From our May 7th Blog entry:
"The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll."
From todays ATW News"
"....At the same time, Chairman Margaret Jackson, who backed APA's effort, reportedly announced her intention not to seek reelection at November's annual meeting."
Chaps get real here - the deal was dodgy at best and TPG does not have enough bandwidth to go after all of these deals at the same time when there are so many other "worthy" causes closer to home with greater value.
So the Kangeroo continues to fly solo. As it should in our humble opinion.
Cheers
Timothy
17 May 2007
GDS 3.1 - The model evolves
The news that Southwest is going back into Galileo will probably send shockwaves around the globe. But as the smoke clears we can start to evaluate some of the realities of the situation.
GDS need new content to remain relevant. They face attack from all sides: Falling Yields, bypass, deregulation, consolidation, etc etc. Over the last 5 years according to figures from ASTA, Travel Agents in the USA have lowered their use of GDS from effectively 100% down to just over 80%. This fall is likely to accelerate as the GNEs come online and as the incentive payments dip. At the same time US agents have increasingly started to use Supplier direct websites. That Gordian knot seems to have been broken and the fragmentation trend continues.
At T2 we believe that this is a natural evolution. We believe that the fundamental forces are going to continue to drive diversity in the GDS – definitely we see that there will be less homogenization of the GDS players.
Southwest is interesting at this juncture. You may ask why did they choose Travelport/Galileo now and what was their rationale. We believe that the deal has been in the works for some time. There were some not inconsiderable technical hurdles to overcome but the writing on the wall has been there for quite some time. SHHHHH don’t say anything to anyone but Southwest is beginning to reach Saturation with the current model. For the past 6 months or so – Southwest has been sounding more and more like a network carrier. In reality it is reaching the HVC – Hybrid Value Carrier model we have been predicting for some time. With the true LCC model just about played out for Southwest – there is no where else to go but – well up. Thus they need to expand their distribution and their model. Thus Galileo fits nicely. Why? They are already available in Sabre but Galileo represents a black hole. Thus the opportunity to reach the #2 corporate agency booking system makes perfect sense. Don’t be surprised if the work does not stop here. Look for GNEs to appear soon with that capability. SWABiz has not been a massive success and the efforts behind it seem to have been somewhat half hearted. The final catalyst has probably been two key factors – both competitive in nature. Firstly the US domestic market is already showing signs of weakness. Just last week WN reported having to revisit its projections for 2008. Secondly jetBlue has shown a remarkable uptick in sales as a result of going back into the GDS. WN cannot afford to ignore these facts.
But why not Amadeus? Simple – Amadeus in the USA is a Leisure system- that is well handled by the direct website. However herein lies a message for the other Hybrid Value Carriers. In other markets HVCs are now eyeing the situation of saturation or at least parity with network carriers and looking for ways to be fully competitive. I think the floodgates could open when Easyjet and Air Berlin look back at being in the GDS. But here is some hope for Amadeus North America – since it has none of the “evil” OTAs on its system here – it may just be OK for Southwest. And Worldspan? By the time the system is ready WSP will be owned by Travelport so the issue is somewhat moot – at least commercially.
Cheers
Timothy
GDS need new content to remain relevant. They face attack from all sides: Falling Yields, bypass, deregulation, consolidation, etc etc. Over the last 5 years according to figures from ASTA, Travel Agents in the USA have lowered their use of GDS from effectively 100% down to just over 80%. This fall is likely to accelerate as the GNEs come online and as the incentive payments dip. At the same time US agents have increasingly started to use Supplier direct websites. That Gordian knot seems to have been broken and the fragmentation trend continues.
At T2 we believe that this is a natural evolution. We believe that the fundamental forces are going to continue to drive diversity in the GDS – definitely we see that there will be less homogenization of the GDS players.
Southwest is interesting at this juncture. You may ask why did they choose Travelport/Galileo now and what was their rationale. We believe that the deal has been in the works for some time. There were some not inconsiderable technical hurdles to overcome but the writing on the wall has been there for quite some time. SHHHHH don’t say anything to anyone but Southwest is beginning to reach Saturation with the current model. For the past 6 months or so – Southwest has been sounding more and more like a network carrier. In reality it is reaching the HVC – Hybrid Value Carrier model we have been predicting for some time. With the true LCC model just about played out for Southwest – there is no where else to go but – well up. Thus they need to expand their distribution and their model. Thus Galileo fits nicely. Why? They are already available in Sabre but Galileo represents a black hole. Thus the opportunity to reach the #2 corporate agency booking system makes perfect sense. Don’t be surprised if the work does not stop here. Look for GNEs to appear soon with that capability. SWABiz has not been a massive success and the efforts behind it seem to have been somewhat half hearted. The final catalyst has probably been two key factors – both competitive in nature. Firstly the US domestic market is already showing signs of weakness. Just last week WN reported having to revisit its projections for 2008. Secondly jetBlue has shown a remarkable uptick in sales as a result of going back into the GDS. WN cannot afford to ignore these facts.
But why not Amadeus? Simple – Amadeus in the USA is a Leisure system- that is well handled by the direct website. However herein lies a message for the other Hybrid Value Carriers. In other markets HVCs are now eyeing the situation of saturation or at least parity with network carriers and looking for ways to be fully competitive. I think the floodgates could open when Easyjet and Air Berlin look back at being in the GDS. But here is some hope for Amadeus North America – since it has none of the “evil” OTAs on its system here – it may just be OK for Southwest. And Worldspan? By the time the system is ready WSP will be owned by Travelport so the issue is somewhat moot – at least commercially.
Cheers
Timothy
Airlines - The Ides of September are coming
In the boom to bust cycle of airlines - the tradition has always been buy at the top and sell at the bottom... not exactly what even your local stock broker would tell you was a smart thing. If you are a student of history you know that Airlines are highly cyclical. Yet many forget that in times of boom. But will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around. Why?At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system.
Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.So what are the airlines doing with the cash?Plowing it into service improvementsStill off-loading unprofitable marginal routes to affiliate partners.Buying new planes.Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.
Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system. A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future. With our new partner InTheKno (http://www.inthekno.com/) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector. For airlines – the sky is quite sunny at the moment. But we see storm clouds a-coming.
The Domestic USA market growth is slowing and already we are seeing indicators of a softening of traffic in other markets too. Those high fares are beginning to bite. Once we get past September and we see winter sales coming in at low fares – we will see a pull back and competition for the consumer will again emerge. Round about September 15th.
You have been warned!
Cheers
Timothy
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around. Why?At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system.
Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.So what are the airlines doing with the cash?Plowing it into service improvementsStill off-loading unprofitable marginal routes to affiliate partners.Buying new planes.Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.
Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system. A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future. With our new partner InTheKno (http://www.inthekno.com/) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector. For airlines – the sky is quite sunny at the moment. But we see storm clouds a-coming.
The Domestic USA market growth is slowing and already we are seeing indicators of a softening of traffic in other markets too. Those high fares are beginning to bite. Once we get past September and we see winter sales coming in at low fares – we will see a pull back and competition for the consumer will again emerge. Round about September 15th.
You have been warned!
Cheers
Timothy
12 May 2007
The Passing of the Torch at jetBlue
Entrepeneurs are seldom good at knowing when to kick themselves out or upstairs. The airline industry is littered with egos of people who have never learned when. (Ed Beauvais, Michael Conway amongst others). Also there are many stories of people who stayed on too long in almost any industry.
I encourage the reader to check out Robert J Serling's Aviation History Series which is a pretty good chronicle of greed and chutzpah: http://www.amazon.com/exec/obidos/search-handle-url/102-8178272-0316913?%5Fencoding=UTF8&search-type=ss&index=books&field-author=Robert%20J.%20Serling
So it is with some sadness and hope that we see David Neeleman being kicked upstairs. There is no sub-plot. The airline was caught wrong footed twice this winter. Its customer service strategy was simply inadequate and the operations manual was - well just plain wrong. It has been fixed (we are led to believe) but the damage is done. So the Founder takes the fall and is kicked upstairs.
However there is a footnote to this which I believe is important to consider. jetBlue decided to use the strategy of low cost carrier, (LCC like Southwest) but full product. The differentiation being that unlike Southwest - B6 would treat its customers to a better experience and charge a premium over true low costs carriers. Thus boosting the bottom line with a higher margin than either the top cost (Legacy, Full Service Network Carriers - FNCs) or the bottom player LCCs. This was a good attempt at hybridization or HVC - Hybrid Value Carriers.
There are 2 flaws to the jetBlue strategy in my opinion.
Flaw 1 - JFK. Not the best place to have a hub due to longer lead times and other endemic problems with the airport and staffers.
Flaw 2 - Competition. Assuming that the others will stay stupid for ever is a temporary strategy at best. Delta has emerged with a focus on JFK but for different reasons (International). The net is that Delta's value proposition is better than jetBlue's when the carriers are compared on a more common set of metrics.
Both these two flaws along with a failure to continue development of a "secret sauce" differentiator by jetBlue is inhibiting its growth profile. So the stock market darling of the early part of the decade is now mired in the same sets of issues and obstacles that it sought to throw rocks at. It is for this reason that jetBlue's customer service failure has more impact. Neeleman wanted this to be the big differentiator.
Wisely there is going to be a seasoned hand on the tiller. Let's all hope that the focus returns and that jetBlue can continue to give the others a run for the money. We all love the underdog. But are we willing to pay for the good feeling? Ultimately no. Its as always - price/service mix.
Cheers
Timothy
I encourage the reader to check out Robert J Serling's Aviation History Series which is a pretty good chronicle of greed and chutzpah: http://www.amazon.com/exec/obidos/search-handle-url/102-8178272-0316913?%5Fencoding=UTF8&search-type=ss&index=books&field-author=Robert%20J.%20Serling
So it is with some sadness and hope that we see David Neeleman being kicked upstairs. There is no sub-plot. The airline was caught wrong footed twice this winter. Its customer service strategy was simply inadequate and the operations manual was - well just plain wrong. It has been fixed (we are led to believe) but the damage is done. So the Founder takes the fall and is kicked upstairs.
However there is a footnote to this which I believe is important to consider. jetBlue decided to use the strategy of low cost carrier, (LCC like Southwest) but full product. The differentiation being that unlike Southwest - B6 would treat its customers to a better experience and charge a premium over true low costs carriers. Thus boosting the bottom line with a higher margin than either the top cost (Legacy, Full Service Network Carriers - FNCs) or the bottom player LCCs. This was a good attempt at hybridization or HVC - Hybrid Value Carriers.
There are 2 flaws to the jetBlue strategy in my opinion.
Flaw 1 - JFK. Not the best place to have a hub due to longer lead times and other endemic problems with the airport and staffers.
Flaw 2 - Competition. Assuming that the others will stay stupid for ever is a temporary strategy at best. Delta has emerged with a focus on JFK but for different reasons (International). The net is that Delta's value proposition is better than jetBlue's when the carriers are compared on a more common set of metrics.
Both these two flaws along with a failure to continue development of a "secret sauce" differentiator by jetBlue is inhibiting its growth profile. So the stock market darling of the early part of the decade is now mired in the same sets of issues and obstacles that it sought to throw rocks at. It is for this reason that jetBlue's customer service failure has more impact. Neeleman wanted this to be the big differentiator.
Wisely there is going to be a seasoned hand on the tiller. Let's all hope that the focus returns and that jetBlue can continue to give the others a run for the money. We all love the underdog. But are we willing to pay for the good feeling? Ultimately no. Its as always - price/service mix.
Cheers
Timothy
11 May 2007
Maturing Markets - UK is now - EU is next?
We can safely assume that the internet travel market is now 11 years old. (Give or take a few months). In the last 2 years we have seen a strong maturing of the market in the US to the point where it is no longer about channel shift but more about market share. The go-go years are done and the game is over (t)here.
The UK market is closer to the US than any other. The maturity of that market is now self evident (at least to Expedia and Priceline). Both of whom have pointed to this in their latest quarterly earnings. With the sea change of the VTOs merging from 4 to 2 now assured the market dynamics are pretty much set.
This essentially gives us an interesting view that we can now say that the UK is about 2-3 years behind the USA. And here its time for me to confess a bad prediction I made 10 years ago. I claimed that the UK market would not be behind the US but rather would evolve differently and in some cases at a faster rate. Well i was partially right. The UK market did evolve differently and clearly the driver was not the OTAs but rather the the LCCs. Expedia (my alma mater) failed miserably in attracting the LCCs into its fold. That failure stunted the growth of the Onlien giant and will continue to do so for many years to come.
So what can we see for the future? Is there a model for the other Tier 1 markets? Germany and France are all on slower slope curves, which will result in both of them reaching maturity later. Adopting in Tier 2 and 3 markets are more constrained due to the physical limitations such as government regulation, expensive telecoms, lack of web accessible households etc. Thus the maturity of these markets will take longer and have less profit maximization capability as the global supply chain continues to aggregate.
We will make one prediction. with this maturity occuring, we believe that the battle for the second tier markets (such as Italy and Spain) will heat up with acquisitions being a preferable way to accelerate the market. Expedia recently launched expedia.es to compete with such local industry heavyweights as eDreams. Still they cannot seem to crack the LCC market, although the WTTC/Ryanair deal does give them a toe tip into the sector.
We can all be assured that next year the scouts for Orbitz, Travelocity and Expedia will be out in force. The battle grounds will not just stop at the top and second tier. We already see massive competitive in 2 of the BRIC countries. What about Brazil and South Africa? Its still a wild ride folks. Come along
Cheers
Timothy
The UK market is closer to the US than any other. The maturity of that market is now self evident (at least to Expedia and Priceline). Both of whom have pointed to this in their latest quarterly earnings. With the sea change of the VTOs merging from 4 to 2 now assured the market dynamics are pretty much set.
This essentially gives us an interesting view that we can now say that the UK is about 2-3 years behind the USA. And here its time for me to confess a bad prediction I made 10 years ago. I claimed that the UK market would not be behind the US but rather would evolve differently and in some cases at a faster rate. Well i was partially right. The UK market did evolve differently and clearly the driver was not the OTAs but rather the the LCCs. Expedia (my alma mater) failed miserably in attracting the LCCs into its fold. That failure stunted the growth of the Onlien giant and will continue to do so for many years to come.
So what can we see for the future? Is there a model for the other Tier 1 markets? Germany and France are all on slower slope curves, which will result in both of them reaching maturity later. Adopting in Tier 2 and 3 markets are more constrained due to the physical limitations such as government regulation, expensive telecoms, lack of web accessible households etc. Thus the maturity of these markets will take longer and have less profit maximization capability as the global supply chain continues to aggregate.
We will make one prediction. with this maturity occuring, we believe that the battle for the second tier markets (such as Italy and Spain) will heat up with acquisitions being a preferable way to accelerate the market. Expedia recently launched expedia.es to compete with such local industry heavyweights as eDreams. Still they cannot seem to crack the LCC market, although the WTTC/Ryanair deal does give them a toe tip into the sector.
We can all be assured that next year the scouts for Orbitz, Travelocity and Expedia will be out in force. The battle grounds will not just stop at the top and second tier. We already see massive competitive in 2 of the BRIC countries. What about Brazil and South Africa? Its still a wild ride folks. Come along
Cheers
Timothy
10 May 2007
For some time there has been a return to basics by the legacy carriers. Battered and bruised even before 9/11 the specter of the failed attempts by United Airlines (Allegis) and SAS to build global broad based travel businesses have scared off the majority of airlines. In recent years we have seen significant divestiture by airlines of even some seemingly core airline services for example BA selling SpeedWing and its airline IT business, Qantas the same, Even Lufthansa offloaded its 50% share in Thomas Cook to long time partner KarstadtQuelle. A recent global survey of nearly 200 carriers by Sabre Airline Solutions has found that less than half (48%) ‘believe developing new revenue streams is important to the overall airline revenue strategy’
However the LCCs continue to power ahead with their ancillary revenue streams. The ever ebullient Mr O’Leary from Ryanair has made no secret of his desire to broaden the base of his airline to a point where he will be actually paying people to fly. With significant revenue streams from its partners in the Car Rental business (Hertz) and Hotels (Formerly Travelport/Octopus and now Expedia WTTC) he is clearly showing that this can be done.
Similarly EasyJet has some proof of this trend. Ancillary revenue per seat for easyJet has increased by 18% to £3.81 during the first half of its financial year, with ‘partner revenues' from car hire and insurance, rather than hotels, driving the growth. The largest single source is from Credit Card fees. All airlines should sit up and pay attention to this. With Google Checkout offering zero fees for processing – we still cannot understand why no airline seems to be partnering with Google for this way to drop cash to the bottom line.
T2Impact is a strong believer in opportunities for non-transaction based revenue opportunities as a core part of any travel site’s gross income.
When the overall travel market goes soft we expect to see a rush hunt for new revenue. Better be prepared now rather than later.
We are here to help
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness Tel (
US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
However the LCCs continue to power ahead with their ancillary revenue streams. The ever ebullient Mr O’Leary from Ryanair has made no secret of his desire to broaden the base of his airline to a point where he will be actually paying people to fly. With significant revenue streams from its partners in the Car Rental business (Hertz) and Hotels (Formerly Travelport/Octopus and now Expedia WTTC) he is clearly showing that this can be done.
Similarly EasyJet has some proof of this trend. Ancillary revenue per seat for easyJet has increased by 18% to £3.81 during the first half of its financial year, with ‘partner revenues' from car hire and insurance, rather than hotels, driving the growth. The largest single source is from Credit Card fees. All airlines should sit up and pay attention to this. With Google Checkout offering zero fees for processing – we still cannot understand why no airline seems to be partnering with Google for this way to drop cash to the bottom line.
T2Impact is a strong believer in opportunities for non-transaction based revenue opportunities as a core part of any travel site’s gross income.
When the overall travel market goes soft we expect to see a rush hunt for new revenue. Better be prepared now rather than later.
We are here to help
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness Tel (
US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
08 May 2007
Launch of InTheKno - New partner
Today we are proud to announce the launch of InTheKno - our new partner in Research. Dubbed "Insight and Analysis without the hard work" the new site and material has been in the works for the past 4 months. T2 is partnering with Travelmole in this endeavor.
Check out the new site: www.inthekno.com
Also check out the commentary blog - www.inthekno.blogspot.com Altitude with Attitude.
Cheers
Timothy
Check out the new site: www.inthekno.com
Also check out the commentary blog - www.inthekno.blogspot.com Altitude with Attitude.
Cheers
Timothy
So as an airline you have extra cash - what do you do with it?
In the boom to bust cycle of airlines - the tradition has always been buy at the top and sell at the bottom... not exactly what even your local stock broker would tell you was a smart thing. If you are a student of history you know that Airlines are highly cyclical. Yet many forget that in times of boom.
Will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around.
Why?
At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system. Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. Is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.
What are the airlines doing with the cash?
Plowing it into service improvements.
Still off-loading unprofitable marginal routes to affiliate partners.
Buying new planes.
Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system.
A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future.
With our new partner InTheKno (www.inthekno.com) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector.
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact LtdGlobal Travel eBusiness
Tel (US) +1 425 836 4770Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
Please treat this email and all forms of communication as confidential use only for the direct recipient(s).
CHECK OUT OUR NEW PARTNER - INTHEKNO
www.inthekno.com
Insight and Analysis without the hard work
Will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around.
Why?
At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system. Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. Is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.
What are the airlines doing with the cash?
Plowing it into service improvements.
Still off-loading unprofitable marginal routes to affiliate partners.
Buying new planes.
Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system.
A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future.
With our new partner InTheKno (www.inthekno.com) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector.
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact LtdGlobal Travel eBusiness
Tel (US) +1 425 836 4770Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
Please treat this email and all forms of communication as confidential use only for the direct recipient(s).
CHECK OUT OUR NEW PARTNER - INTHEKNO
www.inthekno.com
Insight and Analysis without the hard work
07 May 2007
Irony of names - Air Canada's new system
According to recent press reports Air Canada's replacement for Res III (By the way Res III was short for Reservac 3) will be dubbed Polaris. Well that got me thinking. Way back when... I worked for a certain reservations systems company in Kansas City, Northwest pulled their system away from its own environment from nearby friendly supplier Unisys Corp (in this case the Old Univac company) and into what was then called PARS. In doing so the old system that died was called - Polaris.
Lets hope that it lasts a little longer for Air Canada. Incidently Northwest retained the name for its Cargo system. Today it is called Polaris. But for how much longer we wonder!
Cheers
Timothy
Lets hope that it lasts a little longer for Air Canada. Incidently Northwest retained the name for its Cargo system. Today it is called Polaris. But for how much longer we wonder!
Cheers
Timothy
US fights to keep Internet Gambling Ban
http://www.reuters.com/article/internetNews/idUSWAT00742720070504?pageNumber=3
The USA has long had a ban on interstate gambling. The US Gambling lobby is pretty darn strong. For example the current junior Senator from Nevada's father was formerly President of Mandalay Bay Resort Group (now part of Kirkorian's MGM). In the day and age when the US is espousing open commerce for all is seems ironic that one of the Web's best businesses is denied a chance to flourish in its largest market.
For a personal reference I dislike gambling - but that is a matter of personal taste. I defend anyone's right to gamble if they choose.
So I hope that the WTO does indeed sanction the USA for this absurd situation. Selective trade scope seems to be rather protectionist. Perhaps Costa Rica and Antigua should declare war on the USA and then we can have a real headline match. Reminds me of a Peter Sellers movie http://www.imdb.com/title/tt0053084/
Cheers
Timothy
Qantas Deal Collapses - What's next?
If it sounds too good to be true then it must be....
Suffice to say - APA (basically McQuarie and TPG) - received a bloody nose from the regulator and the stockholders and said - you cant ride roughshod over the national icon. The problem is that the perception of value and the actual value in the marketplace are not aligned. The shareholders all believe that there was some monkey business with a bleak future prospects put out when the bid was announced. Yet the performance of QF and the various subs has been much better than the regime of Mr Dixon would have us all believe. Plus the chaps at TPG were really struggling to make the deal work. It was marginal at best.
The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll.
The market for airline stocks is going to be good for the summer and in Oz perhaps even longer given the tight lock that QF currently has on the market. But perhaps not for long. The Canberra government cannot fend off SQ's desire for a seat at the US-OZ highly lucrative market. Not to mention the start soon of Virgin/Pacific/Blue Something's 777 service coming in 2008.
With AMR looking to suffer a summer of labor discontent (Pilots want 30%+ raises) those PE (Private Equity) Funds need to find somewhere to put some of that cash. Remember the old adage - how to make a million? Start with a billion and buy and airline.
Good Luck QF - Flying Solo is probably your best option at this point. But do make sure that you focus on the back door... there are many barbarians at the gate and you cannot rest on your laurels. (I love a mixed metaphor or 3)!
Cheers
Timothy
Suffice to say - APA (basically McQuarie and TPG) - received a bloody nose from the regulator and the stockholders and said - you cant ride roughshod over the national icon. The problem is that the perception of value and the actual value in the marketplace are not aligned. The shareholders all believe that there was some monkey business with a bleak future prospects put out when the bid was announced. Yet the performance of QF and the various subs has been much better than the regime of Mr Dixon would have us all believe. Plus the chaps at TPG were really struggling to make the deal work. It was marginal at best.
The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll.
The market for airline stocks is going to be good for the summer and in Oz perhaps even longer given the tight lock that QF currently has on the market. But perhaps not for long. The Canberra government cannot fend off SQ's desire for a seat at the US-OZ highly lucrative market. Not to mention the start soon of Virgin/Pacific/Blue Something's 777 service coming in 2008.
With AMR looking to suffer a summer of labor discontent (Pilots want 30%+ raises) those PE (Private Equity) Funds need to find somewhere to put some of that cash. Remember the old adage - how to make a million? Start with a billion and buy and airline.
Good Luck QF - Flying Solo is probably your best option at this point. But do make sure that you focus on the back door... there are many barbarians at the gate and you cannot rest on your laurels. (I love a mixed metaphor or 3)!
Cheers
Timothy
04 May 2007
Global Free Calling Day - Yes CALL YOUR MOTHER
Those nice people at Skype are giving you the opportunity of a life time. A FREE DAY of global calling. Call anyone you like anywhere in the world as long as you initiate the call from a Skype VOIP address. Actually it does carry a few restrictions (like only from a US IP address) - here is the full T&Cs. http://www.skype.com/campaigns/giftofgab/terms.html?cm_mmc=Acceleration-_-Email-_-NA_GoG_launch_EN_US_070503-_-terms
Go ahead. Get back some of that money you have paid to eBay
Cheers and CALL YOUR MOTHER
Oh yes... just so you know if you are an American - NOT ALL COUNTRIES have mothers day on May 13th!
Timothy
Go ahead. Get back some of that money you have paid to eBay
Cheers and CALL YOUR MOTHER
Oh yes... just so you know if you are an American - NOT ALL COUNTRIES have mothers day on May 13th!
Timothy
Oops - Blackstone hits snag in pursuit of Worldspan
The EU has decided that it has "serious concerns" which will place the Blackstone/Travelport acquisition of Worldspan under the microscope. Frankly this should be a non-event. The total market for reservations services is not that great. So the scope of the review seems somewhat out of whack with the general industry view.
However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.
The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.
So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.
The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.
Stay tuned. This one is going to run for a while.
Cheers
Timothy
PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.
However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.
The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.
So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.
The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.
Stay tuned. This one is going to run for a while.
Cheers
Timothy
PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.
Electronic Ticketing - will the airlines meet the 12/12/07?
Sabre is claiming 90% plus, Abacus is at 60%.......... So will we make Giovanni's deadline? Actually the answer is no but it wont matter.
The players will decide that those who need to be in the fold will be there - those who dont will be left out. It doesnt matter whether you make it or not.
I recall in 1984 United Airlines complained that they were processing 88 different internal ticket types. we have been working with a carrier who is 77% electronic yet still processes 24 different internal ticket types.
But there is still a hidden burden. The difference between Eticketing and truly ticketless is something that is holding airlines back. GET WITH THE PROGRAM. Its about business simplicity. Simplicity saves money.
So lets do the right thing.
Bite the bullet and make it TICKETLESS now. You still have time. And just pick a date and then do the most you can to eliminate everything else. If you dont then you wont make the savings you need.
Cheers
Timothy
The players will decide that those who need to be in the fold will be there - those who dont will be left out. It doesnt matter whether you make it or not.
I recall in 1984 United Airlines complained that they were processing 88 different internal ticket types. we have been working with a carrier who is 77% electronic yet still processes 24 different internal ticket types.
But there is still a hidden burden. The difference between Eticketing and truly ticketless is something that is holding airlines back. GET WITH THE PROGRAM. Its about business simplicity. Simplicity saves money.
So lets do the right thing.
Bite the bullet and make it TICKETLESS now. You still have time. And just pick a date and then do the most you can to eliminate everything else. If you dont then you wont make the savings you need.
Cheers
Timothy
03 May 2007
Infogluttony = Time Famine and Email Bankruptcy
I read with interest the declining readership of Local Newspapers in the USA - its a worldwide trend. Print media is in decline. Conventional Broadcast media is also in steep decline as fragmentation takes hold. While we all multi-task there comes a point when we cannot do everything during a 24 hour day, more distractions arrive - New Blogs, Wikis and yes Youtube.
So what are we to do?
While I have long lobbied for a 32 hour day no one seems to be interested in that idea - Swatch had a good one – break the day into a different unit called Beats but that did as well as Esperanto. I have even tried sleeping less hours. My sleep bank has been in a state of overdraft for many years now.
The problem is there is TOO much information and too much that we need to process. I call this infogluttony and its leading to the two newest trends. Time Famine and Email bankruptcy.
The former is when you simply run out of time. Whether you blame it on too much info, or too much process (driven by PC -Politically Correct- requirements or even regulatory needs such as SOX rules), we are all screwed. Thinking freely and expressing yourself freely is no longer allowed. You have to be careful not to speak ill and anyone seen wearing a "Nuke the gay whales for Jesus" T shirt is likely to be lynched. That all takes time and extra thought.
The latter is when you just start over. A good friend of mine who works at Customer Service at a certain large LCC did this several years ago. She simply changed her email account and closed it down. Several members of the T2 family tired of spam have done the same. Its rather a scary thing. I registered timothyo at many different email accounts - the spammers don’t even need to steal my accounts - they just guess - like Frankb or Billg.
So if ANYONE out there has an answer for this - PLEASE come and get me. I am seriously considering running away from all this. Thank god my Blackberry works just about anywhere now
Cheers
Timothy
So what are we to do?
While I have long lobbied for a 32 hour day no one seems to be interested in that idea - Swatch had a good one – break the day into a different unit called Beats but that did as well as Esperanto. I have even tried sleeping less hours. My sleep bank has been in a state of overdraft for many years now.
The problem is there is TOO much information and too much that we need to process. I call this infogluttony and its leading to the two newest trends. Time Famine and Email bankruptcy.
The former is when you simply run out of time. Whether you blame it on too much info, or too much process (driven by PC -Politically Correct- requirements or even regulatory needs such as SOX rules), we are all screwed. Thinking freely and expressing yourself freely is no longer allowed. You have to be careful not to speak ill and anyone seen wearing a "Nuke the gay whales for Jesus" T shirt is likely to be lynched. That all takes time and extra thought.
The latter is when you just start over. A good friend of mine who works at Customer Service at a certain large LCC did this several years ago. She simply changed her email account and closed it down. Several members of the T2 family tired of spam have done the same. Its rather a scary thing. I registered timothyo at many different email accounts - the spammers don’t even need to steal my accounts - they just guess - like Frankb or Billg.
So if ANYONE out there has an answer for this - PLEASE come and get me. I am seriously considering running away from all this. Thank god my Blackberry works just about anywhere now
Cheers
Timothy
Sabre emulates Worldspan - sets up GSA in Nigeria
Eyeing one of the largest markets in Africa (also one of the riskiest) Sabre has partnered with local Nigerian Travel Agency group Interguide Air Limited, that will see it become available to the nearly 800 Travel Agencies in the country.
Nigeria is a well known center for fraud and questionable ticketing practices. Cash is the usual form of financial instrument but still altered tickets and various techniques have emenated from there. The age of the internet has not dimmed these efforts. How many of us have received offers to bank $8.7 million from so and so's widow?
However with Virgin Nigeria now more than a year old and well established. New Carrier Arik Air bursting onto the scene with a major order from Boeing last week - you have to think the risk is now lessened. Arguably Nigeria is the largest market in sub-Saharan Africa after Kenya and of course South Africa.
Interestingly here, Sabre has taken a leaf out of Worldspan's book and established a GSA in the market rather than risking its own corporate entity. I can just imagine the chaps in the Texas bunker getting this request from London!!!
Best of luck - count your fingers when you do this!
Cheers
Timothy
Nigeria is a well known center for fraud and questionable ticketing practices. Cash is the usual form of financial instrument but still altered tickets and various techniques have emenated from there. The age of the internet has not dimmed these efforts. How many of us have received offers to bank $8.7 million from so and so's widow?
However with Virgin Nigeria now more than a year old and well established. New Carrier Arik Air bursting onto the scene with a major order from Boeing last week - you have to think the risk is now lessened. Arguably Nigeria is the largest market in sub-Saharan Africa after Kenya and of course South Africa.
Interestingly here, Sabre has taken a leaf out of Worldspan's book and established a GSA in the market rather than risking its own corporate entity. I can just imagine the chaps in the Texas bunker getting this request from London!!!
Best of luck - count your fingers when you do this!
Cheers
Timothy
02 May 2007
Pegs and Wizcom - Last Gasp II
Yes folks the old models are dropping like flies. In my humble opinion, here is another one that will soon be biting the dust...
Pegasus - whose CEO was once called a very derogatory name in public by one of his big customers - has JUST managed to scrape through and get enough cash in the till with a recent offering. Not wishing to even hide their intent on cashing out - the current investors made it very clear they wanted the cash for themselves - oh yes and to buy out Wizcom from Blackstone. This they have managed to do.
But life isn’t so rosy. Pegasus revenues have been falling for some time. Its customers and suppliers are defecting and its business is not as relevant as it once was.
I feel very strongly that despite the underlying trend of disintermediation the team at Pegasus made a mistake many years ago when they didnt develop a solution for Wide Area Availability (aka Availability Search). Hoping to capitalize on what was then a monopoly - they refused to address the question. Well now they will pay the piper.
Their relevance is no longer as strong as fragmentation and bypass are the order of the day. Pegs can no longer rely on the GDSs nor their supply side partners.
I would like to put to rest one awful truth out there about the GDS being a higher yield market for Hotels. While this is technically true it comes at a price:
1. The product/content served up is pretty poor.
2. The technology sucks.
3. Travel Agents are in the main lazy and don’t look hard if the product is not available easily via the GDS.
Consequently the premium paid by users for hotels booked via the GDS Travel Agency (TMC type) bookings versus those booked using Pegasus linked to say and OTA such as Expedia has been of the order 20%+ (source TravelClick). But this is an unnatural act. In today's tight market for product (with occupancy levels at historic highs) this is unsustainable. The hoteliers got VERY smart in recent years and manage now to have the upper hand. Pegasus is largely irrelevant and their total share of the market is falling.
As bypass of different types occurs and fragmentation is the order of the day it is not just Pegs Switch business that suffers but the other pieces also. The rep business has seen significant erosion due to new players at cheaper rates and better services/technologies emerge.
Even the HCC business is coming under fire - without the ubiquity of the Switch carrying all Travel intermediary business - the value of the switch based HCC counting falls away. Perot is the beneficiary of this.
So good luck to Mike and John as the struggle to hold on to the business. There are already more holes in the dyke than you have fingers...
Cheers
Timothy
Pegasus - whose CEO was once called a very derogatory name in public by one of his big customers - has JUST managed to scrape through and get enough cash in the till with a recent offering. Not wishing to even hide their intent on cashing out - the current investors made it very clear they wanted the cash for themselves - oh yes and to buy out Wizcom from Blackstone. This they have managed to do.
But life isn’t so rosy. Pegasus revenues have been falling for some time. Its customers and suppliers are defecting and its business is not as relevant as it once was.
I feel very strongly that despite the underlying trend of disintermediation the team at Pegasus made a mistake many years ago when they didnt develop a solution for Wide Area Availability (aka Availability Search). Hoping to capitalize on what was then a monopoly - they refused to address the question. Well now they will pay the piper.
Their relevance is no longer as strong as fragmentation and bypass are the order of the day. Pegs can no longer rely on the GDSs nor their supply side partners.
I would like to put to rest one awful truth out there about the GDS being a higher yield market for Hotels. While this is technically true it comes at a price:
1. The product/content served up is pretty poor.
2. The technology sucks.
3. Travel Agents are in the main lazy and don’t look hard if the product is not available easily via the GDS.
Consequently the premium paid by users for hotels booked via the GDS Travel Agency (TMC type) bookings versus those booked using Pegasus linked to say and OTA such as Expedia has been of the order 20%+ (source TravelClick). But this is an unnatural act. In today's tight market for product (with occupancy levels at historic highs) this is unsustainable. The hoteliers got VERY smart in recent years and manage now to have the upper hand. Pegasus is largely irrelevant and their total share of the market is falling.
As bypass of different types occurs and fragmentation is the order of the day it is not just Pegs Switch business that suffers but the other pieces also. The rep business has seen significant erosion due to new players at cheaper rates and better services/technologies emerge.
Even the HCC business is coming under fire - without the ubiquity of the Switch carrying all Travel intermediary business - the value of the switch based HCC counting falls away. Perot is the beneficiary of this.
So good luck to Mike and John as the struggle to hold on to the business. There are already more holes in the dyke than you have fingers...
Cheers
Timothy
01 May 2007
Bravo Worldspan - finally someone attacks the core issue of Passive Segments
Despite being the lame duck of GDS, Worldspan seems to be going out with a bang not a whimper.
Worldspan is introducing a new service called Consolidator Control. The first real attempt at solving the root cause of "honest" passive segments.
Lets wish them well with it
Cheers
Timothy
Worldspan is introducing a new service called Consolidator Control. The first real attempt at solving the root cause of "honest" passive segments.
Lets wish them well with it
Cheers
Timothy
LCC with a real difference - the All Veggie airline
New airline with the catchy name of MDLR Airlines http://www.mdlrairlines.in/ has a new and definitely different twist offering Vegetarian "Exquisite Cuisnine" to its patrons on a definitely not LCC Avro RJ70.
With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.
Cheers
Timothy
With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.
Cheers
Timothy
24 April 2007
Bravo FareCompare - Airlines Worst Nightmare revealed
I am a huge fan of smart people who can work the system to their advantage. One of the last bastions of the airline old school system has finally been publically breached. FareCompare has actually called the airlines bluff.
http://www.farecompare.com/articles/cheapest-airline-guarantees/same_day_cheapest_airline_ticket_guarantees_hype_or_hope.html
Read the article and start collecting the bonus certificates. It will take a few weeks for the airlines to start reacting. But NOW they also have a new tool to change their fares. It makes reading fare notices from ATPCo even more fun.
Sadly the fix will be that the airlines will "cheat" and push out the effective dates of the fare change so this "freebie" process will only work for a short time. But its still a great day that the consumer is able to compete on fair terms with the airlines historical obfuscation processes.
Again - Bravo to Neil and Rick!
Gentlemen my hat is off to you
Cheers
Timothy
http://www.farecompare.com/articles/cheapest-airline-guarantees/same_day_cheapest_airline_ticket_guarantees_hype_or_hope.html
Read the article and start collecting the bonus certificates. It will take a few weeks for the airlines to start reacting. But NOW they also have a new tool to change their fares. It makes reading fare notices from ATPCo even more fun.
Sadly the fix will be that the airlines will "cheat" and push out the effective dates of the fare change so this "freebie" process will only work for a short time. But its still a great day that the consumer is able to compete on fair terms with the airlines historical obfuscation processes.
Again - Bravo to Neil and Rick!
Gentlemen my hat is off to you
Cheers
Timothy
07 April 2007
Airline Product Unbundling - A comment
This is a view of the unbundling of airline products and services.
The basic laws of economics work pretty simply. The airline business has traditionally been exempt from them due to - well lets just say unwise management decision. However in this current boom cycle - we are now seeing some interesting trends. One of which is the unbundling of services.
Clearly this is not new. However in the more recent past what has happened has been the imposition of fees for services normally provided. Examples of this are Ryanair charging for bags (now followed by both other LLCs and even a few Network Carriers). The model was add a service - then consider adding a fee.
However we are now seeing a trend towards unbundling on a greater scale. IE you pay for everything. Airlines have ALWAYS been afraid of pricing changes. But its not hard to see if the airline is moving - lets say 10 million passengers and the GDS fees are $5 per segment - then that is going to be more than the traditional net profit for that airline. Ditto in many other areas of cost vs revenue..
Examples of product unbundling come from all areas. Air Canada for example has unbundled services with its line of Tango fares. Resulting in the now famous GDS clause to accommodate it. Interestingly the results of such a GDS clause came to light during the recent Expedia vs AA cat fight. Spirit Airlines, not known for following conventional wisdom now offers its best discounts to people who will pay to join a club. Many European airlines charge for food on short haul runs. A recent example crossed my desk from AA. www.traavelperks.com Not sure I want to sign up for that just yet.
Apart from the economic situation - why are the airlines doing this and why now?
I have 3 basic reasons:
1. The core economic - supply vs demand situation. Tight supply gives pricing power to the airlines, something they have not had for a long while
2. Because they can. Emboldened by recent wins against distributer, the airlines now feel they are pretty powerful and they are flexing this power
3. There is no more savings to be had anywhere in the system. We postulated last year that when the GDS fee issue had been "resolved" the airlines would be hard pressed to find any other sources for net yield growth by cutting further costs. So this is the other shoe, revenue growth - IE more fees
We are going to see more examples of this as the airline accountants scour the system looking for more revenue opportunities. This will continue to boost the bottom line of many airlines. However be prepared for the backlash from the consumer. Remember she/he is getting smarter and will not tolerate gouging. Further expect during a run-up to the next US presidential election that the issue of price gouging by the airlines could become a popular target by at least one of the large field of candidates from either side.
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
The basic laws of economics work pretty simply. The airline business has traditionally been exempt from them due to - well lets just say unwise management decision. However in this current boom cycle - we are now seeing some interesting trends. One of which is the unbundling of services.
Clearly this is not new. However in the more recent past what has happened has been the imposition of fees for services normally provided. Examples of this are Ryanair charging for bags (now followed by both other LLCs and even a few Network Carriers). The model was add a service - then consider adding a fee.
However we are now seeing a trend towards unbundling on a greater scale. IE you pay for everything. Airlines have ALWAYS been afraid of pricing changes. But its not hard to see if the airline is moving - lets say 10 million passengers and the GDS fees are $5 per segment - then that is going to be more than the traditional net profit for that airline. Ditto in many other areas of cost vs revenue..
Examples of product unbundling come from all areas. Air Canada for example has unbundled services with its line of Tango fares. Resulting in the now famous GDS clause to accommodate it. Interestingly the results of such a GDS clause came to light during the recent Expedia vs AA cat fight. Spirit Airlines, not known for following conventional wisdom now offers its best discounts to people who will pay to join a club. Many European airlines charge for food on short haul runs. A recent example crossed my desk from AA. www.traavelperks.com Not sure I want to sign up for that just yet.
Apart from the economic situation - why are the airlines doing this and why now?
I have 3 basic reasons:
1. The core economic - supply vs demand situation. Tight supply gives pricing power to the airlines, something they have not had for a long while
2. Because they can. Emboldened by recent wins against distributer, the airlines now feel they are pretty powerful and they are flexing this power
3. There is no more savings to be had anywhere in the system. We postulated last year that when the GDS fee issue had been "resolved" the airlines would be hard pressed to find any other sources for net yield growth by cutting further costs. So this is the other shoe, revenue growth - IE more fees
We are going to see more examples of this as the airline accountants scour the system looking for more revenue opportunities. This will continue to boost the bottom line of many airlines. However be prepared for the backlash from the consumer. Remember she/he is getting smarter and will not tolerate gouging. Further expect during a run-up to the next US presidential election that the issue of price gouging by the airlines could become a popular target by at least one of the large field of candidates from either side.
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
05 April 2007
BA Bags... Stardate 4-1-2007
No this is not the April fool's joke.
BA lost over 1 million bags last year based on 36 million passengers. So lets assume that on average one bag for every 1 people is checked. That means that the airline looses one bag for every 36 that it handles. Either way you cut it that's a pretty poor number. So what was BA's answer to this problem? New baggage procedures including limiting the the number of bags to be checked etc. Oh yes and lets not forget the outsourcing of bags at LHR.
What is our insight into this?
You have a 1 in 36 chance of having your bag not arrive with you on BA. But wait... just dont forget that you are ONLY allowed 1 carry on at/in/through LHR. So that means that now you have a really tough time.
So BA - do you think this is a good number? Or should you perhaps recall some of those baggage handlers you let go and SOLVE the problem. Of course let's not ask the question whether the percentage of bags lost affected the back of the bus passengers or the front more?
Having had my bag either damaged, destroyed, delayed and well mis-routed countless times on BA, I can tell you that in my experience it is better not to fly on BA if you can possibly avoid it. Particularly if you are transiting or leaving from LHR.
And this is no joke. BA fix this PLEASE
BA lost over 1 million bags last year based on 36 million passengers. So lets assume that on average one bag for every 1 people is checked. That means that the airline looses one bag for every 36 that it handles. Either way you cut it that's a pretty poor number. So what was BA's answer to this problem? New baggage procedures including limiting the the number of bags to be checked etc. Oh yes and lets not forget the outsourcing of bags at LHR.
What is our insight into this?
You have a 1 in 36 chance of having your bag not arrive with you on BA. But wait... just dont forget that you are ONLY allowed 1 carry on at/in/through LHR. So that means that now you have a really tough time.
So BA - do you think this is a good number? Or should you perhaps recall some of those baggage handlers you let go and SOLVE the problem. Of course let's not ask the question whether the percentage of bags lost affected the back of the bus passengers or the front more?
Having had my bag either damaged, destroyed, delayed and well mis-routed countless times on BA, I can tell you that in my experience it is better not to fly on BA if you can possibly avoid it. Particularly if you are transiting or leaving from LHR.
And this is no joke. BA fix this PLEASE
Caveat Emptor
OK... this is a real doozy of a story. A cautionary tale for anyone who takes as gospel what you read online.
Most people have a perception that humans can make mistakes but machines cannot. Therefore what ever you see posted by a machine (for example Expedia or Orbitz) engine then it must be accurate.
This was posted on Register.com by a SF based Attorney. I am sure he was pretty fuming by the end. However he realizes that the outcome is really his own fault. I doubt a class action suit will come of it. Just think you too could have made this mistake...
Orbitz TLC campaign leads to online booking bloodbath
Reg hack in serious condition as inscrutable itinerary blows up in face
By Burke Hansen in Dakar → More by this author
Published Wednesday 4th April 2007 16:50 GMT
Like this story? Receive others like it in your inbox Find your perfect job - click here from thousands of tech vacancies
Product review Who knew that the online booking crew recently threw their throwback jerseys on?
In a bizarre series of events that brought back the flying nightmares of yesteryear, the Register's ICANN Lisbon correspondent found himself living out of an airport hotel in Dakar, Senegal, on a flight path only Google Maps could love.
The quickest route from Lisbon to San Francisco at this point most definitively does not pass through Dakar.
After a last-minute non-refundable booking went through online travel service Orbitz's approval routine, which proved to be the only available booking that returned to SFO in time for my annual UIGEA-approved fantasy baseball draft, your hard-pressed author clicked the "I ACCEPT" button and went about his business. Only later did I check the itinerary and realize that Orbitz's booking software had an unsavory return itinerary of Lisbon-Dakar-New York-and-about-fucking-time-San Francisco.
Uh, you mean Dakar...in Africa?
Here's the final timeline, from start to finish.
Hour 0:
9pm, Portugal time. Check in at Transportes Aereos Portugueses (TAP) counter. Joke with lady at counter about checked luggage making it from Portugal to San Fran via Senegal. Priority means priority to make it or priority to get snagged? Asks why I am routed through Senegal to get to New York, with all the major airports in Europe to go through. Not quite sure, I say.
Hour 1.35:
Hour and a half layover in Dakar scheduled. Should be easily makeable in a backwater airport like Leopold Sedar Senghor Aeroport in Dakar, Senegal. Only 20 minutes behind schedule.
Hour 2.00:
File in to what looks like the approach to the plane, only to find that it funnels us into a motorcoach, which then chugs off across the tarmac toward the plane. Stop in front of the plane - feeling pretty good, until I realize they're not actually opening the glass doors for us.
Pressed to the glass like sardines, and forced to observe the unnerving efforts of the flight crew flailing around desperately trying to get the back door of the plane to close. Guy on tarmac driving ladder truck repeatedly bashes the extended stairway into the stubborn door, finally knocking the jam loose.
Now 45 minutes behind, and cutting it close, but at least we're on the go. Quickly pass out after long week.
Hour 3.25:
Shake myself out of strange dream to the whirring of jet engines and the scrape of tires on tarmac. Check the time on my cell - over 1 hour spent waiting on tarmac. Latent anxiety rises to surface.
Hour 7.50:
Rubber hits road in Dakar. Grab carry-on. Final call for flight to NY over PA. Flash copy of itinerary to airport security. Waves me over to mass of flesh in disembarcation area. Transit line mysteriously closed.
As situational urgency sets in, long lost high school French makes comeback. Find helpful security agent, who takes me to the line for boarding. Am informed that flight is closed. Shamelessly beg to grab checked luggage and go. Luggage nowhere to be found. Adios, flight to NY.
Hour 8.00:
Last piece of luggage rolls off baggage claim. Thar she blows.
Hour 8.50:
Warren of offices in depths of Dakar airport. Argue with local TAP rep for hotel room for night. No dice.
It's not our fault, he says. Why should we pay?
Your flight was two hours late. It's your responsibility.
How were we supposed to know you had a connecting flight to New York? Who ever heard of such a thing?
Point, counterpoint. Too tired to argue any longer.
Hour 9.00:
Now in office of South African Airlines, one of four airlines somehow involved with this trip. Am told there is only one flight daily to NY. Am promised slot on next flight. Come back tomorrow.
Hour 9.25:
Slog upstairs to airport hotel. Besieged by late night scumbags offering assistance. Can't they clear these vermin out of the airport?
Hotel closed until 6am, local time. 45 min to go. Wait it out with beer at 24 hr restaurant across from hotel with other stranded travelers. Part of airport marketing plan? Slip 1 euro piece to meth-addled asshole to be left alone at last.
Tomorrow is the Prophet's birthday, they tell me. It's a national holiday.
Hour 10.00:
Check in to hotel. "Concierge" checks out bald eagle-bedecked passport.
So, you are American. Just one night?
Yes, I'm on my way to New York.
So what are you doing here? he laughs.
I don't know.
Enter room. Disgusting. Undershoots even my already abysmal expectations. Hotel Hellhole is almost a palindrome. Crash out.
Hour 23.50:
Back in SAA offices. No way I will miss this one. Promises me I am connected all the way to SF.
Back to 24 hour restaurant to wait it out. Fading quickly. Just enough afro-francs left for a beer. Last beer and testament.
Hour 26.50:
Down to check in. Absolute chaos. Now traveling on expired ticket, which exasperates my African hosts.
Hoping security's real tight on the Prophet's b-day.
Hour 27.00:
Tight enough- not letting me through due to expired ticket. Manage to flag down SAA manager from night before, who smiles and waves me through.
Hour 27.50:
At counter at last.
This ticket was for last night, the lady says.
Yes, my flight from Portugal arrived two hours late. I had to spend the night.
Well, have you paid the penalties?
Penalties?! They told me last night I didn't have to pay any penalties! That's crazy - I already had to pay for a hotel and this wasn't even my fault.
Who told you you didn't have to pay the penalties? Who?
The manager, last night. He was just here...
A tall man?
Yes, where is he...
Don't actually remember anything about penalties, but am starting to figure out how this game works. Huge and growing crowd behind getting restless.
Well if you don't pay the penalties, then I have to pay the penalties. A manager must approve this.
Continue eyeballing stirring crowd. She folds.
Hour 28.00:
Security keeps squinting at me over lapsed ticket. Retell story.
Hour 29.50:
Out on tarmac at last. One more carry-on inspection. Happy for that.
Only xanax can help me now. Now that's a palindrome.
Hour 43.50:
Arrive at JFK. Attempt to check in.
Sorry, but all the flights to San Francisco are booked.
But they told me in Senegal I was booked all the way through to SFO?
Well, they did something wrong. You can fly standby. It's the start of the holiday week.
You've got to understand, I've been travelling for two days. I'll take anything, whatever you've got. Through Denver, Chicago, anywhere.
I explain the situation about TAP and the itinerary. He's Portuguese and we chat about how much I loved Lisbon.
Well, I'll see what I can do. Tap, tap on the magic keyboard.
Well, we have a flight at 1 through Chicago, but it's out of La Guardia?
I'll take whatever you can guarantee me.
Hour 44.00:
Now on bus from JFK to La Guardia for flight to O'Hare. La Guardia, airport number 4 of 6 on return trip alone.
Hour 47.50:
Guy at JFK at least gave me real travel vouchers. Security no longer giving me the look. Chicago, here I come.
Hour 50.50:
O'Hare at last. Layover in Chicago at this point is nothing. I piss on your layover.
Hour 53.25:
Home stretch - O'Hare to SFO. Forgot how ghetto United is.
Hour 57.00:
Hard to believe I'm back. Thank god I've got Limost picking me up. I need a beer.
Grand total: 57 hours, 6 airports, and 8,362 miles.
Now that's what I call TLC. ®
Most people have a perception that humans can make mistakes but machines cannot. Therefore what ever you see posted by a machine (for example Expedia or Orbitz) engine then it must be accurate.
This was posted on Register.com by a SF based Attorney. I am sure he was pretty fuming by the end. However he realizes that the outcome is really his own fault. I doubt a class action suit will come of it. Just think you too could have made this mistake...
Orbitz TLC campaign leads to online booking bloodbath
Reg hack in serious condition as inscrutable itinerary blows up in face
By Burke Hansen in Dakar → More by this author
Published Wednesday 4th April 2007 16:50 GMT
Like this story? Receive others like it in your inbox Find your perfect job - click here from thousands of tech vacancies
Product review Who knew that the online booking crew recently threw their throwback jerseys on?
In a bizarre series of events that brought back the flying nightmares of yesteryear, the Register's ICANN Lisbon correspondent found himself living out of an airport hotel in Dakar, Senegal, on a flight path only Google Maps could love.
The quickest route from Lisbon to San Francisco at this point most definitively does not pass through Dakar.
After a last-minute non-refundable booking went through online travel service Orbitz's approval routine, which proved to be the only available booking that returned to SFO in time for my annual UIGEA-approved fantasy baseball draft, your hard-pressed author clicked the "I ACCEPT" button and went about his business. Only later did I check the itinerary and realize that Orbitz's booking software had an unsavory return itinerary of Lisbon-Dakar-New York-and-about-fucking-time-San Francisco.
Uh, you mean Dakar...in Africa?
Here's the final timeline, from start to finish.
Hour 0:
9pm, Portugal time. Check in at Transportes Aereos Portugueses (TAP) counter. Joke with lady at counter about checked luggage making it from Portugal to San Fran via Senegal. Priority means priority to make it or priority to get snagged? Asks why I am routed through Senegal to get to New York, with all the major airports in Europe to go through. Not quite sure, I say.
Hour 1.35:
Hour and a half layover in Dakar scheduled. Should be easily makeable in a backwater airport like Leopold Sedar Senghor Aeroport in Dakar, Senegal. Only 20 minutes behind schedule.
Hour 2.00:
File in to what looks like the approach to the plane, only to find that it funnels us into a motorcoach, which then chugs off across the tarmac toward the plane. Stop in front of the plane - feeling pretty good, until I realize they're not actually opening the glass doors for us.
Pressed to the glass like sardines, and forced to observe the unnerving efforts of the flight crew flailing around desperately trying to get the back door of the plane to close. Guy on tarmac driving ladder truck repeatedly bashes the extended stairway into the stubborn door, finally knocking the jam loose.
Now 45 minutes behind, and cutting it close, but at least we're on the go. Quickly pass out after long week.
Hour 3.25:
Shake myself out of strange dream to the whirring of jet engines and the scrape of tires on tarmac. Check the time on my cell - over 1 hour spent waiting on tarmac. Latent anxiety rises to surface.
Hour 7.50:
Rubber hits road in Dakar. Grab carry-on. Final call for flight to NY over PA. Flash copy of itinerary to airport security. Waves me over to mass of flesh in disembarcation area. Transit line mysteriously closed.
As situational urgency sets in, long lost high school French makes comeback. Find helpful security agent, who takes me to the line for boarding. Am informed that flight is closed. Shamelessly beg to grab checked luggage and go. Luggage nowhere to be found. Adios, flight to NY.
Hour 8.00:
Last piece of luggage rolls off baggage claim. Thar she blows.
Hour 8.50:
Warren of offices in depths of Dakar airport. Argue with local TAP rep for hotel room for night. No dice.
It's not our fault, he says. Why should we pay?
Your flight was two hours late. It's your responsibility.
How were we supposed to know you had a connecting flight to New York? Who ever heard of such a thing?
Point, counterpoint. Too tired to argue any longer.
Hour 9.00:
Now in office of South African Airlines, one of four airlines somehow involved with this trip. Am told there is only one flight daily to NY. Am promised slot on next flight. Come back tomorrow.
Hour 9.25:
Slog upstairs to airport hotel. Besieged by late night scumbags offering assistance. Can't they clear these vermin out of the airport?
Hotel closed until 6am, local time. 45 min to go. Wait it out with beer at 24 hr restaurant across from hotel with other stranded travelers. Part of airport marketing plan? Slip 1 euro piece to meth-addled asshole to be left alone at last.
Tomorrow is the Prophet's birthday, they tell me. It's a national holiday.
Hour 10.00:
Check in to hotel. "Concierge" checks out bald eagle-bedecked passport.
So, you are American. Just one night?
Yes, I'm on my way to New York.
So what are you doing here? he laughs.
I don't know.
Enter room. Disgusting. Undershoots even my already abysmal expectations. Hotel Hellhole is almost a palindrome. Crash out.
Hour 23.50:
Back in SAA offices. No way I will miss this one. Promises me I am connected all the way to SF.
Back to 24 hour restaurant to wait it out. Fading quickly. Just enough afro-francs left for a beer. Last beer and testament.
Hour 26.50:
Down to check in. Absolute chaos. Now traveling on expired ticket, which exasperates my African hosts.
Hoping security's real tight on the Prophet's b-day.
Hour 27.00:
Tight enough- not letting me through due to expired ticket. Manage to flag down SAA manager from night before, who smiles and waves me through.
Hour 27.50:
At counter at last.
This ticket was for last night, the lady says.
Yes, my flight from Portugal arrived two hours late. I had to spend the night.
Well, have you paid the penalties?
Penalties?! They told me last night I didn't have to pay any penalties! That's crazy - I already had to pay for a hotel and this wasn't even my fault.
Who told you you didn't have to pay the penalties? Who?
The manager, last night. He was just here...
A tall man?
Yes, where is he...
Don't actually remember anything about penalties, but am starting to figure out how this game works. Huge and growing crowd behind getting restless.
Well if you don't pay the penalties, then I have to pay the penalties. A manager must approve this.
Continue eyeballing stirring crowd. She folds.
Hour 28.00:
Security keeps squinting at me over lapsed ticket. Retell story.
Hour 29.50:
Out on tarmac at last. One more carry-on inspection. Happy for that.
Only xanax can help me now. Now that's a palindrome.
Hour 43.50:
Arrive at JFK. Attempt to check in.
Sorry, but all the flights to San Francisco are booked.
But they told me in Senegal I was booked all the way through to SFO?
Well, they did something wrong. You can fly standby. It's the start of the holiday week.
You've got to understand, I've been travelling for two days. I'll take anything, whatever you've got. Through Denver, Chicago, anywhere.
I explain the situation about TAP and the itinerary. He's Portuguese and we chat about how much I loved Lisbon.
Well, I'll see what I can do. Tap, tap on the magic keyboard.
Well, we have a flight at 1 through Chicago, but it's out of La Guardia?
I'll take whatever you can guarantee me.
Hour 44.00:
Now on bus from JFK to La Guardia for flight to O'Hare. La Guardia, airport number 4 of 6 on return trip alone.
Hour 47.50:
Guy at JFK at least gave me real travel vouchers. Security no longer giving me the look. Chicago, here I come.
Hour 50.50:
O'Hare at last. Layover in Chicago at this point is nothing. I piss on your layover.
Hour 53.25:
Home stretch - O'Hare to SFO. Forgot how ghetto United is.
Hour 57.00:
Hard to believe I'm back. Thank god I've got Limost picking me up. I need a beer.
Grand total: 57 hours, 6 airports, and 8,362 miles.
Now that's what I call TLC. ®
03 April 2007
GOL inches towards GDS wide distribution - signs with Worldspan
Being the 3rd of 4th in a two horse race is always a problem. But in Brazil Worldspan does have some reach. As GoL's aspirations rise so does its need for distribution. But not TOO far. Recognizing that it has a growing corporate travel market - we believe that GOL's distribution strategy is not changing rather subtly it will open up the spigot for the higher yielding fares to these "more expensive" channels.
In like a Lion - out like a Lamb - BA signs WSP deal
Well clearly someone caved... and pretty quickly.
Given that most of the WSP management are lame ducks I suspect no one had the energy or inclination for a battle so they basically took what BA offered them and rolled over.
So interestingly this looks a heck of a lot like last year when AA was making nasty noises about Sabre and sidling up to WSP. Look how that changed. Now the ONLY GDS not signed up is Amadeus. I doubt that there is going to be a huge fight there. BA has still many years to run on its Res hosting contract (remember that Altea is in fact -according to some - just a sooped up version of BABS.
Reading the press release... there are the same superlative words like "Preferred" How BA can give all 4 GDS the same status is of course beyond the logic of mere mortals like you or I.
I do wonder what happened to that scrappy old Worldspan of yore?
Soon to be swallowed into the Blackstone debt laden abyss
Given that most of the WSP management are lame ducks I suspect no one had the energy or inclination for a battle so they basically took what BA offered them and rolled over.
So interestingly this looks a heck of a lot like last year when AA was making nasty noises about Sabre and sidling up to WSP. Look how that changed. Now the ONLY GDS not signed up is Amadeus. I doubt that there is going to be a huge fight there. BA has still many years to run on its Res hosting contract (remember that Altea is in fact -according to some - just a sooped up version of BABS.
Reading the press release... there are the same superlative words like "Preferred" How BA can give all 4 GDS the same status is of course beyond the logic of mere mortals like you or I.
I do wonder what happened to that scrappy old Worldspan of yore?
Soon to be swallowed into the Blackstone debt laden abyss
01 April 2007
Heathrow Slot Action - Comment
The recent spate of activity at LHR indicates a further rush to gain access to the arguably most important airport in the world.
Certainly access is some of the most expensive. As noted earlier - this is the most fun in years.
However did Sir Michael Bishop sell the slots too cheap? Is there something else about this deal we don’t know about? The deal sounds pretty darn good. BMED had 73 slots, BMI sold 51 slots. That leaves 22 slots (enough for 3 daily RTs and then the odd RT to a funky destination). You can be damn sure it’s not going to use all of those slots if it can make money out of them elsewhere.
The BMED slots (the only real assets acquired by BMI) and some funky route authority it operated on behalf of BA under Franchise agreement still smacks of something that is missing here. Agreed BMI picked them up for a song right under the nose of BA who was then forced to pay GBP 30 million for something that is not actually supposed to be traded and was possibly theirs to start off with. Perhaps this is part of the new BA which is striving for the sort of domination in its home markets as AF/KLM (in AMS and CDG) and LH (in FRA and MUC) have. Lets consider the following:
BA sold BA connect (the old Brymon and co regional services) to Flybe but in return granted Flybe some pretty good code sharing deals. Since BMED is under contract to BA for Franchise services to Central and Eastern Europe and the Middle East you can be sure that there will be a follow on agreement between BA and BMI for code sharing and co-servicing at LHR. And these routes wont all go away. So where will BMI move the routes to? If there are no slots at LHR and LGW is pretty constrained those services could be combined into multi-hop flights in the region with larger aircraft. For example running a A321 to Damascus and Lebanon on a triangle would save a slot even without any 5th or 6th Freedom rights.
This creates a new order in the UK. With BA once again reaching a dominance unheard of since it acquired BCAL. With only Virgin on the Long Haul as the indiginous challenger BA is starting to look positively imperial again. But it needs to do that to fend off the challenge of the American Carriers.
So lets consider now the whole picture. BMI is no stranger to code-sharing and being everybody’s "Ho". At one time there was a BD morning flight LHR-LBA with no less than 23 code shares on it... ON A DC9!!! BMI continues to be all things to all people (imagine a flight with both Star and BA passengers on it!) BA gets market coverage additional and market carve up. Can anyone say the word monopoly???
But still this is but a mere raindrop compared to the whopping market shares that AFKL and LH have in their home markets.
All in all its starting to look like fun. My long time dream of One Terminal at LHR for each of the Alliances is starting to look very realistic. Too bad LHR will continue to be a 3rd world airport for the next few years even after T5 opens. Darn it but I do so hate changing planes there.
Cheers
Timothy
Certainly access is some of the most expensive. As noted earlier - this is the most fun in years.
However did Sir Michael Bishop sell the slots too cheap? Is there something else about this deal we don’t know about? The deal sounds pretty darn good. BMED had 73 slots, BMI sold 51 slots. That leaves 22 slots (enough for 3 daily RTs and then the odd RT to a funky destination). You can be damn sure it’s not going to use all of those slots if it can make money out of them elsewhere.
The BMED slots (the only real assets acquired by BMI) and some funky route authority it operated on behalf of BA under Franchise agreement still smacks of something that is missing here. Agreed BMI picked them up for a song right under the nose of BA who was then forced to pay GBP 30 million for something that is not actually supposed to be traded and was possibly theirs to start off with. Perhaps this is part of the new BA which is striving for the sort of domination in its home markets as AF/KLM (in AMS and CDG) and LH (in FRA and MUC) have. Lets consider the following:
BA sold BA connect (the old Brymon and co regional services) to Flybe but in return granted Flybe some pretty good code sharing deals. Since BMED is under contract to BA for Franchise services to Central and Eastern Europe and the Middle East you can be sure that there will be a follow on agreement between BA and BMI for code sharing and co-servicing at LHR. And these routes wont all go away. So where will BMI move the routes to? If there are no slots at LHR and LGW is pretty constrained those services could be combined into multi-hop flights in the region with larger aircraft. For example running a A321 to Damascus and Lebanon on a triangle would save a slot even without any 5th or 6th Freedom rights.
This creates a new order in the UK. With BA once again reaching a dominance unheard of since it acquired BCAL. With only Virgin on the Long Haul as the indiginous challenger BA is starting to look positively imperial again. But it needs to do that to fend off the challenge of the American Carriers.
So lets consider now the whole picture. BMI is no stranger to code-sharing and being everybody’s "Ho". At one time there was a BD morning flight LHR-LBA with no less than 23 code shares on it... ON A DC9!!! BMI continues to be all things to all people (imagine a flight with both Star and BA passengers on it!) BA gets market coverage additional and market carve up. Can anyone say the word monopoly???
But still this is but a mere raindrop compared to the whopping market shares that AFKL and LH have in their home markets.
All in all its starting to look like fun. My long time dream of One Terminal at LHR for each of the Alliances is starting to look very realistic. Too bad LHR will continue to be a 3rd world airport for the next few years even after T5 opens. Darn it but I do so hate changing planes there.
Cheers
Timothy
First there was CPC then CPA now PPA
Good article from WebPro News on Google's hush hush beta trial of PPA - Pay Per Action.
Way back when the world was new we used to surmise that the infinite real estate of the web would mean lower marketing and advertising costs. We surmised that everyone would have an equal chance at each sale whether you were a conglomorate or a Mum an Pop shop. Boy were we ever wrong. Clearly that has not happened and we are back to the sharp pyramids of havs vs have nots.
With Google Keyword search and CPC rates continuing to climb to almost obscene levels Google needs something new to drive new forms of ad revenenue. Enter PPA.
I cant help thinking that (and those who read this blog will know I have espoused this view before) - that Google is fast becoming a bigger (and badder) monopoly than Microsoft ever was. Hello - anyone awake at the DoJ??? Elliot Spitzer are you too busy with your politcal ambition. Nellie where are you? However just one caveat. I am a huge fan of what Google has done. So my concern is the level playing field for everyone particularly the small guys with niche products who cannot hope to compete with the big players.
Read on:
Google Whispers More Details About PPA
David A. Utter Staff Writer
The pay per action beta test for Google AdWords recently debuted, and spurred plenty of advertiser interest.
Since last week's announcement that Google would start offering AdWords PPA ads, where the advertiser pays only when a predetermined conversion has taken place, plenty of buzz has swirled around the plan.
A lot of that buzz has focused on a few distinct questions about PPA on AdWords. The Inside AdWords team at Google posted answers to some of the more frequently asked questions they have received about the plan.
International advertisers will have to wait to participate, as Google has opened this limited test only to US-based clients.
Advertisers must have a billing address in the United States, so even if an international business focuses on US customers, that isn't enough to be eligible yet.
PPA ads only show up through being displayed on sites that participate in Google's content network. They won't appear on Google or in its search network.
An advertiser concern of content networks has been the prospect of being displayed on less than desirable partner sites. Since the condition of PPA requires some kind of conversion to take place, typical worries about click fraud with pay per click ads should not be a problem.
On the content network side, AdSense members can sign up for a referrals program. Search marketers managing clients through the AdWords 'My Client Center' product can select individual accounts to participate in the PPA beta.
The fixed rate provision of PPA through the new program probably won't change in the near term. Some advertisers had asked about paying the PPA as a percentage of a sale, but Google is only doing the beta with a fixed price as the cost of conversion.
Way back when the world was new we used to surmise that the infinite real estate of the web would mean lower marketing and advertising costs. We surmised that everyone would have an equal chance at each sale whether you were a conglomorate or a Mum an Pop shop. Boy were we ever wrong. Clearly that has not happened and we are back to the sharp pyramids of havs vs have nots.
With Google Keyword search and CPC rates continuing to climb to almost obscene levels Google needs something new to drive new forms of ad revenenue. Enter PPA.
I cant help thinking that (and those who read this blog will know I have espoused this view before) - that Google is fast becoming a bigger (and badder) monopoly than Microsoft ever was. Hello - anyone awake at the DoJ??? Elliot Spitzer are you too busy with your politcal ambition. Nellie where are you? However just one caveat. I am a huge fan of what Google has done. So my concern is the level playing field for everyone particularly the small guys with niche products who cannot hope to compete with the big players.
Read on:
Google Whispers More Details About PPA
David A. Utter Staff Writer
The pay per action beta test for Google AdWords recently debuted, and spurred plenty of advertiser interest.
Since last week's announcement that Google would start offering AdWords PPA ads, where the advertiser pays only when a predetermined conversion has taken place, plenty of buzz has swirled around the plan.
A lot of that buzz has focused on a few distinct questions about PPA on AdWords. The Inside AdWords team at Google posted answers to some of the more frequently asked questions they have received about the plan.
International advertisers will have to wait to participate, as Google has opened this limited test only to US-based clients.
Advertisers must have a billing address in the United States, so even if an international business focuses on US customers, that isn't enough to be eligible yet.
PPA ads only show up through being displayed on sites that participate in Google's content network. They won't appear on Google or in its search network.
An advertiser concern of content networks has been the prospect of being displayed on less than desirable partner sites. Since the condition of PPA requires some kind of conversion to take place, typical worries about click fraud with pay per click ads should not be a problem.
On the content network side, AdSense members can sign up for a referrals program. Search marketers managing clients through the AdWords 'My Client Center' product can select individual accounts to participate in the PPA beta.
The fixed rate provision of PPA through the new program probably won't change in the near term. Some advertisers had asked about paying the PPA as a percentage of a sale, but Google is only doing the beta with a fixed price as the cost of conversion.
31 March 2007
World Exclusive: SABRE NAME RETIRED, NEW BRAND ANNOUNCED
World Exclusive to the T2IMPACT BLOG – EMBARGOED until April 1st 2007 0001 AM
On assuming control of the Sabre Business, TPG – Texas Pacific Group - has great pleasure in announcing the retirement of the SABRE name in favor of a more modern and appropriate branding. NEW COMPANY NAME FABLE. Formally the new company will be known as FABLE Holdings LLC.
Asked why the sudden change in name after over 20 years – commenting - a spokesperson close to the company said
“ We were really tired of the acronym that comprises SABRE, IE SEMI-AUTOMATED BUSINESS RESEARCH ENVIRONMENT. You can only imagine the jokes have made over the years about our brand.”
“ So we just had to come up with a new brand name. The embarrassment of having <> was pretty galling for a high tech IT based company such as us, but worse to be regarded as a <> when we had been an operational company for so long just didn’t make sense – so we had to find something more appropriate. Besides – it wasn’t even our own brand name – it was originally coined by IBM of all people.”
“ We are really proud of the new name. We paid a sizeable fee to the leading eBusiness Global Travel Consulting firm (we cannot divulge here due to confidentiality) to come up with the name. “
We believe, and the spokesperson has confirm it, that the new name should be FABLE. Again speaking on the condition of anonymity…
“The new name had to be cutting edge and be representative of the company post the buyout. We also wanted to be memorable and long lasting. The new name FABLE we believe does just that. ” So what does FABLE stand for ? or is it just another trendy name from Madison Avenue?
“On the contrary it – like the prior name of SABRE, the new name actually stands for something.
FULLY AUTOMATED BUSINESS LIABILITY COMPANY”. So what does this mean and what is its relevance. Again the Spokesperson
“That’s easy:
FULLY - we don’t want the company to do things in halves do we?
AUTOMATED - lets keep this IT flavor going
BUSINESS - well let’s face it - it is a commercial entity
LIABILITY - OK so this is a tough one but since we have seen how much debt Blackstone has loaded up to Travelport we can only assume that our new owners TPG and Silver Lake wanted to do the same to Sabre - er - I mean FABLE.
ENTERPRISE - lets think BIG here, not just a simple company we want to be a HUGE enterprise with Global ambitions. “
So there you have it... the new company, a new brand and a new identity. We anticipate over time that we will be renaming most of the product subgroups. For example we understand that the consumer brand will be renamed to reflect the growing emphasis on Desert Tourism. It will henceforth be known as CAMELOCITY with the Joe Camel brand brought back to life in a positive setting and a new role model for the next generation of travelers while still resonating with a sizeable portion of Baby Boomers who are ex-smokers.
Further details will be available from the new FABLE website in due course www.Fable.Global
<>
This is officially a spoof, just in case you didn’t know.
On assuming control of the Sabre Business, TPG – Texas Pacific Group - has great pleasure in announcing the retirement of the SABRE name in favor of a more modern and appropriate branding. NEW COMPANY NAME FABLE. Formally the new company will be known as FABLE Holdings LLC.
Asked why the sudden change in name after over 20 years – commenting - a spokesperson close to the company said
“ We were really tired of the acronym that comprises SABRE, IE SEMI-AUTOMATED BUSINESS RESEARCH ENVIRONMENT. You can only imagine the jokes have made over the years about our brand.”
“ So we just had to come up with a new brand name. The embarrassment of having <
“ We are really proud of the new name. We paid a sizeable fee to the leading eBusiness Global Travel Consulting firm (we cannot divulge here due to confidentiality) to come up with the name. “
We believe, and the spokesperson has confirm it, that the new name should be FABLE. Again speaking on the condition of anonymity…
“The new name had to be cutting edge and be representative of the company post the buyout. We also wanted to be memorable and long lasting. The new name FABLE we believe does just that. ” So what does FABLE stand for ? or is it just another trendy name from Madison Avenue?
“On the contrary it – like the prior name of SABRE, the new name actually stands for something.
FULLY AUTOMATED BUSINESS LIABILITY COMPANY”. So what does this mean and what is its relevance. Again the Spokesperson
“That’s easy:
FULLY - we don’t want the company to do things in halves do we?
AUTOMATED - lets keep this IT flavor going
BUSINESS - well let’s face it - it is a commercial entity
LIABILITY - OK so this is a tough one but since we have seen how much debt Blackstone has loaded up to Travelport we can only assume that our new owners TPG and Silver Lake wanted to do the same to Sabre - er - I mean FABLE.
ENTERPRISE - lets think BIG here, not just a simple company we want to be a HUGE enterprise with Global ambitions. “
So there you have it... the new company, a new brand and a new identity. We anticipate over time that we will be renaming most of the product subgroups. For example we understand that the consumer brand will be renamed to reflect the growing emphasis on Desert Tourism. It will henceforth be known as CAMELOCITY with the Joe Camel brand brought back to life in a positive setting and a new role model for the next generation of travelers while still resonating with a sizeable portion of Baby Boomers who are ex-smokers.
Further details will be available from the new FABLE website in due course www.Fable.Global
<
This is officially a spoof, just in case you didn’t know.
30 March 2007
Great Piece on Fare Strategy from Fare Compare
I am a huge fan of the "reverse yield management" tools that we predicted would emerge over time. The leading two are Fare Compare and Farecase.
Here is a great piece from Fare Compare on the insider column.
Cheers
Timothy
Insider Tip of the Week
Traveling 4 months or more in the future?
Be very careful purchasing U.S. domestic airline tickets.
Airlines manage their revenue in 4 month windows, and raise prices for travel outside this departure time window.
They will gladly sell you a mid-tier price outside of that window.
Many people have been told to buy very early, which can be the worst possible time to buy.
The most dramatic examples are prices in Southwest Airlines' markets. Southwest does not sell tickets for departure after a shrinking 4 1/2 month window (currently August 24th). Southwest usually increases the departure time window every few months.
The classic example is shown at the following link:
http://www.farecompare.com/search/month.html?departure=SAN&destination=PVD&cabin=Coach&date=20070801&days=20070824,20070825
Notice how the major airlines raise their lowest prices by $148 (over 60%) on August 25th -- exactly on the last departure date that Southwest sells tickets.
Here is a great piece from Fare Compare on the insider column.
Cheers
Timothy
Insider Tip of the Week
Traveling 4 months or more in the future?
Be very careful purchasing U.S. domestic airline tickets.
Airlines manage their revenue in 4 month windows, and raise prices for travel outside this departure time window.
They will gladly sell you a mid-tier price outside of that window.
Many people have been told to buy very early, which can be the worst possible time to buy.
The most dramatic examples are prices in Southwest Airlines' markets. Southwest does not sell tickets for departure after a shrinking 4 1/2 month window (currently August 24th). Southwest usually increases the departure time window every few months.
The classic example is shown at the following link:
http://www.farecompare.com/search/month.html?departure=SAN&destination=PVD&cabin=Coach&date=20070801&days=20070824,20070825
Notice how the major airlines raise their lowest prices by $148 (over 60%) on August 25th -- exactly on the last departure date that Southwest sells tickets.
Baseball Season's here again - banning transfats
This has very little to do with Travel and Distribution in particular but I could not resist.
Being a somewhat occasional US resident (heck I do more than the required IRS days out of the country to be officially regarded as Stateless!) I really enjoy spending a few relaxing hours at the ballpark. My home team is nothing to write home about and let’s hope that this "rebuilding" year is more productive than the last 2.
They have just banned Transfats at my local stadium. Great. But that got me thinking how much the airlines could do to ban the evil stuff. Suffering (genetically AND from a so-so diet) from high cholesterol I have to say that airlines could do a lot more about banning the stuff. So here is what I want you to do airlines. BAN TRANSFATS and all snacks containing them. Yes that means Southwest will probably need to find a new peanut vendor.
Thanks
Timothy
Being a somewhat occasional US resident (heck I do more than the required IRS days out of the country to be officially regarded as Stateless!) I really enjoy spending a few relaxing hours at the ballpark. My home team is nothing to write home about and let’s hope that this "rebuilding" year is more productive than the last 2.
They have just banned Transfats at my local stadium. Great. But that got me thinking how much the airlines could do to ban the evil stuff. Suffering (genetically AND from a so-so diet) from high cholesterol I have to say that airlines could do a lot more about banning the stuff. So here is what I want you to do airlines. BAN TRANSFATS and all snacks containing them. Yes that means Southwest will probably need to find a new peanut vendor.
Thanks
Timothy
Sabre goes Private control passes to TPG and Silver Lake Partners for $5 Billion
So its official - while only 62% voted for it - they represented over 85% of the stock so yes Sabre is now part of Mr Brondeman's empire. Interesting to think that the company is now in the same stable as ... Ryanair! Not to mention other memorable current and former inhabitants of TPG:
America West (Now the NEW US Airways)
Continental Airlines
Gate Gourmet
Burger King
Soon to be joined by Qantas (well that’s a definite maybe) Iberia (that’s a remote possibility- what the heck is he doing – buying all of OneWorld?) , and Harrah’s Casinos not to mention Matsushita (JVC and Panasonic).
We can only assume that they will load up the company with debt and offload it after cashing out their chips and pocketing a bunch of money. The likelihood is that Travelocity will be spun out separately from Sabre thus allowing all 3 of the major online brands to be floating freely AND creating a unique category in the process. (Analysts do love it when industry segments do this sort of thing). I once lamented that this would bring focus on our little corner of the world and this would disrupt the business of people like us at T2Impact. But on the other hand – well welcome chaps this makes for a great ride.
Cheers
Timothy
29 March 2007
Flying High in a Competitive Industry - Book Review
Cost-effective service excellence at Singapore Airlines.
Loizos Heracleous, Jochen Wirtz Nitin Pangarkar
Published by McGraw Hill 2006
With both a title and subject matter of immense potential this book is a bit of a let down. Sadly it doesn’t even start well. Rather is reads like a management consultant's tome that seeks to justify a business case through an over abundance of fact with little insight. I was in Singapore at the airport changing planes (actually from United to Tiger!) when I spied this book for sale and immediately bought it.
it is clear that the writers had insider access to SQ's people and documents. For this they should have been able to write a real cracker of a book. What makes SQ tick? Why is SQ so good at what it does? Perhaps it sadly personifies the whiter than white world of Singapore Airlines and the city nation itself without any constructive and objective criticism of what is has done wrong and where things have not gone well for SQ. All of us (me included for sure!) can learn from our mistakes. Not illustrating and then examining failures makes the successes seem more routine and perhaps less interesting. Clearly for me it lessens the value of the underlying story that despite the presentation I still find compelling. For example the disastrous partnership with Air New Zealand and the participation by SQ in the demise of Ansett Australia is not even mentioned.
Much of the early data indeed over 25 % of the book is spent on a flawed analysis of the airline industry. Nice useful data but both the facts are somewhat dated and the analysis far too simplistic for meaningful application and background to the rest of the book. You are left feeling unsatisfied.
Still Singapore Airlines is arguably a great airline. Driven by the notion of cost effective service excellence - they have risen to the top of the heap. SQ - you deserve better than this
Cheers
Timothy
Loizos Heracleous, Jochen Wirtz Nitin Pangarkar
Published by McGraw Hill 2006
With both a title and subject matter of immense potential this book is a bit of a let down. Sadly it doesn’t even start well. Rather is reads like a management consultant's tome that seeks to justify a business case through an over abundance of fact with little insight. I was in Singapore at the airport changing planes (actually from United to Tiger!) when I spied this book for sale and immediately bought it.
it is clear that the writers had insider access to SQ's people and documents. For this they should have been able to write a real cracker of a book. What makes SQ tick? Why is SQ so good at what it does? Perhaps it sadly personifies the whiter than white world of Singapore Airlines and the city nation itself without any constructive and objective criticism of what is has done wrong and where things have not gone well for SQ. All of us (me included for sure!) can learn from our mistakes. Not illustrating and then examining failures makes the successes seem more routine and perhaps less interesting. Clearly for me it lessens the value of the underlying story that despite the presentation I still find compelling. For example the disastrous partnership with Air New Zealand and the participation by SQ in the demise of Ansett Australia is not even mentioned.
Much of the early data indeed over 25 % of the book is spent on a flawed analysis of the airline industry. Nice useful data but both the facts are somewhat dated and the analysis far too simplistic for meaningful application and background to the rest of the book. You are left feeling unsatisfied.
Still Singapore Airlines is arguably a great airline. Driven by the notion of cost effective service excellence - they have risen to the top of the heap. SQ - you deserve better than this
Cheers
Timothy
Boeing vs Airbus - Book Review
Subtitled The Inside Story of the Greatest International Competition in Business
John Newhouse - published by Knopf
For those of us who follow the epic battle between Airbus and Boeing this is a great read. It covers a lot of territory most of which is public information. Essentially drawing a lot on his previous book "The Sporty Game" this is a story that is written about pride and fall from both sides.
Newhouse takes the view from the protagonists as individuals - disappointingly he doesn’t dwell much on the one player who has had as much to do with the downfall of Airbus namely Noel Forgeard. The book probably spends way too much time laying the blame for Boeing's fumble on Phil Condit who comes off very badly. Neither does he spend much time on the complex multi-national management structure that has hampered Airbus' decision making for so long. So if there is bias in the book it is in the lauding of Boeing's recovery and the success of the 787 vs. the (now) well documented issues of the A380.
Still for those who are on the periphery of the business this is a solid tale - really about people. For those on the inside there is much that is new. The insights from the perspective of Harry Stonecipher and Jean Pierson is especially appealing. Highly recommended to get a second hand copy or read it at the library or Borders ;-)
Cheers
Timothy
John Newhouse - published by Knopf
For those of us who follow the epic battle between Airbus and Boeing this is a great read. It covers a lot of territory most of which is public information. Essentially drawing a lot on his previous book "The Sporty Game" this is a story that is written about pride and fall from both sides.
Newhouse takes the view from the protagonists as individuals - disappointingly he doesn’t dwell much on the one player who has had as much to do with the downfall of Airbus namely Noel Forgeard. The book probably spends way too much time laying the blame for Boeing's fumble on Phil Condit who comes off very badly. Neither does he spend much time on the complex multi-national management structure that has hampered Airbus' decision making for so long. So if there is bias in the book it is in the lauding of Boeing's recovery and the success of the 787 vs. the (now) well documented issues of the A380.
Still for those who are on the periphery of the business this is a solid tale - really about people. For those on the inside there is much that is new. The insights from the perspective of Harry Stonecipher and Jean Pierson is especially appealing. Highly recommended to get a second hand copy or read it at the library or Borders ;-)
Cheers
Timothy
28 March 2007
All that glitters... the sad market for Canada
Canadian Flyers - listen up... you WILL be paying more for your tickets.
The notoriously fickle Canadian market claimed another victim. Harmony Airlines will end all scheduled traffic on April 9th. While not a bankruptcy like CanJet or some of the other players in recent years - you can be assured that the prices in Canada will edge higher in the coming months. Sadly for border passengers on both the north and south sides - there is no real relief from hopping over the border to a nearby airport either. The restrictions at border crossings such as the Peace Arch in Blaine Washington mean that it is no easy deal to use a nearby airport.
Surely the duopoly enjoyed by WestJet and Air Canada should encourage the opportunity for another airline to make it - at least in niches. Sadly not so.
Even on the competitive transatlantic market we see little local competition.
For the Summer 2007 both Zoom Airlines and Globespan offer prices significantly below that of behemoth Air Canada or Charter favorite Air Transat. In our brief search we found prices 40-50% below for comparable routings YVR-LON/AMS/MAN/CDG.
Well - you could emigrate to another duopoly market like Australia. At least the cents per mile are a little cheaper. And of course its a tad warmer
Cheers
Timothy
The notoriously fickle Canadian market claimed another victim. Harmony Airlines will end all scheduled traffic on April 9th. While not a bankruptcy like CanJet or some of the other players in recent years - you can be assured that the prices in Canada will edge higher in the coming months. Sadly for border passengers on both the north and south sides - there is no real relief from hopping over the border to a nearby airport either. The restrictions at border crossings such as the Peace Arch in Blaine Washington mean that it is no easy deal to use a nearby airport.
Surely the duopoly enjoyed by WestJet and Air Canada should encourage the opportunity for another airline to make it - at least in niches. Sadly not so.
Even on the competitive transatlantic market we see little local competition.
For the Summer 2007 both Zoom Airlines and Globespan offer prices significantly below that of behemoth Air Canada or Charter favorite Air Transat. In our brief search we found prices 40-50% below for comparable routings YVR-LON/AMS/MAN/CDG.
Well - you could emigrate to another duopoly market like Australia. At least the cents per mile are a little cheaper. And of course its a tad warmer
Cheers
Timothy
Troogle-ettes - arriving at a mobile near you?
More evidence that Troogle may be a myth. Here is a new partnership established with FlightStats: Just text 466453 for flight status. Enter code and flight number and itsends you back the status for any US departing flight.
At the same time on Google Base search box users can enter an airline name and flight number and check the status via links to Travelocity, Expedia or Fboweb.com.
But never say never
Cheers
Timothy
At the same time on Google Base search box users can enter an airline name and flight number and check the status via links to Travelocity, Expedia or Fboweb.com.
But never say never
Cheers
Timothy
27 March 2007
Ah the sweet smell of Slots in the morning
Indulge me a little with speculation. I am sure that someone is REALLY kicking themselves at BA right now that they didnt pick up BMED when they had the chance. BMI paid GBP30 million for BMED. Lets assume that this includes assets and leases etc etc. But what of the slots?
Welcome to the world's most expensive 2 minute experience. A slot at London's Heathrow Airport.
Currently at LHR BMED has 73 listed slots a week. (Source BMED website). The current valuation for slots at LHR ranges from GBP 10 million per slot (paid by Qantas for 2 slots in 2004) and GBP 5 million at the low end. So lets just say its in the middle then the value of BMED for slots alone at just under GBP 80 Million. Can you hear the weeping wailing and gnashing of teeth from Waterside. But this was before the US - EU Open Skies agreement. So added to this that there are going to be some very interested parties in acquiring at least some of those slots and you can see that the actual value could - well - DOUBLE. This puts BMI itself in a very commanding position as the #2 slot holder at LHR. And do we expect that HM Government will step in and regulate this process? probably not - although BAA remember is controlled by the Spanish and we all know what the Brits think about Spaniards invading our shores!
So the have not legacy airlines - from the USA - DL, NW, CO (all Skyteam members) and US (Star Alliance) are going to be anxious to fill the holes in their networks at a premium price. DL paid $21 million for the JFK-LGW route authority in 2006. So you know DL will pay a pretty penny. CO already filed for the route. DL would like to buy at least 4 slots initially - (2 for JFK-LHR and 2 for ATL-LHR) Over time they would like to buy at least 4 more - additional slots for JFK and ATL plus a slot each at CVG and SLC. Even horse trading with its Skyteam partners AF and AZ wont solve that problem.
Well folks roll up for the show - this is going to be one of the most expensive shopping sales in history. Lets sit back and enjoy it.
Cheers
Timothy
Welcome to the world's most expensive 2 minute experience. A slot at London's Heathrow Airport.
Currently at LHR BMED has 73 listed slots a week. (Source BMED website). The current valuation for slots at LHR ranges from GBP 10 million per slot (paid by Qantas for 2 slots in 2004) and GBP 5 million at the low end. So lets just say its in the middle then the value of BMED for slots alone at just under GBP 80 Million. Can you hear the weeping wailing and gnashing of teeth from Waterside. But this was before the US - EU Open Skies agreement. So added to this that there are going to be some very interested parties in acquiring at least some of those slots and you can see that the actual value could - well - DOUBLE. This puts BMI itself in a very commanding position as the #2 slot holder at LHR. And do we expect that HM Government will step in and regulate this process? probably not - although BAA remember is controlled by the Spanish and we all know what the Brits think about Spaniards invading our shores!
So the have not legacy airlines - from the USA - DL, NW, CO (all Skyteam members) and US (Star Alliance) are going to be anxious to fill the holes in their networks at a premium price. DL paid $21 million for the JFK-LGW route authority in 2006. So you know DL will pay a pretty penny. CO already filed for the route. DL would like to buy at least 4 slots initially - (2 for JFK-LHR and 2 for ATL-LHR) Over time they would like to buy at least 4 more - additional slots for JFK and ATL plus a slot each at CVG and SLC. Even horse trading with its Skyteam partners AF and AZ wont solve that problem.
Well folks roll up for the show - this is going to be one of the most expensive shopping sales in history. Lets sit back and enjoy it.
Cheers
Timothy
Travelocity India
Tsk Tsk - Sabre heads need to take a lesson in geography. Bombay is not the name of the city - Mumbai is. Or at least be consistent with your errors.
In the new Travelocity India website www.travelocity.co.in when you do a search for a city using the rather convoluted search function (just like that awful global weather search on CNN.com) you will find there is no city called Mumbai. Although, there is a city called Bombay. However the display of hotels comes back with the correct name.
So Travelocity - which is it - Bombay city or Mumbai?
While we are on the subject of the new website - does the use of the name "Travelocity" spell the end of Zuji? Zuji which is now controlled by Sabre has never been a huge success. In fact its performance has and is rather dismal. Traffic at the other websites for travel in many Asian markets, particularly the branded supplier sites, report much better returns.
Get with the program Sabre. Wasting the value of a global brand by having a poor cousin in Asia makes no sense at all. Given the rather embarassing failure of the Japanese website Tabini - carefully hushed up mind you - its time to get the house in order. Perhaps those nice people at TPG will put some sense into the Sabre management. Or at least they can book some considerable savings from supporting a single brand.
Heck if AT&T can flip flop its brand presence in wireless AT&T Wireless --> Cingular (or is that Xingular) --> AT&T Wireless again in the space of 3 years, Travelocity can put Zuji out to pasture now.
Cheers
Timothy
In the new Travelocity India website www.travelocity.co.in when you do a search for a city using the rather convoluted search function (just like that awful global weather search on CNN.com) you will find there is no city called Mumbai. Although, there is a city called Bombay. However the display of hotels comes back with the correct name.
So Travelocity - which is it - Bombay city or Mumbai?
While we are on the subject of the new website - does the use of the name "Travelocity" spell the end of Zuji? Zuji which is now controlled by Sabre has never been a huge success. In fact its performance has and is rather dismal. Traffic at the other websites for travel in many Asian markets, particularly the branded supplier sites, report much better returns.
Get with the program Sabre. Wasting the value of a global brand by having a poor cousin in Asia makes no sense at all. Given the rather embarassing failure of the Japanese website Tabini - carefully hushed up mind you - its time to get the house in order. Perhaps those nice people at TPG will put some sense into the Sabre management. Or at least they can book some considerable savings from supporting a single brand.
Heck if AT&T can flip flop its brand presence in wireless AT&T Wireless --> Cingular (or is that Xingular) --> AT&T Wireless again in the space of 3 years, Travelocity can put Zuji out to pasture now.
Cheers
Timothy
22 March 2007
New Ryanair deal with Expedia
A bloody nose for Travelport/Gullivers/Octupus Travel
A good deal probably for Expedia and another GREAT deal for Ryanair
For the past 2 weeks the website "Ryanairhotels.com" has been displaying random corporate information. Today its very different...
Yes folks Octopus is out and Expedia WWTE is in. I would definitely say its a coup.
Now can the Bellevue boys deliver? That is to be seen
Cheers
Timothy
A good deal probably for Expedia and another GREAT deal for Ryanair
For the past 2 weeks the website "Ryanairhotels.com" has been displaying random corporate information. Today its very different...
Yes folks Octopus is out and Expedia WWTE is in. I would definitely say its a coup.
Now can the Bellevue boys deliver? That is to be seen
Cheers
Timothy
Troogle... 2nd Opinion
Troogle... 2nd Opinion
I want to reiterate that I do not believe that Troogle is real – in the near term. However lets just continue the speculation of “How” they could do it.
For sometime now the battle in conventional space for improving the seller and the buyer experience has been – well frankly definitely a 1.0 product. However recently as saturation and maturation of the market as progressed – we see new capabilities emerge. I am a huge fan of the Google Checkout product/service. Google has now added better integration on the conventional retail side so that Google Base, Comparison shopping tools and overall integration makes the search function more valuable and the experience better for the consumer. Foogle in its current implementation is clearly demonstrating this in certain product categories as it continues to battle head to head with eBay and Amazon for the hearts and minds of the shoppers.
Clearly it is not a leap to move from there to “Troogle” or Froogle for Travel.
So I would not be jumping too quickly to follow the current hysteria around Troogle, but clearly the capabilities are there.
On a related note, as an ex-Microsoftie (yes the electrodes are now almost all out) you have to wonder about Google’s “integration”. If you think about it. Which is more of a monopoly; Microsoft and a bundled browser or Google Base search and an integrated financial fulfillment system. Now is the time to consider this impact. Can anyone say DoJ Investigation???
Cheers
Timothy
I want to reiterate that I do not believe that Troogle is real – in the near term. However lets just continue the speculation of “How” they could do it.
For sometime now the battle in conventional space for improving the seller and the buyer experience has been – well frankly definitely a 1.0 product. However recently as saturation and maturation of the market as progressed – we see new capabilities emerge. I am a huge fan of the Google Checkout product/service. Google has now added better integration on the conventional retail side so that Google Base, Comparison shopping tools and overall integration makes the search function more valuable and the experience better for the consumer. Foogle in its current implementation is clearly demonstrating this in certain product categories as it continues to battle head to head with eBay and Amazon for the hearts and minds of the shoppers.
Clearly it is not a leap to move from there to “Troogle” or Froogle for Travel.
So I would not be jumping too quickly to follow the current hysteria around Troogle, but clearly the capabilities are there.
On a related note, as an ex-Microsoftie (yes the electrodes are now almost all out) you have to wonder about Google’s “integration”. If you think about it. Which is more of a monopoly; Microsoft and a bundled browser or Google Base search and an integrated financial fulfillment system. Now is the time to consider this impact. Can anyone say DoJ Investigation???
Cheers
Timothy
21 March 2007
Troogle- will Google be stupid and arrogant?
There are all these nasty vicious rumours floating around that Google is getting into the travel business.
PEOPLE GET REAL… GOOGLE IS ALREADY THERE!!!
As good Google watchers know the formula is pretty simple. Offer consumer tools for free in the category then subsume the supply chain in that category. IE Troogle would be on point for Google. BUT consider this…
I have no current insider knowledge on the subject . However I do consider Google to have been pretty smart in Travel so far. They make BOATLOADS of money. An insider told me about a year ago how much and it is mind boggling. Profit margins that are unheard of and gross numbers which are simply staggering. In fact I nominated Jane Butler (head of Google Travel) as Industry person of the year. She certainly wields a hefty amount of influence.
Google is making fine amounts of money already and really doesn’t need to do this at least not yet.
So speculation time… what if they did create a Travel Search tool? Frankly we all know that Travel Product/Content/Technology all share one common attribute – they are very messy and defy simplification. This creates a challenge for Google should it want to. More importantly going into business against your customers will galvanize the entire industry to consider ways other than Google’s tool. We are on a collision course with a trend. Just taking the escalating price of key words (aka scarce internet real estate) this has already priced itself out of the reach of the common players and even the big spenders have a hard time with it. The consumer is also getting jaded with the practice of paid search. I see studies that show the effectiveness of paid keywords is diminishing.
Conclusion. I don’t think they are going to do it… not just yet. The technology is not there and the cost of delivery would be high to do it properly including the need for PEOPLE!!!! But should they do it… I would quietly dump any involvement in Meta Searches and the OTAs. Supply chain owners however would become very valuable. I just dont think Google is that stupid to do it now.
Cheers
Timothy
PEOPLE GET REAL… GOOGLE IS ALREADY THERE!!!
As good Google watchers know the formula is pretty simple. Offer consumer tools for free in the category then subsume the supply chain in that category. IE Troogle would be on point for Google. BUT consider this…
I have no current insider knowledge on the subject . However I do consider Google to have been pretty smart in Travel so far. They make BOATLOADS of money. An insider told me about a year ago how much and it is mind boggling. Profit margins that are unheard of and gross numbers which are simply staggering. In fact I nominated Jane Butler (head of Google Travel) as Industry person of the year. She certainly wields a hefty amount of influence.
Google is making fine amounts of money already and really doesn’t need to do this at least not yet.
So speculation time… what if they did create a Travel Search tool? Frankly we all know that Travel Product/Content/Technology all share one common attribute – they are very messy and defy simplification. This creates a challenge for Google should it want to. More importantly going into business against your customers will galvanize the entire industry to consider ways other than Google’s tool. We are on a collision course with a trend. Just taking the escalating price of key words (aka scarce internet real estate) this has already priced itself out of the reach of the common players and even the big spenders have a hard time with it. The consumer is also getting jaded with the practice of paid search. I see studies that show the effectiveness of paid keywords is diminishing.
Conclusion. I don’t think they are going to do it… not just yet. The technology is not there and the cost of delivery would be high to do it properly including the need for PEOPLE!!!! But should they do it… I would quietly dump any involvement in Meta Searches and the OTAs. Supply chain owners however would become very valuable. I just dont think Google is that stupid to do it now.
Cheers
Timothy
Another BA post... this time a nice one - BA's new Club Class Seat
Well Done BA – a much better product. You are now officially… still not quite there... but it’s a very good effort. This impression is based on a window 747 upper deck seat DXB-LHR BA 106 19 March.
What’s new and what’s good?
The seat itself is much better. Same width(who said it was wider?) it looks like the extra padding really does make it feel better. No more boarding school back when you reach your destination. The controls are better and simpler. The mechanism for reclining seems also to be a lot smoother and more robust. I suspect that this one will last longer too. The new head firmer thingie seems to be pretty useless. The armrests rise and fall well and are pretty good design. I am not sure how robust they are. Perhaps the nice people from IKEA should send their test engineers on the job.
The access is much better but still uses the head to toe rather than the herringbone pattern offered by other airlines. And while it’s a bit better for ingress egress it’s still a tussle.
The bins are still there on the upper deck (thank god BA didn’t remove them). Although I still have to wonder what the zipper bag lining every now and then is for.
The electric powered divider is pretty darn good. Gone is that crappy fan affair.
110 Volt power US and EU – very good and in a reasonable place as well.
AND THE STUPID GLASS tablette is gone – YEAH!!!!
What’s not so good….
A much better footrest. But WHY oh WHY does it have to be not a seat? Other airlines have figured this out. So now we have an even bigger boat anchor than the other one. On my particular seat the mechanism was not working fully and took 3 crew members (oh yes then my superior approach!!!) to resolve it. I had accidently taken the wrong seat. The guy who I usurped got really mad and wanted his seat back when he couldn’t figure it out. We nearly had an international incident. I believe this is going to cause problems later and not just because the crew was unfamiliar with it.
I actually like the LH and QF seat massagers. Well we cant have everything.
IFE system – much better. VOD works a heck of a lot better but the UI/UE engineering is still somewhat quirky and stupid. For example you cannot navigate backwards through the list. You have to go back to the beginning each time you cancel the selected choice. Noise cancelling phones are good. Still it’s not quite state of the art. Cathay’s new system (shhhhh) is way better. QF and SQ’s systems also much better. I believe a software upgrade will be in order before the roll out goes much further. They didn’t change the design of the control keypad. I am surprised at this. Simple changes would have been smart. The light switch didn’t do anything on mine. Why do they persist with a 2 prong headset jack is one of life’s mysteries.
Subtle lights are a very good implementation. I am quite impressed with that part. BUT I would like to have one big light. This is going to annoy people who like to work during the night in their seats.
The new table – great design poor execution. Like almost every other folding table it just won’t go 180 degrees. This is also an area where BA’s engineers and the seat designer should spend some time.
The hard sidewinders protecting your head could do with padding. It’s just not very nice in the full upright position.
Overall impression.
A simple and good design but not category leading. SQ and EK’s new J class seats are easily better in almost every category. (just make sure you don’t fly EK’s old and stupid Z configured seat still extant on the A340-500s. The new lie flat on the 777s is way better. (Worth going via Hamburg rather than the nonstops at this point). VS of course is still the all time champ if you count it as a J seat rather than F/P. The seat and facilities put BA behind the leaders and I suspect will continue not to be the best across the board. In the current generation BA is ahead of the European carriers (like LH and AF) but behind the class leaders – SQ, EK and VS – well ahead of the current Americans. It will be interesting to see how it stacks up against the New DL seat.
I rate this a B+
What’s new and what’s good?
The seat itself is much better. Same width(who said it was wider?) it looks like the extra padding really does make it feel better. No more boarding school back when you reach your destination. The controls are better and simpler. The mechanism for reclining seems also to be a lot smoother and more robust. I suspect that this one will last longer too. The new head firmer thingie seems to be pretty useless. The armrests rise and fall well and are pretty good design. I am not sure how robust they are. Perhaps the nice people from IKEA should send their test engineers on the job.
The access is much better but still uses the head to toe rather than the herringbone pattern offered by other airlines. And while it’s a bit better for ingress egress it’s still a tussle.
The bins are still there on the upper deck (thank god BA didn’t remove them). Although I still have to wonder what the zipper bag lining every now and then is for.
The electric powered divider is pretty darn good. Gone is that crappy fan affair.
110 Volt power US and EU – very good and in a reasonable place as well.
AND THE STUPID GLASS tablette is gone – YEAH!!!!
What’s not so good….
A much better footrest. But WHY oh WHY does it have to be not a seat? Other airlines have figured this out. So now we have an even bigger boat anchor than the other one. On my particular seat the mechanism was not working fully and took 3 crew members (oh yes then my superior approach!!!) to resolve it. I had accidently taken the wrong seat. The guy who I usurped got really mad and wanted his seat back when he couldn’t figure it out. We nearly had an international incident. I believe this is going to cause problems later and not just because the crew was unfamiliar with it.
I actually like the LH and QF seat massagers. Well we cant have everything.
IFE system – much better. VOD works a heck of a lot better but the UI/UE engineering is still somewhat quirky and stupid. For example you cannot navigate backwards through the list. You have to go back to the beginning each time you cancel the selected choice. Noise cancelling phones are good. Still it’s not quite state of the art. Cathay’s new system (shhhhh) is way better. QF and SQ’s systems also much better. I believe a software upgrade will be in order before the roll out goes much further. They didn’t change the design of the control keypad. I am surprised at this. Simple changes would have been smart. The light switch didn’t do anything on mine. Why do they persist with a 2 prong headset jack is one of life’s mysteries.
Subtle lights are a very good implementation. I am quite impressed with that part. BUT I would like to have one big light. This is going to annoy people who like to work during the night in their seats.
The new table – great design poor execution. Like almost every other folding table it just won’t go 180 degrees. This is also an area where BA’s engineers and the seat designer should spend some time.
The hard sidewinders protecting your head could do with padding. It’s just not very nice in the full upright position.
Overall impression.
A simple and good design but not category leading. SQ and EK’s new J class seats are easily better in almost every category. (just make sure you don’t fly EK’s old and stupid Z configured seat still extant on the A340-500s. The new lie flat on the 777s is way better. (Worth going via Hamburg rather than the nonstops at this point). VS of course is still the all time champ if you count it as a J seat rather than F/P. The seat and facilities put BA behind the leaders and I suspect will continue not to be the best across the board. In the current generation BA is ahead of the European carriers (like LH and AF) but behind the class leaders – SQ, EK and VS – well ahead of the current Americans. It will be interesting to see how it stacks up against the New DL seat.
I rate this a B+
I do hope BA's plan B is not this one... or how to blame your customer
Read on if you are a Frequent Flyer and feel like some times your airline doesn’t like to support you.
Recent press reports are hinting that if BA looses its campaign to derail the new EU Open Skies agreement then it has a nifty Plan B up its sleeve. Well this is something you might want to think about as regards BA's legendary customer service or lack thereof.
I am a BA Sliver – down from Gold (you might wonder why I even maintain any status). I fly a lot and often choose BA for schedule reasons and my family is based in the UK. Like many business folk – I have to quickly change my schedule. Paying full fare is the benefit of doing this.
Well BA now you have me… and several of my fellow travelers on the flight BA 951 March 21, 2007 MUC-LHR. There were 12 passengers in the A319 Club class section. Hardly a full load for a capacity of 24. However of the 12 passengers – 5 of us got the same speech from the flight attendant and presumably at check in when I got mine. “Due to YOUR late reservation – you are likely to be denied a meal.” OK 2 hours prior to departure maybe but not the day before… As it turns out 3 of the 5 had made changes to their reservations 24 hours prior to departure. So BA’s official definition of a “Late” reservation is now 24 hours. You might want to think then that BA doesn’t want high revenue full fare last minute flyers. I certainly do.
In my experience with BA there are a number of fundamental areas that bug me. These range from deliberate lying to bad technology to forcing its passengers through many unnecessary hoops. The awful bag situation which is nothing but laughable. But this situation of blaming your customer for your own mistake must be one of the best/worst i have ever encountered.
My flight is part of a round the world ticket I purchase on BA adding up even more to the overall revenue I have generated to BA which now much total more than high 6 figures.
BA will get a complaint letter from me. Clearly I am a second class citizen – well at least I get to share that with nearly 50% of my fellow passengers who I am sure all paid a premium price for their ticket.
So BA if this is your plan B to entice consumers not to abandon the airline when Heathrow is forced to open up under Open Skies… perhaps then I will have to chose another airline. And yes… Heathrow is the airport that best exemplifies a third world country. DE STERN was right. The UK and its institutions do adopt the attributes of a 3rd world country, but my experiences at LHR are subject for another day.
Cheers
Timothy
17 March 2007
Contribute to Global Warming - Dress up!
OK - i am really advocating the reverse. DON'T wear suits and be more casual and you will reduce global warming.
Its time to think of a lot more ways to get creative about how we can all reduce our carbon footprint. Here are some suggestions:
1. Park your suits. The process of dry cleaning adds significantly to warming. Chemicals are bad used in this process not to mention the heat.
2. Move to low wattage bulbs across your house. AND remove one light permenantly.
3. Car pool at least once a month with someone different. If you already do this find another partner to car pool with, if you dont find someone. In the USA for example you can sign up with RideShare organizations.
4. Turn down your thermostat one degree.
5. Run on your battery more frequently when using a laptop
6. Find a creative way to not use energy other than human (eg WALK!)
Cheers
Timothy
Its time to think of a lot more ways to get creative about how we can all reduce our carbon footprint. Here are some suggestions:
1. Park your suits. The process of dry cleaning adds significantly to warming. Chemicals are bad used in this process not to mention the heat.
2. Move to low wattage bulbs across your house. AND remove one light permenantly.
3. Car pool at least once a month with someone different. If you already do this find another partner to car pool with, if you dont find someone. In the USA for example you can sign up with RideShare organizations.
4. Turn down your thermostat one degree.
5. Run on your battery more frequently when using a laptop
6. Find a creative way to not use energy other than human (eg WALK!)
Cheers
Timothy
12 March 2007
New Credit Card Scam - Thank You Chase
Those of you who travel a lot... me included should now be checking your US credit card statements BIG TIME. Chase Morgan Bank has slipped in a new fee for International Travel. Thus every charge you make on your credit card outside North America is subject to new set of fees for using the card. Check it out... it can be as much as a Dollar EXTRA per transaction.
Bloody crooks.............
Bloody crooks.............
Sabre Pacific finally gets it
Well it only took them 10 years but Sabre Pacific's MD finally realized that Travel Agents are dead.
http://www.travelweekly.com.au/dirplus/images/travelweekly/TravelTodayPDF/13_03_2007.pdf
well done - now that you joined the 1990s can you perhaps give your customers some appropriate tools?
But seriously I remain convinced that the Agency Community and the attendant suppliers still have trouble recognizing the new world order.
Good Luck Sabre
Cheers
Timothy
http://www.travelweekly.com.au/dirplus/images/travelweekly/TravelTodayPDF/13_03_2007.pdf
well done - now that you joined the 1990s can you perhaps give your customers some appropriate tools?
But seriously I remain convinced that the Agency Community and the attendant suppliers still have trouble recognizing the new world order.
Good Luck Sabre
Cheers
Timothy
T2 Column in the Beat
GUEST: T2Impact on Low-Cost Long Haul
"This article is republished here with permission from The Beat."
The Beat ~ a travel business newsletter
New York City
3/12/07 8:59 AM
Timothy O'Neil-Dunne and Addison Schonland of T2Impact contribute this guest piece about the potential impact of "game changing" long-haul aircraft and the new entrant airlines that are buying them...
Travel, the great social equalizer, over recent decades has increased at significantly faster rates than gross national product. There is no doubt as well that low-cost carriers have changed the model for the airline market, further accelerating the growth of travel amongst all the world's populations. But this growth has been confined until now to regional or short haul sector pairs. In February 2005, First Choice--the U.K.'s fourth-largest vertically integrated tour operator business and sixth-largest U.K. airline with a fleet of 32 aircraft--announced to a surprised market its first purchase of Boeing 787s. In December, it converted two options to purchases and again this month converted four more to confirmed orders, becoming only the second airline to increase its order twice for the new twinjet before it even takes to the skies. "Having taken the decision to increase our commitment to long-haul destinations, we wanted to ensure we could do this in the most cost-effective and environmentally sound way, while offering our customers new destinations and even more comfortable travel," said Dermot Blastland, managing director of First Choice Mainstream Holidays.
Well, for those of you who think the long-haul LCC is a fantasy, think again. It's here. This is the first "non-legacy airline" to build its business growth engine around the 787, but it will not be the last. It is important to understand that First Choice is not really an LCC. It positions itself as a premium charter and tour company or vertically integrated tour operator (VTO), and it has little in common with any legacy airline. But it has a lot in common with an LCC because it is not a networked airline.
With the ability to connect virtually any secondary city in the world to the U.K., First Choice will be able to move into markets that up until now were exclusively the playthings of British Airways and Virgin Atlantic. Indeed this creates an interesting scenario and pressure on BA, BMI and Virgin as the U.K.'s legacy "flag carriers." At the top, their protected status at London's Heathrow is likely to be blown by the new transatlantic EU-US "just a little bit more open skies" agreement. At the other end is the voracious appetite LCC-type airlines. It's clearly an opportunity for the stock pickers to mark down the legacy airlines.
Many industry pundits have commented on the 787 being a "game changer." This 787 order needs to make many in the aviation world pay attention to what is surely the next frontier to be invaded by LCCs. First Choice's broad base of airports in U.K. means that it will be able to fly just about anywhere, with its 787s, that British holiday-makers want to go. No more stops in Goa on the way to Phuket. With a range of over 15,000 kilometers First Choice's 787 makes a London-to-Sydney nonstop possible.
For airlines that want to accept and realize that air travel is a commodity, the 787 class aircraft is the way to go. For now at least, until the A350XWB is available. If Airbus ever gets the A350XWB out the hanger door, then you could have a 787 and 777-sized airplane that will also connect secondary cities the world over. The good news for U.K. residents is that they will be able to avoid the bottlenecks of the four London airports as First Choice bases its planes at secondary U.K. airports. It should be noted that LCCs in a long haul market will be primarily dependent on leisure traffic. But this is bound to change. Just as the proportion of business travelers using LCCs is growing, so too will that phenomenon apply to the long-haul model.
But it is more than First Choice. Other LCCs (real ones) are getting into the act.
--Ryanair is being helped by the Moroccan government to start service. Four-plus hours on seats that don't recline!
--FlyAsianExpress plans to operate flights to destinations in Asia and Europe as AirAsia X, a new long-haul, low-cost carrier launched by AirAsia.
--Australia's Virgin Blue reported expansion plans including considering an order for eight 777-300ERs to be deployed on planned long-haul operations.
--LionAir is taking delivery of 60 Boeing 737-900Ers, a 6,000 kilometer aircraft.
--Oasis Hong Kong is growing its service from the current daily Hong Kong to London by adding U.S. service this year to Oakland and possibly Chicago and Vancouver.
New opportunities beckon for LCCs. They have created brand following beyond their traditional domestic markets. For example Aer Lingus and JetBlue are going to sell each other's seats on their Web sites. Clearly leveraging its traffic information, Maxjet publishes connections at New York JFK and London Stansted. Imagine this happening outside an airline alliance? When Oasis starts its Oakland service, you can bet JetBlue will be doing the same thing with them. That could even mean round-the-world tickets are coming soon--on LCCs that have no alliance and no legacy costs.
Our conclusion: LCCs are driving innovation and pushing the envelope for airlines, except now in a long haul version.
~ Addison Schonland and Timothy O'Neil-Dunne are consultants with T2Impact Ltd
Send letters for publication to letters@thebeat.travel.
© Copyright 2007 Business Travel Beat, Inc.
Unauthorized email forwarding is a violation of federal copyright law.
The Beat is part of ProMedia.travel LLC, the business-to-business travel industry's most progressive publishing company. Check out our three free publications, online and in print:
http://www.management.travel
http://www.thetransnational.travel
http://www.procurement.travel
"This article is republished here with permission from The Beat."
The Beat ~ a travel business newsletter
New York City
3/12/07 8:59 AM
Timothy O'Neil-Dunne and Addison Schonland of T2Impact contribute this guest piece about the potential impact of "game changing" long-haul aircraft and the new entrant airlines that are buying them...
Travel, the great social equalizer, over recent decades has increased at significantly faster rates than gross national product. There is no doubt as well that low-cost carriers have changed the model for the airline market, further accelerating the growth of travel amongst all the world's populations. But this growth has been confined until now to regional or short haul sector pairs. In February 2005, First Choice--the U.K.'s fourth-largest vertically integrated tour operator business and sixth-largest U.K. airline with a fleet of 32 aircraft--announced to a surprised market its first purchase of Boeing 787s. In December, it converted two options to purchases and again this month converted four more to confirmed orders, becoming only the second airline to increase its order twice for the new twinjet before it even takes to the skies. "Having taken the decision to increase our commitment to long-haul destinations, we wanted to ensure we could do this in the most cost-effective and environmentally sound way, while offering our customers new destinations and even more comfortable travel," said Dermot Blastland, managing director of First Choice Mainstream Holidays.
Well, for those of you who think the long-haul LCC is a fantasy, think again. It's here. This is the first "non-legacy airline" to build its business growth engine around the 787, but it will not be the last. It is important to understand that First Choice is not really an LCC. It positions itself as a premium charter and tour company or vertically integrated tour operator (VTO), and it has little in common with any legacy airline. But it has a lot in common with an LCC because it is not a networked airline.
With the ability to connect virtually any secondary city in the world to the U.K., First Choice will be able to move into markets that up until now were exclusively the playthings of British Airways and Virgin Atlantic. Indeed this creates an interesting scenario and pressure on BA, BMI and Virgin as the U.K.'s legacy "flag carriers." At the top, their protected status at London's Heathrow is likely to be blown by the new transatlantic EU-US "just a little bit more open skies" agreement. At the other end is the voracious appetite LCC-type airlines. It's clearly an opportunity for the stock pickers to mark down the legacy airlines.
Many industry pundits have commented on the 787 being a "game changer." This 787 order needs to make many in the aviation world pay attention to what is surely the next frontier to be invaded by LCCs. First Choice's broad base of airports in U.K. means that it will be able to fly just about anywhere, with its 787s, that British holiday-makers want to go. No more stops in Goa on the way to Phuket. With a range of over 15,000 kilometers First Choice's 787 makes a London-to-Sydney nonstop possible.
For airlines that want to accept and realize that air travel is a commodity, the 787 class aircraft is the way to go. For now at least, until the A350XWB is available. If Airbus ever gets the A350XWB out the hanger door, then you could have a 787 and 777-sized airplane that will also connect secondary cities the world over. The good news for U.K. residents is that they will be able to avoid the bottlenecks of the four London airports as First Choice bases its planes at secondary U.K. airports. It should be noted that LCCs in a long haul market will be primarily dependent on leisure traffic. But this is bound to change. Just as the proportion of business travelers using LCCs is growing, so too will that phenomenon apply to the long-haul model.
But it is more than First Choice. Other LCCs (real ones) are getting into the act.
--Ryanair is being helped by the Moroccan government to start service. Four-plus hours on seats that don't recline!
--FlyAsianExpress plans to operate flights to destinations in Asia and Europe as AirAsia X, a new long-haul, low-cost carrier launched by AirAsia.
--Australia's Virgin Blue reported expansion plans including considering an order for eight 777-300ERs to be deployed on planned long-haul operations.
--LionAir is taking delivery of 60 Boeing 737-900Ers, a 6,000 kilometer aircraft.
--Oasis Hong Kong is growing its service from the current daily Hong Kong to London by adding U.S. service this year to Oakland and possibly Chicago and Vancouver.
New opportunities beckon for LCCs. They have created brand following beyond their traditional domestic markets. For example Aer Lingus and JetBlue are going to sell each other's seats on their Web sites. Clearly leveraging its traffic information, Maxjet publishes connections at New York JFK and London Stansted. Imagine this happening outside an airline alliance? When Oasis starts its Oakland service, you can bet JetBlue will be doing the same thing with them. That could even mean round-the-world tickets are coming soon--on LCCs that have no alliance and no legacy costs.
Our conclusion: LCCs are driving innovation and pushing the envelope for airlines, except now in a long haul version.
~ Addison Schonland and Timothy O'Neil-Dunne are consultants with T2Impact Ltd
Send letters for publication to letters@thebeat.travel.
© Copyright 2007 Business Travel Beat, Inc.
Unauthorized email forwarding is a violation of federal copyright law.
The Beat is part of ProMedia.travel LLC, the business-to-business travel industry's most progressive publishing company. Check out our three free publications, online and in print:
http://www.management.travel
http://www.thetransnational.travel
http://www.procurement.travel
07 March 2007
Bye Bye Site 59 Hello LastMinute.com
So finally Sabre is getting wiser about its brand rationalization. With over 20 different brands across its market, Sabre is finally realizing that the cost and value of each brand is not such a simple thing.
When the internet was young (remember when!) we all thought that the Real Estate of the web was infinite and open to all. Anyone with an idea could get online. IBM was as important as Aunt Edna’s website. IE the whole universe was open to small companies and large. Sadly no more. Perhaps one of the ultimate prices to be paid for the stellar performance at Google is that the days of Homesteading are over. Now we need to pay the toll. The gatekeeper of the first decade of the millennium is without a doubt Google. And the price is pretty hefty!
But we should examine Sabre’s other brand confusions. How long can Abacus and Zuji remain as separate entities? And if we think about it in addition to Sabre, there are many others who issues – lets pass a brief and critical eye over the TravelPort family of brands. The list spans pages
So commercial realism and standard marketing strategies will be the form of the future. The trends start now. I shall for one be a little sad that the little brands will have such a hard time to make headway against the goliaths and their big marketing spends.
Cheers
Timothy
When the internet was young (remember when!) we all thought that the Real Estate of the web was infinite and open to all. Anyone with an idea could get online. IBM was as important as Aunt Edna’s website. IE the whole universe was open to small companies and large. Sadly no more. Perhaps one of the ultimate prices to be paid for the stellar performance at Google is that the days of Homesteading are over. Now we need to pay the toll. The gatekeeper of the first decade of the millennium is without a doubt Google. And the price is pretty hefty!
But we should examine Sabre’s other brand confusions. How long can Abacus and Zuji remain as separate entities? And if we think about it in addition to Sabre, there are many others who issues – lets pass a brief and critical eye over the TravelPort family of brands. The list spans pages
So commercial realism and standard marketing strategies will be the form of the future. The trends start now. I shall for one be a little sad that the little brands will have such a hard time to make headway against the goliaths and their big marketing spends.
Cheers
Timothy
04 March 2007
Sabre no more? - Vote Day March 23rd
The formal motion has been mailed to stockholders of record on Feb 20th 2007.
01 . PROPOSAL TO ADOPT THE AGREEMENT AND PLAN OF MERGER, DATED AS OF DECEMBER 12, 2006, AMONG SABRE HOLDINGS CORPORATION, SOVEREIGN HOLDINGS, INC. AND SOVEREIGN MERGER SUB, INC. AND APPROVE THE MERGER.
Directors Recommend: FOR
So this is it... the last independent GDS falls to a VC.
The migration will be complete once Worldspan gives up the ghost and becomes part of TravelPort.
01 . PROPOSAL TO ADOPT THE AGREEMENT AND PLAN OF MERGER, DATED AS OF DECEMBER 12, 2006, AMONG SABRE HOLDINGS CORPORATION, SOVEREIGN HOLDINGS, INC. AND SOVEREIGN MERGER SUB, INC. AND APPROVE THE MERGER.
Directors Recommend: FOR
So this is it... the last independent GDS falls to a VC.
The migration will be complete once Worldspan gives up the ghost and becomes part of TravelPort.
Jacques Barrot - Wily politicial EU Commissioner for Transport
I would like to applaud Commissioner Barrot (http://en.wikipedia.org/wiki/Jacques_Barrot) for his efforts in getting at least some semblance of a deal together between Europe and the USA. This has indeed been a tough point as there are so many political aims that conflict.
Conside the huge mountains that have to be crossed to get 27 countries on the EU side to give up bilaterlism as well as the USA to overcome the conflicted Executive and Legilative arms of Government. So while the deal itself seems small it represents a structural shift that is without doubt one of the biggest changes made in Air Transportation regulation since the setting up of ICAO and IATA. And it comes not a moment too soon.
The deal is not out of the woods and I expect this will take at least a year to enact fully probably longer in the case of the US and UK. It may not come soon enough for Virgin America whose future is languishing while deliveries of its A320s rack up - straight to the parking garage. The Transatlantic is one of the most heavily travelled set of air routes in the world. Long term government protectionism is a concept whose time has come - and gone. As the airways and airports become an increasingly scarce commodity opening up to the free market the ownership and control of the Air Space users is the right thing to do.
Jacques Barrot has been written off several times in his career. However he is one of the most skilled politicians I have observed in many years. His negotiating skills are unparalled and he deserves a lot of personal credit for this success. I can only hope that he is able to continue in his job long enough for to see this become a lasting legacy to his position at the EU and for the benefits to trickle down to the market.
For further discussion and opinion please contact T2impact directly. timothyo@t2impact.com
Conside the huge mountains that have to be crossed to get 27 countries on the EU side to give up bilaterlism as well as the USA to overcome the conflicted Executive and Legilative arms of Government. So while the deal itself seems small it represents a structural shift that is without doubt one of the biggest changes made in Air Transportation regulation since the setting up of ICAO and IATA. And it comes not a moment too soon.
The deal is not out of the woods and I expect this will take at least a year to enact fully probably longer in the case of the US and UK. It may not come soon enough for Virgin America whose future is languishing while deliveries of its A320s rack up - straight to the parking garage. The Transatlantic is one of the most heavily travelled set of air routes in the world. Long term government protectionism is a concept whose time has come - and gone. As the airways and airports become an increasingly scarce commodity opening up to the free market the ownership and control of the Air Space users is the right thing to do.
Jacques Barrot has been written off several times in his career. However he is one of the most skilled politicians I have observed in many years. His negotiating skills are unparalled and he deserves a lot of personal credit for this success. I can only hope that he is able to continue in his job long enough for to see this become a lasting legacy to his position at the EU and for the benefits to trickle down to the market.
For further discussion and opinion please contact T2impact directly. timothyo@t2impact.com
02 March 2007
Tonight they turn out the lights HP-US
So names change and things pass but tonight will see the end of an era when America West goes away for good. At the same time the last vestiges of the "old" US Airways will also disappear as the reservations cut over from Sabre to EDS-SHARES is completed. The last bank of flights on the midnight runs from Las Vegas will be handled essentially manually but from tomorrow Sabre Airline Soluutions has one less customer for its core airline hosting services.
01 March 2007
Bravo to WestJet.... New Website for Vision impaired
In the late 1980s when I first started to work at TWA-PARS I worked at a desk inside the Res Center in Kansas City. Space was a problem as I was part of a new group focused on Technology and new systems. Over in one corner of the res center was a small group of people who were working on something I had never heard of before. The small group of people didnt last long but they were just as good as any other res user. Except for one thing - they were all blind. Using a system called a Versa Braille and a cobbled together system using a Lanyon board they were able to take reservations. Whether this ever made it beyond a test stage I never found out. However i have always felt that the one thing we suffer in the Web age is our ability to handle it without sight.
Coincidently this week two events occurred which brought this back into focus for me. My mother (who is 96!!!) told me she can no longer see to read - the one thing she always loved to do. This is very thought provoking especially for people like you and me who spend so much time in front of these screens. The other event was WestJet (Canadian LCC) who launched their website for the site impaired.
More power to Westjet and my Mum has employed someone to read to her.
Cheers
Timothy
Coincidently this week two events occurred which brought this back into focus for me. My mother (who is 96!!!) told me she can no longer see to read - the one thing she always loved to do. This is very thought provoking especially for people like you and me who spend so much time in front of these screens. The other event was WestJet (Canadian LCC) who launched their website for the site impaired.
More power to Westjet and my Mum has employed someone to read to her.
Cheers
Timothy
26 February 2007
LCCs - UK CAA study. Evolution or Revolution
To be highly recommended for all students of the Distribution business.
http://www.caa.co.uk/docs/33/CAP770.pdf
I recommend reading this and then we can chat. FYI Look for the new T2Impact/Omnitourism LCC study which was conducted last week. Interesting results. Look for the study to be published in the coming weeks
Cheers
Timothy
http://www.caa.co.uk/docs/33/CAP770.pdf
I recommend reading this and then we can chat. FYI Look for the new T2Impact/Omnitourism LCC study which was conducted last week. Interesting results. Look for the study to be published in the coming weeks
Cheers
Timothy
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