World Exclusive: SABRE NAME RETIRED, NEW BRAND ANNOUNCED

World Exclusive to the T2IMPACT BLOG – EMBARGOED until April 1st 2007 0001 AM

On assuming control of the Sabre Business, TPG – Texas Pacific Group - has great pleasure in announcing the retirement of the SABRE name in favor of a more modern and appropriate branding. NEW COMPANY NAME FABLE. Formally the new company will be known as FABLE Holdings LLC.

Asked why the sudden change in name after over 20 years – commenting - a spokesperson close to the company said

“ We were really tired of the acronym that comprises SABRE, IE SEMI-AUTOMATED BUSINESS RESEARCH ENVIRONMENT. You can only imagine the jokes have made over the years about our brand.”

“ So we just had to come up with a new brand name. The embarrassment of having <> was pretty galling for a high tech IT based company such as us, but worse to be regarded as a <> when we had been an operational company for so long just didn’t make sense – so we had to find something more appropriate. Besides – it wasn’t even our own brand name – it was originally coined by IBM of all people.”

“ We are really proud of the new name. We paid a sizeable fee to the leading eBusiness Global Travel Consulting firm (we cannot divulge here due to confidentiality) to come up with the name. “

We believe, and the spokesperson has confirm it, that the new name should be FABLE. Again speaking on the condition of anonymity…

“The new name had to be cutting edge and be representative of the company post the buyout. We also wanted to be memorable and long lasting. The new name FABLE we believe does just that. ” So what does FABLE stand for ? or is it just another trendy name from Madison Avenue?

“On the contrary it – like the prior name of SABRE, the new name actually stands for something.
FULLY AUTOMATED BUSINESS LIABILITY COMPANY”. So what does this mean and what is its relevance. Again the Spokesperson

“That’s easy:

FULLY - we don’t want the company to do things in halves do we?
AUTOMATED - lets keep this IT flavor going
BUSINESS - well let’s face it - it is a commercial entity
LIABILITY - OK so this is a tough one but since we have seen how much debt Blackstone has loaded up to Travelport we can only assume that our new owners TPG and Silver Lake wanted to do the same to Sabre - er - I mean FABLE.
ENTERPRISE - lets think BIG here, not just a simple company we want to be a HUGE enterprise with Global ambitions. “

So there you have it... the new company, a new brand and a new identity. We anticipate over time that we will be renaming most of the product subgroups. For example we understand that the consumer brand will be renamed to reflect the growing emphasis on Desert Tourism. It will henceforth be known as CAMELOCITY with the Joe Camel brand brought back to life in a positive setting and a new role model for the next generation of travelers while still resonating with a sizeable portion of Baby Boomers who are ex-smokers.

Further details will be available from the new FABLE website in due course www.Fable.Global

<>

This is officially a spoof, just in case you didn’t know.

Great Piece on Fare Strategy from Fare Compare

I am a huge fan of the "reverse yield management" tools that we predicted would emerge over time. The leading two are Fare Compare and Farecase.

Here is a great piece from Fare Compare on the insider column.

Cheers

Timothy

Insider Tip of the Week

Traveling 4 months or more in the future?

Be very careful purchasing U.S. domestic airline tickets.

Airlines manage their revenue in 4 month windows, and raise prices for travel outside this departure time window.
They will gladly sell you a mid-tier price outside of that window.

Many people have been told to buy very early, which can be the worst possible time to buy.

The most dramatic examples are prices in Southwest Airlines' markets. Southwest does not sell tickets for departure after a shrinking 4 1/2 month window (currently August 24th). Southwest usually increases the departure time window every few months.

The classic example is shown at the following link:

http://www.farecompare.com/search/month.html?departure=SAN&destination=PVD&cabin=Coach&date=20070801&days=20070824,20070825

Notice how the major airlines raise their lowest prices by $148 (over 60%) on August 25th -- exactly on the last departure date that Southwest sells tickets.

Baseball Season's here again - banning transfats

This has very little to do with Travel and Distribution in particular but I could not resist.

Being a somewhat occasional US resident (heck I do more than the required IRS days out of the country to be officially regarded as Stateless!) I really enjoy spending a few relaxing hours at the ballpark. My home team is nothing to write home about and let’s hope that this "rebuilding" year is more productive than the last 2.

They have just banned Transfats at my local stadium. Great. But that got me thinking how much the airlines could do to ban the evil stuff. Suffering (genetically AND from a so-so diet) from high cholesterol I have to say that airlines could do a lot more about banning the stuff. So here is what I want you to do airlines. BAN TRANSFATS and all snacks containing them. Yes that means Southwest will probably need to find a new peanut vendor.

Thanks

Timothy

Sabre goes Private control passes to TPG and Silver Lake Partners for $5 Billion

So its official - while only 62% voted for it - they represented over 85% of the stock so yes Sabre is now part of Mr Brondeman's empire. Interesting to think that the company is now in the same stable as ... Ryanair! Not to mention other memorable current and former inhabitants of TPG:

America West (Now the NEW US Airways)
Continental Airlines
Gate Gourmet
Burger King

Soon to be joined by Qantas (well that’s a definite maybe) Iberia (that’s a remote possibility- what the heck is he doing – buying all of OneWorld?) , and Harrah’s Casinos not to mention Matsushita (JVC and Panasonic).

We can only assume that they will load up the company with debt and offload it after cashing out their chips and pocketing a bunch of money. The likelihood is that Travelocity will be spun out separately from Sabre thus allowing all 3 of the major online brands to be floating freely AND creating a unique category in the process. (Analysts do love it when industry segments do this sort of thing). I once lamented that this would bring focus on our little corner of the world and this would disrupt the business of people like us at T2Impact. But on the other hand – well welcome chaps this makes for a great ride.

Cheers

Timothy

Flying High in a Competitive Industry - Book Review

Cost-effective service excellence at Singapore Airlines.

Loizos Heracleous, Jochen Wirtz Nitin Pangarkar
Published by McGraw Hill 2006

With both a title and subject matter of immense potential this book is a bit of a let down. Sadly it doesn’t even start well. Rather is reads like a management consultant's tome that seeks to justify a business case through an over abundance of fact with little insight. I was in Singapore at the airport changing planes (actually from United to Tiger!) when I spied this book for sale and immediately bought it.

it is clear that the writers had insider access to SQ's people and documents. For this they should have been able to write a real cracker of a book. What makes SQ tick? Why is SQ so good at what it does? Perhaps it sadly personifies the whiter than white world of Singapore Airlines and the city nation itself without any constructive and objective criticism of what is has done wrong and where things have not gone well for SQ. All of us (me included for sure!) can learn from our mistakes. Not illustrating and then examining failures makes the successes seem more routine and perhaps less interesting. Clearly for me it lessens the value of the underlying story that despite the presentation I still find compelling. For example the disastrous partnership with Air New Zealand and the participation by SQ in the demise of Ansett Australia is not even mentioned.

Much of the early data indeed over 25 % of the book is spent on a flawed analysis of the airline industry. Nice useful data but both the facts are somewhat dated and the analysis far too simplistic for meaningful application and background to the rest of the book. You are left feeling unsatisfied.

Still Singapore Airlines is arguably a great airline. Driven by the notion of cost effective service excellence - they have risen to the top of the heap. SQ - you deserve better than this

Cheers
Timothy

Boeing vs Airbus - Book Review

Subtitled The Inside Story of the Greatest International Competition in Business

John Newhouse - published by Knopf

For those of us who follow the epic battle between Airbus and Boeing this is a great read. It covers a lot of territory most of which is public information. Essentially drawing a lot on his previous book "The Sporty Game" this is a story that is written about pride and fall from both sides.

Newhouse takes the view from the protagonists as individuals - disappointingly he doesn’t dwell much on the one player who has had as much to do with the downfall of Airbus namely Noel Forgeard. The book probably spends way too much time laying the blame for Boeing's fumble on Phil Condit who comes off very badly. Neither does he spend much time on the complex multi-national management structure that has hampered Airbus' decision making for so long. So if there is bias in the book it is in the lauding of Boeing's recovery and the success of the 787 vs. the (now) well documented issues of the A380.

Still for those who are on the periphery of the business this is a solid tale - really about people. For those on the inside there is much that is new. The insights from the perspective of Harry Stonecipher and Jean Pierson is especially appealing. Highly recommended to get a second hand copy or read it at the library or Borders ;-)

Cheers

Timothy

All that glitters... the sad market for Canada

Canadian Flyers - listen up... you WILL be paying more for your tickets.

The notoriously fickle Canadian market claimed another victim. Harmony Airlines will end all scheduled traffic on April 9th. While not a bankruptcy like CanJet or some of the other players in recent years - you can be assured that the prices in Canada will edge higher in the coming months. Sadly for border passengers on both the north and south sides - there is no real relief from hopping over the border to a nearby airport either. The restrictions at border crossings such as the Peace Arch in Blaine Washington mean that it is no easy deal to use a nearby airport.

Surely the duopoly enjoyed by WestJet and Air Canada should encourage the opportunity for another airline to make it - at least in niches. Sadly not so.

Even on the competitive transatlantic market we see little local competition.

For the Summer 2007 both Zoom Airlines and Globespan offer prices significantly below that of behemoth Air Canada or Charter favorite Air Transat. In our brief search we found prices 40-50% below for comparable routings YVR-LON/AMS/MAN/CDG.

Well - you could emigrate to another duopoly market like Australia. At least the cents per mile are a little cheaper. And of course its a tad warmer

Cheers

Timothy

Troogle-ettes - arriving at a mobile near you?

More evidence that Troogle may be a myth. Here is a new partnership established with FlightStats: Just text 466453 for flight status. Enter code and flight number and itsends you back the status for any US departing flight.

At the same time on Google Base search box users can enter an airline name and flight number and check the status via links to Travelocity, Expedia or Fboweb.com.

But never say never

Cheers

Timothy

Ah the sweet smell of Slots in the morning

Indulge me a little with speculation. I am sure that someone is REALLY kicking themselves at BA right now that they didnt pick up BMED when they had the chance. BMI paid GBP30 million for BMED. Lets assume that this includes assets and leases etc etc. But what of the slots?

Welcome to the world's most expensive 2 minute experience. A slot at London's Heathrow Airport.

Currently at LHR BMED has 73 listed slots a week. (Source BMED website). The current valuation for slots at LHR ranges from GBP 10 million per slot (paid by Qantas for 2 slots in 2004) and GBP 5 million at the low end. So lets just say its in the middle then the value of BMED for slots alone at just under GBP 80 Million. Can you hear the weeping wailing and gnashing of teeth from Waterside. But this was before the US - EU Open Skies agreement. So added to this that there are going to be some very interested parties in acquiring at least some of those slots and you can see that the actual value could - well - DOUBLE. This puts BMI itself in a very commanding position as the #2 slot holder at LHR. And do we expect that HM Government will step in and regulate this process? probably not - although BAA remember is controlled by the Spanish and we all know what the Brits think about Spaniards invading our shores!

So the have not legacy airlines - from the USA - DL, NW, CO (all Skyteam members) and US (Star Alliance) are going to be anxious to fill the holes in their networks at a premium price. DL paid $21 million for the JFK-LGW route authority in 2006. So you know DL will pay a pretty penny. CO already filed for the route. DL would like to buy at least 4 slots initially - (2 for JFK-LHR and 2 for ATL-LHR) Over time they would like to buy at least 4 more - additional slots for JFK and ATL plus a slot each at CVG and SLC. Even horse trading with its Skyteam partners AF and AZ wont solve that problem.

Well folks roll up for the show - this is going to be one of the most expensive shopping sales in history. Lets sit back and enjoy it.

Cheers

Timothy

Travelocity India

Tsk Tsk - Sabre heads need to take a lesson in geography. Bombay is not the name of the city - Mumbai is. Or at least be consistent with your errors.

In the new Travelocity India website www.travelocity.co.in when you do a search for a city using the rather convoluted search function (just like that awful global weather search on CNN.com) you will find there is no city called Mumbai. Although, there is a city called Bombay. However the display of hotels comes back with the correct name.

So Travelocity - which is it - Bombay city or Mumbai?

While we are on the subject of the new website - does the use of the name "Travelocity" spell the end of Zuji? Zuji which is now controlled by Sabre has never been a huge success. In fact its performance has and is rather dismal. Traffic at the other websites for travel in many Asian markets, particularly the branded supplier sites, report much better returns.

Get with the program Sabre. Wasting the value of a global brand by having a poor cousin in Asia makes no sense at all. Given the rather embarassing failure of the Japanese website Tabini - carefully hushed up mind you - its time to get the house in order. Perhaps those nice people at TPG will put some sense into the Sabre management. Or at least they can book some considerable savings from supporting a single brand.

Heck if AT&T can flip flop its brand presence in wireless AT&T Wireless --> Cingular (or is that Xingular) --> AT&T Wireless again in the space of 3 years, Travelocity can put Zuji out to pasture now.

Cheers

Timothy

Ryanair Ad after UK Budget announced increase levy

New Ryanair deal with Expedia

A bloody nose for Travelport/Gullivers/Octupus Travel

A good deal probably for Expedia and another GREAT deal for Ryanair

For the past 2 weeks the website "Ryanairhotels.com" has been displaying random corporate information. Today its very different...

Yes folks Octopus is out and Expedia WWTE is in. I would definitely say its a coup.

Now can the Bellevue boys deliver? That is to be seen

Cheers

Timothy

Troogle... 2nd Opinion

Troogle... 2nd Opinion
I want to reiterate that I do not believe that Troogle is real – in the near term. However lets just continue the speculation of “How” they could do it.

For sometime now the battle in conventional space for improving the seller and the buyer experience has been – well frankly definitely a 1.0 product. However recently as saturation and maturation of the market as progressed – we see new capabilities emerge. I am a huge fan of the Google Checkout product/service. Google has now added better integration on the conventional retail side so that Google Base, Comparison shopping tools and overall integration makes the search function more valuable and the experience better for the consumer. Foogle in its current implementation is clearly demonstrating this in certain product categories as it continues to battle head to head with eBay and Amazon for the hearts and minds of the shoppers.

Clearly it is not a leap to move from there to “Troogle” or Froogle for Travel.

So I would not be jumping too quickly to follow the current hysteria around Troogle, but clearly the capabilities are there.

On a related note, as an ex-Microsoftie (yes the electrodes are now almost all out) you have to wonder about Google’s “integration”. If you think about it. Which is more of a monopoly; Microsoft and a bundled browser or Google Base search and an integrated financial fulfillment system. Now is the time to consider this impact. Can anyone say DoJ Investigation???

Cheers

Timothy

Troogle- will Google be stupid and arrogant?

There are all these nasty vicious rumours floating around that Google is getting into the travel business.

PEOPLE GET REAL… GOOGLE IS ALREADY THERE!!!

As good Google watchers know the formula is pretty simple. Offer consumer tools for free in the category then subsume the supply chain in that category. IE Troogle would be on point for Google. BUT consider this…

I have no current insider knowledge on the subject . However I do consider Google to have been pretty smart in Travel so far. They make BOATLOADS of money. An insider told me about a year ago how much and it is mind boggling. Profit margins that are unheard of and gross numbers which are simply staggering. In fact I nominated Jane Butler (head of Google Travel) as Industry person of the year. She certainly wields a hefty amount of influence.

Google is making fine amounts of money already and really doesn’t need to do this at least not yet.

So speculation time… what if they did create a Travel Search tool? Frankly we all know that Travel Product/Content/Technology all share one common attribute – they are very messy and defy simplification. This creates a challenge for Google should it want to. More importantly going into business against your customers will galvanize the entire industry to consider ways other than Google’s tool. We are on a collision course with a trend. Just taking the escalating price of key words (aka scarce internet real estate) this has already priced itself out of the reach of the common players and even the big spenders have a hard time with it. The consumer is also getting jaded with the practice of paid search. I see studies that show the effectiveness of paid keywords is diminishing.

Conclusion. I don’t think they are going to do it… not just yet. The technology is not there and the cost of delivery would be high to do it properly including the need for PEOPLE!!!! But should they do it… I would quietly dump any involvement in Meta Searches and the OTAs. Supply chain owners however would become very valuable. I just dont think Google is that stupid to do it now.

Cheers
Timothy

Another BA post... this time a nice one - BA's new Club Class Seat

Well Done BA – a much better product. You are now officially… still not quite there... but it’s a very good effort. This impression is based on a window 747 upper deck seat DXB-LHR BA 106 19 March.

What’s new and what’s good?

The seat itself is much better. Same width(who said it was wider?) it looks like the extra padding really does make it feel better. No more boarding school back when you reach your destination. The controls are better and simpler. The mechanism for reclining seems also to be a lot smoother and more robust. I suspect that this one will last longer too. The new head firmer thingie seems to be pretty useless. The armrests rise and fall well and are pretty good design. I am not sure how robust they are. Perhaps the nice people from IKEA should send their test engineers on the job.

The access is much better but still uses the head to toe rather than the herringbone pattern offered by other airlines. And while it’s a bit better for ingress egress it’s still a tussle.

The bins are still there on the upper deck (thank god BA didn’t remove them). Although I still have to wonder what the zipper bag lining every now and then is for.

The electric powered divider is pretty darn good. Gone is that crappy fan affair.

110 Volt power US and EU – very good and in a reasonable place as well.

AND THE STUPID GLASS tablette is gone – YEAH!!!!

What’s not so good….

A much better footrest. But WHY oh WHY does it have to be not a seat? Other airlines have figured this out. So now we have an even bigger boat anchor than the other one. On my particular seat the mechanism was not working fully and took 3 crew members (oh yes then my superior approach!!!) to resolve it. I had accidently taken the wrong seat. The guy who I usurped got really mad and wanted his seat back when he couldn’t figure it out. We nearly had an international incident. I believe this is going to cause problems later and not just because the crew was unfamiliar with it.

I actually like the LH and QF seat massagers. Well we cant have everything.

IFE system – much better. VOD works a heck of a lot better but the UI/UE engineering is still somewhat quirky and stupid. For example you cannot navigate backwards through the list. You have to go back to the beginning each time you cancel the selected choice. Noise cancelling phones are good. Still it’s not quite state of the art. Cathay’s new system (shhhhh) is way better. QF and SQ’s systems also much better. I believe a software upgrade will be in order before the roll out goes much further. They didn’t change the design of the control keypad. I am surprised at this. Simple changes would have been smart. The light switch didn’t do anything on mine. Why do they persist with a 2 prong headset jack is one of life’s mysteries.

Subtle lights are a very good implementation. I am quite impressed with that part. BUT I would like to have one big light. This is going to annoy people who like to work during the night in their seats.

The new table – great design poor execution. Like almost every other folding table it just won’t go 180 degrees. This is also an area where BA’s engineers and the seat designer should spend some time.

The hard sidewinders protecting your head could do with padding. It’s just not very nice in the full upright position.

Overall impression.

A simple and good design but not category leading. SQ and EK’s new J class seats are easily better in almost every category. (just make sure you don’t fly EK’s old and stupid Z configured seat still extant on the A340-500s. The new lie flat on the 777s is way better. (Worth going via Hamburg rather than the nonstops at this point). VS of course is still the all time champ if you count it as a J seat rather than F/P. The seat and facilities put BA behind the leaders and I suspect will continue not to be the best across the board. In the current generation BA is ahead of the European carriers (like LH and AF) but behind the class leaders – SQ, EK and VS – well ahead of the current Americans. It will be interesting to see how it stacks up against the New DL seat.

I rate this a B+

I do hope BA's plan B is not this one... or how to blame your customer

Read on if you are a Frequent Flyer and feel like some times your airline doesn’t like to support you.

Recent press reports are hinting that if BA looses its campaign to derail the new EU Open Skies agreement then it has a nifty Plan B up its sleeve. Well this is something you might want to think about as regards BA's legendary customer service or lack thereof.

I am a BA Sliver – down from Gold (you might wonder why I even maintain any status). I fly a lot and often choose BA for schedule reasons and my family is based in the UK. Like many business folk – I have to quickly change my schedule. Paying full fare is the benefit of doing this.

Well BA now you have me… and several of my fellow travelers on the flight BA 951 March 21, 2007 MUC-LHR. There were 12 passengers in the A319 Club class section. Hardly a full load for a capacity of 24. However of the 12 passengers – 5 of us got the same speech from the flight attendant and presumably at check in when I got mine. “Due to YOUR late reservation – you are likely to be denied a meal.” OK 2 hours prior to departure maybe but not the day before… As it turns out 3 of the 5 had made changes to their reservations 24 hours prior to departure. So BA’s official definition of a “Late” reservation is now 24 hours. You might want to think then that BA doesn’t want high revenue full fare last minute flyers. I certainly do.

In my experience with BA there are a number of fundamental areas that bug me. These range from deliberate lying to bad technology to forcing its passengers through many unnecessary hoops. The awful bag situation which is nothing but laughable. But this situation of blaming your customer for your own mistake must be one of the best/worst i have ever encountered.

My flight is part of a round the world ticket I purchase on BA adding up even more to the overall revenue I have generated to BA which now much total more than high 6 figures.

BA will get a complaint letter from me. Clearly I am a second class citizen – well at least I get to share that with nearly 50% of my fellow passengers who I am sure all paid a premium price for their ticket.

So BA if this is your plan B to entice consumers not to abandon the airline when Heathrow is forced to open up under Open Skies… perhaps then I will have to chose another airline. And yes… Heathrow is the airport that best exemplifies a third world country. DE STERN was right. The UK and its institutions do adopt the attributes of a 3rd world country, but my experiences at LHR are subject for another day.

Cheers

Timothy

Contribute to Global Warming - Dress up!

OK - i am really advocating the reverse. DON'T wear suits and be more casual and you will reduce global warming.

Its time to think of a lot more ways to get creative about how we can all reduce our carbon footprint. Here are some suggestions:

1. Park your suits. The process of dry cleaning adds significantly to warming. Chemicals are bad used in this process not to mention the heat.
2. Move to low wattage bulbs across your house. AND remove one light permenantly.
3. Car pool at least once a month with someone different. If you already do this find another partner to car pool with, if you dont find someone. In the USA for example you can sign up with RideShare organizations.
4. Turn down your thermostat one degree.
5. Run on your battery more frequently when using a laptop
6. Find a creative way to not use energy other than human (eg WALK!)

Cheers

Timothy

New Credit Card Scam - Thank You Chase

Those of you who travel a lot... me included should now be checking your US credit card statements BIG TIME. Chase Morgan Bank has slipped in a new fee for International Travel. Thus every charge you make on your credit card outside North America is subject to new set of fees for using the card. Check it out... it can be as much as a Dollar EXTRA per transaction.

Bloody crooks.............

Sabre Pacific finally gets it

Well it only took them 10 years but Sabre Pacific's MD finally realized that Travel Agents are dead.

http://www.travelweekly.com.au/dirplus/images/travelweekly/TravelTodayPDF/13_03_2007.pdf

well done - now that you joined the 1990s can you perhaps give your customers some appropriate tools?

But seriously I remain convinced that the Agency Community and the attendant suppliers still have trouble recognizing the new world order.

Good Luck Sabre

Cheers

Timothy

T2 Column in the Beat

GUEST: T2Impact on Low-Cost Long Haul
"This article is republished here with permission from The Beat."
The Beat ~ a travel business newsletter
New York City
3/12/07 8:59 AM

Timothy O'Neil-Dunne and Addison Schonland of T2Impact contribute this guest piece about the potential impact of "game changing" long-haul aircraft and the new entrant airlines that are buying them...

Travel, the great social equalizer, over recent decades has increased at significantly faster rates than gross national product. There is no doubt as well that low-cost carriers have changed the model for the airline market, further accelerating the growth of travel amongst all the world's populations. But this growth has been confined until now to regional or short haul sector pairs. In February 2005, First Choice--the U.K.'s fourth-largest vertically integrated tour operator business and sixth-largest U.K. airline with a fleet of 32 aircraft--announced to a surprised market its first purchase of Boeing 787s. In December, it converted two options to purchases and again this month converted four more to confirmed orders, becoming only the second airline to increase its order twice for the new twinjet before it even takes to the skies. "Having taken the decision to increase our commitment to long-haul destinations, we wanted to ensure we could do this in the most cost-effective and environmentally sound way, while offering our customers new destinations and even more comfortable travel," said Dermot Blastland, managing director of First Choice Mainstream Holidays.

Well, for those of you who think the long-haul LCC is a fantasy, think again. It's here. This is the first "non-legacy airline" to build its business growth engine around the 787, but it will not be the last. It is important to understand that First Choice is not really an LCC. It positions itself as a premium charter and tour company or vertically integrated tour operator (VTO), and it has little in common with any legacy airline. But it has a lot in common with an LCC because it is not a networked airline.

With the ability to connect virtually any secondary city in the world to the U.K., First Choice will be able to move into markets that up until now were exclusively the playthings of British Airways and Virgin Atlantic. Indeed this creates an interesting scenario and pressure on BA, BMI and Virgin as the U.K.'s legacy "flag carriers." At the top, their protected status at London's Heathrow is likely to be blown by the new transatlantic EU-US "just a little bit more open skies" agreement. At the other end is the voracious appetite LCC-type airlines. It's clearly an opportunity for the stock pickers to mark down the legacy airlines.

Many industry pundits have commented on the 787 being a "game changer." This 787 order needs to make many in the aviation world pay attention to what is surely the next frontier to be invaded by LCCs. First Choice's broad base of airports in U.K. means that it will be able to fly just about anywhere, with its 787s, that British holiday-makers want to go. No more stops in Goa on the way to Phuket. With a range of over 15,000 kilometers First Choice's 787 makes a London-to-Sydney nonstop possible.

For airlines that want to accept and realize that air travel is a commodity, the 787 class aircraft is the way to go. For now at least, until the A350XWB is available. If Airbus ever gets the A350XWB out the hanger door, then you could have a 787 and 777-sized airplane that will also connect secondary cities the world over. The good news for U.K. residents is that they will be able to avoid the bottlenecks of the four London airports as First Choice bases its planes at secondary U.K. airports. It should be noted that LCCs in a long haul market will be primarily dependent on leisure traffic. But this is bound to change. Just as the proportion of business travelers using LCCs is growing, so too will that phenomenon apply to the long-haul model.

But it is more than First Choice. Other LCCs (real ones) are getting into the act.

--Ryanair is being helped by the Moroccan government to start service. Four-plus hours on seats that don't recline!

--FlyAsianExpress plans to operate flights to destinations in Asia and Europe as AirAsia X, a new long-haul, low-cost carrier launched by AirAsia.

--Australia's Virgin Blue reported expansion plans including considering an order for eight 777-300ERs to be deployed on planned long-haul operations.

--LionAir is taking delivery of 60 Boeing 737-900Ers, a 6,000 kilometer aircraft.

--Oasis Hong Kong is growing its service from the current daily Hong Kong to London by adding U.S. service this year to Oakland and possibly Chicago and Vancouver.

New opportunities beckon for LCCs. They have created brand following beyond their traditional domestic markets. For example Aer Lingus and JetBlue are going to sell each other's seats on their Web sites. Clearly leveraging its traffic information, Maxjet publishes connections at New York JFK and London Stansted. Imagine this happening outside an airline alliance? When Oasis starts its Oakland service, you can bet JetBlue will be doing the same thing with them. That could even mean round-the-world tickets are coming soon--on LCCs that have no alliance and no legacy costs.

Our conclusion: LCCs are driving innovation and pushing the envelope for airlines, except now in a long haul version.

~ Addison Schonland and Timothy O'Neil-Dunne are consultants with T2Impact Ltd


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