I have tremendous respect for Kevin Mitchell and his advocacy of the Business (Corporations) user community.
However I have to wonder why the heat is being turned up against LH? To read more please go here:
http://businesstravelcoalition.com/campaigns/pfp_background.pdf
So why do I disagree with Kevin here? Frankly there is a sense of responsibility that has blame all the way round. LH's frustration with trying to get a resolution out of the GDSs has spilled over into the services model for the agencies. It is of course a classic squeeze play. I have listened intently to both the arguments from the GDSs and from the Airlines who are the real protagonists in this battle. However the agencies (TMCs in the main) and indirectly the corporations are drinking from the well of the Airlines cash which is being diverted by the GDSs for their express intent to retain their customers by using the cash to preserve their market share.
As a member of one of the teams that introduced the incentive model while I was at Worldspan, I can honestly say that the original intent has been somewhat perverted along the way. But frankly it doesn't matter how we got here - the fact is that we are here and the airlines whose cash it is - believe that they should be in control rather than the GDS.
Whether you agree or not, the end game here is that the incentive fees are likely to end or be substantially reduced. It is just an unsustainable model in a transparent distribution world economy.
Where I think there is a real issue is that the transition from a supplier paid model to a user paid model (which is currently under way) requires that the nice and easy holistic one size fits all model either delivers its promise (or its PR!) or the agents have to accept that they cannot rely on the GDSs for full aggregated content. As many regular readers know this has been a constant theme of mine. This is the moment I absolutely think the rhetoric has been misplaced.
I believe that my position is supported by the fact that the Agencies - particularly TMCs - rely ever increasingly on 3rd party automation to fix the inadequacies of the GDSs. Either in content provision (eg access to LCCs) Fare tools, Quality control tools or customer service management tools. The Corporations are happy to demand that level of quality service and even happier to pay for it - or so it would seem.
As the GDSs retreat from the full service model, they are attempting to simply preserve the status quo via a commercially unsustainable incentive program that robs Peter to pay Paul. Perhaps one should ask if that is fair?
Thus in reality if BTC is going to hold a mock trial then there should be a set of co-defendants in the dock. The Agencies and the GDSs are at least accessories to the crime if there is indeed one.
For now, if you follow the logic, LH should not stand alone in the dock - there should be another defendant added to the accused - Air France/KLM. But even then that is not all. You can easily add Gol, Norwegian and EasyJet.
While I think there was once a never never land where the GDSs provided all the tools and services that the agencies (Corporate and Leisure) needed, sadly that time has long passed. There is not going back. So like it or lump it the new world order makes the current model anachronistic at best. Unsustainable - that is for sure. LH is just doing what they think they can.
I just hope that the Airlines and the Corporations can get to an accommodation on this issue - that requires a good dialogue - for that Kevin is correct. But in case anyone is thinking that this will all get resolved with everyone making nice, I fear that they are going to be sadly mistaken. The underlying financial numbers in my humble opinion do not lie. There just isnt a way to make the numbers work for everyone. Whether it is in 2009, 2010 or 2011, the current model WILL undoubtedly change. On that you can depend - and that is no hot air. I simply do not believe the defendants have a case to answer.
Cheers
26 March 2009
Project Hawkeye Launches Open Source
So here it is the first OpenSource GDS interaction system.
I have to chose my words carefully following my post on the Death of the GDS. Project Hawkeye is a departure from the old model of standardized closed systems into a brave new world of OpenSource, warts and all.
http://www.farelogix.com/hawkeye/index.html
I have now sat through several presentations on Hawkeye, I have worked with it since it was released and I can truly say it is very different. It brings in many new capabilities that will please both Suppliers and Users. As it shares the same infrastructure for the Farelogix middleware platform, it means that user interaction can now be supported by green screen as well as GUI services side by side and interoperable.
From my personal perspective this is what should have been launched years ago. With the growth of disparate content, an integration strategy is essential. No matter which side of the distribution fence you sit, we all live in a disparate and fragmented world. Never mind the functionality - which is truly revolutionary - this is the next gen wave. I am confident that this sets the standard for others to follow.
For Airlines the benefits are obvious, the ability to add merchandising functions via fare families or individual components. For the sales environment - the ability to bring together multiple and fragmented content has to be a boon. This is a win win for everyone.
And just so you understand, I am a huge fan of this form of openness. We have already deployed the core platform for one of our clients in EMEA, and they are deploying a customized supported version of Project Hawkeye which will be available soon.
Welcome to the brave new world. Seems like it is arriving a little faster than we all thought. Perhaps they should have called it Wendys instead! (Just a little joke for Americans).
Cheers
Has Expedia Crossed The Line?
The revelation that Expedia (and as it turns out many others) is selling Cookie based data has caused a minor flap.
The fact that they can has not been in doubt for quite some time. but the fact that they do is not the story that anyone wants to here.
The article in Travel Weekly/Dennis Schaal is enough to put many a privacy advocate on high alert.
to me there is a clear line between opt in - implicit approved behavior and selling.
I do believe that the line has been crossed. And what do you think?
Thanks to Professor Alex
Cheers
The fact that they can has not been in doubt for quite some time. but the fact that they do is not the story that anyone wants to here.
The article in Travel Weekly/Dennis Schaal is enough to put many a privacy advocate on high alert.
to me there is a clear line between opt in - implicit approved behavior and selling.
I do believe that the line has been crossed. And what do you think?
Thanks to Professor Alex
Cheers
25 March 2009
The Death Of The GDS
So my topic for 1000th Professor Sabena Blog is the Death of the GDS.
So is this trash talk or is it real?
Actually I think its very real. At CASMA's Spring Conference this week in Dallas (where I am still stuck due to weather) Henry Harteveldt called on the current GDS companies the proverbial big 3 to become GMS - Global Merchandising Systems. He could also mean Global Marketing Solutions. I agree. The age of passive distribution is over.
I hereby declare therefore that from now on the GDSs are officially dead.
Lest you think this is just me spouting off - lets examine the case for the GDS.
I put it to you that they are increasingly less Global. Their products can and generally are used Globally - but the share of the total market for Travel products has fallen to a point where there can be no thread of universality about their global ambitions. Indeed we have evidence that even the executive suites are seriously thinking of retrenching their marketing footprints - perhaps the re-emergence of the National Marketing Company model. Their solutions are no longer globally and more importantly exclusively relevant. There is this major need to add on value added products. As noted in early posts - the sheer percentage of total PNRs touched by a third party system is now staggering.
We see the dealership model emerging. We see a divergence in commercial agreements. We also see that Carriers will establish regional contracts not master global contracts. By necessity the ability of the marketing needs will result in fragmented commercial relationships. (personally I hate this idea but I see no real alternative).
Now if it pleases the court - let me present my case against Distribution. Passive distribution is as dead as Newspapers. Active Marketing and Merchandising is where its at. The GDSs are still not able to assist the airlines in this regard. The airlines will therefore deploy their own solutions in conjunction with - or frequently ignoring the GDSs. Fragmented solutions and requirements by airlines which are no longer part of the holistic model is going to drive everyone nuts.
And for my final argument - I present the GDSs own desire to change the way the customer file management systems work. This is actually very good. All 3 GDS company's have remote profile systems off the mainframe. Amadeus is turning off TPF in 2010. Sabre cannot be too far behind. Indeed Sabre's announcement that it is "flattening the PNR" is but another nail in the coffin of the GDS model.
I will grant you that they are Systems, but they are no longer ubiquitous.
So in summation:
The GDS model is indeed no longer sustainable as a one size fits everything. It has fragmented content, fragmented markets, and different applications. The sector no longer has a homogeneous business model.
So this is it. Farewell to the GDSs. They have served us well. Welcome to the new world of the GMS. Welcome to the new dawn where the servers can be here there and everywhere. Where the competitors will range from Sabre to Farelogix, Multicom to Zujui, Kayak to Expedia, Adventure Central to Pegasus, Travelzoo to Farecompare etc etc. All in some way shape or form a GMS platform. The legacy GDSs will stay around (I hope). But just like the rest of the global economy, everyone has a role in the future market. So too does the user and supplier communities. The GDSs will continue to evolve into GMSs. Losing their unique status is a blow to their ego and pride, but they actually gave that up a long time ago.
This will be fun. This will be hard. But tomorrow Scarlett is another day. And that day has finally dawned.
Cheers! And thanks to all of you. Here's to the next thousand posts. I wonder what the world will be like then!
So is this trash talk or is it real?
Actually I think its very real. At CASMA's Spring Conference this week in Dallas (where I am still stuck due to weather) Henry Harteveldt called on the current GDS companies the proverbial big 3 to become GMS - Global Merchandising Systems. He could also mean Global Marketing Solutions. I agree. The age of passive distribution is over.
I hereby declare therefore that from now on the GDSs are officially dead.
Lest you think this is just me spouting off - lets examine the case for the GDS.
I put it to you that they are increasingly less Global. Their products can and generally are used Globally - but the share of the total market for Travel products has fallen to a point where there can be no thread of universality about their global ambitions. Indeed we have evidence that even the executive suites are seriously thinking of retrenching their marketing footprints - perhaps the re-emergence of the National Marketing Company model. Their solutions are no longer globally and more importantly exclusively relevant. There is this major need to add on value added products. As noted in early posts - the sheer percentage of total PNRs touched by a third party system is now staggering.
We see the dealership model emerging. We see a divergence in commercial agreements. We also see that Carriers will establish regional contracts not master global contracts. By necessity the ability of the marketing needs will result in fragmented commercial relationships. (personally I hate this idea but I see no real alternative).
Now if it pleases the court - let me present my case against Distribution. Passive distribution is as dead as Newspapers. Active Marketing and Merchandising is where its at. The GDSs are still not able to assist the airlines in this regard. The airlines will therefore deploy their own solutions in conjunction with - or frequently ignoring the GDSs. Fragmented solutions and requirements by airlines which are no longer part of the holistic model is going to drive everyone nuts.
And for my final argument - I present the GDSs own desire to change the way the customer file management systems work. This is actually very good. All 3 GDS company's have remote profile systems off the mainframe. Amadeus is turning off TPF in 2010. Sabre cannot be too far behind. Indeed Sabre's announcement that it is "flattening the PNR" is but another nail in the coffin of the GDS model.
I will grant you that they are Systems, but they are no longer ubiquitous.
So in summation:
The GDS model is indeed no longer sustainable as a one size fits everything. It has fragmented content, fragmented markets, and different applications. The sector no longer has a homogeneous business model.
So this is it. Farewell to the GDSs. They have served us well. Welcome to the new world of the GMS. Welcome to the new dawn where the servers can be here there and everywhere. Where the competitors will range from Sabre to Farelogix, Multicom to Zujui, Kayak to Expedia, Adventure Central to Pegasus, Travelzoo to Farecompare etc etc. All in some way shape or form a GMS platform. The legacy GDSs will stay around (I hope). But just like the rest of the global economy, everyone has a role in the future market. So too does the user and supplier communities. The GDSs will continue to evolve into GMSs. Losing their unique status is a blow to their ego and pride, but they actually gave that up a long time ago.
This will be fun. This will be hard. But tomorrow Scarlett is another day. And that day has finally dawned.
Cheers! And thanks to all of you. Here's to the next thousand posts. I wonder what the world will be like then!
Reflecting on Blogging, Tweeting and Social Media
So I admit that perhaps I am not as youthful as I once was. Social Media has definitely changed the way we do things. It has altered my life. It is decidedly a 2.0 activity. However I cannot say that I am truly comfortable with the chaotic nature of the communication tools.
Blogging was not something I took to easily. I am not a writer or a Journalist. However I hope that what I contribute to the ether is useful and valued. I do have people come up and say so (real people real conversations) as well as quite a lot of feedback. Not everyone agrees with things I write. That is one of the beauties of the new channels of communication. It is direct and it is clear and the 2 way nature of the channel makes its impact all the more greater in contrast with the traditional media.
Over the last 2 days, I subjected my Facebook and Twitter network to my Tweets streaming from the CASMA Sprint 2009 conference.
Twitter has a definitive function in Social terms but I remain skeptical about its generalized business use. I think it can be so in the future but right now it's just not quite there.
I dont think I am going to do it again - at least for a while. It requires a degree of responsibility and well it just interferes with the process of comprehending to what is being said perhaps my multi-tasking skills are not quite as good as I thought.
So my reflection on the process is that I think there are some things I am very comfortable with - such as Blogging and Facebook. These are more akin to DIY Publishing and a personal website.
However I still prefer the more normal use of email because I can target to specific people and groups knowing that my addressing is real and controlled. This is not the case for Blogging, Facebook and even more so for Twitter.
The decline of conventional media like newspapers to me is a lost asset, a national treasure. I morn the death of my own local paper. But I am as much of a contributor to its demise as anyone. I haven't used a classified ad in well 6 years that I can remember. I use Craig's list. I largely ignore the news paper ads. So much paper goes straight to recycling. I have a DVR and skip through the commercials. So with all these new tools come new responsibilities and new realities.
It is these new obligations that I find a little hard to absorb. But the biggest issue of all is what I would call the infoglut. Junk data. The extra work that I have to invest to sort through the trash of people's ramblings (mine included). I do try to keep my output focused and valuable. But others don't. There seems to be an expectation that someone (the magical hand of god) will rise and cure this problem. That is part of what I find a conundrum. The expectation that someone else will fix it. I have no such confidence. I also don't feel good about choosing solutions that are clearly bad or compromised just because its the only option out there. The rise of power of Google is a good example. On balance doesn't make Google a universally good company.
So with this - I complete my 999th Blog entry.
Tomorrow - maybe even today - then I will write my 1000th
Cheers
Blogging was not something I took to easily. I am not a writer or a Journalist. However I hope that what I contribute to the ether is useful and valued. I do have people come up and say so (real people real conversations) as well as quite a lot of feedback. Not everyone agrees with things I write. That is one of the beauties of the new channels of communication. It is direct and it is clear and the 2 way nature of the channel makes its impact all the more greater in contrast with the traditional media.
Over the last 2 days, I subjected my Facebook and Twitter network to my Tweets streaming from the CASMA Sprint 2009 conference.
Twitter has a definitive function in Social terms but I remain skeptical about its generalized business use. I think it can be so in the future but right now it's just not quite there.
I dont think I am going to do it again - at least for a while. It requires a degree of responsibility and well it just interferes with the process of comprehending to what is being said perhaps my multi-tasking skills are not quite as good as I thought.
So my reflection on the process is that I think there are some things I am very comfortable with - such as Blogging and Facebook. These are more akin to DIY Publishing and a personal website.
However I still prefer the more normal use of email because I can target to specific people and groups knowing that my addressing is real and controlled. This is not the case for Blogging, Facebook and even more so for Twitter.
The decline of conventional media like newspapers to me is a lost asset, a national treasure. I morn the death of my own local paper. But I am as much of a contributor to its demise as anyone. I haven't used a classified ad in well 6 years that I can remember. I use Craig's list. I largely ignore the news paper ads. So much paper goes straight to recycling. I have a DVR and skip through the commercials. So with all these new tools come new responsibilities and new realities.
It is these new obligations that I find a little hard to absorb. But the biggest issue of all is what I would call the infoglut. Junk data. The extra work that I have to invest to sort through the trash of people's ramblings (mine included). I do try to keep my output focused and valuable. But others don't. There seems to be an expectation that someone (the magical hand of god) will rise and cure this problem. That is part of what I find a conundrum. The expectation that someone else will fix it. I have no such confidence. I also don't feel good about choosing solutions that are clearly bad or compromised just because its the only option out there. The rise of power of Google is a good example. On balance doesn't make Google a universally good company.
So with this - I complete my 999th Blog entry.
Tomorrow - maybe even today - then I will write my 1000th
Cheers
24 March 2009
The Professor Is Tweeting At CASMA in Dallas
OK - I am going to try and do this.
I think this may be useful if I try and use twitter from the CASMA sessions.
I couldn't get online this morning (mea culpa) but I will try and do better this afternoon.
So bear with me. You know I am not a fan of indiscriminate forms of Tweeting. Hopefully I wont be doing the Twittarrhea thing
Cheers
PS I shall be doing CASMA Spring09 as the lead
I think this may be useful if I try and use twitter from the CASMA sessions.
I couldn't get online this morning (mea culpa) but I will try and do better this afternoon.
So bear with me. You know I am not a fan of indiscriminate forms of Tweeting. Hopefully I wont be doing the Twittarrhea thing
Cheers
PS I shall be doing CASMA Spring09 as the lead
22 March 2009
US Airlines decline again
Its old news but these days the decline seems to be pretty constant. So far I have been focusing on a number that says that from mid 2008 to the end of that year traffic declines would be about 10%.The prediction for this year was to be a further 5 points decline. The latest numbers from ATA - the US Airlines body indicates that Feb was indeed down by 12% volume but that 8% revenue per pax flown was a bit of a jolt. Feb however was a larger month last year with both more days and more weekdays in it. So far I am tracking against my prediction.
The big question is when will the bottom hit. Economists are saying end of the year. I think they are being a little optimistic.
With ticket volumes down in the USA and revenue numbers also down significantly per ARC the true picture can emerge now.
If we compare Tickets as passengers and ticket revenue as sales on the airlines we see the following:
Source: ARC ATA
Tix/Pax. 18% 12%
Rev/Sls. 26% 19%
This tells me we really do have a differential between the GDS/ARC based revenue and he carriers' revenue. If Sabre says it is gaining share and Amadeus was smaller and not as affected, this points to some ugly numbers at Travelport.
I do believe we shall see these trends continue throughout 2009. The good news will be if March shows a slight improvement in the overall decline. This remains to be seen.
Fingers crossed.
Cheers
The big question is when will the bottom hit. Economists are saying end of the year. I think they are being a little optimistic.
With ticket volumes down in the USA and revenue numbers also down significantly per ARC the true picture can emerge now.
If we compare Tickets as passengers and ticket revenue as sales on the airlines we see the following:
Source: ARC ATA
Tix/Pax. 18% 12%
Rev/Sls. 26% 19%
This tells me we really do have a differential between the GDS/ARC based revenue and he carriers' revenue. If Sabre says it is gaining share and Amadeus was smaller and not as affected, this points to some ugly numbers at Travelport.
I do believe we shall see these trends continue throughout 2009. The good news will be if March shows a slight improvement in the overall decline. This remains to be seen.
Fingers crossed.
Cheers
20 March 2009
Sabre Launches ProfilePlus.
As regular readers know - I am not a huge fan of the GDSs. But occasionally they do something right.
The new Sabre ProfilePlus product which will replace the old and now very tired STAARS product (actually does it still have 2 As in it?) it has used for so many moons.
All 3 GDSs are now working on the non-TPF hosted Profile system. I cannot comment on the others because I haven't seen the Amadeus and the TravelPort products. However I think it is definitely a product type whose time has come.
Prying open the GDS to allow access to the core functionality of the GDS without necessarily changing the underlying components, would have been heresy even a few years ago. Today with products like LUTE's Open Office Platform and Travelport's new workstation product, the unbundled model is indeed becoming a reality.
It should be remembered that the GDS sits on 3 basic platform legs.
Content and access to supply e.g. Airlines Inventory and pricing
Applications e.g. Shopping tools
Customer File Management e.g. PNRs and profiles
The unbundling of the GDS model has been something that has needed to happen for a very long time.
ProfilePlus represents a good way forward. It is huge. 1600 data elements. It is however still host based. The old flat file based profiles are replaced with significant capabilities and useful tools. It is based on web services model with a GUI as the front end and interfaces using both a command line or a Graphical front end. It is also 2 way although the initial release will be the traditional unidirectional tool. it is tightly coupled to MySabre but in the future will support external services such as Merlin in Germany.
Among the new capabilities are:
1. Templates that will make profile creation a lot easier
2. Filters that enable the display of only critical data a lot easier
3. A master (Oracle based) database for the management and manipulation of profiles
4. PNR interaction via a new *PI function
5. Profile migration tool which is essential
6. A future road map of many functions
7. Interaction with both local and remote applications
There are many elements that will be familiar - A.O.N - Always, Optional and Never move components.
In the discussion with the product folks today, they described how Sabre has a vision for recreating the PNR by "flattening" the structure. This is a pretty radical departure for a GDS.
Product roll out will occur in Q2 2009 with migration complete by the end of 2010. There are already about 25-30 users on the system in test.
Frankly the power will be more than 90% of what agents will generally need. But this wont be too complicated as the standard agent in the high street never need touch the power. However for a large corporate agency this has functions that have been asked for. It is however a whole new structure and functionality that will require extensive support services (that Sabre will initially provide at no additional charge). It is of the same magnitude of effort as the introduction of scripting.
There are still challenges. Prying open the GDS requires a philosophical and commercial model that Sabre doesn't seem to be too keen to support at this point. But with tools like this the technology is not going to be the problem.
Kudos to the team at Sabre who did the work. It looks very thorough. However one should spend a lot of time with the product before deciding on its deployment profile.
It would be very interesting to see how the other 2 systems, Amadeus' new environment and the G2 based solution from Travelport stack up against Sabre's now announced offering.
Cheers
The new Sabre ProfilePlus product which will replace the old and now very tired STAARS product (actually does it still have 2 As in it?) it has used for so many moons.
All 3 GDSs are now working on the non-TPF hosted Profile system. I cannot comment on the others because I haven't seen the Amadeus and the TravelPort products. However I think it is definitely a product type whose time has come.
Prying open the GDS to allow access to the core functionality of the GDS without necessarily changing the underlying components, would have been heresy even a few years ago. Today with products like LUTE's Open Office Platform and Travelport's new workstation product, the unbundled model is indeed becoming a reality.
It should be remembered that the GDS sits on 3 basic platform legs.
Content and access to supply e.g. Airlines Inventory and pricing
Applications e.g. Shopping tools
Customer File Management e.g. PNRs and profiles
The unbundling of the GDS model has been something that has needed to happen for a very long time.
ProfilePlus represents a good way forward. It is huge. 1600 data elements. It is however still host based. The old flat file based profiles are replaced with significant capabilities and useful tools. It is based on web services model with a GUI as the front end and interfaces using both a command line or a Graphical front end. It is also 2 way although the initial release will be the traditional unidirectional tool. it is tightly coupled to MySabre but in the future will support external services such as Merlin in Germany.
Among the new capabilities are:
1. Templates that will make profile creation a lot easier
2. Filters that enable the display of only critical data a lot easier
3. A master (Oracle based) database for the management and manipulation of profiles
4. PNR interaction via a new *PI function
5. Profile migration tool which is essential
6. A future road map of many functions
7. Interaction with both local and remote applications
There are many elements that will be familiar - A.O.N - Always, Optional and Never move components.
In the discussion with the product folks today, they described how Sabre has a vision for recreating the PNR by "flattening" the structure. This is a pretty radical departure for a GDS.
Product roll out will occur in Q2 2009 with migration complete by the end of 2010. There are already about 25-30 users on the system in test.
Frankly the power will be more than 90% of what agents will generally need. But this wont be too complicated as the standard agent in the high street never need touch the power. However for a large corporate agency this has functions that have been asked for. It is however a whole new structure and functionality that will require extensive support services (that Sabre will initially provide at no additional charge). It is of the same magnitude of effort as the introduction of scripting.
There are still challenges. Prying open the GDS requires a philosophical and commercial model that Sabre doesn't seem to be too keen to support at this point. But with tools like this the technology is not going to be the problem.
Kudos to the team at Sabre who did the work. It looks very thorough. However one should spend a lot of time with the product before deciding on its deployment profile.
It would be very interesting to see how the other 2 systems, Amadeus' new environment and the G2 based solution from Travelport stack up against Sabre's now announced offering.
Cheers
From The Dept. Of Crass Headlines:
79% of US email users went on to book travel online after receiving an e-mail from a travel company.
Thank you epsilon. I enjoyed it. No further comment is necessary
Thank you epsilon. I enjoyed it. No further comment is necessary
The Ancillary Revenue Well to Run Dry?
Good piece from Reuters and published in USA Today - march 18.
http://www.usatoday.com/travel/flights/2009-03-18-airline-fees_N.htm
There is no doubt that Ancillary Revenues have definitely saved the Airlines in 2008 and now into 2009 this is of major value and has become a mainstay of airline gross revenues. However there is a sense of foreboding that seems to be permeating the revenue managers of the airlines. Perhaps the well has run dry and the unbundling of the product has reached its logical conclusion. There is only so much that you can ask a customer to pay for separately before he suffers from wallet fatigue. There are a good number of people who firmly believe that they are being ripped off for things like taxes, service fees, surcharges and fuel fees etc.
For LCCs particularly the master of this - Ryanair - the issues are pretty straightforward, they are totally transparent about the issue. However even Ryanair may have reached the end of that limit if they proceed to force a 100% online checkin fee. At least you know where you stand with FR.
However contrast this with the Full Service Network Carriers. They are offering frills for pay and there is a lot of confusion around how these frills are offered or not as the case maybe. Further the inability to purchase some of these things through the traditional environments such as a GDS powered travel agency has become a major frustration on all sides.
Case in point. Why would you make your most frequent flyers pay for change fees at the same time opening up such previously hard won privileges such as lounge passes or priority status for fees. I urge you to go hang out in some of the frequent flyer forums if you want to see some venom being spat out on these subjects.
One thing is for certain the low hanging fruit of this ancillary revenue is done. Now the hard things have to be worked out and made to work. That is going to cost money and the issue of whether the revenue justifies the additional costs come into play.
Of course what this does to your brand proposition and your customer loyalty is a very open question.
As always - don't expect money for nothing - "and your chicks ain't for free!". For those of you running off to yet another ancillary revenue conference be careful. All that glitters is not gold.
Be warned and be careful - all of you.
Cheers
http://www.usatoday.com/travel/flights/2009-03-18-airline-fees_N.htm
There is no doubt that Ancillary Revenues have definitely saved the Airlines in 2008 and now into 2009 this is of major value and has become a mainstay of airline gross revenues. However there is a sense of foreboding that seems to be permeating the revenue managers of the airlines. Perhaps the well has run dry and the unbundling of the product has reached its logical conclusion. There is only so much that you can ask a customer to pay for separately before he suffers from wallet fatigue. There are a good number of people who firmly believe that they are being ripped off for things like taxes, service fees, surcharges and fuel fees etc.
For LCCs particularly the master of this - Ryanair - the issues are pretty straightforward, they are totally transparent about the issue. However even Ryanair may have reached the end of that limit if they proceed to force a 100% online checkin fee. At least you know where you stand with FR.
However contrast this with the Full Service Network Carriers. They are offering frills for pay and there is a lot of confusion around how these frills are offered or not as the case maybe. Further the inability to purchase some of these things through the traditional environments such as a GDS powered travel agency has become a major frustration on all sides.
Case in point. Why would you make your most frequent flyers pay for change fees at the same time opening up such previously hard won privileges such as lounge passes or priority status for fees. I urge you to go hang out in some of the frequent flyer forums if you want to see some venom being spat out on these subjects.
One thing is for certain the low hanging fruit of this ancillary revenue is done. Now the hard things have to be worked out and made to work. That is going to cost money and the issue of whether the revenue justifies the additional costs come into play.
Of course what this does to your brand proposition and your customer loyalty is a very open question.
As always - don't expect money for nothing - "and your chicks ain't for free!". For those of you running off to yet another ancillary revenue conference be careful. All that glitters is not gold.
Be warned and be careful - all of you.
Cheers
19 March 2009
Worldwide Outbreak of Twitarrhea.
Surprising to some - it may be said - but the Professor is not always an early adopter of technology. He is however a very keen gadget hound and usually tries everything at least once. He opines (in the third person) that its a bit like sushi... how do you know if you are going to die unless you try it...
OK so back to the first person and I think I have said before that I find Twitter a little obtrusive. Now I am beginning to find it annoying in certain cases. I do find there are some very good times when Twitter Tweets are very useful. I have noted before that they are great during conferences and probably during emergency situations. But for the rest - well I just have a hard time justifying my very precious time with perhaps a lot of junk.
So my problem is that I don't have the ability to edit it or to know if the person is sending valuable information in the tweets or just describing the contents of their lunch. So it would seem that we are now beginning to suffer a worldwide viral explosion of the new disease Twitarrhea.
This new and it would seem quite pervasive disease is characterized by very often quite rational and sane people using their cellphones to engage in mindless activities and opinions of seldom any relevance. And just because it can be done in 140 characters should not be an excuse to send a stream of the effluent.
It this wasn't bad enough it seems that there is a secondary disease that affects an even greater percentage of the population called Spanish Tweettimetheftuenza. (With full apologies to the people of the Iberian peninsula). This secondary disease could be more harmful to the world than Twitarrhea in that it has now stolen many billions of minutes of people's time causing reduced productivity in the workplace and relationship strain and breakup.
For some extreme examples of Twitarrhea - I refer you to the famous Robert X Cringely.
http://weblog.infoworld.com/robertxcringely/archives/2009/03/escape_from_the.html?source=NLC-NOTES&cgd=2009-03-16
I often admonish my readers to be careful and be warned to terrible afflictions. This is perhaps the most important warning I have given to date.
DON'T DO IT. If I may quote one of the most famous statements of all time (and butcher it just a little) from Walt Disney's Bambi:
"If you cannot Tweet something nice then don't tweet anything at all"
OK so back to the first person and I think I have said before that I find Twitter a little obtrusive. Now I am beginning to find it annoying in certain cases. I do find there are some very good times when Twitter Tweets are very useful. I have noted before that they are great during conferences and probably during emergency situations. But for the rest - well I just have a hard time justifying my very precious time with perhaps a lot of junk.
So my problem is that I don't have the ability to edit it or to know if the person is sending valuable information in the tweets or just describing the contents of their lunch. So it would seem that we are now beginning to suffer a worldwide viral explosion of the new disease Twitarrhea.
This new and it would seem quite pervasive disease is characterized by very often quite rational and sane people using their cellphones to engage in mindless activities and opinions of seldom any relevance. And just because it can be done in 140 characters should not be an excuse to send a stream of the effluent.
It this wasn't bad enough it seems that there is a secondary disease that affects an even greater percentage of the population called Spanish Tweettimetheftuenza. (With full apologies to the people of the Iberian peninsula). This secondary disease could be more harmful to the world than Twitarrhea in that it has now stolen many billions of minutes of people's time causing reduced productivity in the workplace and relationship strain and breakup.
For some extreme examples of Twitarrhea - I refer you to the famous Robert X Cringely.
http://weblog.infoworld.com/robertxcringely/archives/2009/03/escape_from_the.html?source=NLC-NOTES&cgd=2009-03-16
I often admonish my readers to be careful and be warned to terrible afflictions. This is perhaps the most important warning I have given to date.
DON'T DO IT. If I may quote one of the most famous statements of all time (and butcher it just a little) from Walt Disney's Bambi:
"If you cannot Tweet something nice then don't tweet anything at all"
18 March 2009
Airline Seats as Razors?
Tim Hughes - whose blog I really like - writes in his column from down under today on the notion of the airline seat vs ancillary revenues as the Razor vs Razor blade discussion.
http://tims-boot.blogspot.com/2009/03/travelocity-to-remove-air-ticket-fees.html
The concept founded so many years ago by King Gillette (yes that was his real name) of selling the larger product at a loss or zero cost but making the profit of the use of the product is clearly not and not necessarily news.
However adopting this model comes at a huge price that not many may be willing to pay.
Consider this - if (heaven forbid) Ryanair was to have an accident and lives lost or serious injuries what would happen to Ryanair? probably a lot since it has little brand value other than price. Were the same thing to happen to Lufthansa - its a different proposition as LH has a much higher brand value.
if therefore you append the Razor/Blade model over airlines today many things happen. The investmant in the brand proposition changes. The value proposition changes. Most definitely what happens is that you destroy the value of your proposition compared to comparable products and services. In the case of the airline trying to make money out of the initial reservation/seat sale - then they become no better than Ryanair.
Indeed in my opinion this works for someone like Ryanair. It doesnt work for a premium product airline or even an association with a brand that is lesser in perception terms.
All in all its not a good idea.
Seperating the brand proposition from the product works for things like Game Consolers or Razors. It doesnt work for a premium long established airline in my view.
Cheers
Timothy
http://tims-boot.blogspot.com/2009/03/travelocity-to-remove-air-ticket-fees.html
The concept founded so many years ago by King Gillette (yes that was his real name) of selling the larger product at a loss or zero cost but making the profit of the use of the product is clearly not and not necessarily news.
However adopting this model comes at a huge price that not many may be willing to pay.
Consider this - if (heaven forbid) Ryanair was to have an accident and lives lost or serious injuries what would happen to Ryanair? probably a lot since it has little brand value other than price. Were the same thing to happen to Lufthansa - its a different proposition as LH has a much higher brand value.
if therefore you append the Razor/Blade model over airlines today many things happen. The investmant in the brand proposition changes. The value proposition changes. Most definitely what happens is that you destroy the value of your proposition compared to comparable products and services. In the case of the airline trying to make money out of the initial reservation/seat sale - then they become no better than Ryanair.
Indeed in my opinion this works for someone like Ryanair. It doesnt work for a premium product airline or even an association with a brand that is lesser in perception terms.
All in all its not a good idea.
Seperating the brand proposition from the product works for things like Game Consolers or Razors. It doesnt work for a premium long established airline in my view.
Cheers
Timothy
16 March 2009
Is Ryanair Losing Screen Scrape War?
I have to say I am conflicted on this one.
The issue of the ability of a screen scraper to "steal, misuse, misappropriate or manipulate" material off the web pages of an airline attacks one of the fundamental issues of Intellectual Property. Is the data you have yours or not? At the heart of this are two conflicting concepts.
On the open access doctrine sits the - "If you put it out, there it's public" rights.
However if you present the conditions for use of the data then the right to refuse to sell rule comes to play - yes the "no shoes, no shirt, no service" rule. As long as you don't discriminate - this has been a fundamental right of every seller.
At this stage I think that Ryanair and BA (who has similar policy) clearly state the right to use rules on their websites (as does Expedia and many others) have right in their corner. However once the booking has been accepted then the case gets murky. So if someone used subterfuge to get the booking done illegally - then the airline has the right to refuse flight but only if the consumer knowingly deployed some underhanded way of getting the booking.
This little detail seems to have been lost in the Multicom pronouncements that FR is going to lose the battle.
Since at the moment FR has said that it is not allowing ANYONE to screen scrape it means that ALL bookings are the fruit of a poison vine action. This is a fundemental legal concept.
Don't you just love the law!
Cheers
The issue of the ability of a screen scraper to "steal, misuse, misappropriate or manipulate" material off the web pages of an airline attacks one of the fundamental issues of Intellectual Property. Is the data you have yours or not? At the heart of this are two conflicting concepts.
On the open access doctrine sits the - "If you put it out, there it's public" rights.
However if you present the conditions for use of the data then the right to refuse to sell rule comes to play - yes the "no shoes, no shirt, no service" rule. As long as you don't discriminate - this has been a fundamental right of every seller.
At this stage I think that Ryanair and BA (who has similar policy) clearly state the right to use rules on their websites (as does Expedia and many others) have right in their corner. However once the booking has been accepted then the case gets murky. So if someone used subterfuge to get the booking done illegally - then the airline has the right to refuse flight but only if the consumer knowingly deployed some underhanded way of getting the booking.
This little detail seems to have been lost in the Multicom pronouncements that FR is going to lose the battle.
Since at the moment FR has said that it is not allowing ANYONE to screen scrape it means that ALL bookings are the fruit of a poison vine action. This is a fundemental legal concept.
Don't you just love the law!
Cheers
The BTC vs IATA Privacy Debate
The debate between BTC and IATA over the PAXIS information tool has boiled into a brawl. As it should.
The EU New code of conduct has many gray areas - but data privacy is not one of them. There are clear obligations for any provider of data. They must mask individual and corporate/group entity data so that performance of an individual side cannot be interpreted.
Frankly the Paxis product is somewhat clunky to use. As is all MIDT data. BIDT data cannot be used inappropriately, this is what seems to be the case.
IATA is going to have to back down or it will create a back door to data across the board. I hope they see the error of their ways. Perhaps when the boys and girls all move to Miami things will improve!
Cheers
The EU New code of conduct has many gray areas - but data privacy is not one of them. There are clear obligations for any provider of data. They must mask individual and corporate/group entity data so that performance of an individual side cannot be interpreted.
Frankly the Paxis product is somewhat clunky to use. As is all MIDT data. BIDT data cannot be used inappropriately, this is what seems to be the case.
IATA is going to have to back down or it will create a back door to data across the board. I hope they see the error of their ways. Perhaps when the boys and girls all move to Miami things will improve!
Cheers
14 March 2009
PhocusWright Sessions @ITB 2009
Sadly I could not spend as much time as I wanted to with the PCW crew. What I saw (and then cheated by watching the stream (Thanks Phil!) made it worth while. Another good show chaps. Seemed to be more subdued than last year. The whole ITB show seemed to be very busy on the first day but was dead by Friday Afternoon.
However I am seeing a disconnect between what I perceive as the real world and what some of the panelists were saying. Frankly I don't think its Mobile's year. Not for the way that Travel can make money out of it. Sure there are some VERY cool apps on iPhone and now even Crackberry has some interesting apps. But its not that useful. Now I need a kind of traffic cop on my iPhone view top. And even after playing with an iPhone for quite some time - I have gone back to the Crackberry - better for what I need - Email.
Where I am still very uncomfortable is in the persistence that the "cool" elements outweigh "smart" elements. Thus I still dont see a long term huge value in UGC, Mobile, Social Networks and the like. This doesn't mean that there cannot be good uses, but I find it hard to sift through the "noise". And I know customers do too.
One area I am absolutely in sync with is that Context is critical. (I just cannot quite bring myself to say its King though).
What people say on platforms and then what they say in backrooms and coffee places are once again clearly different.
What are clients and their business partners are saying are very different. Cut costs, preserve value and do way more with way less. Many projects involving UGC just quietly died. Social Networks... no time. Mobile - why?
I see a big 3 Cs emerging.
Consistent, Context and Cheap.
And you?
However I am seeing a disconnect between what I perceive as the real world and what some of the panelists were saying. Frankly I don't think its Mobile's year. Not for the way that Travel can make money out of it. Sure there are some VERY cool apps on iPhone and now even Crackberry has some interesting apps. But its not that useful. Now I need a kind of traffic cop on my iPhone view top. And even after playing with an iPhone for quite some time - I have gone back to the Crackberry - better for what I need - Email.
Where I am still very uncomfortable is in the persistence that the "cool" elements outweigh "smart" elements. Thus I still dont see a long term huge value in UGC, Mobile, Social Networks and the like. This doesn't mean that there cannot be good uses, but I find it hard to sift through the "noise". And I know customers do too.
One area I am absolutely in sync with is that Context is critical. (I just cannot quite bring myself to say its King though).
What people say on platforms and then what they say in backrooms and coffee places are once again clearly different.
What are clients and their business partners are saying are very different. Cut costs, preserve value and do way more with way less. Many projects involving UGC just quietly died. Social Networks... no time. Mobile - why?
I see a big 3 Cs emerging.
Consistent, Context and Cheap.
And you?
BA Swings A Soft Axe First (Eugene)
BA has swung its first round of cuts by sending out Voluntary Retirement Notices to all its European based staff. Much like Delta did at the end of 2008, BA's program promises little incentive to leave at the moment.
With BA's troubles mounting across the board, they need to reduce headcount even further and probably a lot faster. The drop off of premium traffic affects BA who is more vulnerable with less "cheap" seats in their inventory.
Having just flown in the back of BA and LH round trip in coach both ways - I can assure you that LH has many more cheap seats available - AND is filling them - than BA has and is not necessarily filling them.
They say perception is reality. In the case of the battle for survival, caution wins. BA's aggressive pursuit of profitability at the expense of the gross revenues is now starting to look a little thin.
Cheers
With BA's troubles mounting across the board, they need to reduce headcount even further and probably a lot faster. The drop off of premium traffic affects BA who is more vulnerable with less "cheap" seats in their inventory.
Having just flown in the back of BA and LH round trip in coach both ways - I can assure you that LH has many more cheap seats available - AND is filling them - than BA has and is not necessarily filling them.
They say perception is reality. In the case of the battle for survival, caution wins. BA's aggressive pursuit of profitability at the expense of the gross revenues is now starting to look a little thin.
Cheers
AF/KL Charges To Be Eaten By Travelport
Travelport has elected to eat the surcharges that will be imposed by AF/KL in France and NL starting this summer.
While both parties admit they are far apart - Travelport is trying to take the pressure out of the system by covering the overage at least for the short term. Just like Amadeus initially did for LH bookings in Germany.
The full impact has not yet hit Germany yet. LH is collecting its fee (4.90 Euros) for LX and LH via an ADM process. Those ADMs should be hitting people's desks in a few days. Then you will see some shift in the market.
We can be pretty sure that there are other carriers considering doing exactly the same thing. So in essence there are at least 4 airlines in Europe charging some form of GDS surcharge fee for content sold via the GDS. (The other 2 players currently doing this are Norwegian Air Shuttle and EasyJet).
Having spent the last week in Berlin at ITB, this is a hot topic for all kinds of Intermediaries, GDSs and Airlines.
With Travelport showing canned demos of its G2 developed product for Multi-Access GDS and LUTE Technologies CommandPRO already in production with several hundred agencies, there are going to be some interesting times ahead.
Cheers
While both parties admit they are far apart - Travelport is trying to take the pressure out of the system by covering the overage at least for the short term. Just like Amadeus initially did for LH bookings in Germany.
The full impact has not yet hit Germany yet. LH is collecting its fee (4.90 Euros) for LX and LH via an ADM process. Those ADMs should be hitting people's desks in a few days. Then you will see some shift in the market.
We can be pretty sure that there are other carriers considering doing exactly the same thing. So in essence there are at least 4 airlines in Europe charging some form of GDS surcharge fee for content sold via the GDS. (The other 2 players currently doing this are Norwegian Air Shuttle and EasyJet).
Having spent the last week in Berlin at ITB, this is a hot topic for all kinds of Intermediaries, GDSs and Airlines.
With Travelport showing canned demos of its G2 developed product for Multi-Access GDS and LUTE Technologies CommandPRO already in production with several hundred agencies, there are going to be some interesting times ahead.
Cheers
12 March 2009
ARC Sales - Stay down
January my friends was not a blip.
But lets be clear here - we are accounting for some aberration.
While total $ value sales were down 26% you have to really look at the number of tickets and the number of days.
So the extra day accounts for 3.6% extra activity. There are other considerations if you want to split hairs such as the number of work days. But in all we should expect that transactions are off a net 15% Y/Y. The falling off in yield is another example of the issues facing everyone. The airlines and the hotels are experiencing some pretty heft yield drops.
This is now exposing a soft underbelly of politicians. IE that the taxation model comes out pretty clearly. Taxes can make up a large chunk of the price now. We have fares across the Atlantic for nearly close to what RyanAir has been proposing. We have fares on legacy carriers between European Capitals for less than Ryanair (just have a look FRA-LON).
So still not healthy. But read between the lines.
Cheers
But lets be clear here - we are accounting for some aberration.
While total $ value sales were down 26% you have to really look at the number of tickets and the number of days.
So the extra day accounts for 3.6% extra activity. There are other considerations if you want to split hairs such as the number of work days. But in all we should expect that transactions are off a net 15% Y/Y. The falling off in yield is another example of the issues facing everyone. The airlines and the hotels are experiencing some pretty heft yield drops.
This is now exposing a soft underbelly of politicians. IE that the taxation model comes out pretty clearly. Taxes can make up a large chunk of the price now. We have fares across the Atlantic for nearly close to what RyanAir has been proposing. We have fares on legacy carriers between European Capitals for less than Ryanair (just have a look FRA-LON).
So still not healthy. But read between the lines.
Cheers
ITB2009 - What's it like?
From the Professor's perch - it looks pretty much the same.
The mad scrum to get into the building, at least this year you can print your entry badges but its still a mad dash. The halls seem just as full of carrier bag toting students and people from all countries. The organizers are saying its the biggest thus far. And it remains certainly very big.
From a Technology point of view there is clearly a lot less going on. The GDSs per se are not there. Travelport has a generic stand, Sabre is not there as a GDS and Amadeus is putting its Traveltainment best foot forward. Thus hall 6.1 is somewhat bereft of the usual players. No Tom Dillon this year to sparkle us with his Irish wit!
I attended quite a few meetings on day 1 and spoke to many people. Even made it to one party. I think I could categorize people into 2 possibly 3 groups. The possible third is the Denials. There are still a few out there. Fortunately only a very few now. So the other groups I will call the Pragmatists and the Deer.
The Pragmatists are hunkering down - chopping vere they can and making plans for the upturn. Survival is a word you hear frequently. Caution is another watchword. Adjusting to the new reality seems to be the focus. Further i think we can see that there are few who believe that this is a short term thing.
The Deer are what a good friend of mine described as those beyond denial. The are not just frozen in the headlights but actually looking for salvation in them. Unfortunately there are still quite of a lot of these.
One element I find interesting is the contrasting views from the geography of the participants. I have not spoken to many from Asia/Pacific but there is a clear contrast from Europe and the USA. More pertinent is that the USA collapse in confidence is not shared so broadly in Europe.
So for now I will keep on observing. There are some wonderful things going on that will make for a fascinating view of the new world order when confidence and the economies return from hiatus.
And what do you think?
Cheers
The mad scrum to get into the building, at least this year you can print your entry badges but its still a mad dash. The halls seem just as full of carrier bag toting students and people from all countries. The organizers are saying its the biggest thus far. And it remains certainly very big.
From a Technology point of view there is clearly a lot less going on. The GDSs per se are not there. Travelport has a generic stand, Sabre is not there as a GDS and Amadeus is putting its Traveltainment best foot forward. Thus hall 6.1 is somewhat bereft of the usual players. No Tom Dillon this year to sparkle us with his Irish wit!
I attended quite a few meetings on day 1 and spoke to many people. Even made it to one party. I think I could categorize people into 2 possibly 3 groups. The possible third is the Denials. There are still a few out there. Fortunately only a very few now. So the other groups I will call the Pragmatists and the Deer.
The Pragmatists are hunkering down - chopping vere they can and making plans for the upturn. Survival is a word you hear frequently. Caution is another watchword. Adjusting to the new reality seems to be the focus. Further i think we can see that there are few who believe that this is a short term thing.
The Deer are what a good friend of mine described as those beyond denial. The are not just frozen in the headlights but actually looking for salvation in them. Unfortunately there are still quite of a lot of these.
One element I find interesting is the contrasting views from the geography of the participants. I have not spoken to many from Asia/Pacific but there is a clear contrast from Europe and the USA. More pertinent is that the USA collapse in confidence is not shared so broadly in Europe.
So for now I will keep on observing. There are some wonderful things going on that will make for a fascinating view of the new world order when confidence and the economies return from hiatus.
And what do you think?
Cheers
09 March 2009
Use of ACH as Debt Collection Works in Reverse for SABRE
Ouch....
NW decided it didnt like getting billed by Sabre for what were interline reservations (as opposed to GDS segments). So it threatened Sabre and eventually carried through on its threat and took a cool $1.5 million from Sabre via the ACH - Airline Clearing House.
Sabre sued and has now withdrawn its lawsuit.
The issue was code share segments on the struggling Midwest Express which NW owns now a share of.
What is fascinating about this is that Sabre pushed the issue a bit too far and Northwest stamped on them hard. It sets a clear precedent that in future any GDS who tries to do this will see the airlines push back - hard.
we have all been warned on this one
Cheers
NW decided it didnt like getting billed by Sabre for what were interline reservations (as opposed to GDS segments). So it threatened Sabre and eventually carried through on its threat and took a cool $1.5 million from Sabre via the ACH - Airline Clearing House.
Sabre sued and has now withdrawn its lawsuit.
The issue was code share segments on the struggling Midwest Express which NW owns now a share of.
What is fascinating about this is that Sabre pushed the issue a bit too far and Northwest stamped on them hard. It sets a clear precedent that in future any GDS who tries to do this will see the airlines push back - hard.
we have all been warned on this one
Cheers
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