In What has been one of the most acrimonious cases and surely the most expensive in 14 years of the WTO rulings - the august body has sent a more than 1000 page ruling to both parties in the case - the USA and the EC.
According to the Wall Street Journal the ruling goes against the EC for illegaly subsidizing Airbus (now a unit of EADS but at the time the case started it was still largely a quasi Government entity).
The Professor's initial scan of the available information is that the case became as much about making law as interpreting it. So it will be long and convoluted. In the near term this means that we will not be able to comprehend much of it.
Look for more updates over the next few days. This is a story that will take a long while to unravel.
Cheers
04 September 2009
Air Anchluss A Reality - LH aquires OS
OK so this is just a little naughty of me - and I know there will be some people who wont find this funny - but the theory has now become fact. After what seems a tortuous process including multiple trips to Brussels, LH has finally succeeded in getting control over Austrian Airlines Group.
So now comes the tricky part of integration. The chaps from Frankfurt have their work cut out for them. On the other hand judging by the success of the integration of LX (a larger airline) into the LH family - the prognosis has to be good that this will be a good program.
For the boys and girls in Vienna - this must be a huge relief.
Cheers
So now comes the tricky part of integration. The chaps from Frankfurt have their work cut out for them. On the other hand judging by the success of the integration of LX (a larger airline) into the LH family - the prognosis has to be good that this will be a good program.
For the boys and girls in Vienna - this must be a huge relief.
Cheers
An A380 Parked in the Desert?
The spectre of armed guards patrolling the high California desert near Victorville guarding one or more of Airbus's behemouth A380s moved a step closer yesterday with the announcement that Airbus and SQ have agreed to defer deliveries of 6 copies. With QF doing the same - it looks like several early adopters are pushing out their deliveries. Another telling sign is that EK's latest schedule is somewhat bereft of A380 routes.
Hmmm given the amount of lead time to build these puppies - it is not that easy to shift them around in the delivery schedule. I maintain that the current recession could have been much worse for both of the big 2 manufacturers if they had been firing on all cylinders on their flagship programs - the A380 and 787 respectively. Imagine if A380s and 787s had been pouring off the lines in both Everett and Toulouse as was originally envisaged. In that case one could well imagine that quite a few of them would have flown straight to the desert.
Cheers
Hmmm given the amount of lead time to build these puppies - it is not that easy to shift them around in the delivery schedule. I maintain that the current recession could have been much worse for both of the big 2 manufacturers if they had been firing on all cylinders on their flagship programs - the A380 and 787 respectively. Imagine if A380s and 787s had been pouring off the lines in both Everett and Toulouse as was originally envisaged. In that case one could well imagine that quite a few of them would have flown straight to the desert.
Cheers
I Come (This Time) To Praise Southwest
In the past I have berated WN for not allowing direct interaction between WN and its customers via email - even though they have email addresses and could easily allow this.
However I do see that in fact they have a number of tools which would alleviate much of the need for a number of these interactions. So while I still feel they should allow it - indeed I am going to carry on my campaign to get them to allow it - The Professor would like to compliment Southwest on being aggressive in deploying a better than average customer alert system.
In a recent piece for CIO entitled Southwest Upgrades Customer Service I learned they WN even has someone who has been dubbed the CAO for Chief Apology Officer. WHAT a cool job! This is a good article to read and there are some great lessons for all airlines.
I recommend it! Further it is good to see airlines taking the moral high ground here even if it is only WN doing it. I contrast this with Easyjet and Ryanair who have deployed similar technology but have the gall to CHARGE for it!!!
Going back to my crusade, I would strongly suggest to WN that they go ahead and allow a non-verbal direct interaction tool. Examples are chat or an automated tool such as NextIT's smart agent which has been deployed as the mystical Jen on Alaska's website. I asked her for a date (since we live near each other) and she was not amused - but that's another matter.
Cheers
However I do see that in fact they have a number of tools which would alleviate much of the need for a number of these interactions. So while I still feel they should allow it - indeed I am going to carry on my campaign to get them to allow it - The Professor would like to compliment Southwest on being aggressive in deploying a better than average customer alert system.
In a recent piece for CIO entitled Southwest Upgrades Customer Service I learned they WN even has someone who has been dubbed the CAO for Chief Apology Officer. WHAT a cool job! This is a good article to read and there are some great lessons for all airlines.
I recommend it! Further it is good to see airlines taking the moral high ground here even if it is only WN doing it. I contrast this with Easyjet and Ryanair who have deployed similar technology but have the gall to CHARGE for it!!!
Going back to my crusade, I would strongly suggest to WN that they go ahead and allow a non-verbal direct interaction tool. Examples are chat or an automated tool such as NextIT's smart agent which has been deployed as the mystical Jen on Alaska's website. I asked her for a date (since we live near each other) and she was not amused - but that's another matter.
Cheers
Airlines Vs GDSs - The Sequel.
The long running battle over distribution control is akin to the Harry Potter saga. It goes on and on, a long drawn out affair with as many plot twists and turns as J K Rowling's Historic Novels. The current phase (at least as far as the movies are concerned) of teenage angst for the three heroes has broad similarities in the airlines separation of their dependency on the GDS. Thus the Three GDSs do rather look like instruments of He-Who-Must-Not-Be-Named.
Finding out who is the one (or ones) who has gone over to the Dark Side draws analogies that could fill volumes.
A recent piece in BTN entitled "GDS CEOs Assess Changed Airline Negotiating Dynamics" has brought a light onto the battle lines that are being drawn.
To some - there is a desire that says they wish the whole issue would go away so that the players could quietly negotiate in peace. Over time they could come out with a solution that is acceptable to the protagonists that evokes images of epic battles of the forces of Good vs those of the Dark Lord. In that way the seemingly innocent bystanders - which is how the agencies cast themselves - could carry on without interruption and changes on their side.
However - this is all somewhat wishful thinking. The facts of the matter demand a change in the status quo. Earlier this year at the height of the recession with bad news resounding in everyone's ears - the top two US airlines CEOs both came out in favour of radical change in the model.
"...maybe I'm dreaming here," American CEO Gerard Arpey said envisioning a future "where those folks who are the intermediary between us and our customer have to pay for access to our product rather than us paying them to distribute our product." Arpey called that shift a "long-term vision," rather than a near-term reality. Within days Delta CEO Richard Anderson followed with a similar statement saying, "Over time, the industry has to evolve to the model of other industries, where people pay us for our content rather than us paying them to take our content."
Over on the other side of the pond the model for the next round of negotiations was quietly being rolled out by arguably one of the more successful of the legacy carriers - Lufthansa. LH, itself an Amadeus owner, was able to to turn the GDS model on its head and control the GDS radically reducing its both core and marketing costs and in some cases turning its GDS expense into a profit center.
Sitting in the USA market and watching Southwest become more and more like a Full Network Carrier, it is easy to assume that the contrarian airlines (LCCs) have little impact. However again over in Europe the share and importance of the Low Cost Carriers particularly Ryanair and Easyjet have changed the dynamics of airline product distribution forever. Multi-source access is not a luxury or even just a competitive differentiator, now its an absolute necessity.
The GDSs have clearly failed to live up to their premise of universal supply chain providorship. The rapid rise in and now significant cost of maintaining independent links to direct airlines and indirect GDSs indeed the rise of all the IT costs for an agency/intermediary make the GDS just one of many - while still important - channels of distribution. For which they now have to justify themselves with better product in service models. In a conventional market - a world described above by Messrs Arpey and Anderson, this should promote a drive to excellence and passion for better products and services. However at this time the GDSs are struggling with lower transaction counts and demands for more product functionality. All at a time when they have paired both their operating services and their R&D to the lowest level possible.
It is against this backdrop that the first airlines will start to see their PCAs - participating carrier agreements open for re-negotiation starting in 2010.
Will it end in tears? Will there be peace and harmony across the land? Will they all end up in a master race lovefest?
Stay tuned - this is a battle for the long term hearts and minds of the user community, both the airlines and the intermediaries. To my point of view the current model represents an unnatural act - rather a series of them. To me it is unsustainable and demands reformation if not revolution.
For the first time real options are emerging not just from within (Like Galileo's Universal Desktop product acquired from G2 and Amadeus One) but also from the independent technology market - like Booking Builder and Farelogix. These applications represent both an unbundling of the GDS product but also new cheaper forms of commercial models that deliver the capabilities faster than the GDS have traditionally been capable.
This is a story that will run long and hard!
Cheers
Finding out who is the one (or ones) who has gone over to the Dark Side draws analogies that could fill volumes.
A recent piece in BTN entitled "GDS CEOs Assess Changed Airline Negotiating Dynamics" has brought a light onto the battle lines that are being drawn.
To some - there is a desire that says they wish the whole issue would go away so that the players could quietly negotiate in peace. Over time they could come out with a solution that is acceptable to the protagonists that evokes images of epic battles of the forces of Good vs those of the Dark Lord. In that way the seemingly innocent bystanders - which is how the agencies cast themselves - could carry on without interruption and changes on their side.
However - this is all somewhat wishful thinking. The facts of the matter demand a change in the status quo. Earlier this year at the height of the recession with bad news resounding in everyone's ears - the top two US airlines CEOs both came out in favour of radical change in the model.
"...maybe I'm dreaming here," American CEO Gerard Arpey said envisioning a future "where those folks who are the intermediary between us and our customer have to pay for access to our product rather than us paying them to distribute our product." Arpey called that shift a "long-term vision," rather than a near-term reality. Within days Delta CEO Richard Anderson followed with a similar statement saying, "Over time, the industry has to evolve to the model of other industries, where people pay us for our content rather than us paying them to take our content."
Over on the other side of the pond the model for the next round of negotiations was quietly being rolled out by arguably one of the more successful of the legacy carriers - Lufthansa. LH, itself an Amadeus owner, was able to to turn the GDS model on its head and control the GDS radically reducing its both core and marketing costs and in some cases turning its GDS expense into a profit center.
Sitting in the USA market and watching Southwest become more and more like a Full Network Carrier, it is easy to assume that the contrarian airlines (LCCs) have little impact. However again over in Europe the share and importance of the Low Cost Carriers particularly Ryanair and Easyjet have changed the dynamics of airline product distribution forever. Multi-source access is not a luxury or even just a competitive differentiator, now its an absolute necessity.
The GDSs have clearly failed to live up to their premise of universal supply chain providorship. The rapid rise in and now significant cost of maintaining independent links to direct airlines and indirect GDSs indeed the rise of all the IT costs for an agency/intermediary make the GDS just one of many - while still important - channels of distribution. For which they now have to justify themselves with better product in service models. In a conventional market - a world described above by Messrs Arpey and Anderson, this should promote a drive to excellence and passion for better products and services. However at this time the GDSs are struggling with lower transaction counts and demands for more product functionality. All at a time when they have paired both their operating services and their R&D to the lowest level possible.
It is against this backdrop that the first airlines will start to see their PCAs - participating carrier agreements open for re-negotiation starting in 2010.
Will it end in tears? Will there be peace and harmony across the land? Will they all end up in a master race lovefest?
Stay tuned - this is a battle for the long term hearts and minds of the user community, both the airlines and the intermediaries. To my point of view the current model represents an unnatural act - rather a series of them. To me it is unsustainable and demands reformation if not revolution.
For the first time real options are emerging not just from within (Like Galileo's Universal Desktop product acquired from G2 and Amadeus One) but also from the independent technology market - like Booking Builder and Farelogix. These applications represent both an unbundling of the GDS product but also new cheaper forms of commercial models that deliver the capabilities faster than the GDS have traditionally been capable.
This is a story that will run long and hard!
Cheers
03 September 2009
Udvar-Hazy To Play Hardball With AIG - May Quit ILFC AND Start Rival
The battle of wits between the ILFC players has become a war of words - or rather a lack of them.
Steven Udvar-Hazy yesterday refused to deny that he would leave the company he founded ILFC. But combined with recent reports it is becoming clear that the players are not all in sync yet.
So at the heart of the matter is the need for AIG to divest itself of its holding in ILFC. But with not enough support for the divestiture deal to Udvar-Hazy himself, he is threatening to leave and start a rival. You can be damned sure that both Boeing and Airbus would support him in a heartbeat. Thus he is really in the driver's seat on this one. Starting a new company with a less complicated and burdened capital structure and the support of both the leading manufacturers could be very advantageous to the Hungarian born master aircraft salesman.
Don't you just love grown up games...
Steven Udvar-Hazy yesterday refused to deny that he would leave the company he founded ILFC. But combined with recent reports it is becoming clear that the players are not all in sync yet.
So at the heart of the matter is the need for AIG to divest itself of its holding in ILFC. But with not enough support for the divestiture deal to Udvar-Hazy himself, he is threatening to leave and start a rival. You can be damned sure that both Boeing and Airbus would support him in a heartbeat. Thus he is really in the driver's seat on this one. Starting a new company with a less complicated and burdened capital structure and the support of both the leading manufacturers could be very advantageous to the Hungarian born master aircraft salesman.
Don't you just love grown up games...
Travel M-Commerce - Still Birth Pains
I am a fan of the whole idea of M-Commerce. Particularly how it can have applications for the whole Travel Category.However my enthusiasm is tempered by (now more than) 10 years of experience in trying to get Mobile Apps off the ground without any noticeable success.So I was very interested in reading the latest M-Commerce Report by eMarketer.
In particular there are two contrasting elements to their study.
Travel was one of the highest categories of product that people SAID they would be willing to purchase via a mobile app. However there is a huge gap between the desire and the execution - early adopters don't even rank travel apps on their radar.
So we have a chicken and egg situation. Further the obstacles to success of M-Commerce are many and varied. Of these the largest percentage are not going to get solved - in my humble opinion - any time soon.
So take a look at the list the ones that consumers in the report detailed this is illustrated on the top here. However consider both the small sample size and the audience.
I spent much of the summer roaming around Asia Pacific and Europe testing 3G networks and interactions. (OK this was a by product of what I was doing - I really am not THAT sad - even though the SFR shop in St Gilles Croix de Vie was getting pretty sick of me by the end of August). I found a lot to commend it. The networks in general are now reliable and robust. But the applications are clearly lacking. So the red hot market at the moment is the marriage of the Netbook to a 3G network and the corresponding Carrier sponsored products. EG Lease a Netbook for X Euros a month and get the device and the data included.
Steve Jobs - not so secret - iTablet project will hope to capitalize on this trend when it emerges likely at CES or MacWorld in January 2010. But by its nature this is likely to be a further obstacle to the deployment of robust Mobile applications. Namely the splintered client side applications environment.
In the various projects I have undertaken on Mobile - I have found that the stumbling block has been both the technology (lack of ubiquity of Client side application environment), the commercial model of making money. (This was usually the greed of the Mobile Operators who refuse to share the data usage revenue or alternatively at the very least figure out a way not to penalize the application with a surcharge). We long ago figured out solutions to the other problems.
The promise of Android (and son of Android aka Chrome) as well as other multi-hardware platform services such as Windows Mobile, Linux and Symbian has all so far proved to be a figment of the developers imaginations.
However I remain hopeful that this will eventually sort itself out. But as you saw from my post yesterday about Skype on Blackberry - the proprietary nature of the vendors and the networks seems to be at the root cause of the issue. However I am not holding my breath in the short term... So I am still bearish on this regardless of the optimism of others such as PhocusWright on the subject.
Thank you and have a nice day.
Southwest's Social Media Efforts Good or?
Today, at the invitation of Professor Addison - I participated in a podcast reviewing WN's effort's in the Social Media space with the new Travel Guide service.
To listen to the podcast check out this link and see if you like it.
I believe that if anyone can do it WN can. But it comes with its pitfalls.
So come listen to the Professor with his usual Curmudgeon view on some of these efforts.
Agree with me or not - this is definitely a 1.0 version. If it makes it to a reasonable delivery of a 2.0 version then I have promised Addison I would pay for his EarlyBird boarding. And I get a word in on what I think about the product too!
So at the risk of being a dart board target for the WN PR folks - see if you agree with me or not.
Cheers
To listen to the podcast check out this link and see if you like it.
I believe that if anyone can do it WN can. But it comes with its pitfalls.
So come listen to the Professor with his usual Curmudgeon view on some of these efforts.
Agree with me or not - this is definitely a 1.0 version. If it makes it to a reasonable delivery of a 2.0 version then I have promised Addison I would pay for his EarlyBird boarding. And I get a word in on what I think about the product too!
So at the risk of being a dart board target for the WN PR folks - see if you agree with me or not.
Cheers
Booking Fee Mania Spreads to AsiaPac
Bowing to another inevitability - Zuji (aka Travelocity AP) will cut booking fees effective today.
Inevitable? Why?
Well the experience elsewhere has shown that it didn't hurt Priceline to start with who killed them in 2007. Earlier this year the big 3 US also cut them - Expedia, Travelocity and Orbitz. All with negligible effect on their bottom line. More importantly the impact in the US market showed that the transaction loss for the OTAs was less than the airlines and of course the traditional offline outlets. Thus proving that there was some growth left in the OTA model.
So Zuji cutting fees is just normalizing something that has shown to work elsewhere.
So now - no more fees... Anyone still charging fees for transactions face a diversion of business away.
So LCCs and others - pay attention - there may just be a lesson here.
Cheers
Inevitable? Why?
Well the experience elsewhere has shown that it didn't hurt Priceline to start with who killed them in 2007. Earlier this year the big 3 US also cut them - Expedia, Travelocity and Orbitz. All with negligible effect on their bottom line. More importantly the impact in the US market showed that the transaction loss for the OTAs was less than the airlines and of course the traditional offline outlets. Thus proving that there was some growth left in the OTA model.
So Zuji cutting fees is just normalizing something that has shown to work elsewhere.
So now - no more fees... Anyone still charging fees for transactions face a diversion of business away.
So LCCs and others - pay attention - there may just be a lesson here.
Cheers
02 September 2009
Any Bets On How Many More Times Boeing Will have to Re-Build 787 Prototypes ZA001 to 003?
Today's absolutely best quote comes from Flightblogger on Tweetdeck.
Flightblogger Tweeting (lord help me for reading Twitter) from the Morgan Stanley Investment Conference was listening in to Boeing's CEO describing the current status of the 787 development:
McNerney on ZA001-ZA003: "We've built a couple of the airplanes four or five times."
'Nuff said Squire!
So I guess they have one more to go before take off... but don't count those chickens. Jim has already replaced Scott - and for sure he is going to be looking not to make the same mistakes of his predecessor(s). Remember the schedule was not his... so he still has a spare life to call another delay.
Cheers
Flightblogger Tweeting (lord help me for reading Twitter) from the Morgan Stanley Investment Conference was listening in to Boeing's CEO describing the current status of the 787 development:
McNerney on ZA001-ZA003: "We've built a couple of the airplanes four or five times."
'Nuff said Squire!
So I guess they have one more to go before take off... but don't count those chickens. Jim has already replaced Scott - and for sure he is going to be looking not to make the same mistakes of his predecessor(s). Remember the schedule was not his... so he still has a spare life to call another delay.
Cheers
Southwest Gingerly Steps Towards Ancilllary Revenue Model
... and may be trips on the way.
Now here is a turnaround. Instead of being the innovator Southwest is taking a leaf out of the European LCCs and charging for an ancillary service - namely early boarding.
Southwest's new "Early Bird" check-in product sounds simple enough - but wait... hold on theer pard'ner - not so fast.
Check out the fine print of the program:
http://www.southwest.com/flight/early-bird-faq.html?int=HOMEWNEW01CHECKN090902
Holy Moli - this sounds pretty complicated:
Contrast this with Ryanair's total boarding policy which fits neatly into the following page. AND this includes their DBC policy AND it covers international passport requirements.
http://www.ryanair.com/site/EN/faqs.php?sect=chk&quest=boardingproc
I have to say that this only goes to show that the myth of Southwest as a non-legacy carrier is clearly just that - a myth.
Come on chaps - you can do better than this. WAY TOO COMPLICATED.
I thought Southwest is about Luv and KISS. This sure ain't it.
Now here is a turnaround. Instead of being the innovator Southwest is taking a leaf out of the European LCCs and charging for an ancillary service - namely early boarding.
Southwest's new "Early Bird" check-in product sounds simple enough - but wait... hold on theer pard'ner - not so fast.
Check out the fine print of the program:
http://www.southwest.com/flight/early-bird-faq.html?int=HOMEWNEW01CHECKN090902
Holy Moli - this sounds pretty complicated:
Contrast this with Ryanair's total boarding policy which fits neatly into the following page. AND this includes their DBC policy AND it covers international passport requirements.
http://www.ryanair.com/site/EN/faqs.php?sect=chk&quest=boardingproc
I have to say that this only goes to show that the myth of Southwest as a non-legacy carrier is clearly just that - a myth.
Come on chaps - you can do better than this. WAY TOO COMPLICATED.
I thought Southwest is about Luv and KISS. This sure ain't it.
Open For Business Initiative - Right Time?
Farelogix seems to have done it again - lit the blue touch paper and retired to watch the resulting fireworks. This time in the Business Travel market.
This time - their focus is an area that has seen a rise of both the cost and the frustration of the user community.
The business adoption of Online should have been an easy proposition. All business users are essentially connected via their corporate web nets. However the complications imposed by both the financial controls and the GDS based environment resulted in a set of complex products that were cumbersome and difficult to deploy and administer. However with the general move away from Office Admin staff to self service activity within the corporation - the human support of the business traveller dwindled over time. Thus self service became the only game in town.
For the TMC intermediaries there was a nice pot of gold in this move. They were able to charge a fee for both automated (Touchless) and serviced (Touched) bookings. Normal figures are at the $25/50 cost per transaction level respectively.
Thus the TMCs were happy to let the user community pay in return they got to keep all the "bennies" that would have normally accrued to an agency.
This is great if the self service technology resulted in both ease of use and more importantly speed of use. However the current crop of tools remain complex and unnecessarily time consuming. One has to wonder if there really was a benefit to the corporation in this process. Today you have a chap who costs about $250-$500 per hour fully loaded making a reservation and typically taking about an hour or usually more to make his reservation. This replaced the $25/hour clerical level agent who previously did the job in half the time. Perhaps not the most efficient use of time and resources.
The level of frustration by the Corporations in the deployment of these tools (what I would call 1.0 products) has a litany that could and does fill volumes. The leading players are Concur with their CliqBook Suite and Sabre's now venerable GetThere product. Despite the development of online corporate tools from the big 3 OTAs their share of the revenue of the players has been minimal despite a fairly mature product. Smaller players have come up with niche products like Booking Builder - and who can forget Portaga - one of the best ideas that never saw the light of day.
Enter Farelogix who has once again caught the wave of the sentiment that the current tools are not up to the job and they are proposing (not a product as yet). They are proposing an open source tool that can be customized by the corporation and used to connect to the traditional GDS infrastructure or any supply chain host that the company wants to do business with - both indirect and direct.
While I am not a huge fan of Open Source I am definitely a fan of unbundling the totalitarian complex reservations and distribution systems into components aka Open Architecture. This to my mind is where Farelogix shines. Providing a platform that can be applied with local smarts to meet the needs of the specific user community. Appropriate use of technology without the need to change everything seems to be a key ingredient. But perhaps the most important feature is that the user community in the Corporations (as embodied in membership in NBTA) now has the ability to take control of their own environment and their own bilateral business relationships with suppliers and/or intermediaries. Note I say seems to be - because this is a vision not a product as yet. However as they have shown with their Hawkeye Open Source solution Farelogix can finally crack open an independent access into the GDS world. And they are developing a good track record of delivering. While this might seem to be heresy to the GDS model, they (the GDSs) clearly seem to agree with Farelogix as can be seen with their initiatives ranging from the new off-core Profiles to Travelport's Open Desktop initiative and Amadeus's ONE product.
As many readers will recall I am oft to comment that today the vast majority of PNRs created in a GDS are now touched by a third party system. This capability today is funded by the agency community themselves or increasingly by the corporations. Farelogix initiatives such as Open for Business and its encouragement by NBTA is not starting a new trend - it is actually continuing the evolution of the distribution model.
So this seems to be the right product at the right time. Let's wish them well in executing it. This is not a sector for the feint hearted. Having developed several corporate products since the mid 1980s, I can attest to the difficulty in getting them ready for market and then deploying them.
Best of luck chaps.
Cheers
This time - their focus is an area that has seen a rise of both the cost and the frustration of the user community.
The business adoption of Online should have been an easy proposition. All business users are essentially connected via their corporate web nets. However the complications imposed by both the financial controls and the GDS based environment resulted in a set of complex products that were cumbersome and difficult to deploy and administer. However with the general move away from Office Admin staff to self service activity within the corporation - the human support of the business traveller dwindled over time. Thus self service became the only game in town.
For the TMC intermediaries there was a nice pot of gold in this move. They were able to charge a fee for both automated (Touchless) and serviced (Touched) bookings. Normal figures are at the $25/50 cost per transaction level respectively.
Thus the TMCs were happy to let the user community pay in return they got to keep all the "bennies" that would have normally accrued to an agency.
This is great if the self service technology resulted in both ease of use and more importantly speed of use. However the current crop of tools remain complex and unnecessarily time consuming. One has to wonder if there really was a benefit to the corporation in this process. Today you have a chap who costs about $250-$500 per hour fully loaded making a reservation and typically taking about an hour or usually more to make his reservation. This replaced the $25/hour clerical level agent who previously did the job in half the time. Perhaps not the most efficient use of time and resources.
The level of frustration by the Corporations in the deployment of these tools (what I would call 1.0 products) has a litany that could and does fill volumes. The leading players are Concur with their CliqBook Suite and Sabre's now venerable GetThere product. Despite the development of online corporate tools from the big 3 OTAs their share of the revenue of the players has been minimal despite a fairly mature product. Smaller players have come up with niche products like Booking Builder - and who can forget Portaga - one of the best ideas that never saw the light of day.
Enter Farelogix who has once again caught the wave of the sentiment that the current tools are not up to the job and they are proposing (not a product as yet). They are proposing an open source tool that can be customized by the corporation and used to connect to the traditional GDS infrastructure or any supply chain host that the company wants to do business with - both indirect and direct.
While I am not a huge fan of Open Source I am definitely a fan of unbundling the totalitarian complex reservations and distribution systems into components aka Open Architecture. This to my mind is where Farelogix shines. Providing a platform that can be applied with local smarts to meet the needs of the specific user community. Appropriate use of technology without the need to change everything seems to be a key ingredient. But perhaps the most important feature is that the user community in the Corporations (as embodied in membership in NBTA) now has the ability to take control of their own environment and their own bilateral business relationships with suppliers and/or intermediaries. Note I say seems to be - because this is a vision not a product as yet. However as they have shown with their Hawkeye Open Source solution Farelogix can finally crack open an independent access into the GDS world. And they are developing a good track record of delivering. While this might seem to be heresy to the GDS model, they (the GDSs) clearly seem to agree with Farelogix as can be seen with their initiatives ranging from the new off-core Profiles to Travelport's Open Desktop initiative and Amadeus's ONE product.
As many readers will recall I am oft to comment that today the vast majority of PNRs created in a GDS are now touched by a third party system. This capability today is funded by the agency community themselves or increasingly by the corporations. Farelogix initiatives such as Open for Business and its encouragement by NBTA is not starting a new trend - it is actually continuing the evolution of the distribution model.
So this seems to be the right product at the right time. Let's wish them well in executing it. This is not a sector for the feint hearted. Having developed several corporate products since the mid 1980s, I can attest to the difficulty in getting them ready for market and then deploying them.
Best of luck chaps.
Cheers
Shoots In The US Market?
OK - so how about a little good news for a change.
I finally got to see the numbers for July from ARC. There is clearly a trend here:
Even accounting for the aberrations in Feb and the changes in Easter - we can see that since March the transaction numbers have clearly changed for the better. July's numbers show only .77% Y/Y down. August which should be out in the next week will be interesting. I would actually expect that we will see a definitive improvement in September as this was the month when sales first started to dive last year.
So now its a game of nerves for all concerned. Will the US airlines maintain discipline and keep capacity down? So far they seem to have done a good job and we don't have a really sick player who could upset the apple cart.
I will not be cheering just yet. We are still in effect bumping along the bottom. We have lost a lot of capacity and traffic from the system. For proof of this look no further than Victorville CA (and several other places like it). That is one heck of a lot of capacity. Including some highly viable 757s out there.
At the moment the really sick sector in the market is the hotels. Despite the recession - actually their capacity (according to Smith Research) INCREASED several points this year. So hotel yields there are going to stay bad.
My current sentiment? The airlines must maintain restraint and even cut more than they would normally seasonally. We have already seen the first seasonal cuts from AMR. We will see many more programs in place. However these programs are really temporary. The Airlines have bought themselves some time and burnished their balance sheets a little to survive till next year. They still need to be prepared for 2 events - a sharp downturn in the economy somewhere in the system due to a localized problem and/or a pandemic like H1N1 flu. Either of these are very possible - one might even say probable.
I will however say one thing that hopefully by now is sinking in. The time that has been bought needs to be leveraged. That means the airlines in particular (although this applies to just about every sector) needs to go back and look at their current cost structures and cut them back. This ranges from the bloated headcount at Expedia to the marketing spends at certain companies. The signs are there. Now is the time to do something about the underlying cost structure.
Carpe Diem
SOURCE (c) ARC CORP 2009
Skype and Blackberry - Missing In Action
Earlier this year Skype made a big deal about producing software for mobile devices. Promising iPhones, Androis and Blackberries access to Skype.
Well not so fast quickdraw. Skype just released a new version of their code and Blackberry is still MIA!!!!
So c'mon Skype - give us what you know we want.
(Memo to everyone else) if you want to get cheap access on your Crackberry - try Truphone.
Cheers
Well not so fast quickdraw. Skype just released a new version of their code and Blackberry is still MIA!!!!
So c'mon Skype - give us what you know we want.
(Memo to everyone else) if you want to get cheap access on your Crackberry - try Truphone.
Cheers
REMINDER - COMMENT POSTING POLICY
As a reminder to those people who follow this blog.
I know you are all good intentioned folk. However there does seem to be an element of radicals out there who are determined to pollute the Professor's prognostications.
Posting commercial entreaties IS STRICTLY VERBOTEN. For example to use comments on this website to sell laptops, or "my hotel in India is the best thing since sliced bread."
So please do us all a favour and don't do it. You are wasting your time and more importantly my time. You will be treated as vermin and stomped on.
If you have an article you want me to write about or you wish to contact me - please send me a private email to professorsabena@gmail.com (when it doesn't have outages of course!)
Thanks for reading and have a nice day!
I know you are all good intentioned folk. However there does seem to be an element of radicals out there who are determined to pollute the Professor's prognostications.
Posting commercial entreaties IS STRICTLY VERBOTEN. For example to use comments on this website to sell laptops, or "my hotel in India is the best thing since sliced bread."
So please do us all a favour and don't do it. You are wasting your time and more importantly my time. You will be treated as vermin and stomped on.
If you have an article you want me to write about or you wish to contact me - please send me a private email to professorsabena@gmail.com (when it doesn't have outages of course!)
Thanks for reading and have a nice day!
01 September 2009
Oh Dear Southwest Again...
Southwest has now had to admit the number of planes affected by the uncertified parts scandal has increased to approaching 20% of the fleet (82 planes out of 500).
While the vendor has been suspended by Southwest, the issue remains. The parts are not that common that WN can simply go out and buy them off the rack, thus the FAA is being very lenient in extending the time for WN to fix things until Christmas. However it is almost guaranteed that this time the FAA will again slap WN with a fine and WN may whine but it will pay the fine this time without murmur.
You may recall that last year for a similar violation the FAA slapped one of the largest fines on an airline for maintenance violations to Southwest who fought it but in the end paid - not that they couldn't have afforded it.
The now former vendor's spokesperson described the problem this: "This is a paperwork and procedures issue, not a flight-safety issue," he said.
Whether it is or it isn't safety can never be compromised. There has to be zero tolerance 100% of the time. However this is a not just an airline issue - the regulatory body has to accept a level of responsibility as does the paymasters who must ensure adequate funding for the process.
A case in point is the extended amount of time that was allowed to address the fuel tank issue after the TW800 disaster and others.
Not that I want to jump to any conclusion. I would happily book WN today if I needed to fly on their route system. I feel they are perfectly safe, but I would probably choose another airline if the price was the same. Call it just a "safe than sorry" attitude.
We should all be able to rest easy that when we board an aircraft that the system works. In the case of WN this has happened more than once. That needs to be fixed. The FAA needs to make sure it doesn't happen again at WN or any other airline for that matter.
Cheers
While the vendor has been suspended by Southwest, the issue remains. The parts are not that common that WN can simply go out and buy them off the rack, thus the FAA is being very lenient in extending the time for WN to fix things until Christmas. However it is almost guaranteed that this time the FAA will again slap WN with a fine and WN may whine but it will pay the fine this time without murmur.
You may recall that last year for a similar violation the FAA slapped one of the largest fines on an airline for maintenance violations to Southwest who fought it but in the end paid - not that they couldn't have afforded it.
The now former vendor's spokesperson described the problem this: "This is a paperwork and procedures issue, not a flight-safety issue," he said.
Whether it is or it isn't safety can never be compromised. There has to be zero tolerance 100% of the time. However this is a not just an airline issue - the regulatory body has to accept a level of responsibility as does the paymasters who must ensure adequate funding for the process.
A case in point is the extended amount of time that was allowed to address the fuel tank issue after the TW800 disaster and others.
Not that I want to jump to any conclusion. I would happily book WN today if I needed to fly on their route system. I feel they are perfectly safe, but I would probably choose another airline if the price was the same. Call it just a "safe than sorry" attitude.
We should all be able to rest easy that when we board an aircraft that the system works. In the case of WN this has happened more than once. That needs to be fixed. The FAA needs to make sure it doesn't happen again at WN or any other airline for that matter.
Cheers
Opening Day of The Culling Season
Today in Idaho - many hundred of hunters headed into the hills to cull the Grey Wolf which after being removed from the endangered species list earlier this year by the US Government Department of Fish and Wildlife, became fair game for legal killing.
For the airline industry - it is still a matter of survival but there is no such Government protection. So the killing instinct is pretty darn strong.
Thus listen up - brace yourselves everyone - the shoots of the reviving economy notwithstanding, we are about to enter the airline employee reduction season. The bean counters have done their sums and the routes have already been paired. Now the only piece is to actually match the costs to the revenues. Yes it is time to cut the staff back again. First out of the gate? AMR with a 900 person cull of their flight attendant ranks.
Not withstanding one of the largest reductions (number wise for sure - and percentage-wise also) in the history of the business already since September of 2008, the airlines must cut again in order to reduce their costs. The pressure of the current elevated (I choose my words carefully) oil price and the continued low yields leave the airlines one possible choice - cut the headcount.
All the fudge factors have already been exhausted. Hiring Freezes (even Southwest), reduced wages, voluntary retirements and as a new wrinkle work for free or take enforced time off. So now the bare bones must be cut. But the other metrics are already in place - Planes parked, deliveries deferred, routes and schedules paired, I could go on.
The numbers coming out of IATA on the first half performance - while expected are still very ugly. Despite recent positive signs, in the main the prognosis is that it will only get a little worse and that we are "bumping along the bottom".
So brace yourself folks - there will be many more announcements over the coming few months on staff reductions.
One side note here - there are still several areas of cost that the bean counters may have missed. The attempt by United to address one of them (Credit Card Fees) has provoked a firestorm of protest including Senate investigation etc. So perhaps it is time again to re-open the cost of distribution and evaluate where further costs cutting can be made. If you don't think this is possible then give me a call - because I can show you multiple ways to reduce the cost of customer delivery and distribution costs. Perhaps the Airline Staff Associations and Unions should get more aggressive with the airlines to look elsewhere for cost savings.
You have been warned.
For the airline industry - it is still a matter of survival but there is no such Government protection. So the killing instinct is pretty darn strong.
Thus listen up - brace yourselves everyone - the shoots of the reviving economy notwithstanding, we are about to enter the airline employee reduction season. The bean counters have done their sums and the routes have already been paired. Now the only piece is to actually match the costs to the revenues. Yes it is time to cut the staff back again. First out of the gate? AMR with a 900 person cull of their flight attendant ranks.
Not withstanding one of the largest reductions (number wise for sure - and percentage-wise also) in the history of the business already since September of 2008, the airlines must cut again in order to reduce their costs. The pressure of the current elevated (I choose my words carefully) oil price and the continued low yields leave the airlines one possible choice - cut the headcount.
All the fudge factors have already been exhausted. Hiring Freezes (even Southwest), reduced wages, voluntary retirements and as a new wrinkle work for free or take enforced time off. So now the bare bones must be cut. But the other metrics are already in place - Planes parked, deliveries deferred, routes and schedules paired, I could go on.
The numbers coming out of IATA on the first half performance - while expected are still very ugly. Despite recent positive signs, in the main the prognosis is that it will only get a little worse and that we are "bumping along the bottom".
So brace yourself folks - there will be many more announcements over the coming few months on staff reductions.
One side note here - there are still several areas of cost that the bean counters may have missed. The attempt by United to address one of them (Credit Card Fees) has provoked a firestorm of protest including Senate investigation etc. So perhaps it is time again to re-open the cost of distribution and evaluate where further costs cutting can be made. If you don't think this is possible then give me a call - because I can show you multiple ways to reduce the cost of customer delivery and distribution costs. Perhaps the Airline Staff Associations and Unions should get more aggressive with the airlines to look elsewhere for cost savings.
You have been warned.
Worst Offending Airports
OK so this should be a Friday post - but since I am just having a little fun today - here is a factoid for you.
Those nice people at Skyscanner have published a list of the worst offending airports with ambiguous names and not quite that close to the city center.
http://news.skyscanner.net/articles/2009/09/002866-ambiguous-airports-how-far-is-the-airport-from-the-city-it-serves.html?utm_source=Airmail&utm_medium=email&utm_campaign=newsletter
In the top 10 of the airports currently with scheduled service, Ryanair takes the biscuit with serving all of them. NOTE London Oxford (newly named and badly so) doesn't have any service today from anyone.
Some of the Worst Offenders:
1. Munich West (Memmingen) - 70 miles (112km) from central Munich
2. Oslo (Torp) - 68 miles (110km) from central Oslo
3. Frankfurt (Hahn) - 68 miles (110km) from central Frankfurt.
4. London (Oxford) - 60 miles (97km) from central London
5. Stockholm (Skavsta) - 59 miles (95km) from central Stockholm
6. Barcelona (Girona) - 58 miles (94km) from central Barcelona
7. Barcelona (Reus) - 58 miles (94km) from central Barcelona
8. Paris (Beauvais ) - 55miles (88km) from central Paris
9. Dusseldorf (Weeze) - 50 miles (80 km) from central Dusseldorf
10. London (Stansted) - 40 miles (km) from central London
In the best performing category - they have forgotten a few:
Toronto City
Singapore
Dubai
Sharjah
However I believe that one of the worst distances is still Riyadh (RUH) which actually does have a downtown airport - though that is reserved for the royal family. The airport is 40 miles from the terminal to the exit gate!!!
Cheers
Those nice people at Skyscanner have published a list of the worst offending airports with ambiguous names and not quite that close to the city center.
http://news.skyscanner.net/articles/2009/09/002866-ambiguous-airports-how-far-is-the-airport-from-the-city-it-serves.html?utm_source=Airmail&utm_medium=email&utm_campaign=newsletter
In the top 10 of the airports currently with scheduled service, Ryanair takes the biscuit with serving all of them. NOTE London Oxford (newly named and badly so) doesn't have any service today from anyone.
Some of the Worst Offenders:
1. Munich West (Memmingen) - 70 miles (112km) from central Munich
2. Oslo (Torp) - 68 miles (110km) from central Oslo
3. Frankfurt (Hahn) - 68 miles (110km) from central Frankfurt.
4. London (Oxford) - 60 miles (97km) from central London
5. Stockholm (Skavsta) - 59 miles (95km) from central Stockholm
6. Barcelona (Girona) - 58 miles (94km) from central Barcelona
7. Barcelona (Reus) - 58 miles (94km) from central Barcelona
8. Paris (Beauvais ) - 55miles (88km) from central Paris
9. Dusseldorf (Weeze) - 50 miles (80 km) from central Dusseldorf
10. London (Stansted) - 40 miles (km) from central London
In the best performing category - they have forgotten a few:
Toronto City
Singapore
Dubai
Sharjah
However I believe that one of the worst distances is still Riyadh (RUH) which actually does have a downtown airport - though that is reserved for the royal family. The airport is 40 miles from the terminal to the exit gate!!!
Cheers
Ebay Finally Dumps Skype
In a move that should have all of us (heavy Skype users) quaking in our boots - Ebay is going to sell off its Skype subsidiary. EBay Inc. said Tuesday it will sell a 65% stake in its Skype Internet phone business to private investors in a deal that marks the end of an unhappy tech marriage.
San Jose, Calif.-based eBay said it will get $1.9 billion in cash and a $125 million note from the buyer, an investment group led by the private equity firm Silver Lake including Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.
The group will take a 65% stake in the company, while Ebay will retain 35%.
In 2005 eBay acquired all of the outstanding shares of privately-held Skype for a total up-front consideration of approximately €2.1 billion, or approximately $2.6 billion, which was comprised of $1.3 billion in cash and the value of 32.4 million shares of eBay stock, which was subject to certain restrictions on resale.
Interestingly Silver Lake is also an investor in Sabre. So there is a travel industry connection here.
Lets hope that the new chaps do the right thing with Skype and keep it true to its roots. However I don't see them being altruistic. Current Skype revenues are pretty meaningless. Today also Boingo dumped Skype as a partner for its Skype Zones service.
I guess I may just have to move to Google (UGH) or Gizmo.
Cheers
San Jose, Calif.-based eBay said it will get $1.9 billion in cash and a $125 million note from the buyer, an investment group led by the private equity firm Silver Lake including Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.
The group will take a 65% stake in the company, while Ebay will retain 35%.
In 2005 eBay acquired all of the outstanding shares of privately-held Skype for a total up-front consideration of approximately €2.1 billion, or approximately $2.6 billion, which was comprised of $1.3 billion in cash and the value of 32.4 million shares of eBay stock, which was subject to certain restrictions on resale.
Interestingly Silver Lake is also an investor in Sabre. So there is a travel industry connection here.
Lets hope that the new chaps do the right thing with Skype and keep it true to its roots. However I don't see them being altruistic. Current Skype revenues are pretty meaningless. Today also Boingo dumped Skype as a partner for its Skype Zones service.
I guess I may just have to move to Google (UGH) or Gizmo.
Cheers
EC To Review Package Holiday Protection
Bowing to the inevitable or just feeling like grabbing a fist full of nettles? Either way the European Commission is to launch a review of the Package Holiday Directive this autumn. The European commissioner for consumer affairs, Meglena Kuneva, said the legislation is "out of date having been created and implemented in the 1990s."
The core of the issue in Package Holiday protection is that now more than 50% of all holidays are booked dynamically either in total package form or in components often from different vendors.
At the same time the UK's regulatory body the CAA is reviewing protection under its ATOL scheme which last year took a big hit from the collapse of XL Airways and is potentially bankrupt.
If the EC is smart it will acknowledge that the market has changed and implement generic rules that apply to the sale of any travel product component or package no matter how its sold.
As expected the agents and tour operators are in favour, the airlines (particularly the LCCs) and online agents are not.
We will keep an eye on this ongoing issue.
Cheers
The core of the issue in Package Holiday protection is that now more than 50% of all holidays are booked dynamically either in total package form or in components often from different vendors.
At the same time the UK's regulatory body the CAA is reviewing protection under its ATOL scheme which last year took a big hit from the collapse of XL Airways and is potentially bankrupt.
If the EC is smart it will acknowledge that the market has changed and implement generic rules that apply to the sale of any travel product component or package no matter how its sold.
As expected the agents and tour operators are in favour, the airlines (particularly the LCCs) and online agents are not.
We will keep an eye on this ongoing issue.
Cheers
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