Aussies Face Economic Reality: Staycation - A New Word

From our friends over at Crossman Communications there is a new survey out. They were interested to see how global and local economies are affecting the Great Aussie Summer Vacation which is about to start down under.

And its not a pretty sight. Things are not looking very positive. The mood in the country is not a happy one.

For a summary - read the PR release from the survey results. I was able to get an actual copy of the complete results and compared to other markets in the Asia Pacific region they make for sobering reading.

As a comparison - check out deal site Getflight. Their Australian site (based on Sydney) compared with their Singapore site illustrate just how far your travel dollars will take you. If this doesn't give you travel envy - I don't know what will.

There is a clear lesson here. Those selling travel products have priced themselves out of the market and the Crossman Newspoll provides a dose of reality about how competitive the pricing is in Australia vs the rest of the region.

Tiger and Qantas's woes - in fact the woes of all the airlines in Australia - illustrate the depth and breadth of the problem. With the Australian Dollar at near all time highs the ability of the local population to take advantage of the natural resource powered prosperity boom seems to be very muted. This survey should also give some credence to Alan Joyce's crusade to get lower costs for Qantas mainline brand. The costs have to come down. As the cost of the aircraft are in US dollars (IE relatively lower) - the local controllable costs are the issue for all airlines.

Check out the Aussie Dollar 5 year currency history compared to three other major currencies (Pegged to the US dollar - the Aussie Dollar vs The Euro and the British Pound.


With the Gillard government that is existing on a single vote seat majority in parliament - they should pay attention to keeping their constituents happy. Happiness is a state of mind.

And there is a lesson in this for all of us. (er hmmm US Congress are you paying attention!)

Cheers

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Is This The Way Forward for P2P Accomodation?

Regular readers and followers of the Professor's Wisdom knows that I am not a fan of the aggregated P2P accomodation business of Airbnb. In my view there is a lot of risk and lack of regulatory adherence hurts consumers. Their somewhat cavalier attitude to the consumer got them into a lot of hot water this past summer. And rightly so.

Part of the problem in P2P accomodation services is that there are a wide number of disconnects between the needs and wants of the people who own the property and those of the consumers. This is not new. However when someone steps into the middle to connect the two there has to be a clear set of roles. Either you have a marketplace where P2P can take place or you are an agent acting for one side or the other.

In the case of the former - this is just like Criag's List. So anyone doing this in an ad model can do so provided they understand their responsiblity to ensure that the ad is genuine. Classified Newspapers around the world have been doing this for years. Its fine. Caveat emptor applies.

In the case of the latter if you step into the middle of the relationship even if its just to collect the money they you become something called an AGENT. In this case they you take on a series of responsibilities. This is the flaw (fatal in my opinion) that companies such as Airbnb failed to comprehend in their pitch to investors.

At last week's PhocusWright in Fort Lauderdale Florida, Bob Sharples CEO of HomeAway was interviewed. Having put a significant ring fence around his business - he was able to demonstrate that the process of renting is not like that of fixed products such as an airline ticket or a car. He made the point that much of the value of HmeAway is not to facilitate automated booking but rather to enable a converesation between the owner/manager of the property and the consumer.

Indeed I have always felt that accomodation by definition drives more customer service questions than an airline ticket. If you are dealing with something that has more unknowns such as a private condo vs a fixed and predictable product such as a hotel room, then naturally you want to get some better sense of it. Having used HomeAway (successfully) and tried to use Airbnb (unsuccesfully so far) I can assure you that Bob's point about the conversational element of his business is spot on.

Last week, DepositGuard put forward a survey which highlights some of these issues. Clearly DepositGuard wants to promote its services, however they have a valid point and seem to be addressing the need. The survey demonstrates that there is a clear missing component in the P2P process that needs an honest broker to solve. Given Airbnb's troubles in this area, both renter and property owner need to ensure that they are dealing in a safe and secure fashion. Ideally there should be regulatory controls in place that address this - and their are - however compliance is almost non-existent.

P2P accomodation services are addressing a need that has long existed in the market. I recall when my team launched Expedia UK that we had Home Exchanges as a lead facility. Personally I hate the impersonal nature of hotels and prefer to stay with friends or take the extra space that condo type accomodation provides. The concept that Airbnb proposed is very attractive to me personally. But do I trust them. Nope I don't. Perhaps this this is the answer.

Think about it

Cheers

Are South African Travel Agents Ripping Off Clients?

It seems that there has been a bit of a storm in a teacup going on in South Africa.

Travelstart the local OTA there commissioned a survey and had cold calls to agents asking them for prices. That the agents gave different results is not in of itself shocking. The disparity of the results however was a bit of an eye opener. The story hit the press this week and has upset the local Travel Agents Association. Here is the original article.

Clearly Travelstart had its own reasons for the survey and that would largely be to demonstrate that inconsistencies exist. And that Online Travel is transparent. However in nice cozy markets where there is not a huge amount of competition - the results tend to vary because the agents dont work as hard as they need to. I want to be clear that there are good agents and bad agents. Any one who claims that all agents are good and vice versa are clearly not giving the whole picture.

So why are there discrepancies?

There are lots of reasons. These range from lack of familiarity by some agents to laziness by others. Whether there is malicious intent is open to interpretation. IE do agents deliberately rip people off? In general I think that would be unlikely. However the ability of the agent to find the lowest fare and communicate that to the consumer remains difficult. The enormous complexity of finding the lowest fare when the request seems so simple can be attributed to the desire of the airlines to obfuscate the true market fare.

What should be a lesson for all concerned is that the lack of a true reference price that consumers can rely on is a problem that affects all outlets irrespective of geographies.

Consumers are forced to jump through a lot of hoops to get a best price. And this is not their fault and not really the fault of the travel agents. Having a deep skilled agent handle your travel has to be tempered with their performance and how it suits you. Most agents surviving today are skilled. But not all. That the airline price can vary based on so many factors should be a lesson to all. Sadly that means that the consumer generates massive amounts of unnecessary searches that are increasing at a time when actual purchases remain flat.

Will this get better? No... because the true players involved - the GDSs and the airlines are not tackling it. Some airlines have had enough and are doing something about it. But the current infrastructure and systems in place do not help.

Cheers

Are Hotels Being Stupid? Are Travel Agents?

When will the ever learn? When will they ever learn.... lines from that old Pete Seeger song we all learned in school.

When it comes to hotels and indeed a large number of other location owners such as convention halls and meeting rooms - it seems never. The number of companies who STILL charge for WiFi is appalling.

I know many organizations who are now insisting on it as a condition of a convention space and meeting hotels. At the ABTA conference this week this message was delivered loud and clear. In a post in e-Tid,  David Rowan, editor of Wired UK, told the ABTA Travel Convention that it was like charging for bath water to ask for basic wi-fi, then akin to charging more for hot water if the customer wanted to upgrade to a faster rate of wi-fi access.

‘It is foolish for a hotel to charge for basic wi-fi. It looks like a rip-off especially when you can get it for free in Starbucks or McDonalds,’ he told the event in Palma.

‘I have called for a boycott of hotels doing this. We expect to be online, we expect wi-fi.’We know that Gen Y people dont waste time complaining - they just move on elsewhere. In a post in  US Travel Weekly - the Luddites seem to be seizing on a DECLINE in internet usage.

Richard Turen thought it was one of the most interesting trends. However I think he is missing something. That the pool of conventional users of brick and mortar agents is shrinking and those that are left are now those who are less and less likely to use the web for Travel Planning.

I divide those who dont use the web for Travel planning and/or buying into two camps. Those that refuse and those that are (still) scared or unable to. The deciding factor is whether the behaviour is wilful or not.

For those who are waiting and holding onto this notion - please get over it. Sure there will be a niche for these people. But they (and those who depend on them) will die out.

Then we will be asking - where have all the Travel Agents gone? I sincerely hope this doesnt happen. But every year the number of agents falls.

Sadly

Now Will You Believe Me Social Media AD Revenues to top $10 Billion by 2013

Holy smokes Batman.

I was a late convert to Social Media. Mostly because in the early days I could not see the Media part of it. Now I do (OK - I am old so that's my excuse).

But now we are seeing dramatic rises in the total revenues from Advertising. With many of the Ad vehicles not yet fleshed out - this tells me we are going to have a hard time understanding how we interact with these tools and more importantly how we deal with them and integrate them.

eMarketer is reporting that global ad revenues for Social Media will top $10 Billion by 2013.

Today sadly it was reported that AC Nielsen JR has passed away. It is interesting to note that we see the world changed forever. A world where he presided as king - now we have a new world. Are we using the right metrics. Now that is a good question.

Cheers

iPad Browsers Killing Others Online

So while Android is doing a great job in working through the pack and like other Google powered monsters - its like PacMan it destroys everything in its path.

Not so in Browser shares on mobile devices. As you can see from the latest Browser share trends, the iPad is clearly a better device for browsers. We know its a better device for Apps based on App numbers and usage.

Sadly Opera Mini the little browser that could is being replaced in people's hearts and is headed south after blazing a trail of browsers on small aperture devices. So much for being first! And having used it vs the Safari browser I much prefer the simplicity of the Opera Browser.

So iOS5 is coming. Let's see what happens next.

And you all thought it would be a new iPhone (me included) although I did speculate that it would be kind of a ho hum release. Seems I was right

Cheers

Farewell Andy Rooney: "Just Let Me Eat My Dinner".

Andy Rooney has been a fixture on American TV for more than half a century. The last 33 years as a commentator on 60 Minutes. Last night he signed off for the last time with a memorable line.

So read about the old curmudgeon. He will however still be writing. And so we can still appreciate that from him

Go to the CBS website to learn more.

Farewell Andy - I will miss you.

cheers

Service Really Is A Differentiator - And Are You REALLY Surprised?

A great post today by Gerry McGovern. I love his posts because they cause me to think about how thing work and what makes things tick.

The really obvious thing to me - and it should be to everyone - is that service matters. Too bad service is such a nebulous concept.

I know many people who hate Ryanair. I like the airline. They fly places I want to go or at least they can fly there. Then their service is consistent. I know just what to expect for my average 100 Euro fare. Yes that is the amount on average I spend with Ryanair. Southwest is also an airline that I like. It gives me a consistency that I appreciate. However they dont fly enough places that I want to fly and therefore I need to rationalize my flying to be on airlines that give me something. So I am a point hound!

I have a very low opinion of service. I dont it expect it and I am rarely disappointed. However every now and then I get surprised by individual personalized service where someone will go that extra mile. I am talking about someone making a difference. There are many hotels who try to force this thought process on their customers via the staff who have not the faintest notion of why they do something. I recall staying at a hotel where they rolled out a corporate credo using a particular word. The word was "surprising". It was AWFUL I challenged a member of staff who( the operator) as to why she had used it 9 times with me and she spilled the beans. Sadly it made everyone uncomfortable. Fortunately within 2 weeks it had been abandoned. 

You cannot force service - you can enable it. And then it must be up to you and your fellow operativess to deliver against it. In online this is really important. Let me give you an example.

I am a member of the Global Entry system - I was an early adopter. This year it will roll out to high level frequent flyers in the elite classes of all US Carriers programs. The service structure is typical government. A system designed by a committee. However I was impressed that the agent at the border recommended - from her own volition what I could do to enhance my experience. That was someone who didnt need to do something going out of their way to help.

So humour me with my rant today. I do see that there are new customer service technologies that are improving the service proposition across the board. However sadly in my experience even in those organizations that adopt them - they are never used properly. What really kills me is that whoever is responsible for these implementations must never walk through their own process. This allows me to indulge in something where  I take a perverse pleasure in breaking systems and processes. It is SO freekin' easy.So what are you doing about


SHAME ON YOU!

So here is a request. GO and think hard about your service. Then WALK through your website. Call your call centre. And then see what I mean. Be difficult. I would be happy to provide anyone who is interested with some use cases to enable you to do this.

YES I MEAN YOU! Your service sucks and it doesnt have to.Please go and fix it

Thank you for your attention - now you can go back to reading your email and updating Facebook... that was what you were doing wasn't it?

Cheers

Twitter Misses Ad Targets - But Outlook Bullish

So Twitter is still struggling to get its revenue model off the ground but it is making headway. In the early days of Twitter I was highly critical of the value of the service. Now that it has matured and we have tools and processes to weed out the Twitterhea - I think the business is a useful tool.

eMarketer is reporting that their initial revenue projections for 2011 will be missed. However they remain upbeat on the future

Check out the article for a full analysis on where Twitter's revenue is going. Twitter has no where near the revenue potential of Facebook. And actually not getting spammed is one of the nice things about Twitter.

In my view - I believe that there is plenty of opportunity to MAKE money via the Twitter platform. Indeed way more than can be had through the restrictive practices of the big 3 F.A.G. gatekeepers.

That indeed counts for something

Cheers

Mobile Maturing - Are You really Ready?

Is 2011 the year of Mobile? This is a question that so many people ask. I have to say I am not quite convinced on either side. In fact I think the question has become rather irrelevant.

Mobile and Social are already here. We are however still struggling to get good at both of them. And good we must get. There is a nice series in WIT drawn from a series of discussions between Siew Hoon and Gerry Samuels Doing it "Bloody Well" and understand who wins - Supplier or Intermediary - are great discussion pieces. If WIT is not on your regular reading list - you are missing a treat.

Getting good at Mobile is not a trivial exercise. There is a lot of infrastructure that is frankly not in place to make it easy. Therefore early providers are having to bootstrap solutions to get the end to end services running. Regulatory and service level functions are scant and frankly the performance of the networks and devices together SUCK. Publishers are complaining that they dont find it easy. For sure they are not adopting fast enough.

One key issue that is decidedly a constraint on Mobile Commerce are the payment systems. There is a plethora of options and the market is just beginning to pick up.  The battle for the mobile wallet is a royal one.

There is the huge battle going on between the OS systems on the small aperture devices.  You have Android split into Pure and Honeycomb. You have the Apple with its iOS. You have a bunch of also ran players - Microsoft, Nokia (now moving with MS), RIM (About to exit the tablet space by slashing the price of the Playbook), HP (not sure if they are in or out at the moment). Let's not forget the App vs Browser battle.  An  astonishing statistic is from HP who projects there will be 25 million apps by 2020.

Underneath it all there is a multi-billion dollar battle over patents. This is enough to make ones head spin.

But allow me to put a little perspective on things. While I think it is a bit premature to declare victory for mobile, there is a very interesting trend. The Gen Y/Millenials are not worrying about the problems of infrastructure. It either works or it doesn't. Unlike the Baby Boomers (like me!) who struggle with the small apperture of the devices concerned - they are quite comfortable in using their mobiles to do a wide number of things concurrently.

My conclusion on this? Mobile is darn hard. The traditional gatekeepers in travel commerce are nowhere near prepared for mobile. The suppliers need to break free and stop using traditional processes to address mobile solutions. AND most importantly you have to use every trick in the book to get the consumers to start pulling through adoption. Traditional ways of pushing products into the marketplace and hoping for the best frankly are useless. If I hear one more person scream that their investment in mobile has been wasted - I think I will eat my hat. It's the adoption not the features stupid!!!

Airlines to DoT - You Can't Count

The US airlines in general think that the US Dept of Transportation's bean counters are not that good.

A cabal of them - representing the Big 4 Network Carriers - US, UA/CO, DL, AA have filed a complaint with the DoT over the issues of the reporting of the Ancillary Revenues.

As reported in the Wall Street Journal the airlines say that the $150,000 figure for the whole industry in extra admin costs are way off what the airlines calculate will cost the average airline $1,000,000 per regulation per average airline. That would be a whopping cost. I bet that some of that is going to be charged by the GDSs!!!

I have to say whether I agree with the DoT or the airlines on the actual numbers. I can assure you that the admin costs that will be spread across the industry in additional costs will be significant. it will hit all sectors of the supply and distribution chain.

Those who argued long and hard for this as a way to put a break on the Airlines revenue aspirations may be happy. But those who thought that this was a way for the GDSs to win a battle in their war with the airlines may rue the day. The legacy GDSs have now been handed a carte blanche ability to charge the airlines an extra set of fees for compliance. And poor travel agents will be picking up much of this tab in both extra costs (through lower incentives) and for sure extra work.

As I say frequently - be careful what you wish for... you just might get it.

Cheers

The Professor's 2300 Posts

Dear Readers - Just a BIG thank you for keeping us going. We have just passed 2300 posts and counting.

I had a wander through some of the prognostications and predictions I have made over the past 5 years. There is a heck of a lot of content here. So I encourage you to read through some of my thoughts. There is a lot of entertainment. Laugh, cry and be entertained but mostly be better informed. I have a lot of opinions on a lot of subjects but I hope that you will see that I try to do this with honesty and thought. If I fail let me know.

Every week hundreds of you come and visit this little site. Thank you and thank you again for doing that.

I know that I am not the world's best writer and also have a strong propensity to typos and some really bad grammar.

However I get loads of emails from you and comments. It takes a lot to keep this site going (no I am not appealing for money) but I will continue to do this as long as you come and read it.

Please do spread the word. And  again a very big...

Cheers

Don;t Be Blue At A Failed Relationship

Most breakups are lets face it less than amicable. People don't just wake up one morning and say "Rationalizing our relationship is not working let's just be friends"

I understand that breakups can now be handled by a wide variety of media. Text (there is even a lame website called TextBreakup), Tweets, and of course the true sign you have been ditched is when your paramour changes her/his status on facebook back to SINGLE AND LOOKING.

In business some of the best laid plans of a business relationship can just fall afoul of the realities of the business environment.


Germany's biggest airline, Deutsche Lufthansa AG, in December 2007 paid $300 million for a 19 percent stake in JetBlue Airways Corp. There were big plans for feeding via JFK and the other points where the 2 airlines intersect. For the smaller airline it was a precursor to a number of deals that have seen them also tie up with some time rival American Airlines who also is in a rival Alliance. 

But to be frank there has been little execution of the grand vision and Lufthansa seems to be pulling in its horns across the board. The German airline's plans for world domination included at the time expansion into the German speaking market and a bold run at different markets like USA (JetBlue), UK (British Midland) and the oft rumoured but never consummated take over of SAS.  With a few bad quarters under their belts - and a general softening of traffic in the markets where its most heavily vested - LH seems to be pulling back. Its put the for sale sign out at Castle Donnington (the English Chateau that doubles as the HQ for BD), now the The Wall Street Journal  is reporting that LH is looking to exit out of its relationship with JetBlue. 

JetBlue and Alaska are the largest unaligned airlines (Southwest should be excluded from this list). Both of them have resisted combining with other larger airlines. AS has a slew of partnerships and has a strong feed as a result while shoring up a fortress on the North South Routes. Effectively AS has conquered the West Coast markets and solved that perennial problem of Mexico vs Hawaii by straddling both effectively.  JutBlue has built a series of very nice hubs in Boston and JFK as well as a number of smaller ones across the country. 

Perhaps what we are seeing is the precursor to a merger between these two feisty and mostly profitable strong regional airlines.

Now there's a thought.

Cheers
 

What Happens When Exclusivity Clauses Collide. The Impact of Exclusivity Clauses on Competition and Consumers

This is a musing on the impact of the Air Asia and Malaysian Airlines agreement with an extension into the overall issue of exclusivity clauses and the impact on the consumer.

Air Asia and Malaysian Air System (MAS) have entered into a cross shareholding agreement. In this agreement - the two airlines will cooperate essentially to carve up the market for Malaysian based traffic. IE traffic INTO and OUT of Malaysia. Effectively the airlines will avoid direct competition where feasible. This will result in a certain reduction in competitive services for consumers. Thus prices will undoubtedly rise in certain thinner markets. 

This is to be expected and will cause a number of people to complain and moan about it. Fair enough. But there is ANOTHER agreement that has some serious impact on the consumer. That is the exclusive agreement between Expedia and the Air Asia Group. In this agreement Expedia and the JVs between Air Asia and Expedia are the EXCLUSIVE distributors of content from these two parent organizations.For intermediaries who may have happily been distributing MAS product in some cases for many many years and in others exclusively, all of a sudden their product has been pulled out from under them when MAS abandons routes in favour of Air Asia. And they will lose their rights.

I raise this issue because JVs and exclusivity has become a new staple of the airline and GDS worlds. Thus creating restrictions on open commercial agreements. So let's dive into that a bit deeper.

Full Content (FCA) GDS agreements are very restrictive. As such FCA contracts will have an overriding pressure to raise prices and reduce consumer choice. An airline who signs the standard FCA agreements will find that it cannot distribute its own content when and where it pleases. This is a relatively new consideration and that has only just started to dawn on the airlines who have signed these agreements. While the original intent of the FCA agreements was to prevent competitors from entering the market for GDS type services - what we are now seeing is an unintended consequence - at least from the airlines sides. The ultimate loser in all of this is the consumer. Less choice = less competition = higher prices. As the legacy GDSs love to trumpet to the vendor community -the highest yielding channels are the GDS based ones. Now perhaps it should dawn on everyone concerned that this results in higher prices for the consumer.

That normally should be positive for the airlines and hotels. However as they have seen the real end result is that they have not only delegated their pricing capability but now also delegated channel management control to the GDSs. And in whose interest do the GDS operate?

Think about it, I wonder if the regulators have been thinking about this problem. What started out as an equal agreement to reduce cost of distribution and ensure wide distribution of airline content has in fact has an opposite effect.

Good or Bad? that depends. Today it means that scaling the fortress tower is going to be that much harder. Believe me when I tell you that this is not a happy realization for a whole host of parties.

Cheers

Travelport Gets A Get Out of Jail Free Card. Probation May Be Rather Costly

Travelport at the 11th hour managed to avoid a pre-packaged Chapter 11 restructuring by getting the approval of all of its Lien Holders on its PIK to allow the $715 million PIK to be repaid by December 2016 instead of March 2012.

However the price is going to be very high. A quick flip through the issues now confronting Travelport Holdings (Parent company to Travelport Inc) are as follows:

1. There is a large group of unhappy bondholders.  A group representing 25% of the bond holders filed on September 23rd a formal complaint to the company which was then submitted in regulatory filings to the SEC.
2. Travelport is now paying a 2011 record interest rate of approx 13% to the lien holders for the revised debt swap however this is a somewhat fictitious amount as the agreement allows the company to use debt rather than cash to pay the dividends.
3. Travelport's ability to raise funds for new activities will now be limited.
4. Travelport may have restructured its immediate debt but it is still creaking under a very heavy debt burden that would discourage any IPO offering.

The level of machinations required to complete the transaction is almost mind-boggling. I have waded through the SEC filings along with analysts briefing on the topic. In my view the long term financial health of the company will be in doubt irrespective of its actual performance. It still has to restructure the overall debt to remain in compliance with the obligations of the different forms of the debt. It has already sounded warning bells of the loss of the United Airlines (Apollo) Hosting contract that must end before April 2012. There are other issues that face the company.

It seems I am not alone in my concern about the [parent company's (Travelport Holdings) health.

The unhappy note holders representing 25% of the outstanding PIK hired Dewey & LeBoeuf to denounce the restructuring. In their September 22nd letter to the company they stated  “The noteholders demand that Holdings (parent company) and its affiliates (presumably including Blackstone)  cease and desist from taking any steps to document or consummate the restructuring,”Their efforts failed. So highly likely there was some smoky backroom deal was made but the resentment is still there. This letter found its way to filings to the SEC the following day.

The initial PIK loan, from the early days of March 2007, was used to finance a dividend to Blackstone and affiliated equity owners, according to the September 22nd letter.  And this has been a pattern all along for Blackstone to cover its own position preferentially at the expense of the other debt holders. Remember that when the original deal to acquire Cendant was done in 2006 - Blackstone was a private company. Today following its IPO it falls under a much tighter regulatory environment.

Travelport Holdings bond values have been falling for some time. Since August the value of the bonds has plummeted over 40 %. Two of the debt rating agencies downgraded the debt first Moody's on 16th August then S&P earlier this month on 13th Sept. This came after the first warning was fired by S&P in February of this year with a caution. By September 23rd the yield on the bonds was 39%, The company’s $247.2 million of 11.875 percent senior unsecured bonds due September 2016 rose 3 cents to 42.5 cents on the dollar that morning and has been very volatile since then. When trading starts again this morning with the immediate debt crisis over - the bonds will likely settle down. That discount shows just how far the debt value has fallen since the notes were first issued in 2007. There is a large amount of this debt out there in the market. There has been a significant amount of trading going on in this debt especially during the last 9 months. 

Long term - this is unhealthy.

Cheers

NOTE Thanks to Bloomberg and the Debt agencies for the information in this story. Thank goodness we have EDGAR to help us navigate the maze of SEC filings.

How Many Is Too Many Apps?

OK Own up... how many Apps on your smartphone or Tablet.

Full disclosure I have way too many devices. I have 2 smartphones, an iTouch and an iPad. The most is on my iPad - 136. I have only paid for 2 of them BTW, looking at my usage. The WSJ, Tetris, Spider Solitaire and Skype are the most frequently used apps. Add in the Settings page and the broswer and that comprises about 98% of all my usage.

And are there any definitive statistics on the Apps use on tablets? Yes there is - our old friends at eMarketer have put out a compendium of surveys on the topic. 

How one finds Apps is also interesting. I talk to a lot of users about their iPad usage. I want to know who has the best apps.

At the moment I am seriously considering how to do presentations from my iPad and also how to use the iPad as an external screen for my laptop. (Just to deal with my ADHD!). I love how all the images of the iPad today only show a few apps on the screen. Mine is just like my desktop on my PC - chock full of icons. "Just in case I might need them".

With more and more Apps coming - I love the quote from HP that there will be 25 MILLION apps in a few years. We can only wonder how we are going to cope with the ability to select and manage them

Cheers

Yes There Is A Slowdown In Passenger Traffic

There is a general view that when cargo goes soft - so does passenger traffic in about 4-6 months immediately following.

I don't want to be a doomsday person but I believe we are going to see a reduction in passenger traffic particularly in TC1, TC2 and between the two coming shortly. Further among the other areas of robust growth I believe we are going to see moderation of that in GCC and Latam traffic.The only area where I believe we will see a continuing growth will be in Asia Pacific. But don't take my word for it. Check out these learned folks:


CAPA
WTTC
The latest IATA numbers have revised upwards the airline profitability. BUT I tend to look at the transactions (e.g. number of passengers and number of flights rather than the financials.

Folks you have been warned. Tighten your belts. The airlines have already started to do this by cutting surgically flights from their schedules. Unlike the traditional slash and burn we have seen in the past these cuts are much more subtle. Less nonstops. Axing of daily frequencies in favour of only several times a week (particularly in International flights). And of course more codeshares.

What is rather interesting is that the DoT should be looking more carefully at the results of its allowance of the JV Alliances and to see what the economic impact has been on the markets. The fundemental question of whether the Alliances benefited the travelling public through lower fares deserves full analysis.

Cheers

Shhhhh! GDS Incentives Are Headed South

While I missed The Beat Live this year - there were still about 130 people who showed up to debate the current market situation.

Writing in Travel Market Report Michele McDonald (who also publishes TTU) has tackled the thorny subject of  the future state of GDS incentive fees. There remains a pervasive view that the battle between the GDSs and the airlines will have consequences. Almost everyone focuses on the issue of cost.

There is a split in the ranks of the intermediaries. Some Agencies advocate pure transparency and provide the information on the incentive fees  to their clients. Others regard it as a perk of the business. However in looking at the holistic view of how much money is paid out - then we have to look at the total significant amounts paid out. My consulting firm has assessed the situation from publicly available documents and we believe that the total amount paid out in direct and indirect incentives by the GDS is a very large amount. $3billion is what we are projecting for 2011. That powers a lot of agencies' revenues. However this largesse is not spread spread equally. The squeaky wheel syndrome favours larger agencies. Further there are clearly geographic differences where highly competitive markets garner higher incentives than other markets where only one GDS may dominate.

There are some dirty little secrets that some agency owners and players tend to ignore. One of which is that legacy GDSs squarely compete with their customers - in more ways than one. We know that all of the GDSs have an interest in one or more agency outlets. EG Travelocity for Business, Travelport and its partners controlling Orbitz, and yes even Amadeus can still be said to have an interest despite having sold its outlet Opodo to a Franco-Spanish combine. One way that they compete in corporate travel is where the GDS contracts directly with the agency customers and passes the fees onto the customer directly.

And interestingly some of the largest incentive fees go from the GDS to (drum roll please) their own subsidiaries/affiliates. One of the lawsuit arguments between AA and Travelport is that the latter (and there is documentation in Travelport filings that illustrate this) is paying a "super" incentive to Orbitz in which there is effective control (by Blackstone companies) of 55%. You can be sure that if the incentives are to be slashed - then these subsidiaries and affiliates will be among the last to feel the cut. Which means that the regular agencies will feel the chill first.  And this is already happening. In several markets today - GDSs cannot pay full incentive fees on all carriers equally. Some airlines simply tack on the GDS fee to the cost of the ticket. Others either prohibit or significantly reduce the payment of incentives in their home markets. Some airlines and GDS contracts have specific clauses in which the payment of fees is expressly prohibited.

In my view there is an inevitability of the axing of GDS inventive fees by the legacy players. However there are broader and bigger issues which are starting to separate the traditional GDSs. The amount of pure R&D is making a difference. Those who are investing will likely see benefits. The cash paid out in incentives is a double edged sword. It has become a drug for quite a few agencies who in turn have to work harder to make the GDSs work for them at a time when the investment in real new technology has declined across the board. The agencies are having to pay more and more for "ameliorating" technology to cover these inadequacies.

The demand for new services are being driven by three factors

• by the needs of the suppliers 
• the emergence of new technologies particularly in mobile and social - and of course big data
• and of course by the changing generational dynamics of the consumers

These changes make functionality and personalization critical. That is not something that these "bribes" (NOTE this is my term and no one else's) can cover.

Cheers

If You Want To Survive An Air Accident - Read This

I fly a lot of miles every year. Typically more than 200,000 actual flown miles. I hear the safety announcements on average 2-4 times a week. Frankly having heard them all - I am pretty blase about them.

Well we should all be better prepared. AND know what to do with the real emergency.

Scott McCartney of the Wall Street Journal's Middle Seat Column did a GREAT piece on a British Airways program. There are many things we can do in the case of a crash.
Here are some REALLY scary stats

Let's do the best we can to be a victim. We can survive an accident.

Cheers

Small Screens Present Less Challenges for Gen Y

One of the things that challenges tired old eyes like mine is that the screens are too small and I struggle with glasses and  what I perseve to be bad lighting to squint and read things on a small screen.

Not so it would appear Gen Y. According to eMarketer they are embracing the use of video on a small screen. OK so this has impact for conventional media but it also has a big implication for the apps we are putting out there. Gen X and Boomers prefer large screens and are more comfortable with large screen formats (aka a PC). But Gen Y don't care.

Thus the adoption of apps on a small screen is very natural for this class.

In my view this will have big impact on the use of devices. Thus the battle of the OS on the small screen is taking on more importance. For Travel based Apps - this means in my view that we can pack more onto those small screens. So less data traffic and more data packed on a small screen is better.

Think about it

Cheers

Apology to my readers

I am experimenting with the new Blogger Interface. Its a tad tough getting used to it. I will however persevere. Please forgive the types etc

Branson Opposes Parting Out of BMI

Ever since Sir Michael Bishop exercised his put option and made Lufthansa purchase the majority shares stake in BMI - the UK carrier has been headed down hill. It has lost market share and pulled back.  The crown jewels remain its footprint at LHR. As the #3 airline at LHR - the valuable slots are idling there.

There was some hope that LH would use the BD footprint to build a base in the market out of Heathrow for the Star alliance family but in truth the carrier continues its down sizing.

It announced a 50% reduction at Manchester and now comes news of the sale of 6 slot pairs at LHR to - of all people IAG's British Airways unit. Based on the last major transaction at LHR a slot pair is typically worth around $50 million each. Therefore 6 slots would be worth approx $300 million.  This latest transaction will boost IAG's slots at LHR to close to 50%. Interestingly enough that still keeps IAG share of the slots at its home market less than that of its closest rivals - AF - CDG, LH, FRA and MUC.

In steps Sir Richard Branson - who is himself competing to purchase the company for the Virgin group - predominantly Virgin Atlantic. He had a nicer term for it... Salami Slicing. he contends the company should be kept intact and sold as such.

Either way the once proud and feisty airline that could is unlikely to survive in its current form. The 3 divisions - Mainline - largely based at LHR with an HQ in the Midlands, Regional - operating commuter aircraft based in Aberdeen and the upstart BMI Baby also based in the Midlands as a LCC type operator will likely be dismembered and sold..

Cheers

Big Brother Facebook IS Watching You - Just Like Google

I used to think that Google was Big Brother.  But in recent months I have started to see that both Apple and Facebook are doing the same to me.

There seems to be an open season on my privacy that Google, Apple and Facebook (F.A.G.) believe that I have to modify my behaviour to opt out of their control. The FAG Triumvirate seem to believe that they and  they alone - are the the new domain rulers of the universe - known and unknown

In my view this level of control and intrusion into my privacy should not be an automatic opt in but an automatic opt out.

The issues of Like and Unlike and how users are interacting with them and this is modifying human behaviour online - and presumeably off line as well - is important to our whole social intercourse. Have a look at this article in eMarketer for some statistics.

Apple understands now my taste in music and this is a surrogate for my persona. Google knows so much about me its scary. But now Facebook is doing the same. If you would like to see an example - read this blog: http://nikcub.appspot.com/logging-out-of-facebook-is-not-enough

Nik's supposition is born in fact. Interestingly Facebook's response was to determine that there was a bug that he had found. If you are a suspcious type like me - you have to think why did they not before? And I think that comes down to the crux of the matter. They are not looking because they dont want to look.

My point is that now these entities are so big and so important to our daily lives that they have a moral responsibility to address these sorts of issues.  Google's advertising revenues are now projected to massively increase. When they don't then they are failing the standard of care. A standard that should be held in the same regard as say product safety.

So let me know what you think

Cheers

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