LH's Loss Equals EK's Gain

When Thierry Antinori announced he wasn't going to take the top slot at Austrian Airways - there was shock across the Lufthansa hierarchy.

A senior manager not filling his anointed role. But darn it the guy was a Frenchman... Sacre Blue!

Now the true nature is revealed. Thierry a savvy airline man - will be joining Emirates as one of the rapidly expanding airline's top management. His formal position will be Head of Sales. Lufthansa will be the loser for letting a canny manager who has proved his stripes go.

For those who are expecting business as usual from Emirates - I can assure you that EK will not be following anyone's path.

Consider that fair warning.  Take notice here folks

Cheers

Online Travel Drags Down ARC August Numbers

Oh dear... after recovering strongly from the depths of the 1st quarter when Expedia and Orbitz suffered without the AA content, the post summer blues seem to have hit the US market for Online Travel Agency sales.

While the $$$ numbers still look good - the transactions of the OTAs are down This is starting to look like the market is going soft. While traffic growth was modest for the earlier part of the year - the GDS powered ARC transactions were down in totality. I believe we are in for a soft late 3rd and all of 4th Quarter. Next year will start soft for sure. With fuel still stubbornly high despite the significant drop in the price of oil. So hold onto your seats everyone - we are going to hit turbulence. Airlines are cutting flights. Cheers

Travelport Exposes Its Financial Weakness

In announcing the restructuring of its upcoming PIK loans – Travelport looked like it had dodged a bullet. In many of these sort of arrangements the loading of junk debt that has been the staple of VCs. In general it has a natural set of consequences IE the VC or PE firm tries to make its money early. That concept has been predicated on the exit of the VC before the big debts become due. Well Travelport was not able to complete its IPO after several attempts and any such future attempt looks like it could be a long way off.

However debt doesn’t just disappear. Someone has to get paid. While in general the stock market's volatility has seen shareholders have their values plummet during crises such as the GFC. Bond holders too have had their fair share of ups and downs.

Bloomberg in reporting the Travelport PIK restructuring headlined with the fact that this was the highest premium being paid thus far in 2011. In the very week when the Federal Reserve Bank moved to lower interest rates Blackstone (ultimate owner of the Travelport businesses) was going the other way. Indeed the debt swap rate has been set at 13% which was certainly an eye opener for many.

At the same time Blackstone made it clear that it would be quite prepared to bankrupt one of the entities probably Travelport Holdings. Blackstone’s complex ownership in Travelport and Orbitz provides effective control funded by the junk bonds and other high risk financial securities. Of course Blackstone itself has minimal risk as it has already withdrawn its own financial outlays in effect meaning that the VC is playing with OPM (Other People’s Money). I want to point out that this is normal behaviour in Wall Street. The formal filing with the SEC can be found here.

In the document the company cited two major reasons for the loss of Market share. The loss of the Expedia business from Worldspan and the loss of the Arab Carrier NDC business that went to Amadeus. Yet in examining the gradual decline in market share – these drops were single one off events. What we actually see is a consistent reduction in transactions Y/Y over the entire period from 2006 through till today. Market share has fallen by 5 points but transactions are now off by nearly one third during this time period according to my analysis of the Travelport filings.

While CEO of the Travelport operating business was gushing in his position and gratitude for the loan restructuring – there is no doubt this will have a long term impact on the company. The glory days of the unlimited cashflow based on minimal investment in R&D are clearly over. Travelport faces significant obstacles at a time when its direct competitors are spending heavily.

The company now has to contend with the fact that they are still supporting 3 core systems – Apollo, Galileo and Worldspan. The cost savings from the merger between Galileo and Worldspan have now effectively ended. Thus there are strong cost pressures as well as revenue pressures.

The company’s direct market share has continued to fall at a time when general GDS global market share as a category is also falling. At the end of the first quarter 2012, United Airlines is scheduled to exit leaving Travelport with no major airline hosting business. Thus a number of synergies will be lost. The roll out of their hoped for blockbuster product - the “almost ready” Universal Desktop is stalled.

Perhaps somewhat interesting is that the company faces a conundrum over its battle in Direct Connect. It has two airline distribution deals that would seem to be supporting the Direct Connect model. Southwest in the USA market and Air Canada in the Canadian market where Travelport connects to the Air Canada host via the Farelogix system. At the same time it is embroiled in a lengthy legal battle with American Airlines (it recently won another round in retaining AA's participation in Orbitz) and is subject - as is Sabre - to a formal investigation by the US Dept of Justice.

With its ability to raise money at all this has to attract funds for hard development. This means that development efforts will be impacted even curtailed as a result of the debt restructuring. Travelport will therefore continue to struggle for the foreseeable future. Something that has not gone unnoticed by Travelport’s competitors and of course their airline suppliers. Travelport’s options don’t look as rosy as they did 5 years ago when the company was effectively formed from the ashes of the now defunct Cendant.

The extent of Travelport's financial weakness comes at a bad time for the company when demands for change and attention to the sea change that Technology is driving are rising rapidly.

These are testing times for the legacy GDS model.

Cheers

Invitation to connect on LinkedIn

From Timothy O'Neil-Dunne Node at Tnooz United States timothyo., I'd like to add you to my professional network on LinkedIn. - Timothy Confirm that you know Timothy You are receiving Invitation to Connect emails. Unsubscribe © 2011, LinkedIn Corporation. 2029 Stierlin Ct. Mountain View, CA 94043, USA

Vancouver Ends Preferential Treatment For US Bound Connections

For the longest time - I have used Vancouver as a gateway to Europe and Asia from my home in Seattle. And this sometimes gets me a better price and a reasonable connection. There used to be a great back door that you could use that bypassed the whole process and gave you a quick access to the commuter terminal.

Well not any more. Despite being assured that I would not have to "land" in Canada - sorry yes now you do. Those nice days of a connection are over.

Welcome to another bureaucratic mess.

UGH

Cheers

Once Again No choice - The Arrogance of Facebook Signup

I am one of these people who doesn't take too kindly to being told what to do. Must be the rebelling against authority or something similar.

So I am not a happy bunny these days.

I cannot understand why external websites who are using Facebook or Twitter to get the sign ups done and then we don't get a choice about the information or the manner in which I can control these apps access to my information.

Once again we find our choice limited and our data controlled.

And when was the last time you actually read the terms and conditions....

So here is an exercise. Just try and match up the T&Cs of Facebook with the T&Cs of the website you just signed up for.

Never mind what they can now do with your data.

Cheers

Google Flight Search - Assessed

So I have been watching reading and using the Google Flight Search product. I have discussed it with my friends and colleagues

It is really fast (for obvious reasons). It has a different not necessarily better UX.

I like it in general but I cannot find a compelling reason to really like it a lot more than what I have today.

But the biggest criticism I have of it... is it doesn't work very well.

I have tried several routes and focused the routes on different hubs so that I could force a particular airline who should be present to appear.

Oops AND I THINK GFS is biased

It only delivers quality results for the airlines who use the ITA engine. You can get an answer for the other airlines and I know I will hear howls of protest about my methodology... but I know how it works and well Delta and Southwest (two of the largest brands in the USA Market) - you are going to be disadvantaged.

Thus part of the problem will be that Google's flight search will still suffer from the same level of issues that contribute to the poor experience we already get from the Meta Search engines and the OTAs.

Sure I can do more because I am an experienced power user. But sadly I do come away feeling like I have been drinking lite beer.

Cheers

Just a Quick Reminder On Comments

Dear Readers, Browsers and Commenters

This is a request and an urging on behaviour on this blog.

Please do not post commercial comments or ask me to evaluate websites or products.

My policy is very clear. If you post a comment with a URL or link that you have not expressly asked my permission to include in a comment then it will be automatically deleted.

If you want me to look at something - then please email me to ProfessorSabena@gmail.com

Thank you for reading our blog.

Cheers

The Professor and the Gang

Must Be Getting A Little Quiet In South Africa!

They are forming a commission to investigate airline prices

You JUST have to read this article and try hard not to fall about laughing too hard.

Let's have one of these in the EU or the USA and waste squillions of the tax payers money

Cheers

Shhhh Don't Tell ANYONE but OIL was down to around $83 today

The airlines complain a lot about the price of oil. Well its at some of its lowest rates in a long time. Ending the day (in NY) at just of $96 - it was hovering at $83 for a while.

This is good news for the airlines.

Will it last?

Naaaahhhh

LSY opens New Data Centre Near London

This is not normally something I would cover, but it is interesting.

LH Systems has been on the block for a while. Every so often rumours come of their impending sale. The last story came about 4 weeks ago. It was mooted that LSY would be sold to either IBM or Tata.

But it would seem they are proceeding with business as usual and have this nice new data centre. It will be a Tier 3+ (that's pretty good) facility serving amongst others Thomas Cook's IT infrastructure.

Cheers

Best BS PR Release of the week. TripFab

SELL YOUR BOEING AND AIRBUS STOCK

This week's Stupid Airline Tricks award - which we haven't awarded in a while - goes to a team outside of airlines (possibly - we cant be sure here at the Professor's secret skunk works lab).

Tripfab is stretching the limits of hyperbole... (that was not a misprint)

Please read this - its hilarious. In this article the team are claiming "change the way people travel". Is this the Travel Industry's equivalent of Ginger?

This is the release from PR.com

Call your broker now... SELL anything to do with Travel.

Cheers

PS the image is from Cerrone a Disco Monarch's album from about 2002.

BA + IB = Devalued Points? Yup You Bet!

Oh Dear.

This doesnt seem to be my week. Those once great deals on BA - and such wonderful things like cheap single partner awards. They look like going and going fast. November to be exact.

While the announcement by BA of Avios as the merged name of its frequent flyer program - there was bound to be something of an "adjustment". Well get ready folks. Some are predicting that the change will be catastrophic. In one case the alignment takes BA from the nice and friendly 240,000 for a RT pacific 1st class to the astronomic 720,000 same level as Qantas has been charging.

And it doesn't stop there. BA will actually be increasing the somewhat less than acceptable charges that will have to be paid. In many cases BA has been charging higher fees (the infamous QR/YQ merged charges) which make its FF flights cost about $100-$200 more than a US airline for the same itineraries. Interestingly there is no evidence that BA actually pays more in fuel or taxes than these same airlines.

So to make you even more unhappy - read this links from different sites on the same topic

UPGRD
The Points Guy
FlyerTalk
Boarding Area

It is worthwhile to read these stories. Bah Humbug BA!!!

Cheers

US Airways Completes Dismantling Of Vegas Hub

When America West was in its ascendancy - it created a second hum in Las Vegas a scant 287 miles apart from its primary hub in PHX. To boost traffic it created a low price night flight set taking advantage of McCarran's no curfew restrictions on flights.

With the realignment of the merged HP+US systems Pittsburgh got the ax first. Now we are seeing Vegas move to a simple flight pattern to the respective other hubs of US. Gone the PSA shuttle from California, Gone the hub, all that will be left will be 21 flights a day. About the same as Delta American and United. Also gone about 880 jobs mostly from Vegas, the Tempe based airline will close its pilot base there. All down from the mid 1990s when it was the largest airline there.

Story and Image from Las Vegas Sun.

The Saga Techcrunch - A$ The World Turns

It would be very easy to poke fun at the shenanigans going on at AOL owned Huffington Post led Techcrunch.

Techcrunch is generally a good read with a great degree of attitude. Perhaps it is a sign of the maturity of the web or just a small window into our web based corporate culture(s). Yes it looks like in this war - no matter who started it - the suits win again.

For clarity - I think of myself more as a contributor rather than a suit - but in reality I have to be a suit a lot of the time.

The web is supposed to be open, wild and free. That's the good news. The bad news is that these concepts don't necessarily sit well together.

The web based economy has effectively destroyed a significant part of the non-physical economy. From banking to personal relationships to our little world of travel. The resulting models are very different from what many of us (Boomers - sic) grew up with.

And we have folks like Arrington to thank for some of the good and the bad of what has happened. We need people like him and we need independent organs (I struggle with the term blog or journal) to act as the fourth estate of the web.

However it plays out - as a soap opera I suspect, this will have the effect of changing the psyche of the web based economy. While the world will carry on without Arrington at the helm of Techcrunch - the likelihood is that it will have lost some of the veneer of adolescence. Yes the web is growing up. I guess we have to now as well...

Cheers

Scoot - New Singapore Long Haul LCC?

There are rumours flying around the web that Singapore's new Low Cost Long Haul Airline will be called Scoot.

Changi Airport is becoming quite a hotbed of LCC activity. The recent numbers show that LCCs are powering much of the airport's growth. Although competition from the GCC based carriers who over fly the Lion City or the explosive growth of KUL an hour's flight away has creamed off some of the lustre. Qantas's new premium airline is supposed to be based in either KUL or SIN. Chances are pretty slim that it will choose KUL in my view - that it will be based in the Malaysian Capital. Since Qantas announced its plan - a long in the works deal was announced showing Malaysian Airlines and Air Asia had agreed to broad cooperation and rationalization. Tony Fernandez will be joining the MH board as a result. Besides Jetstar already has a base in SIN.

Earlier this year - Singapore Airlines announced that it would be starting a long haul LCC using 777-200s - presumably to compete with the likes of Air Asia X which uses wide body Airbus products A330/340 and has A350s on order.

The new airline's proposed name has inadvertently leaked and it has the name Scoot. While I doubt that this would be the name according to Aviation Week quoting Ipos this is the registered brand name.

Doing the usual thing I looked up the term. I personally use the word a little differently but that's just me.Here are the usual definitions one website went into more details on the naming.

But I think the most urgent issue is to assess whether or not the name is a good one. In my view Scoot would have been better for the short haul than the long haul.Tiger would make a better long haul name. (Too bad Tiger somewhat blotted its copy book in Oz).

There are several examples of airlines that have had their names ridiculed. It is a popular past time. Just look at my name for example. SABENA was translated often into the acronym rather than the Belgian airline (formally Société Autonyme Belge d'Exploitation de la Navigation Aérienne) but to "Such A Bloody Experience Never Again"

So a little more on the choice of aircraft. The 777 is wider in the cabin than the Airbus. 19ft 3 inches vs 18 ft 6 inches. Having flown the airbus - I can tell you that 10 abreast seating on these planes is pretty tight. Scoot is supposed to also have 10 abreast. 4 inches on either side of the cabin wall will make the window seats tolerable.

So here is a request. SQ please don't name your airline Scoot. Choose something a little easier and less likely to be ridiculed.

Thanks

Is Airline Boarding Rocket Science?

I have written before about Jason Steffen's attempts to get rationality into airline boarding. Much to be applauded.

The Economist published an article on how his theories have progressed.

However I believe that in the real world - there are different ways to address this.

Randomized allocation of boarding groups is one simple way (as AA is doing now). Southwest's funnel method - feeds traffic into the jetway fast. Ryanair's staged boarding - seems to work the fastest from my observation.

The basic issue remains that the hydraulics of the flow into an airline cabin will never become efficient unless there is a way to address the basic human interaction and the physical size of the passengers. For example domestic Mexico and intra Asian flights with less portly Americans can actually process faster because smaller nimbler people can share the same physical space.

End of the day. Random wins. But take away a major component such as TRUE limits on bags on board as exists in Europe and boarding works way better. Perhaps Spirit has it right for charging for overhead bin usage.


Cheers

Great Buffet Quote: "Give me a good management team in a very difficult industry, and the industry always wins,"

The airline industry and indeed Travel as a whole is very difficult.I have been in and around it for all of my professional career now spanning more than 38 years. Holy crap has it been that long!!!!

Here is a great story that should give you a great sense of warmth. The end of Ansett is finally here. The last check has been paid and the staff got 96 cents on the dollar.

The lesson should be heeded over at Virgin Australia and also Air Australia (formerly Strategic).

Cheers

Travel Massive Trumps Tired Ogre Tribe

Travel Tribe was a name used to describe collections of people who wanted to interact to share their passion for the subject of Travel.

There was (and still is - read further) a great group of people who started various Travel Tribes in different parts of the world.

However enter the evil Brand Owner Ogre. Seems like Travel Tribe was not just a nice informal thing that travelistas could come together. Nope. The value of the brand was just too strong to prevent the Big Brand Ogre from flexing his legal muscle.

So the heavy hand of various legal threats were made and the thriving community was forced to change their name.

But fear not - Right outweighs Might frequently on the web. In this case Legal threat Might is losing to internet social Right.

So the formerly Travel Tribe meetups are now newly named (actually for many months now) as Travel Massive. and now there are 14 of them worldwide with more forming.

So get in on the action. We also tend to have informal meet ups at conventions such as ITB (Berlin March) and WTM (London November) so enjoy it. And Ya Boo Sucks to the Travel Tribe Spoiler Ogres.

Cheers

Is BTC Right on ASTA or Not?

In the interests of equal time - I am publishing here the Open Letter BTC Gram from the tables of Radnor PA.

The background for anyone who missed it - is that President Obama made a reference to Travel Agents in a speech. Check the Economist for a balanced view of the situation. The pointed reference in the letter to "Industry Insiders" was perhaps aimed at the Professor and others who had the temerity to observe that ASTA's response contained a number of inaccuracies.

Check out the debate in Travel Weekly.

I read 2 perspectives on US Travel Weekly. Sadly the one I preferred seems to have been pulled off. http://www.travelweekly.com/Arnie-Weissmann/Obama-and-our-obsolete-language-of-polarity/

So here is the BTC letter, read it then you see if you agree. I have provided some commentary at the end:


BTCgram
August 30, 2011

ASTA Did The Right Thing In Responding To President Obama’s Comments About Travel Agents
BTC has read with interest stories and postings in the travel industry trade press regarding President Obama’s well-intentioned comments about technology and travel agents as well as industry and media response to them and each other. One central element would appear missing from the discussion and that is what we think inside the industry about this issue is largely irrelevant.
Meetings destinations like Las Vegas no doubt vividly remember the immediate and painful impact on business from the President’s words a couple of years ago, as did the corporate aviation business. Road warriors, once-a-year leisure travelers and young, up and coming business travelers recently heard over and again the President’s influential comments about travel agents. ASTA responded early in the news cycle to help prevent a perception of travel agents as yesterday’s resource from becoming an intractable false reality in the marketplace.
In BTC’s view, ASTA did the right thing to safeguard the businesses of its members. Likewise, Travel Leaders also fired back at the President, ostensibly to protect its business. It’s simply a prudent and necessary business response. To its credit ASTA’s strategy seems to have succeeded as evidenced by consumer business press coverage that included ASTA’s perspective in publications such as USA TODAY, The Economist and The Los Angeles Times.
Industry insiders screeching about business models, technology, new paradigms, erroneous statistics and the mistaken notion that ASTA is yearning for a bygone era is, in BTC’s view, inwardly focused and overlooks the central point of ASTA’s effective response to a potential threat to their members’ businesses. Congratulations to Tony Gonchar and ASTA for providing the precisely required leadership at the exact moment it was essential!
###
About Business Travel Coalition
Founded in 1994, the mission of the Business Travel Coalition is to bring transparency to industry and government policies and practices so that the managed travel community can influence issues of strategic importance to their organizations.
Contacts:
Kevin Mitchell
610-999-9247

There were two great pieces by Kevin May in TNooz.

The first was a report on the flap itself. The second was an unusual publication of a response from ASTA itself. TNooz was right to publish both.

For absence of ambiguity. I think ASTA just put its foot in its mouth by presenting an inaccurate set of numbers and thereby destroyed its own credibility. The point it was taking was admirable if a little naive in my view. The world has changed. A large number of former traditional agents are gone. What remains is a core of hard working and valuable resource. However let's be realistic about the whole thing.

Ultimately logic and numbers will prevail. The concept of the old school Travel Agent who acted as an access into the supply chain has been swept away.

Today's Travel Agents are better. They just don't scale well. Sadly. BTC is not helping the cause in my view and only serves to make the issue worse. But then what do I know... For the record - I would hardly think anyone would label the Professor as an "Industry Insider". Perish the thought.

Cheers

Last 1/3 Year US Market Projection

Every year I play a little game - what will the final part of the year look like. Both for the economy and the Travel sector as a whole post Labor Day.

My usual metrics are to look at airline traffic, hotel occupancy, rates and the economy as a whole.

I don't like to be a pessimistic person - but I am not getting warm and fuzzies about the current state. In my crystal ball I believe we are going to see a general slowdown of the Travel Economy in the last quarter of this year. What are the drivers and the evidence to support my hypothesis?

Starting with the economy - we knew August would not be a positive force on the mood of the economy - blame the politicians for that one. The jobs numbers look poor with zero growth when we need to see an increase of 150,000 new jobs before the unemployment rate falls from its almost historic 9.1% level. Business confidence is not going to be good even if there is a significant boost in jobs programs announced next week by Obama. The best we can hope for is flat for the rest of the year.

During the year - the total amount of airline trips taken have risen about 2-3 points yet the Corporate heavy ARC numbers show a fall of more than 2% in total tickets issued. Further the price of the tickets has risen. We are already (through July showing that nearly 6% total expenditure increase over 2010's numbers. Remember that increasingly ARC's ticket only numbers do not track with the total cost of trips. With therefore a significant additional cost of ancillaries not showing up in the ticket numbers - we are going to see squeezed corporate travel budgets that require some pull back in business travel. I am projecting for the last 1/3rd of the year a pull back of 6% in expenditures to bring budgets back in line. This is going to accelerate the cut in trips compared to 2010 to the tune of about 3-4%. Some chaps who are counting on reaching elite status with their trips in the last quarter better think again.

Leisure travel is also going to see a pull back with Thanksgiving having a bit of a hard time.

I had a scan and looked at deals coming up. International travel ex-USA is not looking promising. Delta recently implemented a second round of cuts in the Winter 2011 schedule. Pulling selected flights rather than cutting routes.

So pricing is holding but I am seeing some new lower priced inventory available. Also pretty good inventory for some international flights on frequent flyer miles.

So boys and girls... there we have it. A quiet last third of the year in travel with numbers down. Batten down the hatches. We might start to also see a few layoffs occurring selectively.

Cheers

What Cost Emirates Profits? Just Ask Qantas.

While Emirates continues to rack up impressive profits, other airlines are calling foul and accusing the airline of benefiting from some degree of financial fiddling to justify the seemingly hard profit numbers.

However I believe that the airline makes money the old fashion way - they earn it.

United Airlines Chairman Jeff Smisek was quite effusive on the subject when interviewed last month during GBTA annual convention in Denver.

Embedded in the results of the QANTAS GROUP last month also was a clear indication of the resulting failure of their international business in the face of competition from - well airlines like Emirates.

As reported by Reuters, QF lost more than AU$200 million on its international operations. With net profits being more than $524 million, the airline must be making money hand over fist domestically.

As QF restructures its international business - EK continues to grow its profits on three key sectors.

The Trans Arabian sea routes, The North South ZA to Northern Europe and of course on the Kangeroo routes.

This gives an indication of where EK makes its money. However clearly they have a number of advantages over QF that QF has now come to realize and will address.

Cheers

EasyJet Musical Chairs

The continuing boardroom farce at Easyjet seems to have roped in some new blood which hopefully will bring a degree of stability to Big Orange. (With due deference to Braniff).

For those who have not been following the saga - Stelios has been having a bit of a feud with the board and the management of his favorite child Easyjet. His concern has been that he disagrees with the move for expansion vs profitability that the company has been pursuing. He launched his latest broadside in July. Stelios is concerned that the relationship between his former protoge and Airbus has become a bit too incestuous. And is concerned that the company is paying too much for its aircraft and buying larger machines unnecessarily. The company now has A320s and A321s it acquired when it board GB Airways but has stepped this up by buying new A320s. Note the company could argue that its larger capacity needs were so severe that it needed to lease a different aircraft type (2 Boeing 757s) during the summer 2010 season to accommodation this. The company is now exclusively Airbus as the last 737-700s were returned this year.

For those of us on the sidelines - the battle seems a little silly since the airline is doing nicely thank you. But a battle there is. As the leading shareholder Stelios is entitled to make his point and he has done so. For the record - his family own 38% of the stock.

Latest to leave is deputy chairman Sir David Michels. The revolving door has seen a parade of folks rotating through the board room in Luton. Among the recent hires as board members are Andy Martin and Adele Anderson. They join recent Deputy Chairman recruit Charles Gurassa. The upheavel is so new that the website has not yet updated the composition.

You can discern the tea leaves here of a change in board direction for the company. On board we now have a bunch of real traditional travel stalwarts.

Let's have a little peak.

Out goes also Sven Boinet (ex - Lastminute.com),
Charles Gurassa has as noted above an excellent travel pedigree
Newcomer Andy Martin is ex Forte, Granada and First Choice (now TUI).
The board seems to have a blue chip set of players. Both women, including its new CEO, on the board shared top 50 most powerful women in the UK status as far back as 2002. Adele has experience in aircraft financing - this seems to be at part of the battle that Stelios is fighting.

For those of us with a little memory this was the company that was founded on the premise that travellers should "cut out the travel agent", we can get an impression that the board will likely take a more traditional approach to distribution. One can infer that the company will become more like a regular carrier and discontinue a key plank of Stelios's product positioning.

Stelios's arguments about the board being a bit cosy - does seem to have some merit. Newcomer Adele and the non-exec chairman were both colleagues at KPMG in the 1990s and 2000s. Rigas Doganis has a long history of working with airlines as an academic and board member of Olympic and SAA. Keith Hammil is currently on the board of Travelodge and was part of the original team of Go.

Clearly this story will run for a long while.

Cheers

US DoJ Gets Tough On Anti-Trust

The US Department of Justice is finally waking up from a long slumber and wasting no time in putting some teeth into the enforcement of anti-Trust legislation.

First up - they are likely to deny the merger between NASDAQ and NYSE Eurnext. Next they are likely to deny the AT&T/T-Mobile merger.

What does this mean in travel?

There are 3 major issues on the table today.

First Google - there is now strong evidence that Google will be the target and eventual recipient of stringent anti-Trust measures. It has already paid fines for bad behavior - such as criminal charges related to the Pharma ads issue, This will have big issues going forward for hotels and air activity

Second - GDS behavior. With the protagonists agreeing to a time out for 3-4 months - this moves the Justice Dept's investigation into a common time line with the various lawsuits. With Travelport looking to address its financial woes - a GDS merger is decidedly off the table.

Third for any additional airline merger - the DoJ is going to pour cold water on that. By now any assessment of the situation will see that pricing power has returned to the airlines driven by scarce supply. Thus any additional airline merger type activity will not be viewed favorably in my opinion. that said - the DoJ and the DoT clashed several times on this subject and the DoT won.

Bottom line here folks... be careful what you wish for...

Cheers

Is Google Evil?

This question keeps getting asked.

So have a read what InfoWorld's Cringe column has to say about it.

And in my view (yes my 2 cents)... it doesn't matter any more if there is intention or not. It matters only if people get hurt.

You be the judge

Cheers

ATRA Ratings of "Safest Airlines" are Bunk

The Geneva based organization ATRA claims to use scientific data to rate airlines as being the safest this was provided to me by Professor Jackie who reads the Sydney Morning Herald.

The organization fully termed the Air Transport Rating Agency comes with the tag line "Swiss Quality Assessment". The data is taken from 2009 reports. When it comes to Swiss Airlines I am not sure that quality is that great.
Swiss Airlines are no strangers to accidents the last one being a Crossair Avro RJ100 in 2001 near Zurich.

Further Swiss ATC was to said to take the blame for a mid air collision between a Russian Airliner and a DHL Cargo plane. According to Wikipedia the outcome was as follows. On 19 May 2004, the German Federal Bureau of Aircraft Accidents Investigation (BFU) published its determination that the accident had been caused by shortcomings in the Swiss air traffic control system supervising the flights at the time of the accident and by ambiguities in the use of TCAS, the on-board aircraft collision avoidance system.

Er... Let's look at the list - all the Top 4 Airlines have had crashes in the past 4 years. Note that I am not judging the companies - just indicating whether or not the issue of a crash was to be considered or not. Here is the ATRA list for 2011 and for the top four players their most recent accidents:

Air France-KLM (AF447 A330-200 Mid Atlantic 2009)

AMR Corporation (American Airlines, American Eagle) (AA 331 B737-800 Jamaica 2009)

British Airways (BA38 LHR 2008)

Continental Airlines (CO1404 B737-500 DEN 2008, Calgon Air CO3407 Q400 BUF 2009)

NOTE I DID NOT GO BEYOND THE TOP 4.

Delta Airlines

Japan Airlines

Lufthansa

Southwest Airlines

United Airlines

US Airways

Interestingly none of the Skytrax top 10 airlines are in this list either. So in examining the criteria list they publish top 15 elements. Here we can see part of the problem. Frankly their criteria has some - but in my personal view largely irrelevant - elements that make up the criteria.

The 15 selected criteria are (as stated by ATRA):

Net financial result
Total number of passengers
Total number of employees
Total number of cabin crew employees
Total number of aircrafts
Average fleet age in service
Percentage of aircrafts on order
Fleet homogeneity
Number of aircrafts no longer in production
Number of aircrafts considered at risk
Total aircrafts-km flown
In house maintenance capability
Number of accidents during the last 10 years
Dedicated flight academy pilot-training facilities
Dedicated full flight simulators

(Note the typos are theirs not mine which are more than plenty!)

I therefore would suggest that you go to more relevant and far more respected sources for the information on who is the "safest" airlines.

With IATA now demanding that all members pass the safety audit for membership this should give some comfort.

Air travel is risky but no more so than crossing the street except that you are not in control.

Pronouncements such as this do NOTHING to advance airline safety.

The Professor has spoken.

Cheers and safe flying

Google Chairman Delivers Public Caning To Britain

Outspoken (and now kicked upstairs)Google Chairman Eric Schmidt delivered a public tongue lashing to Britain's education system on its lack of focus on Computer Science.

While I usually dislike his points of view, I have to agree with him. Britain's focus on teaching in just about all sectors is a farce.

Successive governments have screwed the once proud system to the lowest common denominator. The standards of everyone was effectively lowered with the implementation of GCSEs and constant adjustments of the rules results in ineffective results with great soundbites. Read a rather disheartening set of stories in the Grauniad.

Sadly with education now saddled with incredible overheads and bureaucracy and corresponding cost - we are unlikely to see any meaningful changes from the public education system.

But take heart, Google is going to give you money to learn how to produce videos.

Just what the country (with the most CCTV coverage of any nation) needs.

Farewell Steve And A Deep Sense Of Thanks

Steve Jobs announced his exit from the management but not the soul of Apple. Notwithstanding the appalling pictures of him on TMZ (if they are to be believed) Steve’s impact on our lives has been deep and far reaching. I wont dwell on his many accomplishments but take from his work one thing.

Innovation is fundamental to our being.

Innovation and true advances are not achieved by consensus and SWOT analyses. They are driven by people who think and work hard. Who are contrarian. They are delivered by passionate people who believe even though perhaps every ounce of their being tells them it is – well wrong or worse even stupid. Something drives innovators. Steve was the epitome of someone who can make that happen. What Steve did was to be truly his own man. He made his own rules. He didn’t care about standards. He didn’t care about what people thought. He only cared about what his ego drove him to do. And this in our homogenized Googlesque world was iconic and – well different.

So from the bottom of my heart – I just want to say thanks for inspiring lots of people, me included.

I am not an Apple lover. I still use a WINTEL based PC. Sure I have an iPod and an iPad, I hate many of their commercial terms – don’t get me started again on the iPhone’s business model. But I respect and admire Apple enormously.

Steve – get better soon and again, thanks

Expedia Tries to Breathe New Life Into TAAP. Can this Drive Growth?

Expedia has undergone something of a transformation recently.

Earlier this year it reversed a long held tenant of using GDSs for its air supply chain access.

Now it is pushing partnerships of all sorts as a way to solidify growth in the face of a huge onslaught from its now #1 competitor Priceline a company that has trashed Expedia in almost every metric except overall volume.

Will Expedia's new approach win?

TAAP its Travel Agency Affiliate Program has been largely a tepid and tentative approach to a marketplace that doesnt trust the Bellevue based behemoth.

In its latest efforts it is offering it deep supply chain proposition to Chinese Travel agents. However here - it essentially only offering something that would not give a competitive advantage to an independent Chinese agent. With its investment in the #2 online Travel Agency eLong not making any dents in CTrips market lead - Expedia is still struggling here.

TAAP has not done a lot in the other markets where it has a footprint. In my view China will not fare any better.

Sabre's Mobile Study Sends Message To Mothership

Sabre has updated its mobile traveller study.

While the study sample size is in my view woefully small and the questions leave a lot to be desired (bundling of search and buy for example), it has some interesting messages for dear old mother Sabre GDS business and Sabresonic PSS business. I found the comments put forward by the head of the STINGroup Chris Kroeger interesting. A case perhaps of physician heal thyself. Here are the quotes that seem to me to make Sabre want to change some of the things that it does.

“Our survey shows that business travel today is personal. Travelers want the same functionality and convenience from their business travel tools that they have in their daily lives. People use travel services on their smart phones everyday and for every trip – before, during and after they travel,”

“The corporate travel industry needs to keep pace with the services and apps that travelers can access in their personal life and incorporate those into the world of managed business travel.”

“One of the biggest trends we see in the survey data is travelers’ desire for local business information and offerings based on their location via their smartphone or tablet,”

“Travelers will look for this information from suppliers, travel management companies and technology resources such as online booking tools like GetThere. Smart and savvy travel management companies will use technology as a way to fill this need and improve customer support and solidify customer loyalty. ”

“Today’s business travelers expect transactional capabilities from their mobile devices including buying air extras and in-flight amenities,”

“Tomorrow’s business travelers will move from physical passports, wallets and credit cards and will expect their mobile device to fill those needs as continued advancements in mobile payment, commerce and banking make it easier to electronically transact via mobile devices.”

Looking at this tells me that as a current Gatekeeper, The Dallas based company needs to look carefully at three major changes:

1. Providing content to its customers.
2. Mobilizing its applications
3. Removing onerous commercial terms to its users and suppliers alike.

So Sabre - consider this - the advice was free, the impact would be profound.

OK Break over back to the marketplace....

Cheers

Really Proud Of Your Social Status?

I have been skeptical of the personal side of the social web.

Its a lot of fun. We get badges on FourSquare. We get to broadcast to the world how smart we really are....

Oh yea?

Oh YES BABY

I have been playing a game with myself this summer. Let me see how social I can be and the impact.

OK I can officially tell you it's a bust. I am a great believer in social commerce. And that does cross the line into my private life. My family hate it and all my relatives question my motivation. They tend to fall into three buckets:

Bucket one - Yes - way to go prof well done we want to be like you (this BTW is the minority)

Bucket two - Huh? what the FUBAR is he talking about...

Bucket three - this is so silly and dont include us in this (oh but do keep doing it so we can make fun of you privately.

Bucket three is by far the most numerous of my extended family.

Gowalla, Facebook and FourSquare have been the beneficiaries of my experiment. And no I have never made mayor. (I nearly got in in Neuchatel in Switzerland). And I am approaching Mayor status in America which I just found out is 0.7 miles from where I live.

http://pleaserobme.com/ and other sites are out there urging caution. And rightly so. Interestingly the maturity of the environment is mercifully saving us from people telling us about the social habits and their (er hmm) bathroom habits.

The automatic social web is perhaps the scariest. A change in status on Skype used to be only viewable by people I know on Skype. Not any more. It cascades out. The number of different places your status updates now appear are frightening. AND the speed with which it can happen is amazing. But then I get updates conflicting with updates that come via different interfaces. So actively maintaining my social web is well ridiculous and pointless.

So this marks the end of my social experiment.

I am now happy that I know enough to be dangerous.

Do you? Or are you still inviting that home invasion you always wanted. Insurance companies must love this.

Cheers

and a tip of the hat to Mobile Social Local blog for the image.

Lufthansa Close to Offloading Majority Share in IT Subsidiary

Lufthansa Group IT daughter company - Lufthansa Systems (LSY) has been the subject of much speculation as to its future following the decision in in 2005 to move its reservations functions to Amadeus ALTEA or the STAR Alliance Common IT platform.

With the loss of its anchor customer (parent Lufthansa and satellite airlines) for reservations – LSY embarked on an independent effort to replace its aging Unisys based platform known as Multi-Host with a new generation product based on Unisys’s Air Core Environment platform. However this project was abandoned and LSY never proceeded with any customers for the Unisys based system. You cannot find any current reference to this system called FACE on the LSY site but there are still historical references: http://www.lhsystems.com/resource/document/pdf/news/keydata_2004.pdf Instead the Frankfurt based company has concentrated on its line of Airline Solutions, Industry Solutions and Infrastructure Services.

There was much speculation that Lufthansa would want to align its IT services business with that of its part owned Amadeus company in which LH still retails a sizable share. The Financial Times and other news outlets are reporting that LH Group will offload the majority share in LSY. However it appears that the leading two contenders according to these news reports are TCS (India’s Tata Consultancy Services ) and IBM’s T&T Group .
The likely scenario is that the winning bidder will retain the name LH Systems but own a majority stake 51% leaving Big Yellow with 49%.

UK Airline Traffic Faces Bleak Future

I watch traffic trends. Finding what trends are possible is like a treasure hunt.

One of the trends I have been watching is the decline in traffic in the UK. The recent recession pushed the largest adjustment in traffic (read fall) since 1950. But even absent this dramatic worldwide event - the market for travel in the UK has undergone a radical change in the past 15 years.

Just looking at the headline numbers you miss the fundamental shifts in traffic patterns. The massive growth and subsequent maturity of the LCC model produced a huge boom at Stansted and Luton (both one runway locations) and the regions. Only one major runway has been added to the main UK airports in the last 30 years. That was at Manchester. Efficiencies in air traffic and ground control have absorbed the increased travel. Remember when runway separation demanded 2 mins between each movement. The massive growth at Stansted made a huge difference to the UK. Thanks Ryanair and Easyjet.

But the future looks really bad. The current government reversed the previous Blair government in abandoning not 1 but three major airport projects which would have in effect increased capacity in the SouthEast of the UK by 30+%.

While the focus of the DFT's UK Aviation forecasts was to look at the effect of Carbon emissions - it had to have a baseline. That looks pretty bad. Consider their conclusions:


The updated forecasts also incorporate the latest economic growth forecasts, the latest oil price projections, reflect the entry of aviation into the EU Emissions Trading System (ETS) and the Government’s policy not to support new runways at Heathrow, Gatwick and Stansted.

The number of air passengers using UK airports is forecast to recover from the recent downturn, rising from 211mppa in 2010 to 335mppa in 2030 (within the range 300mppa to 380mppa), and to 470mppa in 2050 (within the range 380mppa to 515mppa).

The central forecasts indicate that, with no new runways, the three largest London airports will be at capacity by 2030, and that all further growth beyond 2040 will occur at regional airports.

The impact will be muted somewhat by the growth of rail connections to Europe. Remember that each Eurostar train is the equivalent to 2 747 full flights leaving.

One impact I dont think they have considered is the value of Cross Rail which in turn could add capacity to the market in the UK. By enabling additional traffic to little used airports which are viable. Such as Southend and Manston's massive runway complex. Further Cambridge Airport (1 hour from Kings Cross) could also be added to the pool. So there are several options that the Government refuses to acknowledge as viable choices.

Virgin Atlantic is right to sound the alarm. HM Government must address the lack of capacity and infrastructure in order to enable a vibrant UK economy.

I refer you to Aerotropolis as a good thought provoking book that can stimulate that a strong central government can do.

OK Chaps - time to wake up and smell the Coffee. And you don't have much time before it goes stale.

Cheers

Outstanding Profits for Flight Centre

Confounding just about everyone - Flight Centre has been able to record worldwide profits at another record. While sounding a loud note of caution for the 2011/12 financial year with “crossed fingers and toes” the Brisbane Austalia based company has reported a record annual pre-tax. $213.1 million.(Aussie dollars are currently worth more than the greenback).

Read it and weep fellas

Cheers

Social Web Activity Changes, Declines

The ever evolving web has seen so many radical changes in our social structure that it is hard - especially for old Geezers like the Professor - to keep up.

I wonder openly if I am just special or just others. For some time I have felt like I cannot keep up. For the past 2 months I was not able to keep my email inbox below my optimum numbers.

It seems that we are all suffering from information overload. The result in my view is that there is far less activity in what can be loosely described in the pleasurable parts of the web. (And no that does not mean spending time on porn sites!).

I actually like sometimes to check out what people are doing in different sectors not just the Travel industry. To see how players are evolving their businesses. How the consumer reacts to the changes in a particular site. I love the Wayback machine it gives such perspective to what we are doing today. But sadly the amount of open time I have available to do this has fallen.

It would seem that I am not alone. According to the GlobalWebIndex “Wave 5 Trends” report, social network usage growth has all but stopped among 16- to 24-year-olds in the US, and in a few countries usage within this already-saturated group is actually declining.

I recommend checking out their global chart and the signing up for their reports.

I believe that the world is experiencing a maturation of sorts and that the "fun" part of social networking has been replaced with repetition and utility.

Sadly

Cheers

How Effective Are Coupon Ads Online?

OK so this may not be quite so relevant to Travel but its interesting all the same - but bear with me.

Couponing seems to be all the rage these days. As I have opined before I am not a fan of Groupon and Living Social. I do believe however that Couponing has its place.

So check out this article in eMarketer.

One of the most relevant portions of the article is the assessment of the effectiveness of Print at Home coupons.

For tactical purposes and merchandising the redemption and importance of these tools should not be sniffed at.

Cheers

So You Think The Consumer Is Stupid? Guess Again

I have this strong belief that Web Advertisers are just like traditional marketeers - you treat the customer like he is - well - an idiot at worst - at best not that smart.

However I don't share this view. In general I believe that consumers on the web are smart and getting smarter.

And we better pay attention to it. Because if we don't then they will switch off. Just like they have done in the past with other advertising channels that treated them the same way.

Well it seems that there is some evidence to support my supposition.

Check out this article from eMarketer (yes - I do like their stuff). This report is relevant from two perspectives. One that it demonstrates (at least to my tiny mind) that the consumer is getting smarter, but also that the consumer is well aware of what is going on.

Treat the consumer with care. At least with respect.

Cheers

Looks Like The Professor Called It Wrong. DL Goes For Boeing

Its not a done deal yet but it looks like Boeing is going to go mostly Boeing. With AA splitting its big order - Boeing will get Delta a mixture of 737-900s and 737 REs that now carry the designation that mirrors that of the 787s and 747s So it will get a bunch of 737-9s.

The exact composition should be announced as early as tomorrow

Cheers

The End of the PC Era - Worldwide Shipments to 2017

In-Stat has just published a study on Tablets.

You have to pay big bucks for the study itself but a few highlight items.

• Shipments will read 250 million units by 2017.
• In the consumer segment, tablets are competing against all CE and computing devices, not just PCs.
• Despite similarities in system hardware and software architecture, usage models among mobile devices vary by device type.
• The combination of mobile applications, new semiconductor technology, and the full Internet experience are key factors in empowering the tablet market. Big Data will lead to a massive move towards Cloud based environment to support a range of Apps. This in turn will lead to a raft of poorly designed applications and bootstrapped businesses sitting on top of the current infrastructure. Will Travel be ready for that?
• The 9-inch to 11-inch form factor is forecasted to be the dominant tablet form factor with 56% of the market in 2017.
• iOS and Android are forecast to maintain over 90% of the market share with Windows as a distant 3rd. Farewell WebOS and Symbian - where to RIM?
• Not supporting one of the leading OS platforms is likely to lead to the failure of several companies in the tablet market due to lack of application support. This is pointed at RIM more than anyone else.
• Wireless operator business models could have a tremendous impact on future tablet demand. Thus far the Wireless operators have managed to control the market and force some tough conditions on the user community such as the abandonment of the All you can consume data models in the USA.

Oh we better get to understand what this means.... THINK ABOUT THIS. And now act accordingly

Cheers

Sabre and AA - inch closer to a deal?

Both Sabre and AA sent separate notes to their stakeholders today extending the current agreement due to expire in 9 days for a further week.

Sounds like the lawyers are working over time.

At the same time AA is not letting the grass grow under its feet with the announcement of its second "relationship" (my quotes) for Direct Connect and the launch of a corporate portal.

Sounds like there is a lot of overtime being put in at both company locations and their partners.

Cheers

PS I tried to find an old AA Sabre Logo but could not locate one. So if anyone out there has one - please send it to me! Thanks

BA+QF surrender supremacy on Kangaroo Route

With no fanfare British Airways and Qantas have quietly acknowledged that the Kangaroo route belongs to someone else.

In the past 10 days they have both cut a direct flight each from London to Sydney. Last week QF announced that it would still have the same level of frequency because its partner BA would make up the difference. Today according to e-tid - BA itself has axed one of its two LHR-SYD directs.

Looking at the market shares on the route - we can see that there has been a significant trend away from the traditional carriers. SQ has also seen its share slipping on the route.

A rearranging of the world order on the Northern Europe to SE Asia and Oz has been going on for some time. The Gulf Carriers have been grabbing market share faster than anyone else.

At the height of the economic crisis - a RTW fare for about 500 quid existed. However this is not all the fault of the airlines. The fast rising Aussie dollar makes Australia less of an attractive proposition than other cheaper destinations. Couple this with the pretty dramatic fall in the UK economy and passenger traffic and you can see why BA and QF are making smart decisions to cut traffic on this route.

Still I am nostalgic for the time when this used to be the symbol of the Empire. My RTW this year just may be the last one on a OneWorld ticket.

Cheers

Nike vs Shakespeare

There are many schools of thought on the web about the use of language. Some decry the shortening of the English Language (sorry for those of you who are not native English speakers - I am not good at the subtly of other languages). Yet others decry the over use of words in explaining things.(Prof: Yes I am MORE than guilty of this).

But a very interesting comment from Gerry McGovern this week on the absolute crap we get in our in boxes daily. Drivel driven announcements of less than useful value.

Last week I wrote about the Qantas marketing spin on their new direction. Gerry's column picks on more.

So here is a thought.

Decide if you are Shakespeare (in which case dont impose that on me) or if you are Nike (short sharps stuff I can use).

These days information overload demands Nike.

Cheers

Global Entry Program Gets Added Benefits

For those USA citizens who are enrolled in Global Entry System - it is being expanded.

Two new benefits are now being trialed.

The first is that Global Entry certified people (yes the Professor is one) can use the new expedited TSA security lanes being deployed at certain US airports.

The second is that The USA/Canada Nexus program is being integrated into the Global Entry program. Currently available at YUL, YYZ and YVR. This will speed things through those bottle necks

This should ease some travel hassle.

Here is the text of the Announcements:

We are pleased to announce that U.S. Customs and Border Protection (CBP) is partnering with the Transportation Security Administration (TSA) on a new Department of Homeland Security initiative announced July 14, 2011, that qualifies some passengers for expedited screening through U.S. airport security checkpoints.

This pilot program will be available to U.S. citizens who are members of CBP s Global Entry, NEXUS, and SENTRI Trusted Traveler programs. The pilot program will provide expedited screening through TSA checkpoints via dedicated screening lanes.

Additional information will be sent out prior to the pilot s implementation, explaining more about the program and the necessary steps you will need to take in order to participate.

For more information and the latest updates, please visit www.tsa.gov or contact TSA at (866)289-9673.

Additionally, CBP would like to announce the availability of Global Entry kiosks at select Canadian preclearance locations. Global Entry kiosks are now available at CBP preclearance at the Vancouver International Airport and at Ottawa s MacDonald-Cartier Airport. Global Entry kiosks will be placed at Montreal s Trudeau International Airport and at Toronto s Lester B. Pearson International Airport by September 2011. The placement of Global Entry kiosks at Canadian preclearance locations is the next step in the integration of the Global Entry and NEXUS Trusted Traveler programs.

The integration of the Global Entry and NEXUS programs began in December 2010, when CBP published a Federal Register Notice announcing that NEXUS members could participate in Global Entry. With the deployment of Global Entry kiosks to Canadian preclearance, Global Entry members will be able to take advantage of the program when returning home from Canada. NEXUS members will have the option of using either the Global Entry or NEXUS kiosks in preclearance. Further announcements will be made as necessary.

The Professor Weighs in On US Tax The Rich Concept

A small disclaimer - its Sunday and I often think about larger scale things on the weekend. Today my thoughts turn to the current conundrum of taxes. I was triggered by a Facebook "like" from an old friend of mine. So Professor CP - this is all your fault!

There are many problems with the US taxation system.

1. Its too complex
2. It is very costly to run
3. It is probably unfair
4. it doesn't collect enough

We face a future where our efficiency has in fact caused us to eliminate the very thing that we all depend on. Jobs! We have approx about 30 million unemployed, underemployed or otherwise able bodied but non-taxpayers in the USA.

The USA is no different from many other countries where the concentration of wealth has occurred. USC's Bill Domhoff writes extensively about this.



In the USA unlike emerging markets - there is a majority of mature wealth owners who are no longer actively "earning" new money. So their old money is being used to preserve rather than necessarily grow.

So here is a radically different approach to taxation that I believe everyone can live with and support.

In my concept - it is easy to introduce and easy to calculate. It does not cost much to administer and It is fair. It will increase the coffers of the US Treasury.

My concept is as follows: A flat tax after the social charge of an individual has been paid. The problem of the usual tax rate is that the rich are taxed for being - well rich. My concept is to acknowledge that there is a charge based on the current tax laws to cover that equalization. However over a certain amount the rich have paid their contribution back to society. But we still need their tax revenues. Both on their cash flow inbound and on their assets. Thus I want to recommend a simplistic tax approach.

Tax everyone at one of the following rates:

10% for all income over $1 million after you reach $1,000,000 in gross taxable income

OR

1% of your total net worth is you have a net worth over $2 million.

Which ever is lower.

Then we can adjust based on the level of taxation necessary to support our respective live styles and social needs.

There are many things necessary to ensure equality of contribution to society. We can never solve all the world's ills. but I believe that society has to both incentivize the rich to spend their money and what money is not being actively spent should be "encouraged" to be used productively in the economy.

Consider if the money that went into the stimulus package had been used to spend rather than increase and build more secure capital structures. Interesting no?

Cheers

The Impact of AA Out Of Expedia and Orbitz

The impact of American Airlines non-participation in Expedia and Orbitz during the period from the end of 2010 until restored by agreement (Expedia) and by a judge's order (Orbitz) was interesting in theory. But what about it in practice?



For the absence of ambiguity. The chart shows share sales and percentage increase/decrease in sales of airline tickets. This is transactions NOT sales dollars so they are a true like for like comparison. The source is ARC Corp. The full chart can be seen here. That bulging green line (downwards) represents a significant loss of airline ticket sales from Expedia and Orbitz. Far greater than I believe most people expected. With air revenue comprising such a small amount of Expedia's gross revenues - this did not adversely affect the Bellevue based company. For Orbitz however that does depend more on US Airline sales the impact as we have seen from the recent financial performance of OWW was significant to their bottom line.

This illustration is pretty dramatic and clear. In my view it shows two things.

1. That a single airline's withdrawal from key players in a specific market sector from one or more players who command 50% of that sector can be dramatic.
2. Even after restoration - the intermediary channels as a whole lose share.

There are other interesting things that can be read from this chart. Share does come back. Albeit slowly, but it does come back. it also shows that the OTA's expectation that the AA share would easily be absorbed by consumers switching to other airlines was false. The dramatic drop in tickets as illustrated by this chart is obviously not reflected in AA's total ticket sales loss.

There are many lessons in this chart. I leave you to draw your own conclusions. If you would like to discuss this directly with the Professor. Please see me after class.

Cheers

Tell It Like It Is - Skroo!

I admire Flight Centre. Arguably one of the most successful businesses in Travel Retail. I spend a fair amount of time working and analyzing the Australian market. The recent upheaval at Qantas and its refocused direction on both Jetstar and a diminished uber brand as well as expansion outside of its home market has drawn a lot of local criticsm. But FCL has been largely supportive.

It's outspoken CEO has a really great nickname. Graham Turner is known as Skroo. Pronounced the way it sounds.

While applauding QF's acknowledgement of its issues and being supportive - he could not help but give a little barb onto the way the information was delivered. Judging by the personalized communication message I received (which was really naff in my book) it seems that the airline's marketeers were scrambling to put a bit of spin on the subject matter.

Great quote from Travel Weekly Australia.
QANTAS MARKETEERS, no doubt, agonised,
sweated and debated long into the night - many
nights probably - over the ad campaign which
accompanied the carrier's announcements this
week.
Under the slogan "a new spirit" images of
children were used to portray the message that
Qantas may be taking a new path but you know
what: we'll always be Australian (said with chest
puffed out and that goo). We like straight talkers
here at Final Call and couldn't help but admire the
considered view of Flight Centre's Skroo Turner.
“I don't know who dreamed that up and I don't
know who it's aimed at. But it's meaningless
nonsense.”
Tell us what you really think Skroo.

Gotta love those Bruce's and Sheilas.

Cheers

Groupon - The New Gordon Gekko

I personally don't like Groupon as a business. I am only lukewarm to its personal value to myself and to my family and friends.

The model though really bugs me. It just feels - well plain wrong. Carving up someone else's business model and profiting from it.

I dont buy the whole - new business pitch. That is all BS.

Groupon has burned through and incredible amount of cash in a very short period of time. It has raised $1.1 billion and burned through $942 million.

Henry Bodget has a post on them pointing out that Groupon is running low on cash. This is VERY scary. The business is built on the standard model of growth at all costs. Therefore it should be a Wall Street Darling.

BUT note what it did with the cash. Here is what Henry had to say:
"it is also worth noting that, in the history of the company, Groupon has raised a total of $1.1 billion of cash--and paid out $942 million of that cash to its early investors and executives (highly unusual for such a young company). If Groupon does get into cash trouble, therefore, it will not be because the company didn't discover an amazing new business opportunity or raise all the capital it needed. It will be because of, well, greed."

Read more: http://www.businessinsider.com/groupon-low-on-cash-2011-8?op=1#ixzz1Va99ymW1

Greed is good. Screwing your customers is better.

I really have a problem with this.

Cheers