While some of us bemoan the forced retirement of Concorde there is however a very vibrant market for premium traffic.
If we take the Londont to New York route in Concorde's heyday there were the following flights between London (LHR and LGW) and New York (EWR and JFK):
British Airways 5X - Newark 1, JFK 4 Plus 2 Concorde
American Airlines 4 JFK-LHR
Virgin Atlantic 5 various combos PLUS CO code share
United 3
Continental 2 plus VS code share
Air India 2
Total 21 Flights per day plus 2 Concordes.
Thats a healthy bit of competition.
Fast forward to this summer (using August 12th as the date) and we have even more flights 35 flights daily with premium seat share of the new entrants at a healthy 22% of all premium seats. For clarification a premium seat is a C/J/P/F class seat not premium economy.
With Virgin and BA poised to make an entry into the market we anticipate that the segment will continue to grow. This trend is likely to spread to other markets where already there is premium single plane service on many other sectors including flights offered by Air France, L'Avion, Lufthansa, Swiss International, KLM. We believe that certain other markets will see the introduction of premium service. Even Maxjet filed for one of the US-China frequencies this month.
If general traffic and therefore yields go soft next year as has been predicted (we are still pondering that question) will traffic in the premium plane business also soften? Will the premium traffic take a load of the depressed Coach yields?
Good questions all - stay tuned
Cheers
Note on sources - Source Material is OAG, SeatGuru, IATA and Airlines directly.
21 July 2007
Scaled Composites Succumbs - Big Defense Takes Over
One of the sad footnotes to the Space Face is that the big guys are likely to win. With EADS already announcing its Astrium's Division project for a CTOL (Conventional Take Off and Landing) based Space Plane for Space Tourism, it wasn’t long before one of the big 3 US Contractors decided that this was something they wanted into.
Northrop Grumman Corp agreed July 5th and announced July 20th the agreed purchase of the remaining shares it didn’t own. According to news reports the share holding rose from 20% to 100% with (subject to US government approval) final effect from August 2007. Quietly the other players have been evaluating the market. It is well known that Boeing has been cooperating with the Russians in this area for some time. Lockheed Martin is keeping Mum on the subject. I believe that we will see a small further number of these projects seeing the light of day. Who is to say that Textron (owner of Cessna Aircraft) will not be entering the race. Not to mention Bombardier (Owner of Canadair and Learjet). Indeed the latter's Learjet 25 is the basis for a low cost entry by Rocketplane Ltd based in Oklahoma State.
The obvious impact is that competition will drive down the pricing to reasonable levels from the current astronomical $30-$40 million (For Space Adventures trips to the ISS) to $180,000 for a flight on SpaceShip 2 with reservations maxed out for approximately the first 5 years of service. Most of these reservations are backed by 100% prepayment. The first time there is an accident of course people will be heading for the hills, but in the mean time this is the equivalent of the Concorde Travel experience.
I might just sign up
Cheers
Timothy
Northrop Grumman Corp agreed July 5th and announced July 20th the agreed purchase of the remaining shares it didn’t own. According to news reports the share holding rose from 20% to 100% with (subject to US government approval) final effect from August 2007. Quietly the other players have been evaluating the market. It is well known that Boeing has been cooperating with the Russians in this area for some time. Lockheed Martin is keeping Mum on the subject. I believe that we will see a small further number of these projects seeing the light of day. Who is to say that Textron (owner of Cessna Aircraft) will not be entering the race. Not to mention Bombardier (Owner of Canadair and Learjet). Indeed the latter's Learjet 25 is the basis for a low cost entry by Rocketplane Ltd based in Oklahoma State.
The obvious impact is that competition will drive down the pricing to reasonable levels from the current astronomical $30-$40 million (For Space Adventures trips to the ISS) to $180,000 for a flight on SpaceShip 2 with reservations maxed out for approximately the first 5 years of service. Most of these reservations are backed by 100% prepayment. The first time there is an accident of course people will be heading for the hills, but in the mean time this is the equivalent of the Concorde Travel experience.
I might just sign up
Cheers
Timothy
20 July 2007
Is the EC trying some wizardry to appease Amadeus?
On the eve of the release of the Harry Potter final installment - perhaps we are seeing some signs and clues as to how the EC will define its long awaited changes to the GDS regulations. Up until now we have all assumed that the focus would be on the relaxation of the rules along the lines of the US deregulation of the GDS marketplace. But no - it would appear the bureaucrats in Brussels have other plans in store for us. The final chapter in this saga looks like it is going to have a few interesting plot twists and in the end The GDS/Harry character may not be killed off.
The issue it seems in the somewhat single tasking mode of the EC is that they are responding to some obvious pressure from the Amadeus lobbying efforts. They are now opening the door to the definition of "Parent" carrier. The origins of the "Parent" carrier term come from the 1980s when the battle was initially between the "Have" airlines - i.e. those who owned a part of a GDS vs. the "Have Not" carriers. Since this was clear at the time no one needed to have much definition. All EU based major airlines were all by definition "Parent" carriers by dint of the ownership stakes in either Galileo or Amadeus.
Fast forward to today and with the major airlines in the Galileo group all now non "Parent" carriers and even SAS is not an owner - then in Euro speak the definition is moot.
But I offer two other thoughts for consideration. The definitions of "Control" and "Distribution" should also be on the table for interpretation. Why?
Let’s start with "Distribution" the lines are now clearly drawn differently as we have fragmented distribution. With Amadeus focus now on airline IT it is not hard to see that actually distribution control can be effectively managed through the Airlines' PSS (Passenger Sales and Service aka internal Res Systems). So PSS systems are today doing much of what the GDS did before. If PSS systems were added into the loose definition of GDS in a redefined term of Distribution Platform then Amadeus would fail in my opinion the test of dominant control. Specifically we believe at T2 that the System User agreement should be examined in the same context as the "neutral" GDS agreements.
Now let’s consider the term "Control". The 3 participating owner carriers (and I choose my words carefully hear) are indeed much stronger than they were in the late 1980s and 1990s when the regulations were drawn up. Further the US share of the Transatlantic market has fallen significantly in actual passenger counts. The concentration of control among the 3 is pretty compelling.
However take both terms together - Control AND Distribution - and add ALL system users, CTP (Star Alliance - Common Technology Platform) users, all ALTEA users in the EU together and there is clearly a dominance and concentration of market power the likes of which we have NEVER seen before.
It was our hope that the EC would enact the new legislation for the protection of the consumer and the smaller EC airlines to prevent abuse of the monopolistic power concentration that can occur in situations such as these. Unlike the US market - the EC has the power of judge jury and executioner. They can both write and implement legislation. There is no check of the legislature at this level. Appeal to the judiciary is such a laborious process that it is effectively mute in all but the most high profile of cases. AND it takes many years of significant expense to challenge.
The story is not yet over and there will be many more plot twists. The EC has been known for using some of the Black Arts to conjure up dark forces cloaked in respectability. Let’s hope that
Olivier Onidi doesn’t turn out to be the real Voldermort.
For further reading we recommend going to the EC's Transportation section, Air Transport Portal: http://ec.europa.eu/transport/air_portal/index_en.htm.%20Specifically look a the comments on "Possible revision of Regulation 2299/89 on a Code of Conduct for computerized reservation systems (CRS)" http://ec.europa.eu/transport/air_portal/consultation/2007_04_27_en.htm
Note that the EC uses the older term CRS Computer Reservation System - rather than the more common GDS, Global Distribution System. Perhaps this different wording has an impact on the actual spells used.
OK so I carried the Harry Potter metaphor a bit far but my comments are valid. You have been warned. I have experienced first hand the power of the EC in this regard and how they listen to the "home team" of Amadeus lobbyists.
Other resources I suggest are to go to the BTC's website. http://businesstravelcoalition.com/
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
http://www.t2impact.com/
The issue it seems in the somewhat single tasking mode of the EC is that they are responding to some obvious pressure from the Amadeus lobbying efforts. They are now opening the door to the definition of "Parent" carrier. The origins of the "Parent" carrier term come from the 1980s when the battle was initially between the "Have" airlines - i.e. those who owned a part of a GDS vs. the "Have Not" carriers. Since this was clear at the time no one needed to have much definition. All EU based major airlines were all by definition "Parent" carriers by dint of the ownership stakes in either Galileo or Amadeus.
Fast forward to today and with the major airlines in the Galileo group all now non "Parent" carriers and even SAS is not an owner - then in Euro speak the definition is moot.
But I offer two other thoughts for consideration. The definitions of "Control" and "Distribution" should also be on the table for interpretation. Why?
Let’s start with "Distribution" the lines are now clearly drawn differently as we have fragmented distribution. With Amadeus focus now on airline IT it is not hard to see that actually distribution control can be effectively managed through the Airlines' PSS (Passenger Sales and Service aka internal Res Systems). So PSS systems are today doing much of what the GDS did before. If PSS systems were added into the loose definition of GDS in a redefined term of Distribution Platform then Amadeus would fail in my opinion the test of dominant control. Specifically we believe at T2 that the System User agreement should be examined in the same context as the "neutral" GDS agreements.
Now let’s consider the term "Control". The 3 participating owner carriers (and I choose my words carefully hear) are indeed much stronger than they were in the late 1980s and 1990s when the regulations were drawn up. Further the US share of the Transatlantic market has fallen significantly in actual passenger counts. The concentration of control among the 3 is pretty compelling.
However take both terms together - Control AND Distribution - and add ALL system users, CTP (Star Alliance - Common Technology Platform) users, all ALTEA users in the EU together and there is clearly a dominance and concentration of market power the likes of which we have NEVER seen before.
It was our hope that the EC would enact the new legislation for the protection of the consumer and the smaller EC airlines to prevent abuse of the monopolistic power concentration that can occur in situations such as these. Unlike the US market - the EC has the power of judge jury and executioner. They can both write and implement legislation. There is no check of the legislature at this level. Appeal to the judiciary is such a laborious process that it is effectively mute in all but the most high profile of cases. AND it takes many years of significant expense to challenge.
The story is not yet over and there will be many more plot twists. The EC has been known for using some of the Black Arts to conjure up dark forces cloaked in respectability. Let’s hope that
Olivier Onidi doesn’t turn out to be the real Voldermort.
For further reading we recommend going to the EC's Transportation section, Air Transport Portal: http://ec.europa.eu/transport/air_portal/index_en.htm.%20Specifically look a the comments on "Possible revision of Regulation 2299/89 on a Code of Conduct for computerized reservation systems (CRS)" http://ec.europa.eu/transport/air_portal/consultation/2007_04_27_en.htm
Note that the EC uses the older term CRS Computer Reservation System - rather than the more common GDS, Global Distribution System. Perhaps this different wording has an impact on the actual spells used.
OK so I carried the Harry Potter metaphor a bit far but my comments are valid. You have been warned. I have experienced first hand the power of the EC in this regard and how they listen to the "home team" of Amadeus lobbyists.
Other resources I suggest are to go to the BTC's website. http://businesstravelcoalition.com/
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
http://www.t2impact.com/
19 July 2007
Southwest jumps onto Paypal bandwagon
So the ball is SLOWLY rolling but definitely there is momentum
We have been advocating the use of non-credit card financial fulfilment for some time. We believe that there are considerable savings in various areas such as cross border payments and reduced credit card fees that can be garnered if the merchant is prepared to "shop" around.
With Visa now experiencing Debit card rates of more than 50% the time is right for the use of alternative solutions such as eBay's Paypal and Google's Checkout services.
Well done WN - any more takers?
cheers
Timothy
We have been advocating the use of non-credit card financial fulfilment for some time. We believe that there are considerable savings in various areas such as cross border payments and reduced credit card fees that can be garnered if the merchant is prepared to "shop" around.
With Visa now experiencing Debit card rates of more than 50% the time is right for the use of alternative solutions such as eBay's Paypal and Google's Checkout services.
Well done WN - any more takers?
cheers
Timothy
18 July 2007
Sao Paulo's Congonhas airport - comment
Having flown into this airport frequently (and its corresponding short runway counterpart in Rio) I can personally attest to the scary nature of the experience. The airport is tiny in comparison to other facilities. Given the significant daily traffic not just on the Rio - Sao Paolo run but also flights from there to many other places the location was a major factor in this tragic accident.
I will also however suggest partial culpability at several doors.
Whatever the actual reason for the accident we can say without a doubt that there is more than one issue at stake here. Due to the nature of the Brazilian market it is unlikely that this will ever come out as part of any official investigation.
1. The airport which sits on a small plateau is surrounded by dense population. This would not be tolerated in many other cities. Some of the housing may not be legal. A slum in Brazil (Favella) is not the same as we might expect, speaking from a Non-Brazilian point of view. Hundreds of thousands of people live in these makeshift cities in both Rio and Sao Paolo.
2. The only way to land is to slam the aircraft down on the runway and full thrust reversers and braking to slow the aircraft down. For a fully loaded A320 this is no small feat. Even 737s (Gol and Varig) and F100s (TAM) (the other jets that use the airport) have a hard time with this. There is little to no margin for error.
2. The pilots who fly the shuttle routes are highly competent and used to the "normal" conditions. This was far from normal having been one of the wettest winters in memory.
3. The runway had been repaved but not re-grooved
4. There had been a court case in which a judge had ruled that the airport was safe under pressure from the official bodies.
5. At least once in the preceding months since the runway re-surfacing had a pilot complained of the danger in the runway condition
6. Infraero - the former military organization charged with the infrastructure of the airports in Brazil and its counterpart ANAC http://www.infraero.gov.br/, http://www.anac.gov.br/ respectively are both politically influenced organizations.
7. TAM has been aggressively growing (as has GOL and others) without much check. The aggressive expansion has occurred at a time when the former national carrier VARIG went into deep decline (now only handling less than 3% of the total traffic) and when the air traffic control system was shown to be severely lacking. (See GOL midair collision).
8. TAM has had a poor record of safety particularly with its F100 aircraft. Even Wikipedia doesn’t log all of the accidents. In addition its hero Rolim Amaro was himself killed in a TAM Helicopter crash.
Enough guilt and blame to go round. Our thoughts and prayers are for the victims and their families. Let’s hope that this is a catalyst to cause reform and better oversight by the authorities. Brazil is a great country. its people are some of the nicest you can hope to meet. Let’s hope for the best for them
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
http://www.t2impact.com/
Our thoughts and prayers go
I will also however suggest partial culpability at several doors.
Whatever the actual reason for the accident we can say without a doubt that there is more than one issue at stake here. Due to the nature of the Brazilian market it is unlikely that this will ever come out as part of any official investigation.
1. The airport which sits on a small plateau is surrounded by dense population. This would not be tolerated in many other cities. Some of the housing may not be legal. A slum in Brazil (Favella) is not the same as we might expect, speaking from a Non-Brazilian point of view. Hundreds of thousands of people live in these makeshift cities in both Rio and Sao Paolo.
2. The only way to land is to slam the aircraft down on the runway and full thrust reversers and braking to slow the aircraft down. For a fully loaded A320 this is no small feat. Even 737s (Gol and Varig) and F100s (TAM) (the other jets that use the airport) have a hard time with this. There is little to no margin for error.
2. The pilots who fly the shuttle routes are highly competent and used to the "normal" conditions. This was far from normal having been one of the wettest winters in memory.
3. The runway had been repaved but not re-grooved
4. There had been a court case in which a judge had ruled that the airport was safe under pressure from the official bodies.
5. At least once in the preceding months since the runway re-surfacing had a pilot complained of the danger in the runway condition
6. Infraero - the former military organization charged with the infrastructure of the airports in Brazil and its counterpart ANAC http://www.infraero.gov.br/, http://www.anac.gov.br/ respectively are both politically influenced organizations.
7. TAM has been aggressively growing (as has GOL and others) without much check. The aggressive expansion has occurred at a time when the former national carrier VARIG went into deep decline (now only handling less than 3% of the total traffic) and when the air traffic control system was shown to be severely lacking. (See GOL midair collision).
8. TAM has had a poor record of safety particularly with its F100 aircraft. Even Wikipedia doesn’t log all of the accidents. In addition its hero Rolim Amaro was himself killed in a TAM Helicopter crash.
Enough guilt and blame to go round. Our thoughts and prayers are for the victims and their families. Let’s hope that this is a catalyst to cause reform and better oversight by the authorities. Brazil is a great country. its people are some of the nicest you can hope to meet. Let’s hope for the best for them
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
http://www.t2impact.com/
Our thoughts and prayers go
13 July 2007
FINALLY a deal on EU-US Data
OK so it was inevitable but its at least good to know that you (and me) can go to Europe after July 31st after an 11th hour agreement between the US and the EC on the handing over of data for US Homeland Security.
http://online.wsj.com/article/BT-CO-20070713-705251.html?mod=dist_smartbrief
The DoHS is still somewhat in disarray and still have not resolved many of the grand plans they announced but cannot implement post 9/11 but this is a small step.
I have no sympathy for the airlines in this case who are complaining that it will squeeze existing tight profit margins. What do they expect - largesse?
Now we have this deal in place all is at peace between the US and its transatlantic counterparts. So now perhaps we can get on with the business of a full and true open skies and a free market across the pond
Cheers
Timothy
http://online.wsj.com/article/BT-CO-20070713-705251.html?mod=dist_smartbrief
The DoHS is still somewhat in disarray and still have not resolved many of the grand plans they announced but cannot implement post 9/11 but this is a small step.
I have no sympathy for the airlines in this case who are complaining that it will squeeze existing tight profit margins. What do they expect - largesse?
Now we have this deal in place all is at peace between the US and its transatlantic counterparts. So now perhaps we can get on with the business of a full and true open skies and a free market across the pond
Cheers
Timothy
Statement of Authenticity - Blog Policy for this site
Every once is a while it is important to understand the perspective and authority of the source. So for the benefit of the loyal readers out there (and even if you are only an occasional reader) - I would like to layout our policy for this blog.
We promise to write only accurate information
We promise to try and separate information from opinion
We promise to try and cite accurately the source material if there is a reference.
That's it.
I am the chief writer for this blog but we do have occasional guest writers. So the opinions expressed are those of T2Impact not of anyone else unless specifically so stated. If we screw up we take full responsibility for it. And if this happens we will print a retraction or correction.
If you ever want to comment - please feel free. If you wish to contact me you can reach me on skype - timothyo or via email: timothyo@t2impact.com
Thanks for reading
Cheers
Timothy O'Neil-Dunne
Managing Partner
T2Impact Ltd
+1 302 351 6119
We promise to write only accurate information
We promise to try and separate information from opinion
We promise to try and cite accurately the source material if there is a reference.
That's it.
I am the chief writer for this blog but we do have occasional guest writers. So the opinions expressed are those of T2Impact not of anyone else unless specifically so stated. If we screw up we take full responsibility for it. And if this happens we will print a retraction or correction.
If you ever want to comment - please feel free. If you wish to contact me you can reach me on skype - timothyo or via email: timothyo@t2impact.com
Thanks for reading
Cheers
Timothy O'Neil-Dunne
Managing Partner
T2Impact Ltd
+1 302 351 6119
12 July 2007
Fragmentation - The importance of Tribal Context
One of the more interesting by-products of the Web Life Style has been the fragmentation of the user communities.
Traditionally we have ascribed physical characteristics when we describe people and users. Definitions by:
Race,
Sexual Preference,
Creed
Gender
Economic Profile
etc etc
Traditional media then tried to ascribe people by their media usage characteristics. What DMA you live in, what daypart you belong in etc etc. Even today we see that the long held view of metrics on the web of page views (heck remember when we measured in hits!!!) has been abandoned by none other than Nielsen.
But this traditional characterization no longer applies. Humans have a wonderful habit of constantly evolving. The rate of change has done nothing but accelerate.
Many people can easily scoff at Social Networking as either a flash in the pan or at worst a fad. However we believe that there has been a fundamental shift in thinking and more importantly in behavior that affects consumption and in particular travel.
The characteristics of the users needs a label. Heck we love labels. But in trying to discover a term that correctly defines what we see - we have had to resort to creating our own. We call this new behavior "Tribal Context"
Tribal because the user communities are coming together in a more fluid set of relationships without pattern, these are tribes rather than hard groups They change constantly. Context is much more important because it is no longer mono-cultural - rather the context is dynamic at all levels: Time, Location, Mood, Whim, etc etc. Capturing this constantly evolving elements has created massive challenges for the advertising and marketing chaps attempting to reach these consumers. Past Behavior is no longer any proxy for current or future behavior.
So no matter what side of the game you are on - a user. consumer, supplier, content source indeed any stakeholder, understanding Tribal Context is essential.
Good luck - I am off to pull my hair out to understand how to make it work for our business and our clients...
Cheers
timothy
Traditionally we have ascribed physical characteristics when we describe people and users. Definitions by:
Race,
Sexual Preference,
Creed
Gender
Economic Profile
etc etc
Traditional media then tried to ascribe people by their media usage characteristics. What DMA you live in, what daypart you belong in etc etc. Even today we see that the long held view of metrics on the web of page views (heck remember when we measured in hits!!!) has been abandoned by none other than Nielsen.
But this traditional characterization no longer applies. Humans have a wonderful habit of constantly evolving. The rate of change has done nothing but accelerate.
Many people can easily scoff at Social Networking as either a flash in the pan or at worst a fad. However we believe that there has been a fundamental shift in thinking and more importantly in behavior that affects consumption and in particular travel.
The characteristics of the users needs a label. Heck we love labels. But in trying to discover a term that correctly defines what we see - we have had to resort to creating our own. We call this new behavior "Tribal Context"
Tribal because the user communities are coming together in a more fluid set of relationships without pattern, these are tribes rather than hard groups They change constantly. Context is much more important because it is no longer mono-cultural - rather the context is dynamic at all levels: Time, Location, Mood, Whim, etc etc. Capturing this constantly evolving elements has created massive challenges for the advertising and marketing chaps attempting to reach these consumers. Past Behavior is no longer any proxy for current or future behavior.
So no matter what side of the game you are on - a user. consumer, supplier, content source indeed any stakeholder, understanding Tribal Context is essential.
Good luck - I am off to pull my hair out to understand how to make it work for our business and our clients...
Cheers
timothy
11 July 2007
I was REALLY hoping the iPhoney would be a solution
Usable device.
Sadly it tries to be jack of all trade and master of none.
Everything it does it does OK. Some better than others. Everything together makes for a complicated result that will not necessarily provide for a better experience overall.
While I am not a Luddite - I am somewhat peturbed by sheer number of times I am asked (make that told) to learn a new UI/UE. iPhone is probably the worst so far.
OK so I am not a Mac head (I own one) there are 4 iPods in my house. However having worked with the device for a full day - almost full time - I have to concur with Tom Yager's analysis at Infoworld. http://www.infoworld.com/article/07/07/10/28TCiphone_1.html
I was REALLY hoping to reduce my number of devices. But this doesnt quite cut it. Even though I am already an AT&T user. Thanks I will stick to my Blackberry (8700) and the seperate Sony W810 phone. It has superior call quality and is a great MP3 player. I cant wait to get my hands on the W900 series which should do the trick.
Using a single 4GB chip I get as much music as the base iPhone. All for an extra $37. So at this point I am going to pass on the iPhone. They are cute but not that usable
Cheers
Timothy
Sadly it tries to be jack of all trade and master of none.
Everything it does it does OK. Some better than others. Everything together makes for a complicated result that will not necessarily provide for a better experience overall.
While I am not a Luddite - I am somewhat peturbed by sheer number of times I am asked (make that told) to learn a new UI/UE. iPhone is probably the worst so far.
OK so I am not a Mac head (I own one) there are 4 iPods in my house. However having worked with the device for a full day - almost full time - I have to concur with Tom Yager's analysis at Infoworld. http://www.infoworld.com/article/07/07/10/28TCiphone_1.html
I was REALLY hoping to reduce my number of devices. But this doesnt quite cut it. Even though I am already an AT&T user. Thanks I will stick to my Blackberry (8700) and the seperate Sony W810 phone. It has superior call quality and is a great MP3 player. I cant wait to get my hands on the W900 series which should do the trick.
Using a single 4GB chip I get as much music as the base iPhone. All for an extra $37. So at this point I am going to pass on the iPhone. They are cute but not that usable
Cheers
Timothy
Bidets and Airplanes make a good mix?
I have restrained myself from writing this entry for over 6 months since I first heard that Boeing had put Bidet's on the options list for the 787. Originally I understood it was just for the BBJ version of the aircraft. But no lesser authority than the WSJ: http://online.wsj.com/article/SB118411594813562792-search.html?KEYWORDS=bidet&COLLECTION=wsjie/6month
has confirmed that yes this has in fact been ADOPTED by the two Japanese airlines ANA (launch customer) and JAL. It only remains for Virgin (pardon the pun) to adopt this for it to become a standard accoutrement of all operators.
So all manner of concepts spring to mind. So here are just a few potential PA announcements for you to consider:
1. Use in Turbulence - "Please return to your seat and refrain from using the Bidet while the Seatbelt sign is illuminated"
2. Prior to Landing - "Please return your Tray Tables and Seatbacks to their full and upright positions and refrain from leaving the Bidet on during landing
3. After Boarding before take off - " This aircraft is equipped with escape path Bidets please read the pamphlet in your seat back and familiarize your self with this feature.
4. The return of the gender specific announcement - "Male passengers are requested to kindly remove their shoes before using the Bidet and your accurate aim is highly appreciated
we have a series of illustrations to go with this but as this may be viewed by sensitive folks we will refrain from publishing them
Cheers
Timothy
has confirmed that yes this has in fact been ADOPTED by the two Japanese airlines ANA (launch customer) and JAL. It only remains for Virgin (pardon the pun) to adopt this for it to become a standard accoutrement of all operators.
So all manner of concepts spring to mind. So here are just a few potential PA announcements for you to consider:
1. Use in Turbulence - "Please return to your seat and refrain from using the Bidet while the Seatbelt sign is illuminated"
2. Prior to Landing - "Please return your Tray Tables and Seatbacks to their full and upright positions and refrain from leaving the Bidet on during landing
3. After Boarding before take off - " This aircraft is equipped with escape path Bidets please read the pamphlet in your seat back and familiarize your self with this feature.
4. The return of the gender specific announcement - "Male passengers are requested to kindly remove their shoes before using the Bidet and your accurate aim is highly appreciated
we have a series of illustrations to go with this but as this may be viewed by sensitive folks we will refrain from publishing them
Cheers
Timothy
Mr O'leary - you do have a point. EC logic failure
While the ever ebullient Mr O'Leary can hardly be described as the most diplomatic of folks, he certainly does have a point over the EC's recent ruling on the moribund EI/FR merger.
The EC has been considerably adroit at avoiding a formal confrontation on the aid issues to "sick" European airlines. Particularly Alitalia and Olympic (whatever it’s called this week). But it goes back further to Sabena, Air France TAP and others. To disallow the valid merger between the two certainly goes totally against the grain of the EC's stated and legislated policies.
As this is a family blog I will not repeat some of the more colorful statements of Mr O’Leary on the subject but you have to admit there is a significant logic disconnect going on here.
I believe the merger was a non-starter due to the Irish Government's blocking shareholding and the Union's opposition. But in the next down turn, this is a dangerous precedent of the EC reacting to member state pressure. However when you are judge, jury and executioner (as is the EC's rights in law) then I guess you can do whatever the heck you like.
Personally I think the Commission has done itself a huge disservice and should be publically flogged.
Cheers
Timothy
The EC has been considerably adroit at avoiding a formal confrontation on the aid issues to "sick" European airlines. Particularly Alitalia and Olympic (whatever it’s called this week). But it goes back further to Sabena, Air France TAP and others. To disallow the valid merger between the two certainly goes totally against the grain of the EC's stated and legislated policies.
As this is a family blog I will not repeat some of the more colorful statements of Mr O’Leary on the subject but you have to admit there is a significant logic disconnect going on here.
I believe the merger was a non-starter due to the Irish Government's blocking shareholding and the Union's opposition. But in the next down turn, this is a dangerous precedent of the EC reacting to member state pressure. However when you are judge, jury and executioner (as is the EC's rights in law) then I guess you can do whatever the heck you like.
Personally I think the Commission has done itself a huge disservice and should be publically flogged.
Cheers
Timothy
Will Worldspan exit with a whimper?
The powers that be in the USA have given their tentative approval to Worldspan's "merger" into Galileo. Still subject to the EC approval process which is under review this is likely to drag on for at least another 4 months.
Significant challenges remain - like how do you explain the value without merging the 2 platforms. Sorry guys I just dont buy your logic at the moment. However I am open to hearing a good story.
So the once great Worldspan will likely fade into the sunset rather than go out with a bang.
Cheers
Timothy
Significant challenges remain - like how do you explain the value without merging the 2 platforms. Sorry guys I just dont buy your logic at the moment. However I am open to hearing a good story.
So the once great Worldspan will likely fade into the sunset rather than go out with a bang.
Cheers
Timothy
09 July 2007
You never had it so good - Just ask Delta
There are probably a lot of people out there who have signed up for Delta's weekly email fares notifications. Well at least twice in the last month - they have sent out a spectacular email with... no special airfares.
So one can conclude that either those nice people in the ATLHQ are getting lazy or life is just too good for words. I am actually in the latter camp. For the last year (I keep a log of all the emails I get from each carrier) i have actually had only 5 specials from my home town.
Here is the exact text from their email of today...
Below are your Weekly Fare Specials. All fares require a Saturday departure and return travel on either Monday or Tuesday. Take advantage of these exclusive online offers listed below and earn miles with Delta.
Looks like we're not running any special fares for you this week but maybe you will see a great deal for your family or friends. Take a look and let them know.
Looks like things are good at the moment for the airlines – we all know how miserable it is for the passengers (yes even I had to spend the night on the floor in ATL) ..... But will it last.
Cheers
Timothy
So one can conclude that either those nice people in the ATLHQ are getting lazy or life is just too good for words. I am actually in the latter camp. For the last year (I keep a log of all the emails I get from each carrier) i have actually had only 5 specials from my home town.
Here is the exact text from their email of today...
Below are your Weekly Fare Specials. All fares require a Saturday departure and return travel on either Monday or Tuesday. Take advantage of these exclusive online offers listed below and earn miles with Delta.
Looks like we're not running any special fares for you this week but maybe you will see a great deal for your family or friends. Take a look and let them know.
Looks like things are good at the moment for the airlines – we all know how miserable it is for the passengers (yes even I had to spend the night on the floor in ATL) ..... But will it last.
Cheers
Timothy
07 July 2007
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
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
02 July 2007
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.
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.
01 July 2007
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
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
30 June 2007
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
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.
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.
29 June 2007
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
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
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.
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
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
20 June 2007
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
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
18 June 2007
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
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
05 June 2007
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
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
03 June 2007
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
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
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
30 May 2007
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
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
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
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
29 May 2007
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
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
28 May 2007
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
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
24 May 2007
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
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
23 May 2007
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
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
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
21 May 2007
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
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
17 May 2007
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
"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
GDS need new content to remain relevant. They face attack from all sides: Falling Yields, bypass, deregulation, consolidation, etc etc. Over the last 5 years according to figures from ASTA, Travel Agents in the USA have lowered their use of GDS from effectively 100% down to just over 80%. This fall is likely to accelerate as the GNEs come online and as the incentive payments dip. At the same time US agents have increasingly started to use Supplier direct websites. That Gordian knot seems to have been broken and the fragmentation trend continues.
At T2 we believe that this is a natural evolution. We believe that the fundamental forces are going to continue to drive diversity in the GDS – definitely we see that there will be less homogenization of the GDS players.
Southwest is interesting at this juncture. You may ask why did they choose Travelport/Galileo now and what was their rationale. We believe that the deal has been in the works for some time. There were some not inconsiderable technical hurdles to overcome but the writing on the wall has been there for quite some time. SHHHHH don’t say anything to anyone but Southwest is beginning to reach Saturation with the current model. For the past 6 months or so – Southwest has been sounding more and more like a network carrier. In reality it is reaching the HVC – Hybrid Value Carrier model we have been predicting for some time. With the true LCC model just about played out for Southwest – there is no where else to go but – well up. Thus they need to expand their distribution and their model. Thus Galileo fits nicely. Why? They are already available in Sabre but Galileo represents a black hole. Thus the opportunity to reach the #2 corporate agency booking system makes perfect sense. Don’t be surprised if the work does not stop here. Look for GNEs to appear soon with that capability. SWABiz has not been a massive success and the efforts behind it seem to have been somewhat half hearted. The final catalyst has probably been two key factors – both competitive in nature. Firstly the US domestic market is already showing signs of weakness. Just last week WN reported having to revisit its projections for 2008. Secondly jetBlue has shown a remarkable uptick in sales as a result of going back into the GDS. WN cannot afford to ignore these facts.
But why not Amadeus? Simple – Amadeus in the USA is a Leisure system- that is well handled by the direct website. However herein lies a message for the other Hybrid Value Carriers. In other markets HVCs are now eyeing the situation of saturation or at least parity with network carriers and looking for ways to be fully competitive. I think the floodgates could open when Easyjet and Air Berlin look back at being in the GDS. But here is some hope for Amadeus North America – since it has none of the “evil” OTAs on its system here – it may just be OK for Southwest. And Worldspan? By the time the system is ready WSP will be owned by Travelport so the issue is somewhat moot – at least commercially.
Cheers
Timothy
Airlines - The Ides of September are coming
In the boom to bust cycle of airlines - the tradition has always been buy at the top and sell at the bottom... not exactly what even your local stock broker would tell you was a smart thing. If you are a student of history you know that Airlines are highly cyclical. Yet many forget that in times of boom. But will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around. Why?At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system.
Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.So what are the airlines doing with the cash?Plowing it into service improvementsStill off-loading unprofitable marginal routes to affiliate partners.Buying new planes.Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.
Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system. A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future. With our new partner InTheKno (http://www.inthekno.com/) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector. For airlines – the sky is quite sunny at the moment. But we see storm clouds a-coming.
The Domestic USA market growth is slowing and already we are seeing indicators of a softening of traffic in other markets too. Those high fares are beginning to bite. Once we get past September and we see winter sales coming in at low fares – we will see a pull back and competition for the consumer will again emerge. Round about September 15th.
You have been warned!
Cheers
Timothy
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around. Why?At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system.
Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.So what are the airlines doing with the cash?Plowing it into service improvementsStill off-loading unprofitable marginal routes to affiliate partners.Buying new planes.Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.
Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system. A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future. With our new partner InTheKno (http://www.inthekno.com/) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector. For airlines – the sky is quite sunny at the moment. But we see storm clouds a-coming.
The Domestic USA market growth is slowing and already we are seeing indicators of a softening of traffic in other markets too. Those high fares are beginning to bite. Once we get past September and we see winter sales coming in at low fares – we will see a pull back and competition for the consumer will again emerge. Round about September 15th.
You have been warned!
Cheers
Timothy
12 May 2007
The Passing of the Torch at jetBlue
Entrepeneurs are seldom good at knowing when to kick themselves out or upstairs. The airline industry is littered with egos of people who have never learned when. (Ed Beauvais, Michael Conway amongst others). Also there are many stories of people who stayed on too long in almost any industry.
I encourage the reader to check out Robert J Serling's Aviation History Series which is a pretty good chronicle of greed and chutzpah: http://www.amazon.com/exec/obidos/search-handle-url/102-8178272-0316913?%5Fencoding=UTF8&search-type=ss&index=books&field-author=Robert%20J.%20Serling
So it is with some sadness and hope that we see David Neeleman being kicked upstairs. There is no sub-plot. The airline was caught wrong footed twice this winter. Its customer service strategy was simply inadequate and the operations manual was - well just plain wrong. It has been fixed (we are led to believe) but the damage is done. So the Founder takes the fall and is kicked upstairs.
However there is a footnote to this which I believe is important to consider. jetBlue decided to use the strategy of low cost carrier, (LCC like Southwest) but full product. The differentiation being that unlike Southwest - B6 would treat its customers to a better experience and charge a premium over true low costs carriers. Thus boosting the bottom line with a higher margin than either the top cost (Legacy, Full Service Network Carriers - FNCs) or the bottom player LCCs. This was a good attempt at hybridization or HVC - Hybrid Value Carriers.
There are 2 flaws to the jetBlue strategy in my opinion.
Flaw 1 - JFK. Not the best place to have a hub due to longer lead times and other endemic problems with the airport and staffers.
Flaw 2 - Competition. Assuming that the others will stay stupid for ever is a temporary strategy at best. Delta has emerged with a focus on JFK but for different reasons (International). The net is that Delta's value proposition is better than jetBlue's when the carriers are compared on a more common set of metrics.
Both these two flaws along with a failure to continue development of a "secret sauce" differentiator by jetBlue is inhibiting its growth profile. So the stock market darling of the early part of the decade is now mired in the same sets of issues and obstacles that it sought to throw rocks at. It is for this reason that jetBlue's customer service failure has more impact. Neeleman wanted this to be the big differentiator.
Wisely there is going to be a seasoned hand on the tiller. Let's all hope that the focus returns and that jetBlue can continue to give the others a run for the money. We all love the underdog. But are we willing to pay for the good feeling? Ultimately no. Its as always - price/service mix.
Cheers
Timothy
I encourage the reader to check out Robert J Serling's Aviation History Series which is a pretty good chronicle of greed and chutzpah: http://www.amazon.com/exec/obidos/search-handle-url/102-8178272-0316913?%5Fencoding=UTF8&search-type=ss&index=books&field-author=Robert%20J.%20Serling
So it is with some sadness and hope that we see David Neeleman being kicked upstairs. There is no sub-plot. The airline was caught wrong footed twice this winter. Its customer service strategy was simply inadequate and the operations manual was - well just plain wrong. It has been fixed (we are led to believe) but the damage is done. So the Founder takes the fall and is kicked upstairs.
However there is a footnote to this which I believe is important to consider. jetBlue decided to use the strategy of low cost carrier, (LCC like Southwest) but full product. The differentiation being that unlike Southwest - B6 would treat its customers to a better experience and charge a premium over true low costs carriers. Thus boosting the bottom line with a higher margin than either the top cost (Legacy, Full Service Network Carriers - FNCs) or the bottom player LCCs. This was a good attempt at hybridization or HVC - Hybrid Value Carriers.
There are 2 flaws to the jetBlue strategy in my opinion.
Flaw 1 - JFK. Not the best place to have a hub due to longer lead times and other endemic problems with the airport and staffers.
Flaw 2 - Competition. Assuming that the others will stay stupid for ever is a temporary strategy at best. Delta has emerged with a focus on JFK but for different reasons (International). The net is that Delta's value proposition is better than jetBlue's when the carriers are compared on a more common set of metrics.
Both these two flaws along with a failure to continue development of a "secret sauce" differentiator by jetBlue is inhibiting its growth profile. So the stock market darling of the early part of the decade is now mired in the same sets of issues and obstacles that it sought to throw rocks at. It is for this reason that jetBlue's customer service failure has more impact. Neeleman wanted this to be the big differentiator.
Wisely there is going to be a seasoned hand on the tiller. Let's all hope that the focus returns and that jetBlue can continue to give the others a run for the money. We all love the underdog. But are we willing to pay for the good feeling? Ultimately no. Its as always - price/service mix.
Cheers
Timothy
11 May 2007
Maturing Markets - UK is now - EU is next?
We can safely assume that the internet travel market is now 11 years old. (Give or take a few months). In the last 2 years we have seen a strong maturing of the market in the US to the point where it is no longer about channel shift but more about market share. The go-go years are done and the game is over (t)here.
The UK market is closer to the US than any other. The maturity of that market is now self evident (at least to Expedia and Priceline). Both of whom have pointed to this in their latest quarterly earnings. With the sea change of the VTOs merging from 4 to 2 now assured the market dynamics are pretty much set.
This essentially gives us an interesting view that we can now say that the UK is about 2-3 years behind the USA. And here its time for me to confess a bad prediction I made 10 years ago. I claimed that the UK market would not be behind the US but rather would evolve differently and in some cases at a faster rate. Well i was partially right. The UK market did evolve differently and clearly the driver was not the OTAs but rather the the LCCs. Expedia (my alma mater) failed miserably in attracting the LCCs into its fold. That failure stunted the growth of the Onlien giant and will continue to do so for many years to come.
So what can we see for the future? Is there a model for the other Tier 1 markets? Germany and France are all on slower slope curves, which will result in both of them reaching maturity later. Adopting in Tier 2 and 3 markets are more constrained due to the physical limitations such as government regulation, expensive telecoms, lack of web accessible households etc. Thus the maturity of these markets will take longer and have less profit maximization capability as the global supply chain continues to aggregate.
We will make one prediction. with this maturity occuring, we believe that the battle for the second tier markets (such as Italy and Spain) will heat up with acquisitions being a preferable way to accelerate the market. Expedia recently launched expedia.es to compete with such local industry heavyweights as eDreams. Still they cannot seem to crack the LCC market, although the WTTC/Ryanair deal does give them a toe tip into the sector.
We can all be assured that next year the scouts for Orbitz, Travelocity and Expedia will be out in force. The battle grounds will not just stop at the top and second tier. We already see massive competitive in 2 of the BRIC countries. What about Brazil and South Africa? Its still a wild ride folks. Come along
Cheers
Timothy
The UK market is closer to the US than any other. The maturity of that market is now self evident (at least to Expedia and Priceline). Both of whom have pointed to this in their latest quarterly earnings. With the sea change of the VTOs merging from 4 to 2 now assured the market dynamics are pretty much set.
This essentially gives us an interesting view that we can now say that the UK is about 2-3 years behind the USA. And here its time for me to confess a bad prediction I made 10 years ago. I claimed that the UK market would not be behind the US but rather would evolve differently and in some cases at a faster rate. Well i was partially right. The UK market did evolve differently and clearly the driver was not the OTAs but rather the the LCCs. Expedia (my alma mater) failed miserably in attracting the LCCs into its fold. That failure stunted the growth of the Onlien giant and will continue to do so for many years to come.
So what can we see for the future? Is there a model for the other Tier 1 markets? Germany and France are all on slower slope curves, which will result in both of them reaching maturity later. Adopting in Tier 2 and 3 markets are more constrained due to the physical limitations such as government regulation, expensive telecoms, lack of web accessible households etc. Thus the maturity of these markets will take longer and have less profit maximization capability as the global supply chain continues to aggregate.
We will make one prediction. with this maturity occuring, we believe that the battle for the second tier markets (such as Italy and Spain) will heat up with acquisitions being a preferable way to accelerate the market. Expedia recently launched expedia.es to compete with such local industry heavyweights as eDreams. Still they cannot seem to crack the LCC market, although the WTTC/Ryanair deal does give them a toe tip into the sector.
We can all be assured that next year the scouts for Orbitz, Travelocity and Expedia will be out in force. The battle grounds will not just stop at the top and second tier. We already see massive competitive in 2 of the BRIC countries. What about Brazil and South Africa? Its still a wild ride folks. Come along
Cheers
Timothy
10 May 2007
For some time there has been a return to basics by the legacy carriers. Battered and bruised even before 9/11 the specter of the failed attempts by United Airlines (Allegis) and SAS to build global broad based travel businesses have scared off the majority of airlines. In recent years we have seen significant divestiture by airlines of even some seemingly core airline services for example BA selling SpeedWing and its airline IT business, Qantas the same, Even Lufthansa offloaded its 50% share in Thomas Cook to long time partner KarstadtQuelle. A recent global survey of nearly 200 carriers by Sabre Airline Solutions has found that less than half (48%) ‘believe developing new revenue streams is important to the overall airline revenue strategy’
However the LCCs continue to power ahead with their ancillary revenue streams. The ever ebullient Mr O’Leary from Ryanair has made no secret of his desire to broaden the base of his airline to a point where he will be actually paying people to fly. With significant revenue streams from its partners in the Car Rental business (Hertz) and Hotels (Formerly Travelport/Octopus and now Expedia WTTC) he is clearly showing that this can be done.
Similarly EasyJet has some proof of this trend. Ancillary revenue per seat for easyJet has increased by 18% to £3.81 during the first half of its financial year, with ‘partner revenues' from car hire and insurance, rather than hotels, driving the growth. The largest single source is from Credit Card fees. All airlines should sit up and pay attention to this. With Google Checkout offering zero fees for processing – we still cannot understand why no airline seems to be partnering with Google for this way to drop cash to the bottom line.
T2Impact is a strong believer in opportunities for non-transaction based revenue opportunities as a core part of any travel site’s gross income.
When the overall travel market goes soft we expect to see a rush hunt for new revenue. Better be prepared now rather than later.
We are here to help
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness Tel (
US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
However the LCCs continue to power ahead with their ancillary revenue streams. The ever ebullient Mr O’Leary from Ryanair has made no secret of his desire to broaden the base of his airline to a point where he will be actually paying people to fly. With significant revenue streams from its partners in the Car Rental business (Hertz) and Hotels (Formerly Travelport/Octopus and now Expedia WTTC) he is clearly showing that this can be done.
Similarly EasyJet has some proof of this trend. Ancillary revenue per seat for easyJet has increased by 18% to £3.81 during the first half of its financial year, with ‘partner revenues' from car hire and insurance, rather than hotels, driving the growth. The largest single source is from Credit Card fees. All airlines should sit up and pay attention to this. With Google Checkout offering zero fees for processing – we still cannot understand why no airline seems to be partnering with Google for this way to drop cash to the bottom line.
T2Impact is a strong believer in opportunities for non-transaction based revenue opportunities as a core part of any travel site’s gross income.
When the overall travel market goes soft we expect to see a rush hunt for new revenue. Better be prepared now rather than later.
We are here to help
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness Tel (
US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
08 May 2007
Launch of InTheKno - New partner
Today we are proud to announce the launch of InTheKno - our new partner in Research. Dubbed "Insight and Analysis without the hard work" the new site and material has been in the works for the past 4 months. T2 is partnering with Travelmole in this endeavor.
Check out the new site: www.inthekno.com
Also check out the commentary blog - www.inthekno.blogspot.com Altitude with Attitude.
Cheers
Timothy
Check out the new site: www.inthekno.com
Also check out the commentary blog - www.inthekno.blogspot.com Altitude with Attitude.
Cheers
Timothy
So as an airline you have extra cash - what do you do with it?
In the boom to bust cycle of airlines - the tradition has always been buy at the top and sell at the bottom... not exactly what even your local stock broker would tell you was a smart thing. If you are a student of history you know that Airlines are highly cyclical. Yet many forget that in times of boom.
Will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around.
Why?
At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system. Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. Is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.
What are the airlines doing with the cash?
Plowing it into service improvements.
Still off-loading unprofitable marginal routes to affiliate partners.
Buying new planes.
Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system.
A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future.
With our new partner InTheKno (www.inthekno.com) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector.
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact LtdGlobal Travel eBusiness
Tel (US) +1 425 836 4770Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
Please treat this email and all forms of communication as confidential use only for the direct recipient(s).
CHECK OUT OUR NEW PARTNER - INTHEKNO
www.inthekno.com
Insight and Analysis without the hard work
Will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around.
Why?
At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system. Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. Is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.
What are the airlines doing with the cash?
Plowing it into service improvements.
Still off-loading unprofitable marginal routes to affiliate partners.
Buying new planes.
Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system.
A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future.
With our new partner InTheKno (www.inthekno.com) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector.
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact LtdGlobal Travel eBusiness
Tel (US) +1 425 836 4770Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
Please treat this email and all forms of communication as confidential use only for the direct recipient(s).
CHECK OUT OUR NEW PARTNER - INTHEKNO
www.inthekno.com
Insight and Analysis without the hard work
07 May 2007
Irony of names - Air Canada's new system
According to recent press reports Air Canada's replacement for Res III (By the way Res III was short for Reservac 3) will be dubbed Polaris. Well that got me thinking. Way back when... I worked for a certain reservations systems company in Kansas City, Northwest pulled their system away from its own environment from nearby friendly supplier Unisys Corp (in this case the Old Univac company) and into what was then called PARS. In doing so the old system that died was called - Polaris.
Lets hope that it lasts a little longer for Air Canada. Incidently Northwest retained the name for its Cargo system. Today it is called Polaris. But for how much longer we wonder!
Cheers
Timothy
Lets hope that it lasts a little longer for Air Canada. Incidently Northwest retained the name for its Cargo system. Today it is called Polaris. But for how much longer we wonder!
Cheers
Timothy
US fights to keep Internet Gambling Ban
http://www.reuters.com/article/internetNews/idUSWAT00742720070504?pageNumber=3
The USA has long had a ban on interstate gambling. The US Gambling lobby is pretty darn strong. For example the current junior Senator from Nevada's father was formerly President of Mandalay Bay Resort Group (now part of Kirkorian's MGM). In the day and age when the US is espousing open commerce for all is seems ironic that one of the Web's best businesses is denied a chance to flourish in its largest market.
For a personal reference I dislike gambling - but that is a matter of personal taste. I defend anyone's right to gamble if they choose.
So I hope that the WTO does indeed sanction the USA for this absurd situation. Selective trade scope seems to be rather protectionist. Perhaps Costa Rica and Antigua should declare war on the USA and then we can have a real headline match. Reminds me of a Peter Sellers movie http://www.imdb.com/title/tt0053084/
Cheers
Timothy
Qantas Deal Collapses - What's next?
If it sounds too good to be true then it must be....
Suffice to say - APA (basically McQuarie and TPG) - received a bloody nose from the regulator and the stockholders and said - you cant ride roughshod over the national icon. The problem is that the perception of value and the actual value in the marketplace are not aligned. The shareholders all believe that there was some monkey business with a bleak future prospects put out when the bid was announced. Yet the performance of QF and the various subs has been much better than the regime of Mr Dixon would have us all believe. Plus the chaps at TPG were really struggling to make the deal work. It was marginal at best.
The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll.
The market for airline stocks is going to be good for the summer and in Oz perhaps even longer given the tight lock that QF currently has on the market. But perhaps not for long. The Canberra government cannot fend off SQ's desire for a seat at the US-OZ highly lucrative market. Not to mention the start soon of Virgin/Pacific/Blue Something's 777 service coming in 2008.
With AMR looking to suffer a summer of labor discontent (Pilots want 30%+ raises) those PE (Private Equity) Funds need to find somewhere to put some of that cash. Remember the old adage - how to make a million? Start with a billion and buy and airline.
Good Luck QF - Flying Solo is probably your best option at this point. But do make sure that you focus on the back door... there are many barbarians at the gate and you cannot rest on your laurels. (I love a mixed metaphor or 3)!
Cheers
Timothy
Suffice to say - APA (basically McQuarie and TPG) - received a bloody nose from the regulator and the stockholders and said - you cant ride roughshod over the national icon. The problem is that the perception of value and the actual value in the marketplace are not aligned. The shareholders all believe that there was some monkey business with a bleak future prospects put out when the bid was announced. Yet the performance of QF and the various subs has been much better than the regime of Mr Dixon would have us all believe. Plus the chaps at TPG were really struggling to make the deal work. It was marginal at best.
The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll.
The market for airline stocks is going to be good for the summer and in Oz perhaps even longer given the tight lock that QF currently has on the market. But perhaps not for long. The Canberra government cannot fend off SQ's desire for a seat at the US-OZ highly lucrative market. Not to mention the start soon of Virgin/Pacific/Blue Something's 777 service coming in 2008.
With AMR looking to suffer a summer of labor discontent (Pilots want 30%+ raises) those PE (Private Equity) Funds need to find somewhere to put some of that cash. Remember the old adage - how to make a million? Start with a billion and buy and airline.
Good Luck QF - Flying Solo is probably your best option at this point. But do make sure that you focus on the back door... there are many barbarians at the gate and you cannot rest on your laurels. (I love a mixed metaphor or 3)!
Cheers
Timothy
04 May 2007
Global Free Calling Day - Yes CALL YOUR MOTHER
Those nice people at Skype are giving you the opportunity of a life time. A FREE DAY of global calling. Call anyone you like anywhere in the world as long as you initiate the call from a Skype VOIP address. Actually it does carry a few restrictions (like only from a US IP address) - here is the full T&Cs. http://www.skype.com/campaigns/giftofgab/terms.html?cm_mmc=Acceleration-_-Email-_-NA_GoG_launch_EN_US_070503-_-terms
Go ahead. Get back some of that money you have paid to eBay
Cheers and CALL YOUR MOTHER
Oh yes... just so you know if you are an American - NOT ALL COUNTRIES have mothers day on May 13th!
Timothy
Go ahead. Get back some of that money you have paid to eBay
Cheers and CALL YOUR MOTHER
Oh yes... just so you know if you are an American - NOT ALL COUNTRIES have mothers day on May 13th!
Timothy
Oops - Blackstone hits snag in pursuit of Worldspan
The EU has decided that it has "serious concerns" which will place the Blackstone/Travelport acquisition of Worldspan under the microscope. Frankly this should be a non-event. The total market for reservations services is not that great. So the scope of the review seems somewhat out of whack with the general industry view.
However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.
The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.
So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.
The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.
Stay tuned. This one is going to run for a while.
Cheers
Timothy
PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.
However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.
The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.
So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.
The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.
Stay tuned. This one is going to run for a while.
Cheers
Timothy
PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.
Electronic Ticketing - will the airlines meet the 12/12/07?
Sabre is claiming 90% plus, Abacus is at 60%.......... So will we make Giovanni's deadline? Actually the answer is no but it wont matter.
The players will decide that those who need to be in the fold will be there - those who dont will be left out. It doesnt matter whether you make it or not.
I recall in 1984 United Airlines complained that they were processing 88 different internal ticket types. we have been working with a carrier who is 77% electronic yet still processes 24 different internal ticket types.
But there is still a hidden burden. The difference between Eticketing and truly ticketless is something that is holding airlines back. GET WITH THE PROGRAM. Its about business simplicity. Simplicity saves money.
So lets do the right thing.
Bite the bullet and make it TICKETLESS now. You still have time. And just pick a date and then do the most you can to eliminate everything else. If you dont then you wont make the savings you need.
Cheers
Timothy
The players will decide that those who need to be in the fold will be there - those who dont will be left out. It doesnt matter whether you make it or not.
I recall in 1984 United Airlines complained that they were processing 88 different internal ticket types. we have been working with a carrier who is 77% electronic yet still processes 24 different internal ticket types.
But there is still a hidden burden. The difference between Eticketing and truly ticketless is something that is holding airlines back. GET WITH THE PROGRAM. Its about business simplicity. Simplicity saves money.
So lets do the right thing.
Bite the bullet and make it TICKETLESS now. You still have time. And just pick a date and then do the most you can to eliminate everything else. If you dont then you wont make the savings you need.
Cheers
Timothy
03 May 2007
Infogluttony = Time Famine and Email Bankruptcy
I read with interest the declining readership of Local Newspapers in the USA - its a worldwide trend. Print media is in decline. Conventional Broadcast media is also in steep decline as fragmentation takes hold. While we all multi-task there comes a point when we cannot do everything during a 24 hour day, more distractions arrive - New Blogs, Wikis and yes Youtube.
So what are we to do?
While I have long lobbied for a 32 hour day no one seems to be interested in that idea - Swatch had a good one – break the day into a different unit called Beats but that did as well as Esperanto. I have even tried sleeping less hours. My sleep bank has been in a state of overdraft for many years now.
The problem is there is TOO much information and too much that we need to process. I call this infogluttony and its leading to the two newest trends. Time Famine and Email bankruptcy.
The former is when you simply run out of time. Whether you blame it on too much info, or too much process (driven by PC -Politically Correct- requirements or even regulatory needs such as SOX rules), we are all screwed. Thinking freely and expressing yourself freely is no longer allowed. You have to be careful not to speak ill and anyone seen wearing a "Nuke the gay whales for Jesus" T shirt is likely to be lynched. That all takes time and extra thought.
The latter is when you just start over. A good friend of mine who works at Customer Service at a certain large LCC did this several years ago. She simply changed her email account and closed it down. Several members of the T2 family tired of spam have done the same. Its rather a scary thing. I registered timothyo at many different email accounts - the spammers don’t even need to steal my accounts - they just guess - like Frankb or Billg.
So if ANYONE out there has an answer for this - PLEASE come and get me. I am seriously considering running away from all this. Thank god my Blackberry works just about anywhere now
Cheers
Timothy
So what are we to do?
While I have long lobbied for a 32 hour day no one seems to be interested in that idea - Swatch had a good one – break the day into a different unit called Beats but that did as well as Esperanto. I have even tried sleeping less hours. My sleep bank has been in a state of overdraft for many years now.
The problem is there is TOO much information and too much that we need to process. I call this infogluttony and its leading to the two newest trends. Time Famine and Email bankruptcy.
The former is when you simply run out of time. Whether you blame it on too much info, or too much process (driven by PC -Politically Correct- requirements or even regulatory needs such as SOX rules), we are all screwed. Thinking freely and expressing yourself freely is no longer allowed. You have to be careful not to speak ill and anyone seen wearing a "Nuke the gay whales for Jesus" T shirt is likely to be lynched. That all takes time and extra thought.
The latter is when you just start over. A good friend of mine who works at Customer Service at a certain large LCC did this several years ago. She simply changed her email account and closed it down. Several members of the T2 family tired of spam have done the same. Its rather a scary thing. I registered timothyo at many different email accounts - the spammers don’t even need to steal my accounts - they just guess - like Frankb or Billg.
So if ANYONE out there has an answer for this - PLEASE come and get me. I am seriously considering running away from all this. Thank god my Blackberry works just about anywhere now
Cheers
Timothy
Sabre emulates Worldspan - sets up GSA in Nigeria
Eyeing one of the largest markets in Africa (also one of the riskiest) Sabre has partnered with local Nigerian Travel Agency group Interguide Air Limited, that will see it become available to the nearly 800 Travel Agencies in the country.
Nigeria is a well known center for fraud and questionable ticketing practices. Cash is the usual form of financial instrument but still altered tickets and various techniques have emenated from there. The age of the internet has not dimmed these efforts. How many of us have received offers to bank $8.7 million from so and so's widow?
However with Virgin Nigeria now more than a year old and well established. New Carrier Arik Air bursting onto the scene with a major order from Boeing last week - you have to think the risk is now lessened. Arguably Nigeria is the largest market in sub-Saharan Africa after Kenya and of course South Africa.
Interestingly here, Sabre has taken a leaf out of Worldspan's book and established a GSA in the market rather than risking its own corporate entity. I can just imagine the chaps in the Texas bunker getting this request from London!!!
Best of luck - count your fingers when you do this!
Cheers
Timothy
Nigeria is a well known center for fraud and questionable ticketing practices. Cash is the usual form of financial instrument but still altered tickets and various techniques have emenated from there. The age of the internet has not dimmed these efforts. How many of us have received offers to bank $8.7 million from so and so's widow?
However with Virgin Nigeria now more than a year old and well established. New Carrier Arik Air bursting onto the scene with a major order from Boeing last week - you have to think the risk is now lessened. Arguably Nigeria is the largest market in sub-Saharan Africa after Kenya and of course South Africa.
Interestingly here, Sabre has taken a leaf out of Worldspan's book and established a GSA in the market rather than risking its own corporate entity. I can just imagine the chaps in the Texas bunker getting this request from London!!!
Best of luck - count your fingers when you do this!
Cheers
Timothy
02 May 2007
Pegs and Wizcom - Last Gasp II
Yes folks the old models are dropping like flies. In my humble opinion, here is another one that will soon be biting the dust...
Pegasus - whose CEO was once called a very derogatory name in public by one of his big customers - has JUST managed to scrape through and get enough cash in the till with a recent offering. Not wishing to even hide their intent on cashing out - the current investors made it very clear they wanted the cash for themselves - oh yes and to buy out Wizcom from Blackstone. This they have managed to do.
But life isn’t so rosy. Pegasus revenues have been falling for some time. Its customers and suppliers are defecting and its business is not as relevant as it once was.
I feel very strongly that despite the underlying trend of disintermediation the team at Pegasus made a mistake many years ago when they didnt develop a solution for Wide Area Availability (aka Availability Search). Hoping to capitalize on what was then a monopoly - they refused to address the question. Well now they will pay the piper.
Their relevance is no longer as strong as fragmentation and bypass are the order of the day. Pegs can no longer rely on the GDSs nor their supply side partners.
I would like to put to rest one awful truth out there about the GDS being a higher yield market for Hotels. While this is technically true it comes at a price:
1. The product/content served up is pretty poor.
2. The technology sucks.
3. Travel Agents are in the main lazy and don’t look hard if the product is not available easily via the GDS.
Consequently the premium paid by users for hotels booked via the GDS Travel Agency (TMC type) bookings versus those booked using Pegasus linked to say and OTA such as Expedia has been of the order 20%+ (source TravelClick). But this is an unnatural act. In today's tight market for product (with occupancy levels at historic highs) this is unsustainable. The hoteliers got VERY smart in recent years and manage now to have the upper hand. Pegasus is largely irrelevant and their total share of the market is falling.
As bypass of different types occurs and fragmentation is the order of the day it is not just Pegs Switch business that suffers but the other pieces also. The rep business has seen significant erosion due to new players at cheaper rates and better services/technologies emerge.
Even the HCC business is coming under fire - without the ubiquity of the Switch carrying all Travel intermediary business - the value of the switch based HCC counting falls away. Perot is the beneficiary of this.
So good luck to Mike and John as the struggle to hold on to the business. There are already more holes in the dyke than you have fingers...
Cheers
Timothy
Pegasus - whose CEO was once called a very derogatory name in public by one of his big customers - has JUST managed to scrape through and get enough cash in the till with a recent offering. Not wishing to even hide their intent on cashing out - the current investors made it very clear they wanted the cash for themselves - oh yes and to buy out Wizcom from Blackstone. This they have managed to do.
But life isn’t so rosy. Pegasus revenues have been falling for some time. Its customers and suppliers are defecting and its business is not as relevant as it once was.
I feel very strongly that despite the underlying trend of disintermediation the team at Pegasus made a mistake many years ago when they didnt develop a solution for Wide Area Availability (aka Availability Search). Hoping to capitalize on what was then a monopoly - they refused to address the question. Well now they will pay the piper.
Their relevance is no longer as strong as fragmentation and bypass are the order of the day. Pegs can no longer rely on the GDSs nor their supply side partners.
I would like to put to rest one awful truth out there about the GDS being a higher yield market for Hotels. While this is technically true it comes at a price:
1. The product/content served up is pretty poor.
2. The technology sucks.
3. Travel Agents are in the main lazy and don’t look hard if the product is not available easily via the GDS.
Consequently the premium paid by users for hotels booked via the GDS Travel Agency (TMC type) bookings versus those booked using Pegasus linked to say and OTA such as Expedia has been of the order 20%+ (source TravelClick). But this is an unnatural act. In today's tight market for product (with occupancy levels at historic highs) this is unsustainable. The hoteliers got VERY smart in recent years and manage now to have the upper hand. Pegasus is largely irrelevant and their total share of the market is falling.
As bypass of different types occurs and fragmentation is the order of the day it is not just Pegs Switch business that suffers but the other pieces also. The rep business has seen significant erosion due to new players at cheaper rates and better services/technologies emerge.
Even the HCC business is coming under fire - without the ubiquity of the Switch carrying all Travel intermediary business - the value of the switch based HCC counting falls away. Perot is the beneficiary of this.
So good luck to Mike and John as the struggle to hold on to the business. There are already more holes in the dyke than you have fingers...
Cheers
Timothy
01 May 2007
Bravo Worldspan - finally someone attacks the core issue of Passive Segments
Despite being the lame duck of GDS, Worldspan seems to be going out with a bang not a whimper.
Worldspan is introducing a new service called Consolidator Control. The first real attempt at solving the root cause of "honest" passive segments.
Lets wish them well with it
Cheers
Timothy
Worldspan is introducing a new service called Consolidator Control. The first real attempt at solving the root cause of "honest" passive segments.
Lets wish them well with it
Cheers
Timothy
LCC with a real difference - the All Veggie airline
New airline with the catchy name of MDLR Airlines http://www.mdlrairlines.in/ has a new and definitely different twist offering Vegetarian "Exquisite Cuisnine" to its patrons on a definitely not LCC Avro RJ70.
With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.
Cheers
Timothy
With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.
Cheers
Timothy
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