Mobile Space - Its Not About the Booking

Brett Henry (Abacus and actually quite a good guy!) - made a major statement at WIT Ideas Lab - Mobile is not about the Pre-booking issues - its all about the service element - the Post Booking experience. PC is better for the pre and in buying experience.

So I will challenge that just a little we can make some simple bookings (for non-critical elements of the trip such as a taxi) via mobile. But trying to force stuff down that thin client pipe requires a change of thinking.

And then there is the real problem. Ear Eye.

Just think about it.... Watch how many times you move the handset from your ear to your vision area. Pain in the rear agree?

Cheers

1A+1G/1C/1P vs 1A+1S(1W) Or....

So I have been trying to decide if this really is a credible story from the first time I heard it 3 weeks ago. I prefer not to address rumours although I LOVE to speculate as you may have gathered.

So let me address this is 2 parts.

Firstly is the idea of a merger of GDSs a good idea?

I have opined often that I believe the GDS current model is flawed and in need of either a revolution or something more dramatic. I think we are long past the stage of evolution of the GDS model - but there again I tend to be more radical in this regard. So is a merger the right answer to a broken model? I liken this solution to the idea of merging bankrupt airlines.

Secondly is it viable if a merger should take place - with either of the 3 possible combinations. So can we eliminate any of them?

Actually no all bets are ON. that includes Amadeus and Sabre, Amadeus and Travelport and Travelport and Sabre. Frankly none of these is appealing. Travelport is from reading the Beat the weakest of the players. So which option looks best?

Actually I am going to say there is another option. Carve up Travelport.

This option is the more obvious if you consider the market footprint alone

A carve up.

Slice up Travelport. Put the USA assets over to Amadeus and take the International Assets over to Sabre.

Game over - best value.

Any questions?

Social Media vs Search - Bedfellows Or Mortal Enemies

At one of the sessions today at WIT09 (for tweets follow #webintravel) there was a debate between Search vs Social Media. The audience at the end concluded (bless them) that they belong together in a show of hands under Siew Hoon's moderation.

It would seem that this isn't just a set of let's get along - it has some validity. Last week eMarketer pushed out an article on the Synergy of Search and Social Media

Frankly I am of the opinion that there is a large amount of metrics that are about as valid as financial derivatives are good.

So bear that in mind if you want to believe you can. But retain a healthy sense of skepticism.

Cheers

Consumers - We Think Travel Websites Are Confusing

With travel trying to cram more and more information into their websites - we are begining to see a customer backlash. I got an email the other day from Leonardo/VFM. In it they quoted an interesting statistic - only 34% of US online travelers surveyed believe that travel Web sites clearly present their choices and trade-offs.
North American Technographics® Travel Online Survey Q1 2009 (US), Forrester Research, Inc., February 2009.

That tells me something that I have long suspected that the Consumer is being increasingly browned off by the junk in front of him.

At today's Web in Travel session of which I was a panelist - my fellow stage occupants - Ram Badrinathan, General Manager-Asia Pacific, PhoCusWright Inc and Mark Inkster, Managing Director, Microsoft Online Services Group, Southeast Asia also agreed that things are not good.

Last week's missive from Gerry McGovern focused on an example from the BBC websites. The purity of the service keeps a lot of the clutter away from the process of diving into detail. Given the amount of screens of information the user has to go through to get to the pure information nugget (he or she) wants, this makes it easier.

I sense there is a backlash from the consumer who is tired of being bombarded with "just in case" information when he wants to get to only information that is contextual to his request. Thus those who push everything including the kitchen sink and let any (as opposed to only relevant) stakeholders have sway in the scarce real estate on the web (particularly above the fold), should take heed.

Today's web user will move away from a site that is too cluttered and if you judge by some of the panelists today on the OTA panel - UI/UE trumps content.

Now that is food for thought

Cheers

JAL Lurches Towards Crisis

The size of the crisis at JAL is slowly coming to leak out. It would appear that both the initial size and the rate of outflow are definitely reaching crisis level.

So what is anyone doing about it?

Well basically the idea of a crisis at the former national airline is unthinkable - except for a small detail - it's very real and very now in nature. So the government is having to step up its efforts.

The banks are also tapped out with other opportunities and obligations. The old joke about how to make a million seems to ring in someone's ears. (BTW its start with a billion and invest in/start and airline). Thus they are not terribly keen to throw good money after what is increasingly seen like a bad investment.

All the while back at JAL's HQ, Rome is burning and there is a great need to fix a large number of things. So the clock is ticking down the seconds and its really dark outside. There is an urgent need for action now to stem the bleeding.

Enough may be enough but for Japan this will be hard. There will have to be a real crisis and some radical surgery. The time for nuanced change is over. If JAL is to survive then someone needs to grab the wheel.

Enough of the metaphors. Can some one do something or will there be someone who has to turn out the lights on a storied brand.

Cheers

Westjet Cuts Over to Sabre PSS

So the aggressive guys at Westjet went from announcement to implementation in about 9 months.

WOW!

So that must be a record for an airline of that size to make such a migration in such a period of time.

Kudos to the Sabre team for the work done.

There are some clear lessons here that can be applied to many airlines who are currently reviewing their PSS infrastructure.

The Professor therefore thinks airlines should consider their position as follows:

1. Changing your PSS is not as traumatic as has been believed. If you are focused and set a clear goal and objectives - you can do it in a reasonable time. Remember one of the Professor's cardinal rules - no project should take longer than one year.

2. The complexity of a PSS system is no longer a black art. Focus works.

3. Navitaire is pretty vulnerable and has done little to support the increased complexity of the airline model. Now they are paying the price with major defections of jetBlue and Westjet. There are other customers who are not happy. Chaps - this should be a wake up call.

4. Sabre is VERY hungry and given the loss of their anchor customer American to the new Jetstream product of HP/EDS - you can expect great deals and good service from Dallas - the like of which has not been seen in decades.

5. Amadeus is NOT the only game in town. There are good choices possible, available and desirable. From the big guys (Sabre et al) to the mid/small size guys - Results, Radixx etc.

6. the importance of the Distribution manangement system means you must take the time and have a clear layer between the PSS and the GDSs. Don't believe the BS from the bigger players that their systems answer everything.

7. Examine your costs and check very carefully on the offers from the vendors. Focus on the bottom line not just the headline price. AND make sure that your invoicing works in a comprehensible manner. PSS and GDS vendors have long since obfuscated the true cost of the service.

8. Finally remember that there is the out of pocket cost but also the internal service costs surrounding things. Watch this one.

Cheers

The Professor Will Be At WIT 2009

The Professor will be attending, speaking and just hanging around - soaking up the ambiance of WIT's 5th Anniversary conference in Singapore. I will try and Tweet also.

Arriving not quite the way I planned (thank you Qantas for canceling QF31 tonight), I have settled into my hotel and am raring to go.

If you are attending - stop by and see me. I will be the older guy with the confused look on his face!

Cheers

Timothy

Is Google Evil?

Hmmm

I have mused on this subject before.

In Travel, Google is probably now the company that benefits the most from the move to the web centric world. Make that positively in terms of cash flow.

Recently a number of people have started to question the validity if not the sincerity of Google's "Don't be evil motto".

Google has so far avoided the wrath of the media through skillful PR and undoubtedly hiding behind the concept evil empire of Microsoft.

Now someone has actually compiled a list of the 11 Ways Google is Evil.

And as if that is not enough on last AT&T let rip at Google in a formal letter to the US FCC (the telecoms regulator) claiming that Google Voice is blocking calls to Convents and Health Centers.

Whether Google is being callous deliberately or is having to "spin" its vision of "evil" can be debated. One thing is for sure - be careful with the now 20,000 ton Gorilla. He can crush you. Or at least block your calls.

You have been warned

Cheers

Feds To Crackdown On Airline Cheats.

Scott McCartney of the WSJ's Middle Seat column did a great piece this week on the Government finally tracking down on Airlines who fail to adequately compensate passengers for service failures.

Many airlines think that the rules do not apply to them. Customer service (now there is an oxymoron) departments of airlines are actively engaged in campaigns of disinformation on the subject.

I believe that this may be an effort by the Obama Administration to forestall legislation on a passenger bill of rights. At least to get them to smarten up the act of the airlines.

Delta - I hope you read the article because I am still mad at you for

A) Failing to get me to my destination as contracted (not to mention the screwed up alleged recovery)
B) Failing to recognize that you screwed up 3 times in one O&D
C) For being downright insulting in the responses to my perfectly valid requests for legal compensation.

Cheers

Behavioural Targeting - Good or Bad?

I think many of us believe we are being tracked in one way or another on our web activity. Is this a good thing or a bad thing? How are attitudes differing in the USA vs the Rest of the World.

Privacy laws vary dramatically from country to country. The ability to track behavior either for commercial, social or government reasons has been radically enhanced over the past 20 years via the explosion of web tools and services.

We have had a number of studies pointed at us at how effective Behavioural Targeting (BT) is. Personally (living in the USA but traveling frequently across countries - spending a lot of time in Europe) I find that attitudes to this are pretty polarized. In countries with strong privacy laws (e.g. EU stalwarts like Germany) the attitude is negative. In the USA its pretty laissez faire.

Finally some independent studies are beginning to appear.

eMarketer has just put together a little piece which is based on an independent study (when are studies not independent!!!).

It appears that actually many Americans don't like it. Frankly I don't like it and I really think that its bad enough being spammed with a lot of stuff but I find BT somewhat creepy.

I was chatting to an Australian friend of mine this week and he explained how annoying he felt getting "targeted" emails which then when he wants to use them he is told - US residents only.

So this is the other part - BT that is sloppy and the spill goes out to completely non-possible respondents.

So BT should indeed be more careful. You cant have it both ways - IE deliver BT tightly to a group and then not check basic things like their email addresses or any other items that would clearly identify them as "foreigners".

But at the end of the day - I think that BT is here to stay. I just hope the metrics and the use thereof are better than the somewhat poor implementations today. This is definitely a version 1.0 product category.

Cheers

Shock Horror - WN Loses Money - AGAIN!

Using the opportunity to have another bad quarter along with everyone else - WN lost $16 million. Itself an improvement on the $120 million loss from last year's numbers.

It is interesting to note that WN has become more and more like a legacy carrier and less and less like a LCC carrier. Perhaps its profitability is tracking that behavior.

Hmmm that's an interesting thought

Cheers

Air New Zealand's IT "Melt Down" vs Ryanair's "Planned Outage"

Air New Zealand is one of those airlines that has had its fair share of ups and downs. Nearly brought down by the Ansett Failure and a disastrous set of relationships, the carrier in recent years has operated shall we say a more realistic business model.

On Sunday (October 11th) an airline's worst operations nightmare was realized. Their IT systems crashed - specifically check-in went down. Interestingly it happened on the quietest day of the week in a relatively light weekend. The total number of passengers impacted was estimated at 10,000. The outage did not meet the threshold of compensation as the actual outage was less than the mandatory period. So in reality it was not such a huge deal.

The next day the staff of NZ were treated to a blistering memo from CEO Rob Fife. Here is one link from Computerworld which was probably the most prosaic of all the commentaries.

Now this was interesting in two ways and this is the point of my post here.

The press over Ryanair's planned outage during its cutover from OpenSkies to NewSkies was quite moderate in comparison. And the system was actually down for days not a few hours with operational impact that lasted for several weeks after. Even more recently there have been issues reported at Stansted with check-in systems going down. Remember FR is now 100% web or kiosk check in. Ryanair typically moves more than a million passengers per week.

So the setting of expectations and managing the message becomes quite clear. However perhaps more important it illustrates the love hate relationship that Airlines have with IT.

A final point is a demonstration of why I think Ryanair is actually actually behind the scenes a model for a lot of other airlines. The fact that the airline (FR) can revert to running essentially on paper is nothing short of miraculous. The fact that today they are one of the top 5 airlines for branded passenger operations shows that perhaps there is a lot of stuff that other airlines have that is really useless.

Now that is what I call food for thought.

Cheers

Mesa and Mokulele Kiss and Make Up- Competition to Suffer

The giant battle for second place in the Hawaiian intra-island market took a remarkable turn yesterday with the two challengers agreeing to back off and cooperate.

From here on in - Republic - the controlling shareholder of Mokulele will bring its 3 E170s back to the mainland and instead it will become 25% owner of the local lift of the JV.

The two apparently will mix and match routes. Republic, for example, will pull three E-170s it had allocated to Mokulele back to the US mainland to be operated by one of a number of carriers the company owns. Go! will take over the routes that Mokulele operated with those aircraft.

As with all deals - this one is probably an unnatural act. The real winner here is going to stay Hawaiian Airlines the 80% dominant carrier. And of course the big loser (drum roll please) - the consumer.

Cheers

Airlines: Are You Conflicted?

According to the Sabre Airline Study - you just very well might be.

Sabre has released a study In the study highlights there are a number of key findings. I will pick out the ones I think are relevant and while cherry picking is the name of the game here - I think it is important to recognize that while airlines think they know what they are doing - there is an underlying trend that shows they are conflicted. So what do you want - Revenue or Brand Value?

According to the study it is "customer loyalty and retention efforts that are viewed by an overwhelming majority of survey respondents (86 percent) as having the most positive impact on their business."

The study goes on to note the conflict the airlines face: "The importance of developing customer loyalty is part of the unwieldy crisis airlines face today as charging additional fees is viewed by them as one of the top tactics to increase revenues."

Overall customer satisfaction with airlines was down this year, at at time when the fewer passengers on planes should have improved the service. The recent passenger imprisonment examples can't have done a lot for their overall image. But if you look at the recent annual Power's survey, Airline customer satisfaction has fallen to its lowest level in four years.

The decline in satisfaction in this year's survey largely was driven by unfavorable customer perceptions on in-flight services, flight crew and costs and fees, according to the survey of nearly 13,000 passengers who flew on a North American airline between April 2008 and May 2009. Both leisure and business traveler respondents reported overall declines in customer service.In its annual survey, JDP measures customer satisfaction in seven categories: cost and fees, flight crew, inflight services, aircraft, boarding/deplaning/baggage, and check-in and reservations. It awarded Alaska Airlines its highest US airline ranking.

"Unfortunately, any improvements in customer satisfaction are being offset by passenger displeasure with cutbacks on inflight services, increases in fees and issues with the helpfulness and courtesy of flight crews" said Dale Haines, senior director of JDP's travel practice.

Going back to the Sabre study, according to 58 percent of those (airlines) surveyed, merchandising and ancillary revenue will help airlines’ bottom line results. Baggage fees, travel insurance, and vacation packaging were rated among the highest in the survey to generate revenue.

And herein lies the conundrum. Revenue or Brand Value.

The Professor thinks that there is a clear case for the "Brandless" brand such as the LCCs leader Ryanair. Michael O'Leary and his crew don't give a toffee for brand. For them the issue of revenue and thence profit is paramount. For legacy airlines in survival mode - as the Head of IATA constantly reminds us - one would have thought that was also the case. But the legacy airlines tend to revert to type. For example one would have thought that it was a little weird that Qantas in the middle of a recession and in the middle of one of their heaviest periods of losses in recent memory - would be running a very expensive strategic branding campaign.

So let's count the ways the airlines are undermining their brand value:

- Confusing fees
- Unbundling the product IE charging for things that were previously included
- Debasing the currency by "selling" differentiators that the high value frequent flyers have paid for with their loyalty
- Moving ancillaries to the point of departure and not making them available at the point of sale
- Selling frequent flyer miles for cash

I could go on but you get the point. The numbers don't lie. Airlines are surviving because of ancillary revenue not because of the long term brand value.

Other interesting Sabre survey findings:

o Increasing revenue and reducing costs is among the most significant challenges in managing airline profits over the next 18 months, according to 67 percent of those surveyed

o Managing revenues (44 percent) and distribution mix (12 percent) are the top two tactics survey respondents plan to use to increase revenues. Ancillary revenues followed closely behind with 11 percent of those surveyed planning to employ this tactic.

It is the last one that I find most perplexing. Given the sponsorship by Sabre of the study - one would expect it to be brought out. However if the legacy airlines REALLY don't regard distribution as important - then they are missing both the opportunity in lowering costs and increasing revenue by doing the one thing they seem to be failing to do... IE leveraging the value of their relationship with the majority of their distribution namely agents. The obvious way to solve that conundrum is through the deployment of new technology and breaking the Gordian knot of the GDS cost model. But then I guess Sabre is none too keen to bring out that point.

Still there is food for thought here. Are the airlines mortgaging their future value for revenue today? Does that future value of the brand actually matter? Perhaps more to the point are the airlines going to have to finally admit that they really are not in control of their brand. Social Media seems to have done a number on several airline brands - both good and bad?

Ah this is good stuff

Enjoy

Cheers

JAL Pulls Back. Sees Salvation At Home

JAL seems to have gone cold on its need for external support and has slowed the discussions with the OneWorld and the Skyteam opposing teams.

After a certain dance between itself and the new government, it seems that one of them blinked and while the new Japanese government is not promising to fork over large amounts of cash - it does seem that the local financial markets will once again shore up the ailing carrier's balance sheet and cash position, at least for the short term. With the US carriers having taken advantage of the easing credit markets to improve their current positions, the pressure for JAL to do the same thing is becoming acute.

JAL has clearly listened and is starting to cut into the fat. It is pairing routes and frequencies. As the one of the largest 747-400 operators - it can clearly save a lot of money by parking some of those and replacing them with large twins. But the biggest issues remain that the culture within the airline remains a critical obstacle to change and the speed of change.

For that only a new focused management team can actually make the changes necessary for the long term survival of this legacy monolith.

Cheers

Boeing to Scrap first three 787 prototypes

Part of the grand plan with the 787 program was that the development aircraft would be refurbished and put out into the passenger fleet.

It seems that Boeing has had to scrap that idea and indeed it has a $2.5 Billion (in a non cash charge) to write off the first 3 test examples which are not possible to be returned to the pax fleet. Boeing describes the situation that these aircraft are not commercially marketable due to "extensive modification work".

Let's hope that these aircraft don't end up on the scrap heap like these fellows here. I am sure that the Museum of Flight and the Smithsonian Museum will want them

Big US Airlines complete round of refinancing – Airlines Financial Health Improving

With UA restructuring by borrowing $659 million to refinance debt; the US airlines have now completed a round of debt refinancing.
So far we have seen all the US majors (with the exception of WN whose balance sheet is quite healthy thank you). This doesn’t mean that the effort is over. Far from it.

US, UA, CO, DL, AA have all managed to engage in some financial re-engineering over the past 4 months. This is good because it means going into the “bad” winter season - the carriers have bolstered their cash positions and will now emerge next year reasonably healthy. It also shows that the credit markets are indeed loosening up. So the US airlines are now a reasonable bet for the coming months. I think we will see a period of stock declines until the first shoots of spring start to pick up. However – I think we will see only good news on lift numbers. Yield of course will remain depressed.

With the US carriers now with a cleaner financial bill of health – what about the other airlines. BA is in need of some financial help. Irish carrier Aer Lingus is still a basket case. JAL we know is sick. The other airline to watch is Scandinavian. They are struggling. Camping outside Star partner LH is not necessarily the right answer but seems to be the only conventional outcome. Among the other airlines – we see that Malaysian is “accelerating” its restructuring program. There are several other airlines that are in similar situations.

One thing is for certain – the airlines will emerge in 2010 much leaner. Anyone who doesn’t will find themselves somewhat challenged in fighting the competition.

Cheers

Amadeus to German Agents: Free Money!

At the FVW Kongress in Cologne last month, Amadeus offered a hint in a speech that they would be reconsidering the issue of the 4.90 Euros fee that Lufthansa has been leveraging for segments booked on Amadeus for the PFP program.

A quick recap. Last year LH introduced the Private Fares Program which essentially raised all fares 15 Euros each way if the fares were booked without a contract. With a special contract between LH and the agency - the agents could get the lower negotiated rate provided it was booked via a channel that LH designated. Travelport and Sabre signed up for the program and therefore there is no charge for agents from LH for PNRs booked via these GDSs on the PFP fares. The largest GDS in Germany is Amadeus. For the first 6 months or so they picked up the 4.90 fee until they realized how much it would cost them to do so. This "pick up the tab" program ended at the start of February this year. Thus agents who book a PFP fare now pay 4.90 per segment for every ticket issued via Amadeus. Interestingly it is collected via an agent debit memo!

Fast forward to yesterday Amadeus has announced that it will again pick up the tab for the fee - well now its only SOME of the fee. They are offering to pay 3.40 Euros for the LH PFP segments. Leaving just 1.50 to still be funded by the agent.

Battle lines drawn again - clearly there must have been an impact in the German market for Amadeus by defections to the airline direct, to other GDSs and to third party technology solutions such as offered by AER Ticket (the largest consolidator) via the LUTE platform.

One has to ask why? and why now?

The offer by Amadeus states that it will be effective from January 1 2010 for the whole year or until Amadeus and its part owner Lufthansa come to some agreement. This could be very expensive for Amadeus even at the lower fee. So free money for the agents.

Interestingly one has to ask if Lufthansa has become successful at this why don't other airlines propose to do the same? Indeed is this a model for airlines outside of the German market? AF/KL have already tried this with Travelport earlier in 2009 which brought a new level of agreement between the two. So it seems that airlines have found a tool with which to leverage a different contract arrangement between the players.

With the GDSs unbundling their services and appearing (if one can judge from the Travelport financials) to be able to increase their yields from the airlines, it seems only natural that the airlines need to push back. This might be the answer. I leave you all to work out the mathematics on this one.

In our discussions with agencies on the current status of the market for GDS products, my team and I have noticed a trend that (according to multiple agents) in different markets the GDSs are not in fact cutting back the incentives but offering even more in some cases greater incentives than before.

There will be tears....someone is bound not to be happy.

Cheers

Nokia Buys Dopplr - Finally Mobile Gets Travel?

The leading mobile players are the handset guys and the networks.

Up till now they have disdained the travel market plumbing for the sexier applications such as music. However I have always believed that the real deployment of smart handsets would occur when the applications moved into being more generic.

Although there was a link between Dopplr and Nokia before (shall we just say it was family), the move is a smart one for Nokia. They are now staking a claim in the concept that the handset really is a PID - Personal Information Device. This makes the device a serious contender for the user's favorite service. Up till now Blackberry has been leading in this space with the delivery of most applications via the BB service.

The stunning success of Apple and the iphone has changed the paradigm. The vast number of user based applications is great but after a while you are bewildered with the array of choice and the support of these applications makes big demands on the user. Great and fun for now in a social context - but perhaps not so interesting in the "useful" category. I realize that I will be slammed by the faithful for this statement - but bear with me a little. I have watched a lot of iPhone users (from the original to the latest 2 versions) and you can see how the lack of some functionality hurts and the frustration of having too many different apps becomes counter productive. In essence the line "there is an application for that" is now replaced with "how the heck do I manage all that".

The silence of the network providers is stunning in all of this. The profitability of the mobile environment even after forking out all that money for 3G licenses remains almost obscene. However the network providers who have tried so desperately to avoid becoming just a pipe as the internet was for fixed line operators are not necessarily winning the war for the hearts and minds of the user. We are seeing higher churn rates in different countries where the networks have matured. I believe that the applications like Dopplr need to be offered by the networks and that the networks need to be far more involved in the PID services than they have in the past.

So SOME of Mobile gets Travel. When will Mobile really get Travel? I am hoping that it will be sooner rather than later.

So How Much Was/Is BMI Worth?

About 4 and half LHR slots.

Today LH announced buying the remaining 20% of BD for $38 million. That is less than a slot pair price at LHR. Thus the total value of the airline is - well about - 4 and a half LHR slots.

Last time I checked BD is the #2 carrier at LHR.

It also bought BMED for 30 million pounds. With at least 11 slots at LHR. So you do the maths....

Cheers

Timothy