BA Customer Service Model - Ryanair

You would thing that the "World's Favourite Airline" would not want to emulate the World's Cheapest Airline. But it seems that BA wants to do just that.

I am a member of OnBusiness their small business corporate account program. I could not access the account - my fault - cannot remember the password. So I follow the onscreen instructions which fail to let me reset my password. (OK I gave it a good shot 5 times for me and one for another more deliberate and less impatient human being).

OK so the site advises me to contact BA OnBusiness customer service. This is where the joke starts to get funnier. The web instructions are incorrect - redirecting me as a US account to the UK service centers. OK - I deal with that by finding the right information in another area on the website. So I do.... a nice BA agent lets call him Fred (Who is a real BA employee not a contractor). Duly takes the information and after being on the phone for 5 minutes I realize that he has to speak to another desk who has the ultimate power. Nope they dont want to help - contact us by email. We will get to it later. Of course the REASON I want to use the account is so I can make a booking. Silly me.

This process took over 20 mins including trying to speak to a Supervisor who also didn't want to help and directed me to the same (broken and lame) process.

So my only option is to follow the bouncing ball on the website. Customer service contact information - it AGAIN incorrectly directs me to the UK centers. So US customer service options of course are nothing like what I would need... the best option for logging my "issue" was "Corporate Policy".

Even Ryanair is easier to deal with - they at least tell me NO up front.

Memo to BA... you lost a biz class trip US to Europe. You will lose more unless you can figure out a way to deal with this.

Oh yes and I am a Gold Card holder on BA. Boy do I feel special.....

Cheers

Timothy

Neat Tool - Pinger for Voice Messages

Most of the time this blog is about ATT- Aviation Travel and Tourism. Occasionally we find things that are just too darn fun to pass up. This is one of them

Pinger is a pretty cool tool for messaging.

If you live in any of these countries and/or wish to communicate with people with mobiles in these countries then this is for you:

Australia France Norway Transylvania
Austria Germany Poland UK
Belgium Ireland Romania US
Brazil Israel Spain
Bulgaria Italy Sweden
Canada Netherlands Switzerland

Go to www.pinger.com - sign up and then send away. Send my voicemail a message in the USA: +1 425 785 4457.

Cheers

Timothy

Travelport's Worldspan holds onto Priceline, Expedia may have second thoughts?

Priceline and Travelport have renewed vows for Worldspan and the Priceline service allowing an uninterrupted even enhanced access to Worldspan's fares and pricing services.

Expedia on the other hand may have been a bit hasty in cutting over to Sabre too quickly. Published reports indicate that the cut over for ECT was somewhat of a nightmare. Despite ECT's admonishments to the contrary, the boys in Bellevue may be rethinking how many of their eggs they really want in the Sabre and Amadeus baskets.

Enquiring minds want to know.......

Cheers

Boeing "Guarded" on 787 during earnings call

According to FlightGlobal's Flightblogger blog (what a mouthful!) who listened in on the earnings call today - James Mcnerny was "guarded" And so he should be.

The 787 has a significant way to go before they will be ready to even turn that puppy on. So at this point unlike this time last year when the Boeing team was effusing about how many they would deliver in the first year... pride comes before fall.

One thing to note will be how many of the 787s end up in San Antonio and have to be "reworked..."

At the moment they are saying about 25. However I have private bet how many ultimately end up there in some form or another. My bet is a significant number higher than this. Why? The pipeline of parts could be as high as 100 shipsets or parts thereof. These parts will either have to be reworked or new ones built. Many of these have very long lead times.

There is of course a piece of good news. The back end supply of the raw materials for composite components now has more time to ramp up. Lets just hope there has been enough testing of these materials as to how they will stand up to ramp rash and JFK baggage handlers.

Good Luck Boeing... of course if you hadn't relocated to Chicago none of this would have happened.................

Varig Switches Gears (again)

VRG - "New" Varig has again re-tooled its business plan under new owners GOL.

For those who were looking for a strong international footprint for the "New" Varig - similar to the old old Varig you will be saddened by the decision to only connect to just 2 European cities - Madrid and Paris - all the other routes LHR, FRA and FCO will be dropped.

The route structure will however focus on more domestic and regional LATAM routes. Sadly the Brazilian Star will no longer shine over a large network that once spanned the globe from Athens to Tokyo.

Best of luck VRG - some of us are still routing for you

Cheers

Timothy

US Mega Mergers... Good or Bad - you be the judge

I believe that the arguments for consolidation in the US Airline market are not compelling, however I believe that the industry and the public at large needs to consider all sides of the discussion.

Here is one perspective which I believe lays out many of the issues. I encourage you all to read it.

This is provided with open permission to republish by the author.

Top ten false claims about the need for U.S. airline mergers
By Hubert Horan
January 29, 2008
1. “There’s a strong, growing groundswell of support for airline mergers.” This is complete nonsense. Only three very narrow groups are arguing for Legacy airline mergers in the U.S.—(a) individual hedge funds who don’t understand industry fundamentals but have made big speculative gambles on consolidation, (b) a handful of very senior airline executives who are finding it very difficult to generate sustainable profits but would realize multi-million personal payouts in most merger scenarios and (c) Wall Street firms, lawyers and consultants lusting after big fees. No one with any long-term stake in these airlines is advocating mergers. There is no objective, quantitative analysis showing competitive or efficiency gains, or long-term improvements in corporate value. These same three groups generated huge publicity for the “pro -merger” case in early 2006. Nothing happened then, and no one else has taken up the cause since. The Big 6 Legacy carriers have been intensively studying merger/consolidation scenarios for ten years, but the only carriers that could justify merging (America West-US Airways) were bankrupt and on the verge of liquidation.
2. “Airline mergers would be part of a natural industry shakeout process.” A wholly dishonest claim. “Natural” industry shakeouts involve wiping out the managements and investors of small, weak, inefficient competitors in a declining industry, and the displacement of companies using obsolete technologies and business models. These mergers would protect and entrench weak airlines such as United and Delta that haven’t generated returns for shareholders for over a decade and would enrich many of the same managers that drove them into bankruptcy. A true shakeout might consolidate smaller airlines with limited scale or network scope, but does anyone actually believe that United and Delta are too small to compete? Does anyone believe that aviation is a declining, shrinking industry? A true shakeout would allow more efficient carriers such as Southwest and AirTran to grow faster by dramat ically shrinking unprofitable Legacy capacity. The misrepresentations about “natural shakeouts” can also be seen in Europe where very large airlines with high costs and traditional business models (Air France and KLM in Europe) are using mergers to make it harder for airlines with lower costs and lower fares (such as Ryanair and Easyjet) to compete.
3. “Airline mergers would be a necessary response to $100/bbl fuel and a downturn in the business cycle.” This is the exact opposite of the truth. If no one could justify a Legacy merger when revenue, cash flow and access to capital were extremely strong, then they certainly can’t be justified now. Cash flow becomes incredibly critical to airlines during an economic downturn, and multi-billion dollar merger costs would rapidly drain needed reserves. The revenue risk of implementation problems becomes much greater when demand is weak. The argument that mergers are needed now assumes that airline mangers had already been doing a fantastic job optimizing fleet, network structure, information technology, employee relations, operational efficiency, customer service, brand marketing, supplier relationships, capital structure, and things like that, and therefore, the only option left as conditions worsen is to change the number of airlines. Wall Street analysts and airline executives are pushing the same merger PR arguments that they did when fuel was $50/bbl and when demand and prices were extremely robust, and the money to finance deals was practically falling off of trees.
4. “Airline mergers could be implemented with limited risk.” It is hard to believe that anyone could make this general claim with a straight face. A merger between two big 6 US Legacy carriers would cost something on the order of $5 billion to implement, and there has never been a merger between large airlines that was both an operational and financial success. There have been mergers between large airlines where strong potential synergies were wiped out by terrible implementation (Northwest-Republic, Continental-People Express) and mergers with careful, expensive implementation that generated no long-term financial benefits (Delta-Western) and mergers that were across the board failures (American-TWA), and all past cases involved smaller operations than cases like Delta-Northwest or United-Continental would today. The slightest hiccups while integrating complex computer systems, aircraft maintenance programs, employee operating practices and seniority lists and the like could cause huge disruptions that would alienate customers for years. More importantly, the financial structure these mergers would follow appears designed to ensure the worst possible implementation. All of the big financial gains (stock price bump triggered by the merger announcements, management change-in-control bonuses, fees to investment bankers, lawyers and consultants) would be realized prior to implementation, and none of these people would have any financial incentive to manage the operational and customer service risks.
5. “Airline mergers would generate significant operating synergies and strengthen efficiency.” None of the merger advocates have presented an iota of evidence supporting this claim. Any merger could generate some savings, but no airline merger has ever been justified primarily by cost synergies, and these savings could never cover the multi-billion dollar implementation costs and disruption risks. All of the costs are 100% certain, and need to be paid for up front while the synergies are much less certain and might take years to realize. Legacy carriers have very little potential for further scale economies, unless you believe that Aeroflot under the USSR was a model of efficiency. If you merge airlines in bankruptcy (as with last year’s proposed Delta-US Airways merger) you can maximize cost synergies by restructuring hubs, fleets, and union/vendor contracts as part of the reorganization proc ess (although you’d still face significant implementation challenges and risks). The cost of merging Delta and Northwest outside of bankruptcy protection is much higher because they have much less ability to shed the assets and staff that would become redundant after a merger.
6. “Mergers are required to rationalize excess industry capacity.” Once again, this is the exact opposite of the truth. The industry does have “excess” (structurally unprofitable) capacity, and higher fuel prices mean that even more capacity is unsustainable. But nobody needs expensive, risky mergers to cut this capacity, and consolidation will actually make it more difficult to bring supply and demand back into line. Mergers give disadvantaged employees, lessors, local airports and politicians greater leverage to block or disrupt capacity cuts, all of whom can point to select insiders (hedge funds, senior executives) making big short-term gains at their expense.
7. “U.S. Airlines need to merge in order to compete with foreign airlines that are better financed and offer better service.” The claim that US carriers have a distinct competitive disadvantage against foreign airlines contradicts all recent evidence—Legacy hubs provide a highly efficient means of serving many international markets, international routes are highly profitable and U.S carriers are shifting capacity to them as fast as possible. Obviously US carriers can’t compete on some routes, but foreign carriers can’t compete on others. Nothing in these long haul/overseas markets has changed in recent years that created a competitive deficiency that would be fixed by a Legacy merger. If US carrier service isn’t as good as it could be, disruptive mergers that reduce competition will only make the problem worse.
8. “Airline managers have an obligation to pursue mergers in order to boost their falling stock prices.” The people arguing this do not seem to understand the difference between sustainable growth in shareholder value and short-term stock price manipulation. This is not a plan to strengthen airline finances, but a scheme to enrich one narrow group of investors at the expense of every other group of investors. Many merger advocates (including certain hedge funds, day traders and their Wall Street supporters) know that steady press speculation about merger battles and bidding wars can pump up prices and trading volumes, as was witnessed following the merger PR campaign last year. The merger advocates are looking for speculative profits and trading fees that contribute nothing to the financial strength of the airlines. Senior executives can pocket both multi-million dollar “performance” bonu ses (which are tied to short-term equity swings rather than sustainable gains in corporate value) plus multi-million dollar “change-in-control” payments following the merger. The merger does nothing to improve fundamentals such as competitiveness or efficiency, and potential savings are dwarfed by implementation costs, operational disruptions, and other problems. Corporate value is destroyed, reducing returns and increasing the risk faced by lenders, lessors and bondholders. As witnessed with US Airways and Delta after last year’s merger mania died down, the stock price quickly collapses, creating huge losses for many investors, and making it even more difficult for airlines to attract long-term investment in the future.
9. “Consolidation would strengthen the entire industry.” Widespread consolidation is actually the biggest threat to consumers, employees and investors. It hasn’t happened yet, but hypothetically one could design an isolated Legacy merger that actually created long-term corporate value based on improved efficiency or competitiveness. But the “mergers would be wonderful” PR arguments ignore the economics of each case because the real objective is to create a general merger frenzy. The first megamerger proposal could quickly trigger additional defensive mergers permanently reducing the number of airline competitors. The stock speculators who have been demanding mergers are clearly gambling on this scenario, and it produces a massive payday for the lawyers and investment bankers. Thus you can’t evaluate a potential merger such as Delta-Northwest in isolation; you have to look at h ow the entire wave of consolidation would affect industry efficiency and performance. Two or three megamergers in quick succession, just as an economic downturn hits, each incurring multi-billion implementation costs and huge operational risks, each entrenching weak management teams, each unleashing union hostilities and systems integration nightmares, could greatly accelerate the next round of industry bankruptcy cases.
10. “Airline mergers would increase long-term corporate value without harming consumers.” Legacy megagmergers won’t increase the level of service operated, won’t improve the quality of customer service, could easily increase costs and reduce efficiency, and would increase overall financial risk while seriously damaging certain portions of the capital structure. The only way megamergers could overcome these problems and generate a net increase in corporate value is by artificially distorting competition, or to put it directly, by screwing consumers. Big profits from consolidation depends on artificial barriers to LCCs and other more efficient competitors (so less efficient airlines can raise prices with impunity) and a level of overall market domination that makes it easy to discipline and challenges to the oligopoly status quo. In the domestic US market, consolidating the 6 Legacy carrier s into 3 larger ones wouldn’t create enough artificial market “power” to drive fares high enough to justify these expensive mergers (although consumers using the constrained airports of the Northeast would undoubtedly suffer). The real threat to consumers is in international markets, especially the North Atlantic. These markets are rapidly growing, are already highly profitable, but have huge entry barriers that make it impossible for new, more efficient airlines (such as LCCs) to compete. The “industry consolidation” that has been actively advocated by United, Air France, Lufthansa and big airlines would quickly create a North Atlantic oligopoly where two competitors had 90% of all service between the United States and continental Europe. The artificial profits from rigging these long haul markets could easily justify the multi-billion cost of industry consolidation. Much of the Wall Street/industry discussion about alternative mer! ger pairings (United with Continental or Delta?) focuses on how this oligopoly might emerge, and how quickly it might spread to the Pacific and other markets. Much of the discussion about “natural industry shakeouts” or how mergers are the only way to shed excess capacity or respond to high fuel prices is simply a PR smokescreen for megacarriers hoping to radically reduce international competition.

ABOUT THE AUTHOR
Hubert Horan has been in aviation for over twenty years, directly involved with multiple waves of airline mergers and restructurings, from the perspectives of both consulting projects and senior management positions at Northwest, America West, Swissair and Sabena. Previous articles on airline competition included two detailed analyses of the economics of industry consolidation, “Airline Consolidation-Myth and Reality” (Aviation Strategy November 2006), and “An Update on Industry Consolidation and EU-US Treaty Negotiations” (Aviation Strategy March 2007). He is based in Phoenix and can be contacted at huberthoran@hotmail.com .

Consolidation - European Style LH+TUI combine LCCs

TUI's TUIFly aka Hapag Express bright yellow taxi planes, and Lufthansa's German Wings (Yellow Tails and we don't mean fish) have agreed to merge to present a potent force to counter the growing strength of Air Berlin's conglomerate.

This is likely to see some realignment of routes and probably a cut back at CGN airport whose locals have been enjoying some really good fares lately.

It is unlikely that LH would allow the name TUI on the new venture so the likely surviving name is German Wings. Although I really thought the HEX planes were a great idea.

Net result - LH gets MUCH bigger. Don't forget they have a small stakeholding in the other guys at TC through the merging of TC's airline operations with Condor - LH's former charter susidiary. Almost overnight - OK in a year... the German market has consolidated from 4 players into 2. Once again the big yellow of LH casts a huge shadow over the whole market. Peace is restored and life goes on. Of course there will be a lot of work for those people who negotiate pilot seniority lists.

I always say Germany Inc. would never pass the USA's RICO act.

Cheers

Timothy

Ryanair does it again... Sarkozy objects to ad featuring him

Te he....

The French are not amused. At least the Elysee Palace is objecting to the current ad that appeared today in Le Parisien.

It features Sarkozy and his main squeeze who has a little speech bubble that says - now all my family can come to the wedding. It is actually very funny.

http://www.ibtimes.com/articles/20080128/sarkozy-objects-to-ryanair-ad.htm

Some people have no sense of humour

For all the hoopla - Railteam is a real dud

Trying to find a way to book travel around Europe is usually pretty straightforward.

But the much ballyhooed combination of high speed rail lines is a real waste of time.

www.railteam.eu is a completely useless site.

Lets just hope this is a Rail equivalent of a notice board telling you the train MIGHT be coming. Clearly on time is not a great train strength.

Cheers

Timothy

WIT teams up with ITB-Asia

After three successful years of running one of the best conferences anywhere, Siew Hoon Yeoh has added yet another partner to her roster.

Not content to be working just with the likes of PhocusWright, her conference WIT - Web in Travel - is teaming up to complement the ITB-Asia Trade Show which will run adjacent to and at the same time as WIT (October21-22 2008).The Expo starts on October 22 and runs for 3 days.

Asia is just different and Singapore is one of the main commercial hubs of the region so its location is perfect. Having attended and contributed at the first three conferences, I can tell you that this is a meeting that doesn't leave you unsatisfied.

For people like me who attend conferences worldwide mostly because we have to, every year the value of any onference (selfishly) is boiled down to 2 basic propositions:
1. the Content - am I going to learn something and will it benefit me later?
2. the people who attend – is this a good networking opportunity for existing and new clients?

Of course what makes it work is the secret ingredient of the organization.
This is where Siew Hoon shines. Managing to challenge both left and right brain simultaneously is no mean feat in the face of so many other conferences and as we know there are really way too many of them, many of little value. The content at WIT and its audiences are some of the best I have ever seen. The speakers are not the same old boring industry pundits. The conversations after the sessions always animated and energizing.

Adding in the ITB Asia for a trade show makes it really valuable to the audience. For ITB Asia goers it's a win too for networking and great content.

Go... even if you don't want to hear me speak ;-)
www.thetransitcafe.com/wit and www.itb-asia.com

Little Trouble in Big China - the China Eastern Saga

Some of you (us) might be just a little confused in the shenanigans going on over at China Eastern. I know I am.

This doesn't make sense.

Singapore Airlines (SQ) made a play To take a minority stake in the Chinese airline (MU). It made sense. Bringing in Western Style discipline but with a distinctly Asian style that SQ has made all its own. Bringing MU up to World class standards wa very attractive to all concerned.

However not EVERYBODY agreed.

China's big fish airline Air China (CA) doesn't like too much competition. It is much happier if there is fractured and unaligned or weak competition. Oh yes and CA's parent China National Aviation Corp sits on MU's board. So just before the end of last year, China National Aviation Corp started making public noises about how it didn't like the merger and that it would offer a lot of money for a much larger stake in MU. Before you can say Kung Fu - they veto the Tamasek/SQ deal and then offer $1.9 Bn for 30% of China Eastern.

To nobody's surprise this was rejected by MU's management and board. At the same time Air China offered a tie up alliance with MU. Again rejected.

Now comes news that MU has jumped into the other side with an alliance with fellow struggler China Southern (CZ). Are you keeping up so far?

So let's see if we can sort out the alliance players here.

MU is not a member of any alliance.
SQ is in Star
CA just joined Star
CZ just joined Skyteam
CX (CA's partner and cross shareholding) is in OneWorld.

So what is the likely outcome?

For veteran China watchers like us... this is just another nice example of the convoluted arrangements in the Middle Kingdom. It will ultimately have a happy ending. Just don't expect one any time soon and the outcome will be a true example of face saving and complexity.

Got it?

And another thing... are alliances really that useful for consumers?

So LH drops a rather large bomb on the German market

...and Austrian, Lichtenstein and Switzerland...

Having read the document and discussed the situation with a number of players inside and outside the Germanic markets - I believe that we are indeed achieving a tipping point of fundamental change in European distribution of airfares.

Here is the article and analysis from Michele MacDonald in her excellent newsletter TTU - Travel Technology Update and reprinted in ATW - Air Transport World.

Here is the public link where you can read the article.

http://www.atwonline.com/news/story.html?storyID=11477

Lufthansa is able to leverage its not inconsiderable market power within its home markets and those of its vassal carriers - Swiss Air Lines and Austria Airlines in their respective home markets.

This event is analogous to the expiration of the DCA contracts in the USA market. Clearly a lot of legal eagles have been working on this for some time!

For those of you who have been waiting for the other shoe to fall in Europe - folks this is it. Don't wait any longer. Go make sure you have an independent solution that allows GDS and non-GDS content to be combined in your own environment. Hopefully you can make a euro or two at it.

Cheers

Timothy

Finally a Green Conference....

While it may almost seem to be an oxymoron to promote Green via a conference, it is indeed a subject that we need to take far more seriously.

Aviation is generally acknowledged as being only a relatively small contributor to Carbon based emissions. But that should not deter the entire air transportation system - from baggage handling all the way through to reservations systems - from getting behind the movement.

I highly encourage you - if you are able to check out at www.greenskies.com being organized for May 21-23 in that highly eco friendly place Orlando!

Think green and responsible in all that you do.

Cheers

Timothy
PS if you are interested - please ping me for a copy of our white paper. "It isn't easy being green or is it?"

Control? What is the definition of control?

According to an evaluation published by USA Today and the FT - the results of a merger between DL and UAL would be control of approx 25% of the US Domestic lift. If DL merges with NW the number falls to 22%. If UAL and CO merge then the number is closer to 23%. This could then force AA to merge with US which would be even higher. Thus creating a big 3 airlines group.

In any case such a consolidation would result in significant oligopoly power for the surviving companies.

I note that there has been a long held law that prevents foreign ownership control of ANY US carrier to exceed 24.9%. So if we apply such logic control is defined by this number.

The idea that a small number of airlines could hold the rest of the country to ransom remains a very real threat.

So again I will say - JUST SAY NO to this idea of the mergers. I hotly dispute Gordon Bethune's position - much though he is to be admired for turning around CO. IE that the mergers benefit the consumers of America.

Follow this wisely.

If you ever want to see the impact of consolidation - may I suggest you ask people who live in 2 communities: St Louis and Pittsburgh.

Cheers

Timothy

More on BA038. Airframe headed for Steptoe and Son.

Despite the great performance of the BA flight crew:
Captain Peter Burkill
Sr FO John Coward
FO Conor Magenis
...It is unlikely that the British Airways 777 is salvageable. It is currently being chopped up in situ into chunks small enough to haul away. With the collapse of he undercarriage and the significant impact on the engines - the latter are also likely not to be candidates for reuse.

As far as we can tell according to several databases this represents only the second 777 to be removed from flying. The first - an ex Varig 777 was so clapped out when returned to the owner that is was sold for scrap. Out of a total of 687 delivered that is not a bad record.

It shows the robustness of the design and it cannot be stressed strongly enough the correct interaction of the major factors: Crew training, Airplane strength. For BA with 43 -er make that 42 of both GE (29) and RR (16) powered airframes, they and all other operators will want to know what happened.

So do we

Cheers

Timothy

Toppling the Giants - USA and Expedia

OK this was a somewhat misleading headline but it made you look!!!!

2 reports published today show how the world is changing.

In online CHINA finished just behind the USA and will easily pass the former leader in a matter of days as the world's largest Internet market. Lest we think otherwise it is not a fair comparison. These are in total numbers and of course the definition of the experience in a Chinese Internet cafe is vastly different from the high-speed surfing we can do at home in the USA. Still a seismic shift and we should all bow for a moment and reflect. OK? Done

In the UK Hitwise is reporting that longtime travel category leader Expedia UK (which I had a "small" hand is starting) has been knocked off its perch by TUI/Thomsons of all people. That was definitely interesting!

So changes abound

Cheers

Timothy

Air Union Appoints DG; moves closer to integration

Air Union the Russian association of several airlines anchored by KrasAir has approved the appointment of Boris (no relation to Roman) Abromovich as Director General. Last May they approved the creation of the holding company that will formally integrate the alliance into a single legal entity.

The current partners also now own Malev (Hungarian Airlines) as well as its Russian component carriers: Domodedovo Airlines, KrasAir, Omskavia, Samara Airlines, Sibaviatrans.

Air Union is emerging as a strong challenger for the number 2 slot with Sibir S7 (Formerly Siberian Airlines). With the formal creation of Air Union there is clear water between the top 3 groupings and the rest of the remaining pack of Russian carriers. The three players are:

Aeroflot - Russian International (including Aeroflot Nord)
Sibir S7
Air Union.

These 3 are now the leading domestic airlines. The only other carrier of note is the independent airline TransAero who now seems to make most of its money shuttling its ancient 11 747s (200s, 300s and a single -400) between cold weather locations in Moscow and St Petersburg and warm weather locations in Egypt.

The Russian market after falling from a high of 160 Million pax at the height of the Soviet Union to below 4 million pax is now running a respectable 40 million pax a year and very strong growth.

Maturing is setting in. With the strong restrictions on the purchase of Western Airline equipment - it seems likely that these 4 players will dominate the market for some time to come.

Ryanair to Scrapers - DON'T!

Ryanair is getting tough with agents again. Despite conciliatory noises from Easyjet to open the door to the Travel Trade - Ryanair is talking tough (probably with a few expletives thrown in!)

Rather than just hitting the agencies themselves they are targeting selective technology providers. We understand that Comtec and Traveltek were both selected out for action. The latter (who also powers Dolphin Dynamics scraper) represents about 70 UK Travel Agencies. Said that last year 30,000 clients booked through the system.

Ryanair clearly doesn't care. With 50 million total pax flown this is an insignificant number.

Clearly this represents the difference and divergence of the models being pursued by the 2 leading LCCs. We have said many times that the LCC model itself will fracture and that the purists will continue to defend their direct channels to the consumer. The Hybrid Value Carriers - HVCs, and we clearly see that EasyJet fits that profile, are going to start doing certain things like opening up subtle avenues in the travel trade channels.

Michael O'Leary to the Travel Trade - 2 fingers up!

So the 787 is going to be late....

That as your humble writer is not new news. But there are some subtle issues that Boeing has finally come clean about.

The biggest decision is to wait before making a decision on the production start up, ramp speed and full production dates.

The decision for production and setting a date is going to be much later - don't expect this until late Q3 at the earliest. Our betting is that first deliveries wont be until Q2 in 2009. We are projecting about 40-50 deliveries in the first year. Well below the 109 Boeing originally projected.

We are all going to see a much chastened Boeing for a while. They have yet to get things right. The issues now remain:

The supply chain is not yet ready. Already some of the supply chain partners are saying that they will not be able to meet Boeing's targets.

The design is "soft" frozen. Boeing doesn't as yet have a full set of plans to work with. If all the pieces had been delivered as envisaged then this would not have been too much of an issue in delivering Aircraft 1 for flight testing. However now Boeing has had to take back control of certain sections (remember the Italians!) they need the full documentation and guess what... they don't have it all... So the "Traveling Work" is both more complex and time consuming than was allowed for.

Oh yes and Rolls has a problem with Fuel burn. They are still 2%+ off targets.

At least Boeing is (kinda) coming clean on these issues. There are others. There is no clear path out of here. Let's hope Pat Shanahan and his crew are left alone to do their job. His 90 day honeymoon is well and truly over.

My admonishment is the same... take the time.

That was extremely lucky!

The BA pilot of BA038 PEK-LHR who managed to get the 777 down this morning at LHR deserves a medal. While we don't have the full details as to what caused the power failure - a rather large aircraft and a crew who had been flying for many hours is not exactly a recipe for success. But these guys did it and more power to them.

Now of course there is chaos at LHR with one runway out of action. Many flights have been cancelled today - over 200 mostly short haul.
www.bbcnews.com has the best pictures.

Cheers

Timothy

The year is starting with a bang... Thoughts on DL-NW + AF/KL

Those of you who are regular readers know that I am personally opposed to the idea of a DL+someone else merger. I just cannot see the logic in the near and probably long term for such a Union.

So for the next 2 weeks (that's DL's time line) actually 3 months is more likely! We are going to be subjected to the constant war of words between the protagonists.

As we noted in our 200 predictions - the market in the USA is ripe for investment from EMEA (that's both Europe and the GCC states). Finally someone else agrees - the WSJ today described the first thing that Richard Anderson did after leaving Friday's Board Meeting where he secured the OK to negotiate with NW and UA. Where did he go? Paris.

AF/KL holds the key card in this conversation. They are the biggest player in the world and their JV with DL and NW separately makes the union a good tie. HOWEVER I stand by my statements earlier. This is not good for the two players. NOR will it be good for the customers and staff.

As for the alternatives - UAL is a basket case and no one should touch it.

But the impact of the DL+NW merger will be far reaching and not necessarily good. Fortunately it seems that Senator Oberstar seems to agree with me. Fortunately he comes from Minnesota so he has a vested interest in not seeing it happen! Oh yes he is a Democrat which almost counts for something these days.

I stand by hope that this will be resolved not by a full merger but by a combined alliance/JV which makes much more sense.

Cheers

BA's OpenSkies - Divine Inspiration or Crass and Stupid?

Listen to the Podcast of Addison, Doug and yours truly debating the merits of BA's OpenSkies.

http://iagblog.podomatic.com/entry/2008-01-16T10_48_07-08_00

Could Microsoft be heading for a Split of a different kind?

Normally the faithful like to gather around the water coolers and offices on the Campuses around the Puget Sound and ponder a stock split. Actually since that hasn't happened in such a long time - many Microsofties have not even experienced the joy of a Stock Split.

However there is clearly a changing of the guard going on. With Bill leaving some time this year and Jeff Raikes announcing his retirement - we are seeing also a host of senior and middle level long time leaders leaving.

Perhaps it just isn't as much fun anymore.

However I believe there is another reason. With MSFT being so widely held it makes it very hard for there to be any major stock movement. Stock buybacks and other normal behaviour have done little to move the old stock clock needle of late.

I think the company is headed for a SPLIT. With the company being spun into 4 major divisions.

1. OS and Enterprise infrastructure services (aka Windows)
2. Desktop and Web Apps (aka Office)
3. Online Services (aka MSN)
4. Entertainment. (aka Xbox)

Some smaller businesses like MCS - Microsoft Consulting Services would be spun out along the way - but these are the biggies.

Steve - time to o it - it will realize a lot of shareholder equity and create competition for the marketplace.

The 4 businesses would generate significantly more market value that the core businesses do today.

Something to think about - eh Steve?

Airline Stocks - ever get that sinking feeling?

Airline stocks are going to take a pounding in the USA market for he next half year at least. Probably longer.

Why?

The simple answer is "It's the economy, stupid!"...

The longer answer is there are not enough fundamentals to make airline stocks sexy. All the sectors are under pressure: Network Carriers under-performing, Regionals and Contract Carriers (Like Mesa and Republic), Even the one time darling jetBlue is cutting planed capacity as indeed is Southwest.

So Delta is hoping for a sexy quick win in its proposed merger with either Northwest or United.

I will say it again - JUST SAY NO!

The merger of Delta and Northwest is a union made in hell. DL and UA would be torture for everybody concerned except for Glenn "Gordon Gekko" Tilton.

Corn futures look good...........

Europe Soars as USA Stalls - 1st Quarter Traffic Estimates

We are seeing some extraordinary growth numbers coming from the global growth of air traffic. Frankly we are having a hard time believing these numbers.

Global headline growth is predicted at nearly 10% in quarter 1 with a slackening off in the second quarter. This is all the more astonishing given that the US market is at most optimistic flat or continuing its slide since August 2007. In December the US market fell 0.6%.

We believe there will be a number of contradictory indicators over the next year. Today for example - and unjustified in logic - we saw UK based EasyJet's shares take a tumble. We have already seen a pull back in flights flown for the quarter from the US Network Carriers. Yet at the end of the quarter March 30th will see the largest expansion of Transatlantic flights in one day ever. The opening of LHR to OpenSkies will result in over 16 new Transatlantic flights from current non-resident airlines.

It will be a season to watch - just like American Idol that starts this week

Boeing vs Airbus - Tanker (PR) Wars

Monday was a great day for people who read and write blogs. Boeing and Airbus were having a bad PR haircut day.

Airbus is trying to win (against the odds) the Tanker contract based on the A330 Airframe. Boeing is trying to keep the contract based on the 767 Airframe they already won once but were disqualified due to some rather nefarious practices which resulted in Jail time for two of their former execs.

So Airbus thought they could raise the stakes by offering some political value in a backdoor offset. The offer is to position an additional A330 civil production line (for Freighters only) at the same plant in Alabama. Currently Airbus has a backlog of 65 of these aircraft.

So back to the war - yesterday was Airbus's big announcement. All the politicos who wanted news ink showed up. Hoping for some good positive stories to put the pressure on the Tanker Selection Committee to choose the European subsidiary of EADS rather than the normal US Contractor choice.

Some little dickie birdie decided yesterday was the perfect day to look at Airbus's first military program - the A400M and see how well they are doing. Or not doing as the case may be. So rather than Airbus scoring a nice PR coup - the focus in the papers this morning was on Airbus's problems not the positives.

The article that appeared in the Wall Street Journal today was less than complementary about EADS's Airbus division. Pointing to Project Management, Politics and Technology complexity as the chief causes of the A400M's woes.

In here is a little nugget that everyone should be paying attention to; a global supply chain for aircraft is by no means a trivial task even for experienced hands such as at Airbus. For Boeing there is a lesson here too. The long software integrated supply chain has incredible complexity and is very hard to get right particularly when politics and expedient choices are made.

Lessons learned. I think we will all so some more rhetoric before the decision is announced. Even then it is likely to get appealed.

News Trickling out - 787 delays are more serious

The Wall Street Journal will publish an article tomorrow on the 787 delays. They are saying what we have been hearing for some time that the Q1 first flight is not going to happen with even an end of June a tough date.

Perhaps more telling is the longer term implications. IE what we have been saying for some time that the production schedule is still way too ambitious.

We believe a more prudent approach would be a slower ramp rate is advisable which would push full initial production to 2010. Boeing's stock wont like this but the plane will do better for it.

For early ship-sets this could have some serious implications.

Read Sheik Rashid al Maktoum's Commentary in the Wall Street Journal

As a keen scholar of the Middle East and the GCC states in particular - Today's WSJ offers an insight into the thinking of one of the world's most dynamic economies.

I encourage everyone to read it - you will hopefully find it illuminating.

http://online.wsj.com/article_print/SB120010558127985667.html

USAF Boeing F-15s found with issues

From today's Seattle PI:
http://seattlepi.nwsource.com/business/346772_bizbriefs10.html

Unauthorized components found on grounded F-15 jets
About 40 percent of F-15s grounded after a crash in November have major structural components that don't meet original manufacturing specifications, the Air Force said Wednesday.
Air Force inspectors determined that 183 of 442 Boeing aircraft that remain grounded have at least one structural component "that does not meet blueprint specifications," the service said.
The Air Force said 60 percent of the fighters grounded since the Nov. 2 accident have been cleared for flight after intense inspections.

This is somewhat scary for everyone because it meant that the primary front line Air Superiority fighter has been grounded for over 2 months. During that inspection time many parts were found to differ from the Blueprint.

While the F-15 is quite an old aircraft dating from the 1970s - it is pretty solid. What is perhaps worrying is that Boeing's process allowed these issues to emerge. What does it say about the current Boeing commercial and military aircraft projects?

To be fair this was a project from MDC not Boeing. But is this a common practise?

Lets hope not

Cheers

Death and Taxes - are they inevitable - are they equal?

There is the old saying about nothing being certain in life except Death and Taxes. Probably true.

But are they always imposed the same way.

So until this point taxes on airfares have been largely considered to be evenly applied. If you are based in the UK or another country in Europe they Should be the same no matter what path or routing you take. The reverse is not so true. For sometime now I have been looking at taxes and I remain amazed at the differences in taxes how the rules are interpreted and applied EVEN FOR THE SAME ITINERARY.

If you don't believe me - just try this at home folks. Go to a neutral site (whether its an OTA or a Meta Search) and look at the results you get. If you have enough frequent flyer miles also consider trying to purchase a FF ticket and look at taxes that are applied there.

One of the worst offenders? British Airways for their "Free" tickets. I have often seen taxes of up to $500 roundtrip Transatlantic flight. Yet for the same O&D on a US carrier like Delta the taxes were a mere $50.

So what gives here. Is someone OVER-COLLECTING on taxes. Surely this cannot be right?

And you all know how much I hate paying taxes - just like you do.

Cheers

Timothy

Changing of the guard at Carlson Companies - sort of.

In a somewhat emotional ceremony this week Marilyn Carlson Nelson stepped down from the day to day management of the group (one of the largest privately run operational businesses in the USA) in favor of long time trusted CEO of the CC/Accor Joint Venture CarlsonWagonLit - Hubert Jolly.

She gave a long interview to Travel Weekly's Arnie Weissman - http://www.travelweekly.com/articles.aspx?articleid=59873
It is interesting to note somewhat poignantly how there wont be a family member at the helm. Curtis Nelson - her son an one time presumed heir - is now involved in an acrimonious battle for his birthright. At the same time he seems - according to interpreting news reports - to be out of control with at least one drink driving arrest. Having worked with both of them this is not such a surprise.

What is a surprise is how Jolly has become such a trusted advisor and a welcome addition to her personal team. Don't look for Marilyn to go away anytime soon but she will be pushing back from the day to day. In due time we shall see more pieces of Carlson become public and a bigger growth pattern as Jolly makes his personal mark on the business

Good luck to both Marilyn and Hubert. It is good to see a transition of this sort. Others should take note.

No Virgins on the Picket Line

Fortunately for the brand a marketing nightmare has been averted. At the 11th Hour the Flight attendant's union agreed to a new 2 year pay deal.

Interestingly the Union is called UNITE. So unfortunately the opportunity for such great headlines as:

"Flying Virgins UNITE and strike against Sir Richard" and others will sadly not be appearing in this Blog. Darn it!

Cheers

Timothy

What Happens in Vegas ..... is no more

Las Vegas VCB is changing their slogan. So rather than keep it "in" house with "What Happens in Vegas, Stays in Vegas - they want you now to flaunt it.

The new slogan is (drum roll please) "Your Vegas is Showing"

ROLF - LOL................

Forgive me - I forgot where I was for a minute

Cheers

EK exits Management Contract at Sri Lankan

Wow what 4 months can change....

In September EK said it wanted to extend the Sri Lankan management contract for another 5 years and also up its stake in the airline.

However a spat ensued in November when the airline's ops people refused to bump revenue passengers for all President Mahinda Rajapakse's entourage. The President responded by suspending the work permit of the UK National (Peter Hill) who was the airline's CEO appointed by Emirates.

Now the other show drops and EK is first exiting the management contract and has also put its 44% share up for sale. This is EK's only investment in a foreign airline ever.

Given that Tourism represents the only major form of foreign direct income and the airline is vital to the national interest it seems somewhat short-sighted of the country's rulers to have acted in this manner.

Under EK's management the airline has made significant gains and retained a stable operating environment despite loosing half the fleet to a Tamil Tigers rebel air attack in 2001. The constant threat of hostile operations must have been a big drain on the management team. With the situation now worsening again EK must be thinking themselves lucky.

EK's contract will end in March 31st 2008

Mass Confusion at UK Airports with new bag rules

Congrats to the UK Powers that be and the airlines for not being smart.

As a result you have 2 separate sets of rules to check before you can know if you have the ability to carry on 2 bags.

So here are the T2 recommended rules to live buy.
1. CHECK the airline's policy for the specific airport you are using
2. Don't believe what people tell you - check with the airline via the phone
3. Don't assume that the rules are the same as the USA - they are not.

The following airports from today (Jan 7th) have the ability to allow up to 2 pieces per pax. UK airports that are now kitted out to cope the new regime include; London Heathrow, Manchester, Glasgow, Edinburgh, Aberdeen and Inverness. Easyjet has said only a single piece no matter which airport (specifically this means Gatwick pax are screwed.)

Stansted is TBD as are other UK airports. Changes are supposed to be in place "later this year". Remember that Stansted has absolutely NO PLANS for an IRIS fast track retina scan system. So chances for a 2 bag limit being in place before summer is remote.

Cheers

Timothy

Under the covers - things still not good with the 787

So there I was over Christmas and chatting with some friends who include a number of Boeing workers.

Seems like things are not good with the 787 - yet.

Specifically "partner" quality and the Software interface are the oft cited reasons. To this I think we can add the fastener problem.

A member of the team of guys who is actually sitting there with the bits of plastic (aka parts) delivered was very vocal in his disgust with the program. Nor was he confining his vent on just the subcontractors alone. Boeing was never a good one with its software and it offloaded that group prior to the commencement of the 787 program proper.

For the neophytes (me included) it is normal for any manufacturer to have a staging area where they fix the parts that come in from external vendors or suppliers and make them fit into the final production area. Normally this is a relatively straightforward process. However in the case of the 787 it has turned into a nightmare of almost biblical proportions. It is a worst case scenario.

The production drawings (actually its all in CATIA) don't match the production delivery items. CATIA, the Dassault Systèmes flagship PLM solution is supposed to make this all better.
The material delivered doesn't match the drawings as they exist. Changes in design seem to be occurring all the time so the "production" aircraft configuration is really not "frozen" in the sense we are used to. We wont see that until probably 20 or so aircraft have gone down the line.

The big impact here is that we should take with a grain of salt that Boeing will make the delivery schedule. I think they will be taking a fair amount of time to catch up.

However I have faith in Boeing's ability to fix this. I just don't know for sure if I want to be flying in an early model JAL or ANA 787.

So lets just hope that things work out well all round. However for now... there is one HECK of a lot overtime being put in by a certain number of engineers and key workers in Everett. Best of luck chaps....

Cheers

So who won in 2007 - Boeing or Airbus

Mass Speculation on who won the 2007 battle.

Officially Boeing is on top with 1423 sales confirmed by the Chicago based company. But wait - dont order (more) yet. Airbus has according to Flight International approx 1399 sales. BUT and this is the big one not included are many of the posted "orders" that Airbus announced during the year. This includes about 650 plus aircraft of all types.

Can Airbus pull one out of the bag here? I think so. So I am betting that Airbus will publish a higher order than Boeing when they announce on Jan 16th.

Anyone willing to take me on?

Cheers

Timothy

Webtrends 2008

Borrowed librally from WebProNews and embellished

As rough as webmasters thought they had it with Google over paid links in 2007, we think Google will play rougher in 2008. Their approved acquisition of DoubleClick in the US needs only similar approval from the European Union to be completed.

When that happens, and we think it will, imagine Google making the same PageRank adjustments to sites that display graphical ads to what they deem as low-quality destinations. Webmasters will long for the days when it was just text links getting this treatment.

Here is something we think won't happen - Yahoo isn't going anywhere. Not to Microsoft. Not to Google. Not to Martin Sorrell and WPP, or anyone else. Being second in search market share and having a display ad business that can bring brand names to its pages may not be sexy, but it brings revenue to Yahoo.

Another thing we won't see - Powerset launching to the public. The natural language search engine lost its CEO in November 2007. Though they offered us a peek at the site months ago, Powerset never followed through. Natural language search is hard, kids. Lots of favorable press hype can't counter that. Enough of the won'ts.

We think we will see the first efforts of disenchanted Hollywood writers show up on the Internet as they turn to creating content they control, instead of a studio.

But don't expect a two and a half hour summer blockbusters showing up on the web. We think a short series of 7 to 8 minute episodes with a name star participating, and sufficient financial backing to deliver high-quality production of the shows, could lead to someone becoming the first Tony Gilroy of the Internet.

We also expect Microsoft to reorg its Net brands again and shuffle people up, down, in, and out of MSN and Windows Live. MS always does this - usually in April. The company is stuck with two brands to promote. It makes more sense for Microsoft to promote Windows Live than MSN as a name, so we think the transition to one distinct identity should happen in 2008.

Though it's popular now, Facebook gets its comeuppance in 2008. Someone somewhere will adopt Facebook's old model of requiring .edu email addresses for membership in a social networking site, build up some buzz, and start grabbing members before they get to Facebook. The open platform snafu will really piss off College kids.

Similarly Linked-in and Plaxo however will become more popular for adults. Other wannabe sites like Jigsaw and Xing will also rise.

We predict that Second Life will be a footnote for gamers not mainstream and Advertisers will walk elsewhere.

Finally we (T2) predict that some order will come to content creation in the form of an independent classification which will create a metric. Thus making random UGC less common. We also predict that the UGC will peak probably in 2009 and turn to a steady state rather than being the ascendant and babe of the hour it is now.

Shame on NASA - Pilot data should be open and transparent

NASA, its prima donna engineers and its administrator Michael Griffin should be brought to task for bungling the release of the US Pilot Survey data (Fomally called
NAOMS).

The data presented itself is pretty useless, the timing was way off, the release of the information was obfuscation by Government at its best.

The USA relies on Air Transport. Keeping the airways and air transportation system safe has to be job 1. Clearly NASA doesn't share that view.

So Mr Griffin - get off your ass and instruct your people to present the data in a meaningful way. Instruct them then to make recommendations so we users (yes consumers and tax payers) as a whole can benefit.

Here is a short summary:
http://www.nasa.gov/pdf/207285main_NAOMS%20Redaction%20Summary%201231%20FINAL.pdf

Here is the full "redacted" versions:

http://www.nasa.gov/news/reports/NAOMS_survey_data.html

2008 Predictions

So here we are the last day of 2007 – and so what are our predictions for 2008.

We have already given a podcast on the subject – but here are some of the more detailed items we believe will occur in 2008.

CAUTION – we have been frequently correct in our predictions however we have frequently been premature in our predictions. So think of the timelines when considering our views.

1. Economy. The US economy will continue to suck during 2008. We have a long time to wait until the outcome of the election. Then after that it will still take some time to emerge. I don’t think its going to matter who wins with regard to the general ATT market sector. Other economies will continue to be business as usual. One possible disruption could occur in Asia driven by China’s actions.
2. Open Skies. Initial euphoria will be replaced by some of the cold hard realities that the US-LHR market is not that robust enough to support all the new service. There will be at least one carrier who downsizes their expectations on the routes into LHR from the USA. REMEMBER that the slots that are being replaced with Transatlantic also happen to be some of the most cross-feed flights. Thus the reduction of feeders into the LHR will result have a knock on result. The surplus capacity on the routes will result in some pretty good deals. Future waves of new flights across the pond will not occur until end of 2008 probably 2009 season.
3. Mergers and Consolidation. We will see a lot of merger interest particularly in the USA carriers. Depending on the make up of the USA Congress (clear mandate or not) will determine whether the 25% rule for foreign ownership of a US carrier is allowed. We believe that unless one party sweeps Both Houses and the Presidency that this rule will remain intact. We do believe Southwest will attempt to grow via an acquisition. Westjet and AirTran both look likely candidates. Should that occur we should see also an AC foray across the border. United is looking very inviting. Elsewhere – we do believe that some more European consolidation will occur but with the big event being AF/KL’s acquisition of AZ – nothing will come close unless SK and LH finally stop the dance and merge. AF/KL is going to be a very big player. More than most people understand. Air Berlin might add another player but in general we believe the LCC market is healthy.
4. Amadeus and Travelport will both go IPO – they will likely be the big Equity events during the mid part of the year.
5. The GDS model will continue its transformation. Although the Travel Agent base will continue its unit decline. More and more players will be seeking direct relationships. We expect to see further splintering of the options in distribution
6. Commission cuts and fee increases. Lots of these.
7. ETS – Emissions Trading will be a hot topic but not a big impact in 2008 – that comes in 2009.
8. Far out predictions:
a. One major player will exit
b. One model will undergo radical transformation
c. One major player will eat another
d. Private Equity action will be at the lower pace than 2007

2007 - The Year In Review

The year in review

This year 2007 has been yet another period that confirms the old French adage Plus ça change, plus c'est la même chose

So here are Plaudits and Brickbats for well the Aviation, Travel and Tourism Industry.

r Fuel – price thereof. UGH…. Proves that what goes up – must keep going up. Biggest impact has been the actual lack of impact. The global economy has learned to accommodate rising oil prices.

r Slime Green – Cloaking one selves in Green has become a popular past time. So far the industry has done very little actual work to mitigate the effects of Climate Change. The goal has to be the REDUCTION not just the amelioration of Climate Change gases and effects. We advocate the following:

1. Zero footprint. Leave no footprint after you leave.
2. Reduce all your energy consumption (replace light bulbs etc etc)
3. Reduce your energy footprint – use less devices and use them more efficiently
4. Carbon offset more than you use.

r The decline of the greenback. The dollar took a huge tumble. Well someone finally figured out that the Bush strategy of mortgaging the future wasn’t going to work. Blame all round for the subprime mess. Did we learn anything? Yes – a castle is not a home.

a US Airlines – the patient recovered enough to take a walk and in fact even run a little in 2007. However they are catching a cold from the overall US economy. Stay the course chaps – be wise.

a A380/787/A350XWB – new planes! The A380 finally entered service. Airbus launched the A350 formally and Boeing while stumbling on delivery looks like it has racked up 800 orders for the 787.

a Money – Part 1 – New Money – the Arab states, China and other Asian markets are flexing their economic power and buying into the US depressed economy. There will be a HUGE impact in 2008.

a Money – Part 2 – Private Equity – while credit dried up in the latter parts of the year – we still saw a blistering pace of PE deals. Blackstone for Travelport acquiring Worldspan, Harrahs, Closing Sabre, MidWest Airlines, etc etc. Adam Aaron joined Apollo and set about building a very nice Cruise Portfolio. Instead of 2 now there are 3?

a Money – Part 3 – Acquisitions – Airline Consolidation – didn’t really happen – but its coming – well maybe. Air France bought VLM, Lufthansa bought into jetBlue and Air France looks like its going to win Alitalia. Vanguard was acquired by Enterprise. Finally a home for the much travelled Alamo and National brands. The end of Wayne Huizinga’s travel dream.

a OpenSkies – Its going to be ugly at London Heathrow on March 30th with all the new airlines and the opening of T5. EU Open Skies has actually focused all the attention on LHR but it applies across the board. We are going to see a significant battle for market share into and out of the UK mostly transatlantic. However Open Skies also applies to Singapore and other markets. Asean nations are accelerating their own Open Skies and we will see free competition SIN-KUL by the end of 2008. Other markets across Asia will also become free and open.

r Commissions and remuneration – the move to consumer paid distribution continues. GDS distribution is well and truly changed. There are no easy deals for distributers. Cruise commissions – long regarded as being best for the few remaining Travel Agencies out there are now being subject to death by a thousand cuts. The latest being the removal of commissions for Cruise based Air. And lets not talk about Fees!!!!

a Ancillary Revenue – looks good to me – lets unbundle and charge for everything. Would you like to pay for that barf bag or not?

2 Industry Giants left the industry – Gerald Grinstein retired after successfully piloting Delta out of bankruptcy. And only took his salary. Way to go Jerry! You are a scholar and a Gentlemen. Now of only some of your former peers had been not so greedy…. Bob Dickerson after 35+ years retired from Carnival. Obituaries – Bill Misunas, Warren Avis you will be missed.

First Salvo Fired in New Transatlantic Fare ware

Air France and Delta have launched the first assault on LHR with their first fare promotion effective March 30th 2008. $222 OW based on RT LAX-LHR.

As noted previously we anticipate a pretty hefty fare war for Coach passengers beginning March 30th.

With 4 Carrier groupings offering new Nonstop flights from LHR (NW-KL, CO, US and DL-AF)this is going to be a great boon for travellers to Europe next year.

So mark you calendars. Seats are now available for sale and will likely be common rated along the West Coast from flights to LHR. The ripple effect will be significant. Yields will be trashed.

Cheers

Timothy

Who was naughty at UK Airports? Slot Abuse!

You just have to love the Internet... there is so much fun filled facts available.

From Airport Coordination Ltd (ACL) who run the slot committee at LHR and other BAA managed airports - they have complied with UK and EU law regarding he abuse of slot times.

5 Airlines ran afoul of the regulations. Surprisingly Easyjet and Ryanair were slapped with the initial largest fine GBP 20K each for transgressions at LGW and Stansted respectively in a very short period of time - 3 weeks in 2007. Smaller airlines ThomsonFly (now TUIFly), Flybe and Thomas Cook Airlines (soon to be Air Berlin) were each hit with a GBP 1,000 fine for transgressions at different airports.

The latest fine was for October 2007 so we can assume that there will be more next quarter.

There should be some consideration for the fact that the two LCCs are the largest players at their respective airports - but the fines will definitely make people sit up and pay attention. It would be interesting to see if the USA applied this rule especially at JFK and other slot restricted airports.

I can just hear Michael O'Leary getting a copy of his fine. I bet he wont be quite so naughty next time.

Ready for 2008 LHR Passenger Changes?

Here is the official LHR Change Schedule for 2008.

So if you are travelling in, through, near or on a LHR transiting carrier - better make a note of these changes:

New Words for 2008

Troogle -
"n1" Google's cash sucking sound from the Aviation, Travel and Tourism Sector.
"n2" Previously a secret search project inside Google now just their cash register.

"v3" as in "I am troogled by this..." Getting into trouble with Google and loosing certain privileges.

KALF
"v1" as in "I used to have a reasonable competitive niche until Air France/KLM came in and bought my competitor - now I am in deep Hushanga."

O'Leary
"v1 - usually past tense" as in - "I got a great deal on Ryanair only to pay more than twice the amount of fares, taxes and fees for Baggage Handling, Check-in and a measly cup of coffee."

Slime-Green
"n1" the new color pseudo eco friendly brands like to paint themselves in to make them sound and look like they are really helping the planet. Can also be a verb.

Bushed
"v1" usually past tense - the state used to describe any situation that occurs to American or other nationalities after they encounter a problem directly related to the current lame duck administration of G. W. Bush. ... as in "my vacation to Europe was great except the prices really bushed me". See also former words like "Roved and Libied"

Cheneyed
"v1" usually past tense - the state you feel when you realized you have been shot.

Wolfowitz
"v1" meaning mislead - synonym. As in "Wow I was really wolfowitzed that time."
"n2" meaning I am in total control here and do not interfere in my activities. Usually used to describe the actions of a person who does not like interference. As in "He is being a real Paul Wolfowitz with the board".

Tilton
"n1" This decades version of Gekko as in Gordon.

Googleplex-
"n1" The massive Google corporate campus that is making 1 Microsoft Way look like a subdivision.

Tamaseked
"v1" To be acquired by Singapore.

More words available on request to timothyo@t2impact.com (c) T2impact Ltd 2007.

"Sir Francis Drake - Sire! The French Have Captured The CIty What Are We To Do?"

It bad enough that the major UK airports are now run by a Spanish Construction company, now comes news that the French have captured effectively control of London City Airport by acquiring 50% of all the slots there. Air France/KLM Group have swooped in an acquired VLM Airlines (Belgium operator) who with a fleet of F50s and a single BAe 146 was the largest single carrier at LCY.

Over the past few years as UK road and public transportation has degraded, the Docklands development has improved and of course LHR has become more of an embarrassment than an airport - LCY has slowly grown. It is now handling over 2.5 Million passengers on a single runway with no aircraft larger than an AVRO 100 currently servicing the place.

AF/KL was already almost joint #1 at the airport having acquired Irish player CityJet in 1997 and through its upcoming codeshare relationship with the #3 player at LCY - Scot Airways (the former Suckling Airways).

Shut out!

BA acquired a nice footprint at LCY when it acquired CityFlyer and then subsequently sold off most of the business to Flybe. However its ambitions are now well and truly thwarted after BA was unable to prevent the Franco-Dutch juggernaut from picking up VLM. BA will have to make do with very few slots and pickings at LCY.

So sorry Willie.

In case you missed it... AZ Board Recommends AF/KL; Approves Slot Sell-off

This is a wonderful case of DUH!

The Alitalia Board (who have proved themselves to be both largely incompetent and ineffectual) has recommended Air-France KLM Group as the recommended bidder from the remaining 3 duly qualified combatants. (A/KL, AirOne Consortia and an independent financial team from Italy).

They held off announcing their decision. Government sources told the Financial Times earlier this week that Air France-KLM was the preferred option but that threats of protest action by unions over Christmas had led to a postponement of a formal decision. Please note that it is not the board who will make the decision but the Government in who will win the bidding for the 49.9% Government share.

Over the Christmas Holiday, the ailing Italian airline also sold off 3 slot pairs at LHR for a record price. One slot pair each went to US Airways and Continental for $60 Million each. A minor slot pair went (as reported in the FT) for $20 million to BA. With Ryanair now the largest carrier from Italy to the UK - the AZ Slot pairs at LHR are no longer as meaningful. This will bolster the airline's balance sheet.

Once the smoke clears a little more we will write another posting on the latest of the slot pair trading that is still on-going at LHR.

Cheers

Maxjet RIP - Does this mean Premium Niche is dead?

Maxjet after struggling for the last month to find new sources of credit to keep the airline afloat succumbed on Christmas Eve and grounded all flights.

Our assessment...

Not enough capital, too much competition and not a good enough product. The official reasons were "Anemic Credit Market" and "Skyrocketing Fuel Costs". We believe that the management must also take some blame for not focusing on developing a core market fast enough and also misjudging the consumer in what they want.

Under capitalizing the airline meant that normal features that business folk want (eg InSeat power was not offered). For flights on the routes they flew - STN-JFK, LAS, LAX and IAD the business person was mostly king yet the product did not match up. I flew Maxjet LAX-STN and the service product was at best mediocre. The focus on inflight amenities such as video and food rather than the core product did not make the investor community feel good.

So what finally killed Maxjet?

AA's 2 nonstops a day JFK-STN and the credit crunch. Basically they ran out of money.

Let this be a lesson to Silverjet, L'avion and to EOS. You need to have a better product in order to compete. Business folk can accommodate a clunky old 767-200 if they get what they want to do business. With massive competition coming in March of 2008 from the US airlines coming into LHR - the survivors better start looking for making their product a little better.

Sadly the purple planes will grace the skies no more.

Did the Rabbi steal Christmas - You be the judge

Last year (December 2006) Rabbi Elazar Bogomilsky got his 10 minutes of fame for asking for equal time for a Menorah to be displayed at SEATAC during the holiday season. The result? The Port of Seattle removed all Christmas trees from the airport in a story that reverberated round the web mostly for its absurdity.

http://www.nysun.com/article/44912

This year - 2007 - we have a very imaginative (not) display of unidentified trees and snow making. With nary a religious nor festive symbol or icon in sight.

So congrats to the Port of Seattle for being overly PC. Congrats to the Rabbi for ensuring that Seattle will NEVER have a festive icon or remotely religious symbol of any kind in its airport.

Next year we will have scenes from the Grinch and a permanent display of Jim Carey to guide us through our holiday (non-festive) season.

And so for everyone - Merry Christmas from all of us at T2. No matter what your religion, or preferences are - you are always welcome with us. Revel in your individuality and lets enjoy our differences rather than hiding them!

Cheers and to all a good night!

Timothy

Selling America by the Dollar - Saudis think BIG very BIG

OK so this is a paraphrase of the 5th Genesis Album for those of you old enough to remember when Peter Gabriel fronted the band!

The Saudi Government has established the largest Sovereign Fund ever created. http://www.ft.com/cms/s/0/412752ae-afa4-11dc-b874-0000779fd2ac.html?nclick_check=1
According to the FT the new Saudi fund will dwarf even the very large $1.8 Trillion fund being set up by Abu Dhabi.

So thanks to Geo Bush and Co, America is now going to be old piece by piece. Whether or not this helps the US economy is yet to be seen, however entities from Europe to Asia and the Middle East see big bargains in the US economy.

Some of this will undoubtedly be in the Aviation Travel and Tourism Sectors. So far we have seen very little impact with perhaps only the traditional players making any noises - for example like Lufthansa's investment in jetBlue. However this will undoubtedly change.

Stay tuned folks this is going to be an interesting season

Merry Christmas

To all our readers friends and associated persons....

Wishing you all holiday cheer and happiness this season

Peace to you all

Cheers

The T2Impact Team

US Airlines - Grow up and stop complaining

The US Airline community as represented by ATA has for a long period of time - specifically since 9/11 been an oligopoly who has disdained consumers in favor of their own goals and objectives.

However Consumers are finally getting their day in the sun - if not in court.

On Tuesday NY Judge threw out a challenge to the NY State law enacted post the debacle of last winter with passengers imprisoned on aircraft at JFK and other places. http://www.boston.com/business/globe/articles/2007/12/21/court_rejects_airlines_suit_to_block_ny_law_on_passenger_rights/

The US airlines have been woefully inadequate in their following even the basic guidelines (note not law) as agreed with the US DoT. http://airconsumer.ost.dot.gov/publications/flyrights.htm

However - now we see the States stepping in to mandate tougher consumer protection.

In Europe a similar effort was mounted by all airlines but in 2004 new regulations that are far more strict were enacted.
http://ec.europa.eu/transport/air_portal/passenger_rights/doc/2006_flyer_be_informed/2006_be_informed_flyer_en.pdf These apply no matter if you are flying on a first class ticket or short LCC hop. Even charter airlines - notorious for their lack of consumer services are all identically covered. Impact? Better behavior and no huge financial impact on the airlines.

So US Airlines and ATA - get over it... join the rest of the world.

T2 Podcast 208 Predictions

Listen to Managing Partner Timothy O'Neil-Dunne

http://iagblog.podomatic.com/entry/eg/2007-12-21T10_05_45-08_00

2008 Predictions... a lively conversation

Paying the Piper... a comment on the US Financial Sector Meltdown

For once I am going to stray outside - actually pretty far outside - our normal area of expertise and talk about the US economy. I have no expertise in this area but my personal frustration and that of my colleagues has reached the point of not being able to remain silent.

The current meltdown in the US Financial Sector has been driven by the usual and predictably explainable factors. However we cannot avoid the responsibility of understanding that the current US Administration's policies of mortgaging the future through a number of "must-have- instant-gratification" moves has failed. Funding a war with amounts of money that are simply untenable has beaten the US economy to a pulp. The Administration's policy of hoping (yes it was that - just a hope) that the domestic economy would be the engine to drive a need for less tax and no worries about the value of the dollar has clearly failed. So now those of us who are subject to the dictates of the US Administration are now going to pay ... and pay ... and pay.

But there is an even worse price. The very economic factors (namely a free market) lauded by the Bush Administration means that the more fiscally conservative and financially stable (read smarter and rich) nations of the world are now picking up the bargain basement opportunities right across the US economy.

For me personally the one that brought it home was the announcement by Singapore Inc's Tamasek Holdings taking a large share in Merril Lynch.

I am not advocating a return to restrictive practices of currency controls and restraints on trade - far from it. I am just stating that the US Administration and the Weany Congress have but a few months - not years - to figure out what to do about the War. Clearly common sense and Body bags are not enough to convince anyone that the War is morally and factually wrong and should be terminated. So now the economic argument might ring true.

The economic value of holding on to Iraq has been washed away. The right of that country to self determination - should be granted and let the Iraqis take that responsibility for themselves. If that includes their own civil war - then now is the time to let them do that. But let's just stop funding one man's stupidity and an Administration's Folly. Enough is Enough.

So now it must be a decision that is based on what is best of the worst situation rather than doing what was once a seemingly noble deed - however flawed.

Let's hope for all concerned that America's next Administration and the current Congress are able to grapple with the real issues rather than the "spin" of what makes no sense.

The American Economy is on Life Support. Having it being funded by China, Singapore, UAE as well as larger smart commercial organizations should be an embarrassment.

One final thought: Ignorance is no excuse.

US Travel - Flat at best in 2008

We are seeing more signs of slowing in the economy. Unlike GWB the team at T2 does not believe that everything in the garden is rosy. We firmly believe that there is a real recession and it will bite hard for at least the first 2 quarters of 2008. Recovery won’t happen until after the election in November. Uncertainty is the watchword.

We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.

We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.

Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.

International NON-US market will be more robust but will also feel some of the same heat. More on that later

Cheers

Timothy

Only a few more hours to go; Will the Italian Government Postpone the Alitalia decision again?

OK so today is D day for Alitalia well at least its scheduled that way.

There are 2 front runners (AF/KL and AirOne investors) and a dark horse (local Italian investors) and several - well others (SQ, perhaps) - waiting in the wings.

Most people are betting on AF to win. But we have a slightly contrarian view that this may not actually happen even if the Prodi Government chooses AF or even AirOne. How so?

Remember a little earlier this year that the European Commission ruled on a small case of RyanAir and Aer Lingus? Don't think that Mr O'Leary has forgotten this little sleight. There is a strong possibility - no make that a certainty - that who ever wins will see a challenge filed by Ryanair amongst others.

The EC is going to have a pretty hard time approving an airline merger given the concentration argument it used against FR+EI. Further there is still a simmering dispute on the question of how much State Aid will need to be paid back.

Folks this one may yet run for months. Even with Alitalia losing altitude all the time.

Happy punting....

T2 Podcast on 2007 - The year in Review

Addison and I had a good banter today on the 2007 Year in Review.

If you would like to listen in - please click here.

Cheers

Timothy

http://iagblog.podomatic.com/entry/eg/2007-12-17T11_40_49-08_00

Amadeus gets into the consulting business

Sheez, not only do we have to contend with all the new consulting agencies springing up but now we have to compete with Amadeus. Those nice people can even bring you a video to show you how nice they really are. http://www.amadeus.com/airlines/x79170.html

I think this was made by the same group that did those nice 20 year anniversary personalized emails called Thank you!

Oh well... lets see if they are any good. If anyone uses their services please drop me a line and let me know what you think of it. timothyo@t2impact.com

Cheers

T

For many airlines in search of new revenue opportunities – the alliance game has played out and the incremental revenues are becoming less and less attractive. Consider the basic mathematics. For new partners joining an Alliance – they tend to be smaller and with an in inferior product than the established carriers. So the lager airlines are unlikely to gain much from a new partner joining. The new joinee tends to get greater reach and the benefit from the larger airline.

Of the alliances – the Star group probably has the most structure and is the most mature. But they are now struggling with the fundemental flaws of the concept. Consider Singapore Airlines. They have been very reluctant to put their code onto any other airlines' flight. Indeed if you look at the actual SQ codeshares – the number is very small. On the other hand many carriers want to place their code on SQ because of its “superior” product. In the past I have used Lufthansa as an example of where the Alliance concept is broken. Perhaps now SQ is a better example. If I was a SQ frequent flyer I don’t think I would be happy to be flying on say LOT.

Now lets consider the new (well not new lets call it a rebirth) of the bilateral arrangement which has (usually) hard equity in a formal JV. Recently we have seen two good examples of this:
Air France/KLM Group joint venture with Delta for servicing Transatlantic passengers including from London’s Heathrow. Another example is the recent Lufthansa investment in jetBlue. Both these arrangements return real value in the near term that can be both quantified and tracked in real time.

In our opinion the future of Alliances is not rosy. Those guys who work there are going to be working overtime trying to justify their existence. Not just to their bosses but well each airline.
Example are: Fees that keep rising, more complications, advertising that is ineffective, endless meetings that produce no results… I think you get the picture.

On the other hand consider a partnership with mutual investment or a big parent owning a smaller player. Sound good? Well maybe. The recent past of mutual investment didn’t work out… remember BA and US Airways, SQ and Virgin, The Quality Alliance: SwissAir, Virgin and Delta… lots of not so good stories.

However at the end of the day – airlines like to be married. They are a bit like humans. Maybe polygamy is not such a good thing. Just sleeping together or even getting engaged even married is a better solution for a relationship. Interlining is just being good friends.

USA finally gets ADS from China

The USA has finally qualified for ADS making the world’s second largest market inbound open to the world’s fastest growing source market. Getting ADS – Approved Destination Status – was never a sure thing. The politics are very complex as can be imagined. Also the USA is not the first. Many countries already have mature ADS agreements with China and have seen the benefits rise enormously. Why is ADS important? As the China market opens up to new travelers seeking new experiences the USA would be number 1 on their list of places to go. For many the first trip is important as travel begets more travel. China is fast becoming a consumerist society driven by their burgeoning individual middle class wealth. Their lack of other major expenses (housing and education plus costs of children) drives a bigger disposable portion of their salaries.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.

USA finally gets ADS from China

The USA has finally qualified for ADS making the world’s second largest market inbound open to the world’s fastest growing source market. Getting ADS – Approved Destination Status – was never a sure thing. The politics are very complex as can be imagined. Also the USA is not the first. Many countries already have mature ADS agreements with China and have seen the benefits rise enormously. Why is ADS important? As the China market opens up to new travelers seeking new experiences the USA would be number 1 on their list of places to go. For many the first trip is important as travel begets more travel. China is fast becoming a consumerist society driven by their burgeoning individual middle class wealth. Their lack of other major expenses (housing and education plus costs of children) drives a bigger disposable portion of their salaries.
However a cautionary note. If the USA continues to make it difficult to obtain Visas and persists in setting up roadblocks to entry from China (justified or not) then the business will go elsewhere. The USA also will need to start learning to speak Mandarin.

The big keep getting bigger - EU Giants In Travel

The big keep getting bigger.

The sea change that occurred over the last 18 months in Europe in distribution is now starting to bear fruit. The two powerhouses of TUI and Thomas Cook (daughter company of the old Karstadt Quelle) have now been admitted to the UK’s FTSE (Footsie) 100 top shares. (This is the UK equivalent of the Dow Jones index). This may seem to be a big achievement but in reality it simply acknowledges that the world’s second largest commercial market after financial services is Travel. Further it acknowledges that the concentration of the distribution system into fewer hands is a global trend. Congrats to both companies. Let the battle commence. At December 12th close, Thomas Cook Group had the 96th largest market capitalization of UK listed companies; TUI Travel was 88th.

Alitalia - it aint over yet folks

Well they postponed again - but now there is a reason. LH is back interested. SQ is denying everything and even BA is having a look.

The price just went a little higher. However will it go really high? Not in our opinion.

Stay tuned.

Lufthansa rides into rescue jetBlue's damsel in distress

As if further proof was needed - the world is a crazy mixed up place. So LH is spending some of its cashpile to buy into jetblue and create a local USA footprint. jetblue needed a big strategic change given its current malaise and this is a good match. If for no other reason than it stirs things up a bit.

So this is a good win for LH - with the dollar at an all time low - this is costing LH very little.
This is bad for UAL as it means that LH (who has a real service issue with UAL's product) can have alternative and put its code on a number of flights from JFK hub, as well as the other interconnecting points - DEN, BOS, IAD, etc etc.

It is a shot to Virgin that they cannot have it both ways - on the periphery of Star, and eating their cake domestically in the USA.

It is a competitive response to the tie ups of US and European airlines - if you like there are now 2 layers of alliance. Super Partners (AF and DL, KL and NW, LH and B6 etc), and Alliance partners. Frankly we believe that the general alliance market as reached its sell by date. These tighter relationships will make for better service levels.

We predict more of these in the near future

This is a good move

2008 The year of the Spaceship says Virgin Glactic

Well sorry folks I dont have the $200K for the seat - nor the $3 million for the satellite launch cost lying around in my pocket - but it seems that others do. Virgin Galactic is making is plans sound much more realistic wth the maiden flght of SS2 (Spaceship 2) the pre-production version of the in flight vehicle and its carrier - WK2 - White Knight 2 scheduled in July 2008.

The company now has $30 million in fully paid tickets and deposits and 100 of its around 200 "signed customers" have experienced the SS2 flight profile in a centrifuge. That's a pretty big WOW. So go and sign up... and if you can save a space for me. Window seat please

Thanks

Sabre Opening Up to LCCs

The battle ground for the love of LCCs and HVCs has just become a little more interesting. As regular readers know we are strong believers in the emergence of Hybrid (HVC) airlines. Thus far the game has been some what interesting. But recently we have seen Amadeus making a big play for LCCs while at the same time Sabre has been sitting on the sidelines. Now Sabre has come out with all guns blazing.

Will this be enough? It will depend signficantly on the costs. So the battle is now joined. Galileo - where are you in all this?

To see the Sabre press release go here: http://phx.corporate-ir.net/phoenix.zhtml?c=73098&p=irol-newsArticle&ID=1085638&highlight=

Cheers

Timothy

Roundup

Forgive the lack of writing dear readers… pressure of real work and – well also some time out has caused the absence from the blogosphere.

So here is a quick round up of some happenings and a few comments:

The 2 sick carriers of Europe could possibly be entering their final moments. Olympic needs to – well just be left to die. Alitalia will enter into a very tense few weeks as the auction (#2 for those who are counting) enters its final moments. From our experience point of view we know what it takes to recover orderly from bankruptcy – our experience with Varig and cleaning up the mess was invaluable. It isn’t easy but its possible. Clearly the scale of the problems at both these carriers will take many months even years to cleanup. BUT it can be done.

Heathrow is still a third world airport. For all you fans of London’s gateway – I can assure you that LHR is still no better. Recently I have been able to avail myself of its charms in three different modes: Arrival, Transfer and departure. In ALL 3 situations (T4, T4-T1 and T2 respectively) the experience was thoroughly awful. Contrast this with MUC (Transfer) STN (arrival) TXL (Arrival and Departure) It is nothing short of a national disgrace. T5 however does look REALLY ready.

Air Berlin – not bad! I had an opportunity to try its services. Air Berlin is not really an LCC. We have written before that it is indeed a new generation of HVC – Hybrid Value Carriers. Recently I have flown on almost the entire inventory of the airline’s narrow body fleet – F100s, B733, B738, A320. They are now a very large carrier. It is creaking in some areas but they do seem to be bringing cohesion pretty quickly to their operating units. Interestingly when I flew on one sector (TXL-STN) the listed carrier was LTU!

Tiger vs Jetstar. I was privileged to host a panel at the recent WebinTravel conference in Singapore late last month. (Note to the Boot – you missed a cracker show). In the continuing theme of LCCs that are not really LCCs I had both CEOs of Jetstar Asia and Tiger Airways. We had too little time but there are a few things I learned.

1. Tamesek Holdings is letting these guys duke it out in the market without any help from SQ. Whether this condition is allowed to stay remains interesting and an open verdict
2. Both airlines are determined to follow different paths. Jetstar is reverting more and more to its traditional parentage (nee Qantas). Tiger will seem to remain more like Ryanair and the purest LCC model.
3. Both airlines are reluctant – unlike Ryanair – to release figures like average fares or percentage of fares under a certain number. Interestingly we had an audience question (the composition was actually a good mix with just under 300 people) – What is your price definition of a LCC sector fare? Answer – SG$100 – only 1 or 2 hands went up. Less than SG$50 and everyone raised their hands.
4. Tiger and Jetstar will have a hard time in Korea as they progress there. It will be a local blood bath when next year Domestic LCCs are allowed – all of whom must operate for 2 years before the market opens up to international LCC activity.
5. Open Skies in Asean is coming slowly. But the largely Singaporean audience was highly enthusiastic about the Feb launch of 4 LCC frequencies on the SIN-KL Sector. Full deregulation however wont happen until Dec 2008. Then open season on one of the last regulated commuter city pairs will be a model for the rest of Asia. All Asean markets (intra region and domestic) are supposed to be deregulated fully at that time. However we think this will not be fully implemented.

More later and talk soon…

Extra Extra - Frequent Flyer Mileage Devalued....

Its been on the cards for ages... no longer subtle - the airlines are now going to devalue the currency.

With high load factors we have been seeing the stealth devalution. No availability at the cheaper rates (which used to be the regular rates). Premium charges needed. Extra or Surcharges for certain categories. etc etc

Well now its the full montey. Additional 10% at least has been imposed by CO on its premium traffic First Class and Business First frequent flyer tickets

The end of civilization as we know it....