this guy - he makes the Professor look nice!

So if you think you have been spun a line by the airline and your compensation has been denied - then watch out for Euclaim. www.euclaim.co.uk

It is run by Henrik Noorderhaven. He delights in that wonderful old fashioned of past times - exposing liars, and he gets paid for it by getting you the consumer compensation.

In tomorrow's (October 13th at 2000) Dispatches program on the UK's Channel 4 TV station - he was the featured part of the story.

He has exposed BA as the WORST airline in Europe for cancellations.
http://www.breakingnews.ie/Business/mhidkfeyidsn/rss2/

Here is the link for C4- however only UK stationed computer machines can view the program. (And special thanks to Professor Stuart for this one!

http://www.channel4.com/news/articles/dispatches/the+trouble+with+british+airways/2490477

What Henrik does is to track the airlines performance and looks for chronic conditions, for example BA914 and BA915 operated LHR-FRA and back. It has been canceled 27 times so far this year.

BA actually cancels 2% of all its flights. This makes it the worst airline in Europe. Further it loses a lot of bags - 2.5 million or a similar number about 2.7% of all bags.

So much for the World's Favorite Airline.

Now of only someone would do this for the US airlines and check out the invocation of Rule 240 and domestic and international compensation. The US airlines are even worse. OK - they fly more but nearly 70,000 cancellations for the first 6 months of this year is not a pretty sight.

Airlines - time to behave and get better at doing what you are SUPPOSED to do. Of course IATA and ATA are crowing about how much better they are this year than last year. But there is this new issue of leaving early which makes it even harder to cope.

I should know - I have been a victim MORE than once.

Cheers

One More for the Gipper - VOTE for MicroLoans

Oh Best Beloved (I am feeling rather Kipling like today)... a good segue into exhorting you to vote for Kiva in the American Express Member's Projects final.

Yoi now have 3 days to vote. In fact if you already voted for another project - you can still change your vote since only the last one counts.

So if you are an American Express Card holder - even if you are not and still want to vote please go here and VOTE. It wont cost you anything but could help Kiva land a BIG prize.

http://www.membersproject.com/

Your votes so far have already moved Kiva up from #4 to #3. so one more push for the Gipper.

MANY thanks and Cheers

The Professor is eternally grateful.

Heads up - The Professor is on the Road thru Halloween

Dear All

I shall be out of the office and on the road for the next 2 weeks.

Europe next week and then Asia the following week - back to the USA or maybe even Mexico.

In the mean time I will endeavor to blog on any stories that are of relevance.

I am soliciting anyone who would like to be a guest blogger at any time - please contact me directly and I will be happy to post your story.

Cheers

The Professor

LeisureLogix - back in stealth mode?

Oh Best Beloved..........

I received an email this morning from Chicke Fitzgerald of LeisureLogix in response to one of my comments which was picked up by 4Hoteliers.

Here is the original article - well actually how it appeared in 4Hoteliers.com :

http://www.4hoteliers.com/4hots_nshw.php?mwi=5049

and then Chicke's response.

http://distribution-solutionz.blogspot.com/

Comments are always welcome!

Best of luck today

Cheers

Latest Amadeus says... Technology more important than GDS rebates

In the early 1990s there was a great TV show intended for kids but with great satirical overtones called "Dinosaurs". It aired for 3 seasons on the US ABC network. It was very American humour but the satire was global.

It played to contemporary themes of overbearing corporations who would not tell the truth to their customers or their workers as seen through the eyes of a drone worker Earl Sinclair. Earl worked for the WeSaySo Corporation.

Sometimes Amadeus reminds me of the this company.

Their latest pronouncement comes from Australia. Speaking to Oz Travel Trade rag "Travel Today", Amadeus Australia managing director Tim Russell said GDS rebates - incentives given to agency chains to offset transactional charges - were slowly becoming less of a deciding factor than the functionality of the systems.

OK - so I have to call him on this one. Hogwash.

Actually on 2 counts.

Firstly cash is always more important that technology and functionality. However this notion hides a multitude of assumed sins which I wont bore you with now.

Secondly the hidden message is that Incentives are going away slowly but surely and Tim is actually preparing the market for this eventuality. The airlines HATE the fact that the GDS's are paying these fees basically from their pocket. Full Content GDS contracts were supposed to get past this problem but so far they have failed to achieve that. GDS revenues keep rising even amidst falling transaction counts and incentive fees also keep rising. But there is a point where the balance is lost. I think we are there and some airlines are already achieving savings through aggressive GDS bypass.

Ironically it is technology that is becoming the differentiator in all this. Why? Because distribution technology based on GDS bypass technology now exists that can be delivered at a lower price point than GDS's can compete at. So Tim Russell's statement is technically true even though it is not what he meant. Be careful what you wish for - Tim - it may actually happen that Agencies decide that Technology is important but that GDS based technology does not fit the bill any more.

Cheers

S&P downgrades Southwest to BBB+

Ouch,

Southwest the last US airline with an A anything rating just got downgraded by S&P.

Clearly the ratings agencies are not taking any chances and have themselves turned bearish on everyone. Southwest just happened to be caught in the stampede.

Nothing wrong with WN - just the same as everyone else. ... or is there?

I have to say I am a little concerned at their load factors for September. With everyone cutting capacity WN needs to be either more aggressive in launching new markets or cutting. it has to do one or the other or both. Doing neither is not an option.

OAG revises its forecasts - we say its worse

Following the 3rd quarter and September results from the US majors - OAG has revised its numbers downwards. Basing this new figure on flights filed through the end of the year - OAG is showing a slowing trend worldwide - it says not as bad as originally feared. I say baloney - its worse. Here are OAG's details.

The global picture has improved slightly, with the winter schedules showing a 5.2% decline in capacity and a 6.1% decline in the number of flights. OAG’s earlier analysis in August showed a 7% drop for both measures. The latest figures reveal that the world’s airlines will offer 46.3 million fewer seats for October, November and December 2008 and 451,000 fewer flights.

The US domestic market will account for 21.4 million of the cutback in available seats, or 46% of the global decline and a staggering 59% of the global drop in frequencies with 265,000 fewer flights.

The OAG analysis takes into account all future schedules filed by the airlines to date, to provide a comprehensive snapshot of planned airline activity for October to December 2008 with comparisons tracking back 10 years.

Flights and capacity within Europe are also showing worsening cutbacks. Figures for intra-Europe flights are now 5% lower than for Q4 2007 (forecast at -2.7% in August), and seat capacity is now 5.6% lower compared with the previous analysis drop of 2.8% a couple of months ago.

Earlier indications for Asia are not as bad as feared, although still worse than the global figure with a 6.5% fall in capacity and a 7.1% drop in the number of flights.

The effect of what is happening within the US and Europe is seen by the shift on transatlantic and transpacific routes. In August, OAG figures showed that both were showing some growth. The latest figures reveal a capacity reduction of 2.9% for transatlantic capacity, reversing the earlier schedule analysis of 2% growth and a drop of 3.1% on transpacific routes compared with the previous nominal rise of 0.2% year on year.

The impact of capacity cutbacks on the world’s airports remains high. OAG’s analysis reveals that 219 of the world’s airports are losing scheduled air service altogether, compared to the August figure of 275. Of these, 33 are in the US (15% of the global total); 94 (43%) are in the Asia Pacific region and 45 (21%) are in Europe.

So in looking at Septembers actual numbers load factors are way off. We are also seeing something that OAG would not be able to report on - dynamic cancellations. We are seeing a lot of those. So far for 2008 the first half of the year saw ad hoc cancellations at twice the 2007 rate.

So we estimate the total US capacity will be cut by a level of about 10% domestically vs the OAG's numbers which are just over 5%. Hmmm - whose right? Let's see how the numbers stack up at the end of the year.

One thing is pretty sure - we are going to see US domestic airline capacity cuts in January at a further level than we have now. We are estimating that the cuts could be as much as a further 5 points. if fuel stays down at this level - the US airlines may choose to keep the capacity in the air in order to stimulate more activity and ancillary revenue. So far we are seeing dramatic cut backs in all forms of oil usage - including a significant cut in petrol and kerosene usage. The speed with which the inventories built back up after Ike has been amazing. Consumers are learning new tricks - like conservation.

So as far as the market for airline products is concerned - we are not quite at the bottom yet.

Cheers

So you didnt get the invite to Google's Travelfest in NYC?

Well actually neither did I, but yesterday on October 8th about a 100 of your closest friendly Travel Marketeers did at the TravelThink 2008 event in New York. Google put on a full court press including Tim Armstrong, president of the Americas for Google.

The Professor knew the event was happening but was looking for someone to give me the inside scoop - so far only little bits and pieces. A little dickie birdy did give me some insight so here goes:

Google of course wants the travel industry to do well. It has a significant revenue stream that is sourced from the Travel Industry. Like many other consumer facing businesses Google has captured the cold hard marketing dollars like has never been seen. One wag I spoke to thinks that Google makes more money from the Travel Industry than Microsoft does. Now there's a thought. I of course have no way to validate it.They presented some statistics from Jupiter (hmmm they don't seem to be too pally with PCW and Forrester).

According to the Google sponsored study by Jupiter 94% of travel executives said online advertising would provide the strongest return on investment compared to other media in the next 12 months. Some 20% of travel advertisers will spend more than $10 million on online marketing. Folks that's probably several billions of dollars all headed Google's way. Latest stats from the IAB - the Interactive Advertising Bureau - in their report released Tuesday showed that tracked leisure travel-related ad dollars during the first six months were essentially slightly down, dropping from $687 million to $667 million, or from 7% to 6% of total spending. However in our analysis we think this under- represents the category as a whole and that the number is much higher and doesnt cover specialist sites as well as the generalists. It is also not covering the business sectors.

So banish that idea called Troogle from your minds - this is about ensuring that Google continues to capture the lion's share of your ad and marketing dollars. Travel is a VERY BIG category for Google's revenue. When travel falls - then Google's revenues dive at the same time. However don't feel sorry for them just yet - there is still a fundamental shift of revenue from traditional media to Google's pockets so the sector is still growing. And what it cant get directly it will try and get in cooperation with Yahoo in their new ad deal.

So chaps you are essentially shifting cash to one of the world's most profitable companies.

That said there were some interesting things that came out of the meetings...

Google and DoubleClick (its recent purchase) which has dumped even more revenue streams to Sergey's and Larry's fuel fund for their 767, are looking to bring together more interesting elements of search. One of their latest revelations is the focus on behavioral targeting or BT as they call it. "(DoubleClick) understands conversions through display and we know about conversions through search," said Tim Clark. Add in Yahoo once the DOJ rubber stamps it and you have a lot of information on the way people behave. Google is positively Orwellian in what it knows about us.

Among the software (read ways to get you to part with more money) that Google is rolling out to help travel advertisers is a tool that suggests appropriate keywords based on spikes in certain search terms. By spotting a rising search term early such as "staycation," a travel company can develop marketing programs suited to emerging industry trends. Just don't tell Aer Lingus that or they might understand what the word means...

Another new tool that those nice people at Google think could benefit travel marketers especially OTAs and cross product sellers is something that seeks to cross-match surges around certain search terms with terms used on a company's site to come up with new keywords. The technology could yield 50 to 100 new keywords may not have recognized before to generate conversions, said Penry Price (sorry for the previous typo but apparently I am not the only one to make the mistake in print - again apologies) - N. American head of ad sales at the Search Giant. Given the learned behavior of the consumer to input more words into the search string this will likely drive up the cost of under utilized key words. It is also a threat to the add on SEO players.

We see Google trying to capture the link from the broadcast media - particularly TV - to search. We foresee a time when Google will actually predict search traffic based on its knowledge of broadcast programming and ad scheduling and jack up keyword pricing just prior to that time. (If they don't already do it).

Call me paranoid but while its a great tool - Google does seem to have a lock on the whole revenue stream side and its becoming bigger and stronger all the time.

And we used to think Microsoft was the evil empire....

Cheers

Realignment is a Euphemism for ??? AF Yanks LHR-LAX

Ah those heady days in March when oil was leaping and bounding and Heathrow was opening up.

Fast forward... global slump, oil in free fall and AF is yanking the much ballyhooed LHR-LAX flight.

"We need the plane elsewhere".

Well the truth is it didn't work. Loads and yields were not up to snuff.

So plan B...

The 777 will be deployed to LHR-JFK giving the DL-AF-KL-NW alliance 3 Nonstops between NYC and LHR.

If this is the decision for the big twin - can the SEA-LHR route be far behind?

What is clear that there is now excess capacity on the Transatlantic routes. Even the cutting back at LGW is not taking up the necessary slack. There will need to be more reductions.

Hmmm so much for Open Skies?

Will this bolster the case for BAAABI?

Time will tell

Cheers

No more bets on which airline is next....

Paddy Power has now officially withdrawn the betting on the next airline to go bankrupt.

After some media noise (all noise is good noise as far as they are concerned), Paddy's withdrew the bets saying the bet had “run its course”

Dang it I was about to put a boat load down on several carriers..........

Cheers

The Party's Getting Started - TAM is the Star!

Yes friends the new Star of Latin America is TAM. TAM has been unanimously voted in as the next airline to join the Star Alliance. Not really a surprise but it fills a hole nicely.

So what's next - Oneworld is likely to want to get closer to LAN and then there is TACA still sitting out there, currently they have code shares etc with Iberia, Avianca and United. The odd one out at the moment is Skyteam who doesn't have anyone south of Aeromexico.

Let's Salsa!