Expedia's Actions Strike Fear and Loathing Into Many Suppliers

At first glance - the Expedia decision to kick AA out of the shopping displays was portrayed as a gesture of solidarity with its friends over at Sabre and Travelocity/Orbitz.

However perhaps there is a more sinister reason why Expedia took this action now.

After chatting with some colleagues who are in both the air and non-air space there is a very strong sense of disquiet on the supply community.

If Expedia wins and AA is forced to back down - then Expedia will have demonstrated that is has HUGE power to control the supply chain.

For smaller airlines and hotel chains in particular this strikes fear and loathing on their part. They fear that Expedia will start to throw its weight around with the supply chain and that could really hurt marginal suppliers who depend on Expedia for a large percentage of their business. In the US Market we are coming up on the quiet season when there is much lower volume of transaction. Many of these same suppliers fear that Expedia will now threaten them with punitive action unless they go along with higher yields to the company.

Even if Expedia doesn't prevail - there are few suppliers who could afford a protracted battle with the Bellevue based OTA giant.

Thus many of these players are secretly quaking in their boots over holiday season and looking at Expedia as the Evil GRINCH for stealing Christmas.

BAH HUMBUG

Forrester's Take on AA et al. Video Link

Our fave analyst - well one of them anyway - Henry Harteveldt - was on Bloomberg TV yesterday.

Check out this video.

Henry explains in good terms the issues. While I dont fully agree with him about these issues - we can say that he does a good job in laying them out.

One key issue he brought out is that AA is ALREADY directly connected to Orbitz. But his analysis of saying that the Direct Connect option is the more expensive one is incorrect one.

Still a good session to watch

Cheers

How To Outsmart Expedia's Ban On AA

Game time everyone - listen up. The Professor's Guide to Buying American Airlines Tickets. A Primer for smart shoppers.

Today's game is how to use Expedia and Orbitz to easily get access to AA in these OTAs. Keep this link however because it will become more useful over time. I will come back and update this page as new changes happen.

Firstly you are already a smart shopper so we are not going to teach you how to suck eggs. We are going to assume that you know a little bit - probably a lot if you read this blog on a regular basis.

The easiest way to book AA is to use those "neutral" sites that have retained AA. For example if you are used to using Orbitz - just click on over to Cheaptickets who still shows AA. (Yes luv its the same engine at the back! so for Orbitz users this will be REALLY familiar)

For example here is a display that (honest 'guv) I just chose at random a route where I know a nonstop would return to me an AA result. Interestingly the AA price was cheaper than the other guys... how about that!!!



But what if you dont want to use any other site than Expedia or Orbitz itself and that despite all that your little inner voice tells you - you REALLY want to use Expedia to see about AA and compare AA's priced. Well you can do that.

Here is how.

Path 1 - see if there is a code share that might cover the route.

AA as with many airlines has code share partners. Unlike United, Continental and US Airways who are clogging our results screens with the same flights - AA has fewer partners. But here is where to get the list:

AA.com's Code Share pages.

Print this page and keep it with you at all times. It is much better for International Flights than domestic. So think of this. For Transatlantic flights look for Iberia, Finnair and British Airways options with flight numbers generally in the 4 digit range. For service in the USA try using Alaska as a preferred airline but caution AS fares on AA tend to be higher than AA itself - often significantly so. Again refer to the list and the links from the AA Codeshare home page above.

Here is an example



Look at the BA 4 digit flight numbers they are the AA flights.

Path 2 - Use a Meta/Real Search Site

For this good sites like Kayak in the USA and Skyscanner in Europe provide a way to see things neutrally and still then go through the task of selecting the flight you want on AA.

For example here is the Kayak display for all sites. To eliminate duplication I only requested nonstops on mainline aircraft but all carriers all sites.



Path 3 - suck it up and figure out where to go to get the right flight data.

To do this you can only use Expedia as neither Orbitz.com not Orbitz for business sites are displaying AA right now - although eBookers and Cheaptickets are.

And of course if all else fails go to AA.com. Well heck you were going to buy there anyway weren't you!

Cheers

Still Time To Donate

Please support the T2Impact/Professor Sabena Annual charity drive.

This year our end of year charity contribution will be to raise money to Sponsor A Puppy For the Guilde Dogs for the Blind UK. If you would like to do this yourself click here:
https://donate.guidedogs.org.uk/give.asp?id=3

Cheers

Did You Forget? Well 2 Years To Go

Did you fly on BA and Virgin between August 11, 2004 and March 23, 2006?

If so then here is your annual reminder to file with the court to get some money back.

Go to the website and get collecting your paper trail proof. If you dont you will be sorry.

In re International Air Transportation Surcharge Antitrust Litigation
Case No. M:06-md-1793-CRB

REMINDER NOTICE

You may be a member of a settlement class relating to a class action lawsuit in the United States District Court - Northern District of California, San Francisco Division, In re International Air Transportation Surcharge Antitrust Litigation; Case No. M:06-md-1793-CRB, concerning fuel surcharges on "long haul" flights provided by British Airways Plc and Virgin Atlantic Airways, Ltd. If you bought a ticket on British Airways or Virgin Atlantic in the U.S. or in the U.K. between August 11, 2004 and March 23, 2006, you may be entitled to a partial refund of the fuel surcharge.
The settlement relates only to tickets on "long haul" flights. All flights on Virgin Atlantic are "long haul." Most British Airways flights between the U.K. and non E.U. destinations, including flights to and from the United States, are "long haul." A complete list of qualifying flights can be found on the website listed below. If you have already submitted a claim, you do not need to do so again. The last day to submit a claim is December 31, 2012. For more information please visit www.airpassengerrefund.com or call the toll free number at 1-877-625-9432. You can also write to Kenneth R. Feinberg, Esquire, Settlement Administrator, c/o Epiq Systems, P.O. Box 19263, Washington, D.C. 20036-9263

'Tis The For Crystal Ball Gazing

Oil is not likely to come down in price to any major degree in 2011.

This post is going to discuss the impact of high oil prices as a factor in 2011.

This one has kinda crept up on us. Oil is now cresting above $100 a barrel. With the severe weather across Europe battering Airports and other uses of oil for transport alike - we are likely to see a peaking and spot shortage of fuels across the northern hemisphere this winter. After when the spring season hits the North it is not likely to moderate to much extent. This is going to have a knock on effect.

I believe that air ticket prices are going to stay high. This will in turn drive the need for Fuel surcharges. I believe the airlines will flex their YQ/YR muscle and raise those rates. Remember that after the peak pricing in 2008/9 the Fuel surcharges only moderated a small amount.

With Fuel consuming a larger percentage of the airline cost base - the amount of available flexibility on airline pricing will lead to restrained capacity growth, particularly among the legacy and high cost carriers of Northern Europe and North America. Those with aging fleets - particularly the US Carriers will feel this pain more than others with younger fleets. This sets up a long term conflict with the aircraft manufacturers. Both Airbus and Boeing have recently upped their short term production rates. But where are those planes going? Expansion in Asia/Pacific who demands keep rising. I saw an amazing statistic that saw Beijing add a higher rate of cares to the city that already has the worst commute (tied with Mexico City). The official Xinhua News Agency said 30,000 new vehicles were registered in the past week alone, at least three times the normal rate.

Airbus actually has more flexibility as it has 3 production lines running in separate areas - China, Hamburg and Toulouse for the A320 family. Boeing is actually running at full capacity on the 2 737 lines in Renton. I spoke with a senior manager there over the past few days and he opined that the current run rate can only be marginally improved without significant changes to the work flow and supply chain. That requires infrastructure change such as more plant or another line. Neither is going to happen any time soon.

The reason I point these out is that China is going to really start competing with the USA as a huge importer of oil for domestic consumption. And the US airlines do not have the resources to significantly reduce their fuel burn rate and cost.

Despite Skype's well publicized outage on December 22nd we are going to see a lot more traffic exit from the higher yielding business travel. But that is not confined to just business travel.

The use of Skype and GoogleTalk is growing fast and we can expect others to adopt similar technologies. This means that we will have SMEs and personal consumers adopt live real time personal and small group interaction via video. The upcoming deployment of 2 cameras in the iPad 2 will mean that Facetime will have a much broader and viable usage.

The growing divergence of meeting cost - real presence rising costs and virtual presence diminishing costs will mean a permanent leakage of the former to the latter.

Bottom line the elasticity of demand will be low and it will be a supply market in the USA. In turn this will favor the supply side. It will also significantly favor non-oil based communication solutions such as tele-presence and other comms based solutions.

That my friends is not going to favor those who are intermediaries in my view.

Cheers

The Professor's Xmas Wishes

So what is Santa bringing you under the tree this year?

Well since I bought Tivo during the year - I will have to give it a content boost - probably I will make a netflix subscription.

I wont reveal what I bought as a communal gift for family and friends but I will reveal one tomorrow.

But here is my big wish for 2011.

That we will finally get a way to search and display the true value based price to the consumer.

Boring But really important.

For other wishes... let's hope Google plays nice when it buys ITA.
Let's hope AA et al work it out in an equitable way.

BUT MOST OF ALL

That we are all safe and sound this time next year to enjoy it.

Cheers and peace and love to you and your families this holiday season.

The Professor is working and will be pushing out stuff over the period. Just to keep you all entertained.

Cheers

Your Fave Complainer

OK so the poll was not well attended but the winner by a mile

Who is your favorite complainer?

Fair Search with 75% of the votes.

Cheers

How Not To Do A Great Apology

Poor American Honda ...

Either they were hacked or there was unauthorized use of a list by a vendor who was misusing the Honda Email list for owners of Acura and Hondas in the USA.

The intro paragraph immediately sets the tone of the whole mail. I am going to paraphrase what went through my mind when I read it.

"Sorry mate not our fault that we let your personal data get misused - so that makes it alright OK???"

They really did a poor job of communicating what the problem was and what the impact could have been. Further they did an ineffective job of communicating that this was bad or not so bad.


So you be the Judge. But I think they did a bad job. And I REALLY like Hondas - I have 3 of them!



Dear Customer,

American Honda Motor Co., Inc. recently became aware of unauthorized access to an email list used by a vendor to create a welcome email to customers who have an Owner Link or My Acura vehicle account. The data that was obtained included your email address, your name, Vehicle Identification Number (VIN) and User ID. Your password was not included and no other sensitive information was contained in that list.

We apologize for any inconvenience this may cause. As a company, we believe that all customer relationships must be built on trust. That is why we believe it is important to inform you of this incident. You may be aware of attacks on email marketing systems, therefore we want to assure you that we take the safeguarding of your information seriously and that the appropriate authorities have been contacted regarding this incident. Additionally, we have taken steps to minimize this type of exposure in the future.

As a Company, we encourage you to continue to be aware of the increasingly common email scams that may use your email address to contact you and ask for personal or sensitive information -- Be cautious when opening links or attachments from unsolicited third parties. Also, know that American Honda Motor Co., Inc. will not send you emails asking for your credit card number, social security number or other personal information. If ever asked for this information, you can be confident it is not from us.

Again, let us reassure you that we are taking necessary steps to safeguard your personal information.

If you would like further information on this topic please visit honda.com/info/b

Thank you.

American Honda Motor Co., Inc.

Expedia's Christmas Gift In Rhyme to Orbitz

Christmas is coming, the airlines are getting fat
Please put a penny in the Orbitz's hat
If you haven't got a penny, a fare ban will do
If you haven't got any content, then God bless you!

So The Professor's Contribution to Orbitz is not coal. I offer this free video with how to make a cheap Xmas Tree for your apartment or office that looks a LOT more expensive than it really is.

On - Off - Now On Again. LH and SK

What happened today... did the whole world just wake up?

Well LH and SK are back in talks. SK's really only viable option is to join the Star Alliance Heavyweight.

However with LO bailing and moving (likely) to Oneworld and into BA's loving arms - there is actually an alternative that no one seems to be thinking about.

SK+FI merge and then become part of the Baaabi Alliance. That would really shake things up in the Alliance world.

Nah - that will never happen...

Cheers

Shhhh. Wanna Get a Sneak Peak At Google's Xmas Page..

Then Go here

http://online.wsj.com/article/SB10001424052748704774604576035500936272100.html?mod=djemTECH_h

The Trouble With Blackberry

With a huge Shout Out to Professor Eric for sending me this one.

All I can say is even if you are a non-native English Speaker - this will make you smile.

Click here.

Cheers and a Goodnight From him

Willie's Appeal for Calm

Following the terrible situation at LHR - BA's CEO issued the following email and advice

I am reprinting it here as advice and at least to give the boys and girls over there a break and know their efforts are acknowledged and valued

Cheers

Timothy

Oops EK A380 taken out by Catering Truck

OUCH!!!

The A380 program has just had its string of bad luck extended.

An Emirates A380 had a very unfortunate incident where a Catering truck had a "wardrobe" malfunction and collapsed onto the wing of the Leviathan.

For more pictures and the rest of the story go here:

Cheers

New NZ Seats are not Beds

NZ is making a lot of noise about its new Sky couches.

But lets add a dose of realism to this.

For anyone who has ever tried to sleep in Y class with 3 across seating you know its not a bed.

Indeed using standard metrics the size of 3 seats all together is about 54 inches. Hardly enough to sleep on.

Not So Quietly DL Cuts 3 OTAs

Its not quite mature enough to call it a trend but the US airlines are making their presence felt by pulling content from some channels.

Delta was always the Travel Agents best friend. But since 1995 when it elected to curtail commissions - it has taken on a certain mantle of dislike from the intermediary (mostly traditional) channels.

Now Delta is the latest airline to move out of some sales locations.

And what do you make of all this Virginia?

UA Apollo To Die in 2012/2013

A little break in the AA vs Travelport story was the news that United Airlines has served notice that it will be terminating its contract with Travelport for passenger reservations and airline IT.

According to Travelport they believe the business will go to HP's EDS Airline unit marking a big win for the California based Computer Services firm.

This marks the second time in 2 years that a major US carrier has cut its links to its former child. Last year AA announced it was severing its PSS agreement with Sabre and going to HP's new reservations system called Jetstream.

The announcement also hurts ITA's PSS prospects where it was also bidding for the business. However the only real contest was between the current big 3 PSS vendors. Sabre, Amadeus and HP.

Another icon bites the dust. For Travelport this will mark the 3 major airline loss.

TWA was folded and withdrew from Worldspan hosting
Northwest was subsumed into Delta - which has a facilities management agreement with Travelport
And now United is leaving.

Travelport needs to take its reservations services and give it a shot in the arm. From my personal experience, the hosting system of the old PARS was one of the more flexible and functionally rich hosting environments.

Cheers

A Day Without Skype - Tough!

Today was a tough day. I had to do without Skype.

I did not realize how much I have come to depend on it.

So please Mr Skype get better soon so I can carry on my life

Cheers

Spreading Uniformed Junk Courtesy of BTC

BTC Spreads False Information about How Web Users Search For Fares.

Time Out for A Moment Of Clarification.

This really bugs me. There is a complete and utter well dog poo of stuff coming from some of those players who support the legacy GDS - In this case Travelport - in its battle against American Airlines. I am particularly irritated by BTC.

Firstly a disclaimer - I have several clients who can benefit from the move to more direct connect activity by the airlines and yes personally I support that idea that airlines should be free to chose how and where they distribute, similarly how customers search and buy airline product. After all the USA is supposed to be the land of the Free. Thus yes I am clearly biased. However in this case I think I just want to set the record straight so that a reasoned analysis of the situation and the impact can be had by all.

In the latest missive from BTC - it would seem that the message is designed to show how stupid AA is for shutting off $800 million dollars of revenue that AA receives from Orbitz annually. But worse - the impact is accelerated by the importance of Orbitz which is far greater because of its relevance to the consumer in the marketplace.

Here is a statement from the latest BTC PR missive against American Airlines.

QUOTE:
According to a May 2010 PhoCusWright report, 87% of travelers start their shopping process on the Internet. What’s more, some 28% of shoppers at online travel agencies (e.g., Orbitz) end up purchasing on suppliers’ websites.

The point: Consumers who start the shopping process on Orbitz before going to airline.com will now completely miss AA offerings and end up on AA competitors’ websites. This could represent a much bigger number than AA is willing to acknowledge.

END QUOTE

Clearly the writer has little clue how people search for fares on the internet. BTW the total revenue - I Believe - is not just from Orbitz.com but also from the other OWW (Orbitz Worldwide) sites such as eBookers, and Cheaptickets all of whom (at time of writing) are still able to access AA. If I am wrong please can someone correct me and I will publish a correction asap. Indeed as I noted yesterday AA is even advertising on Cheaptickets. Anyone who is still naive enough to assume that shopping on the web for travel is a simple and fair process has not been paying attention for the past 15 years.

So let's start with an understanding the vast majority of searches on the web start in a specific place. Only 15% or so start in a pure search engine such is Google. Alright so far.

There are a lot of ways to search for information and Google aims to capture a much larger piece of that pie if - as we expect - the Google acquisition proceeds.

People shop in one place and buy in others. To say otherwise is rather disingenuous to the consumer. There are some folks who think that there should be a tax on people who look in one shop window and buy else where. On the web that is possible because a click-through does generate money. But in the real world does Bloomingdales charge people for looking in their shop window and buying at K-Mart? Hardly.

But let's return to the BTC statement.

If you examine the study concerned from PCW - there are other salient facts - that the customer will typically search in a large number of sites before making their decision. That search process is driven by a wide number of factors. To make the assumption that it is linear and that the search process goes in a linear path would be a false assumption. So to assume that:

A large number of searches start specifically with Orbitz.com and end at the AA website would be a bit of a stretch. A very big bit of a stretch.

As the Boomers retire and move out of mainstream - they are being replaced by new generations of consumers - Gen X, Y and Millenials who are far more comfortable in using social media to go straight to what they want or go via places that are nowhere near Orbitz.com.



Over time the relevance of the OTAs as a class and Orbitz as a member of the class has declined as the premier source of travel information.

This is a trend that will likely continue.

My other point is that the consumers are smart and if they feel that they want an offer from AA - they will either go direct to AA.com or to those sites where AA is present. They do this all the time anyway. Just in case you think this is a strange phenomenon - then consider how Southwest is rarely compared with other airlines. And Southwest is the number one US based carrier by passenger numbers domestically.

However let me be clear - there is an impact on AA. I cannot hope to know what is going on in the mind of the folks over at AA but I have to hope that they know what they are doing. This is a calculated risk and one they clearly feel comfortable in making. Also I think Travelport has calculated and made the decisions that they have.

To paint Travelport as the pure victim would be a falsehood in my view. Further for Travelport to have characterized their defense of Orbitz as the champion of the free is a bit of a stretch, particularly since they failed to disclose in public statements their ownership share in Orbitz.

Interestingly in issuing his decision on the subject - Cook County Circuit Court judge Martin Agras clarified things as he stated his grounds for denying the preliminary injunction, ...that Travelport, which controls 48% of Orbitz, “does not have standing to sue on behalf of Orbitz".

However I will agree with the folk at BTC. This is a just a shot in what will be a very long war. There will be casualties on all sides and the consumers will be affected. Ultimately in my view the essence of the battle is seen as purely an economic problem - there is a consumer benefit from buying direct it is cheaper to one side of the purchase. Consider that there is a tax being paid for partial neutrality in search. That tax is one of the issues here but I can assure you it is not the only one.

Cheers