UI/UE debate on WIWIH

Max Starkov and co are running a Hospitality website called WIWIH. http://www.wiwih.com/

Fairly typical of different hotel discussion groups. However one debate caught my eye - UI.

The topic is: WIWIH Poll - Do you think that One-Screen/Flash booking engines (e.g. iStay-iHotelier) are better than the traditional step-by-step booking engines (e.g. Expedia's, Marriott's, SynXis')? I have a passionate belief that the end of the life cycle of the current explicit User Experience is in sight. Whether of course it is adopted remains to be seen. Sadly the whole advent of Mashups and Web2.0 technologies (if you can call them that) has actually done a dis-service to the market by prolonging the lifespan of the current metaphors. IE you can get away with continuing with the same old clunky back ends because there is a few bolt on extras and some nice lipstick for the old pigs. Check out the debate. (Sorry you have to sign up)

http://www.wiwih.com/topic/36000539.html

I do hope that people are listening/reading - because this is something that is the pachyderm on the table. We do need new engines and the current UI/UE metaphor is going to go away. Of course I don’t have to pay for this - but doesn’t mean I am not going to push for it.

Cheers

Timothy

Tear Down the Wall: IATA Block Exemption is cancelled

The EC in its infinite wisdom has chosen not to renew the Block Exemption it gave last year to the IATA Passenger Tariff Conference.

For once this is a good thing as it slowly breaks down the barriers to normal behavior by the airlines. For many years the IATA carriers (now numbering approx 250) have benefitted from operating under supra national rules. In the years before GATT and with certain strange legal mechanisms that actively worked against global trade this was understandable. With GATT and better legal frameworks for international trade, these protections are not nearly as relevant. Perhaps the biggest most telling argument is that there is now a significantly larger non-IATA component to air travel - at least regionally within each Traffic Conference. The second component of this is the alliances which means a single ticket and carrier listing even if the metal is from another airline. According to the EC now less than 5% of travel within EU (defined as EC to non-EC countries) is interlined. This therefore negates the need for the exemption.

We are encouraged by this move to make the airline world more competitive. Perhaps now IATA can go back to being an association of talkers.

Man of the (half) Year 2007

Now we have 6 months under our belts - we would like to nominate the person who we believe exemplifies the best there is in the Aviation, Travel and Tourism sectors. Our nominee from a large field of possible candidates rose head and shoulders above everyone.

Gerald Grinstein deserves the title.

Successfully piloting Delta into, through and now out of Chapter 11 he managed to turn the oil tanker around without creating too much disturbance and disruption amongst the key stakeholders - Customers, Staff and the financial community.

Specifically he tried much harder than his counterparts at UAL and NWA to preserve the base before finally stepping into Chapter 11 when there was no real option but to do it. He is to be commended for trying not to destroy too much of the shareholders equity.

He managed to fend off the unwitting advances of AWA/US Airways which despite looking good on paper would have been a complete disaster. At the same time he also managed to hold off TPG's advances.

While in Chapter 11 his team reformed the airline from the inside out. Not only shedding costs but also changing business practices and processes for better customer experience at a lower cost. While the pillow removal may have galvanized a lot of attention underneath DL really did change the way it did business and has emerged much more competitive.

Finally from a personal integrity point of view while he fellow CEOs were gouging themselves in stock and cash incentives (for doing their job) Jerry took home a modest $300K for his efforts.

Time will be the ultimate judge of his legacy at Delta. As the article in the WSJ http://online.wsj.com/article/SB118307487060552233-search.html?KEYWORDS=United+Airlines+UAL&COLLECTION=wsjie/6month on UAL's progress shows that it can stall pretty quickly DL has a long road ahead. We believe that UAL and NWA remain pretty sick and have many issues to contend with. DL itself has some significant customer service issues (as my forced overnight in the ATL airport last week attests). Lets hope they keep getting it right.

His long service at both Western and Delta should be recognized. We believe he is a solid example to which many of us should aspire.

To Jerry - we salute you

TravelClick 2006 Stats show wide variance in Hotel Yield by Channel

Sorry folks i have had this one to write for some time now. Finally getting round to it.

The TravelClick 2006 stats show a huge discrepancy between bookings made via GDS backed web sites and those via GDS/Travel Agencies. For 2006 the number is 41%. This variance has existed for some time. For example in 2004 the ADR difference was a similar 26%. In order to understand the difference you have to consider the source. We consider the TravelClick numbers to be skewed due to the source of the tracking and the lack of broad reach of the numbers. Its based on GDS based sales. Thus there is always a higher skew of bookings from Travel Agents as is clear. Since this occurs the comparison is fair but it is like comparing apples from the same tree rather than between trees or even different varieties.

Formally they are issuing a caution that this discrepancy is unsustainable. DUH!!!! The web is about transparency. The next gen hotel systems currently being designed (such as 2nd Travel and Pegasus GuestClick) will remove much of the need for a discrepancy.

Here is the full PR release but you can get it off the TravelClick website

Cheers


PR Release Follows:

Press Releases
Worldwide Electronic Hotel Revenue Up 19.3 Percent in Q4 2006
TravelCLICK's eMonitor Reports Annual Growth for Room Nights at 8.4 Percent, ADR at 7.4 Percent
PRNewswireCHICAGO
CHICAGO, April 25 /PRNewswire/ -- TravelCLICK's quarterly eMonitor results indicate continued robust health for the hotel industry based on electronic distribution performance for the fourth quarter of 2006. The data shows that worldwide electronic hotel revenue from the Global Distribution Systems (GDS) and key Internet sites increased 19.3 percent over the fourth quarter of 2005. The number of electronic room nights booked for the fourth quarter increased 7.7 percent over the same time last year, while the Average Daily Rate (ADR) increased by 10.8 percent. The average length of stay for the fourth quarter 2006 was 2.06 nights, nearly the same as last year.
eMonitor results are compiled from TravelCLICK's comprehensive proprietary database, which is the exclusive source of hotel industry electronic distribution data from the Amadeus, Galileo, Sabre and Worldspan GDS. The database of electronic distribution performance provides a comprehensive foundation for data analysis and trend forecasting that is used by the global hospitality industry in the development of integrated distribution strategy.
Observations for the market based on this latest data include:

-- Hotel bookings through the GDS continue steady sustainable growth on a
large base of more than 50MM.
-- In 2006, ADR for room nights booked through travel agents was
41 percent higher than ADR booked through consumer Internet.
-- In nearly every segment and top destination market, ADR continues its
strong year-over-year growth.
"Within the GDS, there is a sustainable trend of much higher ADR business opportunity when compared to other online distribution channels," said John Hach, Vice President of eMarketing Products at TravelCLICK. "The ADR variance of 41 percent provides compelling evidence regarding the need for hoteliers to reach travel agents during their primary point of customer interaction."
Travel Agent Component
Travel agent bookings represented 79.3 percent of total room nights. The travel agent component of GDS bookings had an 11.5 percent increase in ADR and an 18.5 percent increase in revenue versus the fourth quarter of 2005. Travel agents also continued to be a key source of higher rate business for hotels. The average rate for room nights booked through travel agents for the fourth quarter of 2006 was 43.6 percent higher than the average rate for room nights booked via the Internet for the same period last year.
Year-to-date for 2006, travel agent hotel room nights via the GDS were up 6.3 percent, driving an 8.4 percent growth in ADR from the same period in 2005.
Internet Component
Internet room nights, sourced from consumer online transactions on third-party websites powered by the GDS and Online Distribution Database (ODD), showed a gain of 13.6 percent compared to the fourth quarter of 2005. ADR was up 9.2 percent for Internet bookings; revenue was up 24.1 percent compared to the same period last year.
Fourth Quarter 2006

Room Nights %Change ADR %Change
Total GDS and ODD Hotel eCommerce 31,786,682 7.7% $149.52 10.8%
Travel Agent Component 25,200,589 6.3% $159.56 11.5%
Consumer Internet Component 6,586,093 13.6% $111.08 9.2%


Year-to-Date 2006

Room Nights %Change ADR %Change
Total GDS and ODD Hotel eCommerce 131,127,784 8.4% $142.83 7.4%
Travel Agent Component 103,468,230 6.3% $152.17 8.4%
Consumer Internet Component 27,659,554 17.2% $107.89 5.5%


GDS Performance by Market Segment
Results for the fourth quarter of 2006 by market segment are shown below for GDS bookings only. All market segments showed increases in both room nights and ADR compared to the fourth quarter of 2005.
Fourth Quarter 2006

Market Segment Room Nights %Change ADR %Change
Luxury 927,508 13.6% $363.66 12.4%
Upscale 9,887,664 4.2% $191.08 11.1%
Mid-Scale 11,160,152 6.1% $121.67 11.9%
Economy 2,135,983 6.9% $81.51 8.9%


Year-to-Date 2006

Market Segment Room Nights %Change ADR %Change
Luxury 3,636,512 12.2% $345.94 8.6%
Upscale 40,244,398 2.4% $181.79 8.6%
Mid-Scale 46,615,608 5.2% $117.94 8.9%
Economy 9,453,732 7.8% $81.46 7.9%


Top Destination Markets
The top 10 worldwide destination markets in room nights for GDS and ODD-powered third-party websites, in order, were:
Fourth Quarter 2006

Top Destination Markets Room Nights %Change ADR %Change
New York 1,481,273 6.3% $299.00 10.2%
London 1,471,575 27.7% $213.04 12.5%
Los Angeles 1,015,225 4.2% $149.49 9.5%
San Francisco/Oakland/San Jose 941,533 7.7% $154.34 9.0%
Washington/Baltimore 870,787 -1.0% $177.92 7.6%
Chicago 804,459 6.5% $164.28 11.7%
Dallas 558,285 0.4% $119.26 10.1%
Atlanta 495,656 -1.7% $122.27 6.7%
Boston 465,155 3.3% $168.68 8.4%
Houston 437,893 4.0% $124.37 7.4%
To receive a free listing of fourth quarter results by top 50 cities worldwide in electronic bookings, please email emonitor@travelclick.net. GDS hotel booking summaries by individual local market also are available at http://www.travelclick.net/.
Sign up to receive TravelCLICK news by email or through RSS distribution at http://travelclick.mediaroom.com/.
About TravelCLICK
TravelCLICK (http://www.travelclick.net/) is the leading provider of hotel business process management (BPM) solutions that drive long-term profitability. TravelCLICK helps hotels maximize asset ROI by combining innovative market analysis and proven industry best practices with advanced technology to develop and implement high-return strategies. The company offers a full set of solutions including reservations and distribution management, market intelligence-based decision support, and marketing services. Serving the hospitality industry since 1996 and headquartered in the Chicago area, TravelCLICK has more than 12,000 customers in 140 countries.
SOURCE: TravelCLICK

Insane TSA proposal for Biometrics run by the airlines

Those wonderful mad cap keystone cops (aka the Dept of Homeland Security) are at it again. This time they are demanding that the Airlines install and manage the biometrics System.

This one will definitely run for a while. Given the current fiasco over passports – the TSA/DHS boffins have no clue about people processing. I think this stems from the last time they had to seriously think about it IE Ellis Island.

A brief aside here. I go through Security on average 2x a week. I can assure you the TSA is behind almost any other service in the world.

So considering all things that the airline have to deal with today for security – it is understandable why the TSA would like to shift the responsibility of the biometric tracking to the airlines for handling. But the TSA wants its cake and eat it. They wont share the results nor will they provide an instant alert scheme for the airlines.

Here is the full article. You be the judge – but one thing is for sure – this issue will not be going away.

Despite protests, DHS biometric data plan moving forward (06/07/2007)
VANCOUVER -- The U.S. Dept. of Homeland Security is sticking to its proposal to require airlines to collect fingerprints at check-in from departing travelers on international flights, in spite of vehement protests from U.S. carriers that the mandate would be costly and time-consuming and create longer check-in lines, and should instead be handled by the Transportation Security Administration.

Michael Jackson, the DHS' deputy secretary, attending the International Air Transport Association's Annual General Meeting and World Air Transport Summit here June 5, said the department still plans to issue a Notice of Proposed Rulemaking with the requirement soon.

"It's the only model that we can figure out that will work," he said, while insisting it would not create long check-in lines.

"People's dwell time at a check-in point is vastly longer than the one or two seconds it will take to simply put your finger on a fingerprint reader," he said. "I think it's going to be easy, iteratively, over time, to integrate this into the business model that the aviation industry has for doing its work, which is to make it easy for passengers to come through an airport and not have a burdensome delay."

Jackson, who wants the process in place by 2008, did make one concession: he said the DHS is willing to provide airlines with fingerprint readers for use at the check-in counters, and help them connect it to their passport card readers. He also said the department is willing to let airlines move the process to self-service check-in kiosks equipped with fingerprint readers and passport readers.

The proposed requirement stems from a DHS effort to beef up a 3-year-old pilot program called US-VISIT, which collects biometric data from foreign visitors.

Under that program, inbound visitors at U.S. airports and other points of entry are digitally photographed and fingerprinted at special kiosks. The resulting data are later matched against DHS' own database to verify international travelers' identity. Digital fingerprints are also collected when the traveler exits the U.S.

However, travelers are asked to provide the data on a volunteer basis.

Consequently, the DHS said, while the US-VISIT biometric technology "works," there has been a "low traveler-compliance" rate. It believes integrating the process into check-in would boost the rate.

Shock Horror, LHR Owner admits its "Old and Dirty"

In a by line from the Gaurdian Newspaper of today - 29 Jun 2007
Ferrovial, the Spanish construction group that owns BAA, claims the Civil Aviation Authority is not doing enough to incentivise it to invest in Heathrow Airport.

Those of you who follow some of our personal trials and tribulations of travel through the world's busiest international gateway, know full well what we think of LHR. It is a disgrace. Check out this clip on YouTube: http://www.youtube.com/watch?v=zwB4G7XxyRI

Attempting to deflect the mounting customer and user criticsm the new owner of LHR operator BAA is trying to push the blame onto the HM Government. Sorry - but no dice here. BAA you have milked this cash cow for way too long. Now you have to pay the price.

There is a great article in this month's ATW on the subject: http://www.atwonline.com/magazine/article.html?articleID=1959

Having an Airport Operators License doesnt mean you can rape the customers.

Perhaps Mr O'Leary will get a little credit for his battle with Aer Rianta (operator of Dublin's airport).

Cheers

Timothy

NWA - First to cross the barrier wi9th Paypal

Not that we are against the credit card companies in any way - but we have been a long believer that the next major cost battle in airline distribution cost reduction would come in credit card fees. With Google Checkout our dark horse bet - we believe that the airlines stand to gain significant bottom line benefits in enabling non-credit card financial fulfilment from such players as Paypal and Google.

NWA finally becomes the first airline (by our understanding) to announce such a deal. It is even offering bonus worldperks miles to anyone who uses the service.

The leverage that this gains as well as the additional customers it enables is a win win for the airline. We are particularly encouraged about the impact in non-traditional (and therefore emerging) financial markets such as across Asia Africa and Latin America.

Pay attention boys and girls - this is a big shift

Now is the summer of our discontent...

Well our worst nightmare has actually come to pass. This summer - the US domestic air transportation system (if you can call it that) will grind to a halt or at least a series of significant outages.

I can attest to this personally. During the past week (W/C June 25 2007) I have been to the airport everyday. Each time I have been there the flights that i was involved in - picking people up, dropping them off or flying was at least 2 hours late. On Thursday a delay of 3 hours bumped me in Atlanta. But it gets better. There were no more hotel rooms available. To get to someone to actually talk too takes hours. All of the airlines have been similarly affected and while some handle it better than others it is clear that the massive cutbacks in staff are now beginning to bite. They are just unprepared for even minor problems. The system is SO fragile that it breaks at the slightest provocation.

I have seen families waiting for 24hours plus. People in Wheelchairs abandoned. Groups displaced and split up.

It is unpleasant and will only get worse during the summer.

I do believe (changing my position) that a passengers' Bill of Rights is now a must. I strongly urge the US to adopt the European model. But govern this and tie it to the role of the TSA so that there is a clear shared sense of responsibility with Government and Private Enterprise.

Southwest Hits Wall, Ryanair Next?

For some time we have been saying to our investor clients that the problem of growth would eventually reach the point of good old diminishing marginal returns. Southwest has finally admitted that this has happened to them. The core problem is one faced by other sectors – such as Microsoft – in that the ROI starts to decline over time due to effective saturation. For WN this means that they will now have to address the issue head on.

What we find curious is that WN doesn’t want to hit the competition head on. So the slowdown in growth is an acknowledgement of this. However WN has one ace up its sleeve. That is its planes. WN can fly the longest commercial routes in the county (eg SEA-MIA) with its 737-700s.

For WN we shall see them looking hard at Revenue opportunities and only dealing with the ones that make sense.

There is a lesson here for other LCCs. Chaps – sooner or later you will hit the wall. AirTran and JetBlue – I hope you are listening. Fortunately for Mr O’Leary – this problem is several years away. Long after he has left the CEO slot at FR.

Cheers
Timothy

Aeroflot drops out of AZ Bidding

Sounding the deathknell of the current auction - SU has dropped out leaving only the local Italian Airline left. Aeroflot said it was withdrawing because its advisers had not been given access to what it called critical information on Alitalia’s business. Almost identical to the owrds that Joint bidders Mattelin Patterson and TPG used. This leaves a single bidder that will hardly wash with the government. So once more the sickest airline in Europe is back on the deathwatch list

Airlines - So you think you are doing OK - 2006 Numbers

Accoding to ICAO the airlines FINALLY made a profit in 2006. $2.7Bn give or take the odd lost bag. Well how does that stack up against hotels? No so good... about 11% of hotels' profits give or take the odd missing bathrobe. For hotels; revenues increased by 8.7% from the $122.7 billion generated in 2005 and profits increased 17.9%, up from $22.6 billion last year.

For exact details see:

ICAO - http://www.icao.int/cgi/goto_m.pl?icao/en/nr/2007/pio200703_e.pdf
For STR - http://www.hotelnewsresource.com/article28028.html

TSK... TSK... there needs to be a better ROI.

Cheers

Timothy

Expedia's Stock at 52 week high

So Expedia's stock is riding high. Should you buy in or is this the peak.

Here is our take on the current run-up. Given how bad things have been lately over there in Bellevue - we were wondering for some time how long Dara would last. But since he has the confidence of Chairman Barry he will be around for a while. Having been caught off guard by the TPG/Sabre and then Blackstone/Travelport, Expedia should be making solid progress on a wide variety of fronts in order to show it is maintaining momentum. And there has been progress. Probably more of the "not-so-bad" variety rather than than a great performance.

Expedia just might go private. The current price is too high. But if there is a significant dip in the price over the next few months I think we can see more buybacks or an offer to take it private.
The long tail wont affect Expedia for a few years yet. The critical metrics are to look at the performance of the international divisions - particularly China, Germany and UK - and the value of TripAdvisor which could probably be hived off at a premium. Especially given certain analysts hype of Travel 2.0.

The suppliers are sitting pretty. The Hotel Industry just reported another record year with profits that probably exceed the total profits ever recorded by the airline industry. As long as this is the situation - then Expedia will be constrained. If (as we expect) we see a softening of the market in 2008/9, then Expedia's yields should pick up. So now would be a good time to go private IF the prices was right.

Stay tuned folks

Cheers

DL and CO - Do you REALLY want LHR? Check this out.

For some time now this blog has ranted about the 3rd world nature of LHR and its symbiotic partner BA. Both of whom are providing a pretty piss-poor service. With Open Skies now a reality and many US carriers climbing over themselves to get slots at LHR. Here is something to make you pause and wonder.

This summer - I really do not recommend you even setting foot in the place.

Check this blog entry from Tim Hughes at THE BOOT. http://tims-boot.blogspot.com/2007/06/500-miles-of-security-queue-at-london.html

I know LHR pretty well from both the in/out as well as the changing planes there. With T5 still 10 months away this is just appalling. This is for T2 passengers. Trust me it isnt much better for T1, 3 or 4.

Cheers

BA not for sale... probably with good reason.

Service deteriorates at World's Favourite Airline

BA's Willie Walsh has put the NOT FOR SALE sign up outside Waterside. Despite his buddies over at Goldman Sachs wanting to make another packet now is probably not quite the right time. There just isn’t enough support although there are (as we have noted before) some great numbers to look at - not least of which is the free cash flow.

Now the reason for the run up in stock (for those talking it up) was the great numbers in the front cabin. well so far so good but that is not a long term thing. Having just experienced again the airline's less than stellar service I hope you will indulge my rant here.

BA's premium traffic has increased but not the staff to handle them. As a result LHR is a giant mess - both in and out bound. This week inbound traffic to Terminal 4 suffered yet another baggage meltdown due to "...Insufficient Allocation of Resources", and no I am not making this stuff up. this was the official reason given by BA over the Tannoy (they don’t use a more modern PA system trust me on this) why bags were "15 mins later than normal baggage wait times". I checked with several other passengers especially Flight BA 288 (from PHX) and BA242 (from MEX) both of whom endured waits for over 2 hours. My flight BA52 from Seattle had bags show up 90 minutes late.

Leaving on Sunday to go from Terminal 1 to Moscow I witnessed yet another example of how bad things are: the Zone R (premium travellers) area took over 40 minutes to go through to "Bag Drop". Zone R vs Qatar Airways Premium Terminal in Doha. No contest. I do hope someone from BA has actually TAKEN one of these flights.

Couple this significant fall off in service with BAA/UK government's crippled one on board bag policy and you get a recipe for meltdown's like this. But BA must shoulder the lion's share of the blame. For some time I have been hyper-critical of their baggage policy and handling at LHR. This is a management problem caused by the ill-fated decision to outsource baggage management to a thoroughly incompetent group.

BA may be taking advantage of an increase in premium traffic but it will be short lived. When the US airlines start arriving at LHR in greater numbers expect to see real competition. With significantly better service from the GCC based airlines allowing you to bypass LHR AND with easier connection services in AMS, CDG even MAD you can easily see that things are going to get a lot worse before they get better. Having flown BA's new Club Class service, I can attest to its improvement over the existing 1st generation service. But VS has nothing to fear and the plans by AA and in particular DL to offer premium C/J services will be a real fight. BA could easily lose its self adopted crown.

Are you listening Mr Walsh?

I hope so...

Cheers

Timothy
www.t2impact.com

Delta Quietly Dumps Expedia

Delta has quietly dumped its most recent hotel and car partner Expedia WWTC.
It is now directing traffic to its "friends".

Car rental for Avis and Budget go to www.carrental.com (the joint booking engine for Avis group) and Hotels go to Hiltons master reservations sites.

The search for additional revenues via the website are become more intense and the competition for traffic has once again become a hot topic.

I am sure there will be more changes. If you are not currently evaluating your options you are likely to be loosing out in this intense battle for customers.

Cheers

Timothy

Expedia has largest share by far of online hotels in South Florida

According to Travel Weekly's Travel Technology Newsletter MIAMI-DADE COUNTY QUIETLY NOTIFIED ONLINE TRAVEL COMPANIES in February that it would commence tax audits related to unremitted 6% hotel bed taxes. In March it sent them estimated tax assessments totaling almost $10 million for the past five years.

What is interesting is the market share of each of these players.

If we just use the tax numbers and assume an equal average daily rate then the share of business for hotels in South Florida is quite startling.

Expedia: 60.1%
Travelport: 14.1%
Priceline: 11.1%
Travelocity 8.3%
Others 5.8%

After 5 years activity this represents quite a significant share. However the total numbers are not that great. if we assume about $120 per ADR then it only represents a total of approx 800 rooms per night occupied and sourced by the OTAs' guests in South Florida. Just about enough to fill the Fontainbleu twice over.

So still lots of room for growth.

Now I wonder if the hotels are also feeling the heat from offering some of their stuff online.

Any clues anyone?

Cheers

Timothy

SQ Biting off more than it can chew with China Eastern?

Already the industry analysts are wagging tongues at the SQ investment into MU. One of the weakest of the big China Airline companies MU has not had a great track record since it became one of the designated major National and International carriers from China.

SQ has had a good record as a passive investor (think Tamasek) in Silk Air (its own subsidiary) and Tiger Airways. That is close to home. However its forays further afield have been somewhat of a mixed bag. It has its significant holding in Virgin Atlantic (not any of the other Virgin group airlines) which has not shown a significant impact although both parties are happy with the deal. But then we can look at the Air New Zealand episode that frankly many at SINHQ would rather forget. Much has been speculated as to what MIGHT have happened if SQ had followed through and bailed out Ansett. My wouldn't the world be a different place!

So its going to be worth following to see what role SQ management takes in the running of MU. There is clearly potential value on both sides. Similarly Air China is doing all it can to fuse some knowledge learned from CX in improving its product and bottom line. China Southern has not yet seen much out of its DL match up.

But the night as they say is yet young and we all know China plays for the long haul - and for keeps. As long time China watchers - we recommend paying attention to how this shakes out for the long game. China is determined not to allow any embarrassment occur prior to the 2008 Games. After that we see a loosening of the reins and a significant expansionist pursuit by many of the players. There is room for many victors.
Cheers

Don't worry - Be happy apart. Galileo and Worldspan to remain Seperate

Forget synergies - its all about making a buck. So what if you have 2 sets of infrastructure to support the "Full service" suites of both now isolated systems, Blackstone led Travelport has announced that it will keep the 2 GDS apart rather than go through the enormous pain and cost of a single platform.

On the one hand we applaud the rationality of the argument not to go through with the very painful exercise (Ed: I have done it twice!). However we believe that there will be a significant amount of confusion amongst the respective customer bases. we just hope that Travelport has some good integration strategies up its sleeve or else the sheer cost of supporting 2 data centers and two product lines has got to be a Controller's nightmare.

Rest assured your trusty team at ITK will be on the case watching the situation and reporting back from the field including customer reaction and some insider news.

Travelport - we wish you success. Please make it clear what you are really going to be doing. We would like to have a clear story to present to the world.

Cheers

ITK Team

Did BA put itself in play? Goldman Sachs thinks so or...

Talk about a tangled web. So follow the story if you can. BA owns about 10% of Iberia. BA used to own a sizable chunk of Qantas. TPG has failed in its bid as APA to get control of Qantas. BA joined the TPG based consortium bidding for IB. IB's advisers are Goldman Sachs. Goldman raised its ownership in BA to over 5% making it the 4th largest shareholder in BA.

Got it?

OK so if we read the tealeaves (something we love to do at T2 although personally I think hot caffeine based drinks are over-rated) then there is something going on.

BA has been the target of some speculation of a PE based bid (in the old days we used to call these LBOs). Why? its that juicy cash flow - GBP 800 million a year. (That's $1.6 Billion in greenbacks). With Private Equity cash chasing just about anything that moves - BA is a good target. However its institutional investors in the City would likely harrumph a lot at this.

But you have to think that that there is some truth in all of this to BA being really in play.

Cheers

Timothy

Virgin Oz - Splits 4 ways

Following in the footsteps of its arch rival Qantas - Virgin Blue is now the uber-brand for the Ozzie carrier. As it has slowly and relentlessly moved upmarket with its primary brand going after the corporate market - Virgin has seen its low cost roots (and routes) usurped by the upstart part of the Qantas group - Jetstar. With Tiger airways a mere few months away from starting domestic Oz routes - Virgin is not sitting still.

The company will now have 4 main brands:

Virgin Blue will be the premium branded service for Domestic routes.
Pacific Blue will be APAC regional routes including TransTasman services already in operation. The two newcomers will be the Long Haul (initially Trans Pacific) 777 service and the even sooner to be launched LCC player.
Commenting to Travel Weekly Australia at the Australia Tourism Exchange on Monday May 29th, Brett Godfrey, Virgin Blue CEO said "As we already have an Aircraft Operators Certificate (AOC), we can be up and running almost immediately". This pits Virgin Blue firmly against its rival. With some variation!

We believe that now the ownership issue is long resolved the company has been planning this expansion strategy for some time.

With Qantas itself in somewhat disarray following the recent debacle of the APA aborted tender and the subsequent resignation of 2 board members, we can see that there is life in the old dogs yet. Now why didn’t Ansett do this???? Answers on a postcard or email to me asap....

Cheers

Timothy

timothyo@t2impact.com

For Airbus - what is the compensation for the delay of the Whaleliner?

Disclaimer - this blog entry is pure speculation on our part. However we believe the numbers to be accurate for the aircraft concerned.

For some time we have been trying to assess the likely impact to Airbus customer airlines for the delays. We now believe that the offer is pretty clear. It is a 5% free off IF a further aircraft is purchased. Rather a kind of buy one get one free to the affected airlines. We know that Virgin has opted to take a delay with a small compensation. However for the major players this translates into bolstering the order book. As a result We estimate that a total of 18 aircraft will be added to the production order book as a result of this special offer. Not quite compensation for the cancellations of the Freighter version of which 20 were ordered but then cancelled by UPS and Fedex.

T2 estimates that the current order book changes (prior to the Paris Airshow) will be as follows:
EK +4 (announced), AF +2 (announced) QF +8 (of which 2 will be compensation - announced), We believe that ILFC and SQ will announce 2 additional orders each. LH will add 3 with one a piece going to KE, TG and MH. A possibility exists that QR and EY will vie to order at least one a piece. However it is wrapped up into whether the orders for A350s will be made permenant. We dont think the (at least 1) private A380 will actually be taking up the twofer deal. Total cost at book value to Airbus in these special deals will be over 2.2 Billion Euros.

Airbus is planning some blockbuster announcements for Paris. Some of those orders will be part of these deals we believe. Boeing will be low key as they have been having a lot of basking in the sun at Airbus' expense of late.

Stay tuned. This could be fun

Cheers

Timothy

Why Iberia? Can BA capitalize?

Flanking the Skyteam Alliance anchored around 2 Northern European airports (CDG and AMS) has been a goal of BA. Of late BA has been feeling the heat with the infrastructure failures at LHR which has resulted in generally a loss of connecting traffic at the world's busiest international airport. As someone who connects frequently through the major EU hubs I can assure you they are usually pretty bad. But AMS is still the champ at this. I am sure many of my fellow travellers can recite tales of horror from FRA (the furthest A gates) LHR (the staircase to heaven or the escalators to hell), or CDG (the bus rides around Northern France). The new Madrid airport terminal feels like a positive dream. BA is hoping its new T5 will be just as terrific and give them the edge against all its new competitors.

BA desperately needs another platform to retain its dominance. Wednesday's (May 23) article in the WSJ was a good overview of the motivations. But BA has been either very lucky (financially from its 2 major investments) or very unlucky (less than fulfillment of traffic potential) in its alliances. This time its hoping for success on both accounts.

BA's failures have been when it meddles in other people's markets. The US Air investment and involvement was unhappy for all concerned. But Qantas worked out just fine. Because Ayling and his successors wisely left them alone. TPG's team is not a group of hands off players. So we can be prepared for some fireworks in execution if the team wins. Right now they are the only game in town. With 35% of the shares locked up - anyone else hoping for a look in will be hard pressed. Let’s just hope there isn’t a repeat of the APA debacle.

Cheers

Is Boeing Fudging on 787 Delays?

Boeing has committed in very public pronouncements on the roll out for the 787 on july 8 07. A huge embarassemtn for them if they miss it. But they wont. Flying it will be a different matter.

The delivery of several important components are not all coming together at quite the right time. So there will be some parts that are going to be late. Specifically sources tell us - the wiring wont be ready and they will be installing this long after the actual roll out.

We wish Boeing ALL the luck with 787. Having seen and actually touched a test subject - I can assure you that it is going to be a great aircraft. However it is ground breaking and there are many aggressive new components that make up this ambitions design. Comparing sections side by side with a conventional metal based fuselage shows just how different it is. Across the airport not more than a mile or two away from where the 787 is being assembled there is a fine example of what can go wrong. Volunteers mostly from Boeing are nearing the end of their 11 year restoration of a Comet (a 4C originally delivered to Mexicana). Lets just hope that Boeing hasnt made the same mistakes that De Havilland did with the original Comet 1.

Still lets see if they make an early first flight with the 787. If there is a screw up on the dates and significant slack time is taken up - it could make for some bad press for Boeing and bad news for the current high flying stock.

Cheers

Timothy

Will Willie make a run at Iberia?

So far Willie Walsh's tenure at the head of the World's Favorite Airline has been a bit of a dud. While vowing to clean house he has been relatively low profile and not a heck of a lot seems to be going on at Waterside these days. Not quite what the Board wanted in a CEO after kicking out Ayling and having the able Rod Eddington stabilize the business.

But this is about to change. Frustrated with the pace of change and now faced with the impending loss of Bermuda II rights at LHR - BA needs to make its move on to the continent and soon.

Iberia is a perfect candidate - already a strategic investment vehicle for BA and a OneWorld member there is little overlap between the airlines. But with OpenSkies coming within the next 12 months the time to build up alliances is not something that happens overnight. For success to happen now - BA needs also to benefit from a loosening of the leash on its relationship with AA. The argument is there already. If DL and AF and their sub-partners can have a nice a tight alignment there is no longer a reason to restrain BA and AA. It will just depend on how far the US DoJ and the EU can come to terms in fairness and openness on the Transatlantic.

If BA does not push the issue then we can be pretty sure that they have received the word that such a boost in the alliance would be frowned on and result in a somewhat pyrrhic victory - with BA being forced to surrender slots at LHR. Something right now it doesn't want to do.

Interestingly this would be a coming together of Spanish and UK interests hard on the heels of last year's takeover of BAA by the Spaniards. Sir Francis Drake must be spinning in his grave.

Cheers

Timothy

Did we call it right? QF Chairwoman to resign

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

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

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
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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

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. ®

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

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

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.