In the boom to bust cycle of airlines - the tradition has always been buy at the top and sell at the bottom... not exactly what even your local stock broker would tell you was a smart thing. If you are a student of history you know that Airlines are highly cyclical. Yet many forget that in times of boom.
Will this cycle be any different?
Many would argue that this is the top of the cycle and we are approaching the peak of the airlines' net earning capability. Barring a catastrophe - of either an economic or socio-political variety, the airlines as a group should be very profitable this year. But the dynamics are very different this time around.
Why?
At T2Impact we believe that we are headed for a long term fundamental shift in the structure of the airline system. Here are some pointers to monitor.
1. We are approaching practical capacity constraints in certain key junction points within the system. For example - The US system is already crowded at peak times yet the investment in ATC infrastructure by successive Administrations has been laughable.
2. Barriers to entry are much higher than they have been - witness the number of new airlines starting in the US market has dwindled to a trickle. In Europe there is a surfeit of LCC startups. Even the robust growth markets of GCC and Asia Pacific are not experiencing a growth of new players.
3. The massive savings gained over the last 10 years in labor cost cuts, distribution cost reductions have been offset by massive increases in fuel. Frankly there are no more major cost cutting areas left.
4. Yields are at historical highs.
5. There is going to be significant labor unrest due to the afore-mentioned labor reductions. Is it time for payback? AMR's AA pilots think so with an opening round request for 30% pay increases.
What are the airlines doing with the cash?
Plowing it into service improvements.
Still off-loading unprofitable marginal routes to affiliate partners.
Buying new planes.
Etc.
What worries us is that there is no fundamental effort to address the core issues. Neither is there a regulatory mechanism for addressing the true scarcity value of the whole trip and the attendant resources consumed.We believe that a future airline sin tax regime will be introduced. If for no other reason than the usual sin tax revenues on cigarettes (for example) are starting to wane.Our belief is that the Government bodies - both national and pan-national - and the Industry should be working on improving the efficiency of the system.
A fair user fee basis of regulatory payments needs to replace the outmoded and clearly now unworkable 1944 Chicago Convention.
Finally - how about a rainy day fund?In the coming months we will explore different ways that the airlines should be responding to the future.
With our new partner InTheKno (www.inthekno.com) we will be examining business models for airlines and the impact on the whole of the Travel and Tourism sector.
Cheers
Timothy
Timothy J O'Neil-Dunne
Managing Partner - T2Impact LtdGlobal Travel eBusiness
Tel (US) +1 425 836 4770Mobile (US) +1 425 785 4457
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www.t2impact.com
Please treat this email and all forms of communication as confidential use only for the direct recipient(s).
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Insight and Analysis without the hard work
07 May 2007
Irony of names - Air Canada's new system
According to recent press reports Air Canada's replacement for Res III (By the way Res III was short for Reservac 3) will be dubbed Polaris. Well that got me thinking. Way back when... I worked for a certain reservations systems company in Kansas City, Northwest pulled their system away from its own environment from nearby friendly supplier Unisys Corp (in this case the Old Univac company) and into what was then called PARS. In doing so the old system that died was called - Polaris.
Lets hope that it lasts a little longer for Air Canada. Incidently Northwest retained the name for its Cargo system. Today it is called Polaris. But for how much longer we wonder!
Cheers
Timothy
Lets hope that it lasts a little longer for Air Canada. Incidently Northwest retained the name for its Cargo system. Today it is called Polaris. But for how much longer we wonder!
Cheers
Timothy
US fights to keep Internet Gambling Ban
http://www.reuters.com/article/internetNews/idUSWAT00742720070504?pageNumber=3
The USA has long had a ban on interstate gambling. The US Gambling lobby is pretty darn strong. For example the current junior Senator from Nevada's father was formerly President of Mandalay Bay Resort Group (now part of Kirkorian's MGM). In the day and age when the US is espousing open commerce for all is seems ironic that one of the Web's best businesses is denied a chance to flourish in its largest market.
For a personal reference I dislike gambling - but that is a matter of personal taste. I defend anyone's right to gamble if they choose.
So I hope that the WTO does indeed sanction the USA for this absurd situation. Selective trade scope seems to be rather protectionist. Perhaps Costa Rica and Antigua should declare war on the USA and then we can have a real headline match. Reminds me of a Peter Sellers movie http://www.imdb.com/title/tt0053084/
Cheers
Timothy
Qantas Deal Collapses - What's next?
If it sounds too good to be true then it must be....
Suffice to say - APA (basically McQuarie and TPG) - received a bloody nose from the regulator and the stockholders and said - you cant ride roughshod over the national icon. The problem is that the perception of value and the actual value in the marketplace are not aligned. The shareholders all believe that there was some monkey business with a bleak future prospects put out when the bid was announced. Yet the performance of QF and the various subs has been much better than the regime of Mr Dixon would have us all believe. Plus the chaps at TPG were really struggling to make the deal work. It was marginal at best.
The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll.
The market for airline stocks is going to be good for the summer and in Oz perhaps even longer given the tight lock that QF currently has on the market. But perhaps not for long. The Canberra government cannot fend off SQ's desire for a seat at the US-OZ highly lucrative market. Not to mention the start soon of Virgin/Pacific/Blue Something's 777 service coming in 2008.
With AMR looking to suffer a summer of labor discontent (Pilots want 30%+ raises) those PE (Private Equity) Funds need to find somewhere to put some of that cash. Remember the old adage - how to make a million? Start with a billion and buy and airline.
Good Luck QF - Flying Solo is probably your best option at this point. But do make sure that you focus on the back door... there are many barbarians at the gate and you cannot rest on your laurels. (I love a mixed metaphor or 3)!
Cheers
Timothy
Suffice to say - APA (basically McQuarie and TPG) - received a bloody nose from the regulator and the stockholders and said - you cant ride roughshod over the national icon. The problem is that the perception of value and the actual value in the marketplace are not aligned. The shareholders all believe that there was some monkey business with a bleak future prospects put out when the bid was announced. Yet the performance of QF and the various subs has been much better than the regime of Mr Dixon would have us all believe. Plus the chaps at TPG were really struggling to make the deal work. It was marginal at best.
The Flying Kangeroo is somewhat therefore in limbo. The senior management find themselves in a quandry because unless APA or either partner makes a bid very soon - then at least the Chairwoman's head must roll.
The market for airline stocks is going to be good for the summer and in Oz perhaps even longer given the tight lock that QF currently has on the market. But perhaps not for long. The Canberra government cannot fend off SQ's desire for a seat at the US-OZ highly lucrative market. Not to mention the start soon of Virgin/Pacific/Blue Something's 777 service coming in 2008.
With AMR looking to suffer a summer of labor discontent (Pilots want 30%+ raises) those PE (Private Equity) Funds need to find somewhere to put some of that cash. Remember the old adage - how to make a million? Start with a billion and buy and airline.
Good Luck QF - Flying Solo is probably your best option at this point. But do make sure that you focus on the back door... there are many barbarians at the gate and you cannot rest on your laurels. (I love a mixed metaphor or 3)!
Cheers
Timothy
04 May 2007
Global Free Calling Day - Yes CALL YOUR MOTHER
Those nice people at Skype are giving you the opportunity of a life time. A FREE DAY of global calling. Call anyone you like anywhere in the world as long as you initiate the call from a Skype VOIP address. Actually it does carry a few restrictions (like only from a US IP address) - here is the full T&Cs. http://www.skype.com/campaigns/giftofgab/terms.html?cm_mmc=Acceleration-_-Email-_-NA_GoG_launch_EN_US_070503-_-terms
Go ahead. Get back some of that money you have paid to eBay
Cheers and CALL YOUR MOTHER
Oh yes... just so you know if you are an American - NOT ALL COUNTRIES have mothers day on May 13th!
Timothy
Go ahead. Get back some of that money you have paid to eBay
Cheers and CALL YOUR MOTHER
Oh yes... just so you know if you are an American - NOT ALL COUNTRIES have mothers day on May 13th!
Timothy
Oops - Blackstone hits snag in pursuit of Worldspan
The EU has decided that it has "serious concerns" which will place the Blackstone/Travelport acquisition of Worldspan under the microscope. Frankly this should be a non-event. The total market for reservations services is not that great. So the scope of the review seems somewhat out of whack with the general industry view.
However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.
The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.
So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.
The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.
Stay tuned. This one is going to run for a while.
Cheers
Timothy
PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.
However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.
The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.
So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.
The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.
Stay tuned. This one is going to run for a while.
Cheers
Timothy
PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.
Electronic Ticketing - will the airlines meet the 12/12/07?
Sabre is claiming 90% plus, Abacus is at 60%.......... So will we make Giovanni's deadline? Actually the answer is no but it wont matter.
The players will decide that those who need to be in the fold will be there - those who dont will be left out. It doesnt matter whether you make it or not.
I recall in 1984 United Airlines complained that they were processing 88 different internal ticket types. we have been working with a carrier who is 77% electronic yet still processes 24 different internal ticket types.
But there is still a hidden burden. The difference between Eticketing and truly ticketless is something that is holding airlines back. GET WITH THE PROGRAM. Its about business simplicity. Simplicity saves money.
So lets do the right thing.
Bite the bullet and make it TICKETLESS now. You still have time. And just pick a date and then do the most you can to eliminate everything else. If you dont then you wont make the savings you need.
Cheers
Timothy
The players will decide that those who need to be in the fold will be there - those who dont will be left out. It doesnt matter whether you make it or not.
I recall in 1984 United Airlines complained that they were processing 88 different internal ticket types. we have been working with a carrier who is 77% electronic yet still processes 24 different internal ticket types.
But there is still a hidden burden. The difference between Eticketing and truly ticketless is something that is holding airlines back. GET WITH THE PROGRAM. Its about business simplicity. Simplicity saves money.
So lets do the right thing.
Bite the bullet and make it TICKETLESS now. You still have time. And just pick a date and then do the most you can to eliminate everything else. If you dont then you wont make the savings you need.
Cheers
Timothy
03 May 2007
Infogluttony = Time Famine and Email Bankruptcy
I read with interest the declining readership of Local Newspapers in the USA - its a worldwide trend. Print media is in decline. Conventional Broadcast media is also in steep decline as fragmentation takes hold. While we all multi-task there comes a point when we cannot do everything during a 24 hour day, more distractions arrive - New Blogs, Wikis and yes Youtube.
So what are we to do?
While I have long lobbied for a 32 hour day no one seems to be interested in that idea - Swatch had a good one – break the day into a different unit called Beats but that did as well as Esperanto. I have even tried sleeping less hours. My sleep bank has been in a state of overdraft for many years now.
The problem is there is TOO much information and too much that we need to process. I call this infogluttony and its leading to the two newest trends. Time Famine and Email bankruptcy.
The former is when you simply run out of time. Whether you blame it on too much info, or too much process (driven by PC -Politically Correct- requirements or even regulatory needs such as SOX rules), we are all screwed. Thinking freely and expressing yourself freely is no longer allowed. You have to be careful not to speak ill and anyone seen wearing a "Nuke the gay whales for Jesus" T shirt is likely to be lynched. That all takes time and extra thought.
The latter is when you just start over. A good friend of mine who works at Customer Service at a certain large LCC did this several years ago. She simply changed her email account and closed it down. Several members of the T2 family tired of spam have done the same. Its rather a scary thing. I registered timothyo at many different email accounts - the spammers don’t even need to steal my accounts - they just guess - like Frankb or Billg.
So if ANYONE out there has an answer for this - PLEASE come and get me. I am seriously considering running away from all this. Thank god my Blackberry works just about anywhere now
Cheers
Timothy
So what are we to do?
While I have long lobbied for a 32 hour day no one seems to be interested in that idea - Swatch had a good one – break the day into a different unit called Beats but that did as well as Esperanto. I have even tried sleeping less hours. My sleep bank has been in a state of overdraft for many years now.
The problem is there is TOO much information and too much that we need to process. I call this infogluttony and its leading to the two newest trends. Time Famine and Email bankruptcy.
The former is when you simply run out of time. Whether you blame it on too much info, or too much process (driven by PC -Politically Correct- requirements or even regulatory needs such as SOX rules), we are all screwed. Thinking freely and expressing yourself freely is no longer allowed. You have to be careful not to speak ill and anyone seen wearing a "Nuke the gay whales for Jesus" T shirt is likely to be lynched. That all takes time and extra thought.
The latter is when you just start over. A good friend of mine who works at Customer Service at a certain large LCC did this several years ago. She simply changed her email account and closed it down. Several members of the T2 family tired of spam have done the same. Its rather a scary thing. I registered timothyo at many different email accounts - the spammers don’t even need to steal my accounts - they just guess - like Frankb or Billg.
So if ANYONE out there has an answer for this - PLEASE come and get me. I am seriously considering running away from all this. Thank god my Blackberry works just about anywhere now
Cheers
Timothy
Sabre emulates Worldspan - sets up GSA in Nigeria
Eyeing one of the largest markets in Africa (also one of the riskiest) Sabre has partnered with local Nigerian Travel Agency group Interguide Air Limited, that will see it become available to the nearly 800 Travel Agencies in the country.
Nigeria is a well known center for fraud and questionable ticketing practices. Cash is the usual form of financial instrument but still altered tickets and various techniques have emenated from there. The age of the internet has not dimmed these efforts. How many of us have received offers to bank $8.7 million from so and so's widow?
However with Virgin Nigeria now more than a year old and well established. New Carrier Arik Air bursting onto the scene with a major order from Boeing last week - you have to think the risk is now lessened. Arguably Nigeria is the largest market in sub-Saharan Africa after Kenya and of course South Africa.
Interestingly here, Sabre has taken a leaf out of Worldspan's book and established a GSA in the market rather than risking its own corporate entity. I can just imagine the chaps in the Texas bunker getting this request from London!!!
Best of luck - count your fingers when you do this!
Cheers
Timothy
Nigeria is a well known center for fraud and questionable ticketing practices. Cash is the usual form of financial instrument but still altered tickets and various techniques have emenated from there. The age of the internet has not dimmed these efforts. How many of us have received offers to bank $8.7 million from so and so's widow?
However with Virgin Nigeria now more than a year old and well established. New Carrier Arik Air bursting onto the scene with a major order from Boeing last week - you have to think the risk is now lessened. Arguably Nigeria is the largest market in sub-Saharan Africa after Kenya and of course South Africa.
Interestingly here, Sabre has taken a leaf out of Worldspan's book and established a GSA in the market rather than risking its own corporate entity. I can just imagine the chaps in the Texas bunker getting this request from London!!!
Best of luck - count your fingers when you do this!
Cheers
Timothy
02 May 2007
Pegs and Wizcom - Last Gasp II
Yes folks the old models are dropping like flies. In my humble opinion, here is another one that will soon be biting the dust...
Pegasus - whose CEO was once called a very derogatory name in public by one of his big customers - has JUST managed to scrape through and get enough cash in the till with a recent offering. Not wishing to even hide their intent on cashing out - the current investors made it very clear they wanted the cash for themselves - oh yes and to buy out Wizcom from Blackstone. This they have managed to do.
But life isn’t so rosy. Pegasus revenues have been falling for some time. Its customers and suppliers are defecting and its business is not as relevant as it once was.
I feel very strongly that despite the underlying trend of disintermediation the team at Pegasus made a mistake many years ago when they didnt develop a solution for Wide Area Availability (aka Availability Search). Hoping to capitalize on what was then a monopoly - they refused to address the question. Well now they will pay the piper.
Their relevance is no longer as strong as fragmentation and bypass are the order of the day. Pegs can no longer rely on the GDSs nor their supply side partners.
I would like to put to rest one awful truth out there about the GDS being a higher yield market for Hotels. While this is technically true it comes at a price:
1. The product/content served up is pretty poor.
2. The technology sucks.
3. Travel Agents are in the main lazy and don’t look hard if the product is not available easily via the GDS.
Consequently the premium paid by users for hotels booked via the GDS Travel Agency (TMC type) bookings versus those booked using Pegasus linked to say and OTA such as Expedia has been of the order 20%+ (source TravelClick). But this is an unnatural act. In today's tight market for product (with occupancy levels at historic highs) this is unsustainable. The hoteliers got VERY smart in recent years and manage now to have the upper hand. Pegasus is largely irrelevant and their total share of the market is falling.
As bypass of different types occurs and fragmentation is the order of the day it is not just Pegs Switch business that suffers but the other pieces also. The rep business has seen significant erosion due to new players at cheaper rates and better services/technologies emerge.
Even the HCC business is coming under fire - without the ubiquity of the Switch carrying all Travel intermediary business - the value of the switch based HCC counting falls away. Perot is the beneficiary of this.
So good luck to Mike and John as the struggle to hold on to the business. There are already more holes in the dyke than you have fingers...
Cheers
Timothy
Pegasus - whose CEO was once called a very derogatory name in public by one of his big customers - has JUST managed to scrape through and get enough cash in the till with a recent offering. Not wishing to even hide their intent on cashing out - the current investors made it very clear they wanted the cash for themselves - oh yes and to buy out Wizcom from Blackstone. This they have managed to do.
But life isn’t so rosy. Pegasus revenues have been falling for some time. Its customers and suppliers are defecting and its business is not as relevant as it once was.
I feel very strongly that despite the underlying trend of disintermediation the team at Pegasus made a mistake many years ago when they didnt develop a solution for Wide Area Availability (aka Availability Search). Hoping to capitalize on what was then a monopoly - they refused to address the question. Well now they will pay the piper.
Their relevance is no longer as strong as fragmentation and bypass are the order of the day. Pegs can no longer rely on the GDSs nor their supply side partners.
I would like to put to rest one awful truth out there about the GDS being a higher yield market for Hotels. While this is technically true it comes at a price:
1. The product/content served up is pretty poor.
2. The technology sucks.
3. Travel Agents are in the main lazy and don’t look hard if the product is not available easily via the GDS.
Consequently the premium paid by users for hotels booked via the GDS Travel Agency (TMC type) bookings versus those booked using Pegasus linked to say and OTA such as Expedia has been of the order 20%+ (source TravelClick). But this is an unnatural act. In today's tight market for product (with occupancy levels at historic highs) this is unsustainable. The hoteliers got VERY smart in recent years and manage now to have the upper hand. Pegasus is largely irrelevant and their total share of the market is falling.
As bypass of different types occurs and fragmentation is the order of the day it is not just Pegs Switch business that suffers but the other pieces also. The rep business has seen significant erosion due to new players at cheaper rates and better services/technologies emerge.
Even the HCC business is coming under fire - without the ubiquity of the Switch carrying all Travel intermediary business - the value of the switch based HCC counting falls away. Perot is the beneficiary of this.
So good luck to Mike and John as the struggle to hold on to the business. There are already more holes in the dyke than you have fingers...
Cheers
Timothy
01 May 2007
Bravo Worldspan - finally someone attacks the core issue of Passive Segments
Despite being the lame duck of GDS, Worldspan seems to be going out with a bang not a whimper.
Worldspan is introducing a new service called Consolidator Control. The first real attempt at solving the root cause of "honest" passive segments.
Lets wish them well with it
Cheers
Timothy
Worldspan is introducing a new service called Consolidator Control. The first real attempt at solving the root cause of "honest" passive segments.
Lets wish them well with it
Cheers
Timothy
LCC with a real difference - the All Veggie airline
New airline with the catchy name of MDLR Airlines http://www.mdlrairlines.in/ has a new and definitely different twist offering Vegetarian "Exquisite Cuisnine" to its patrons on a definitely not LCC Avro RJ70.
With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.
Cheers
Timothy
With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.
Cheers
Timothy
24 April 2007
Bravo FareCompare - Airlines Worst Nightmare revealed
I am a huge fan of smart people who can work the system to their advantage. One of the last bastions of the airline old school system has finally been publically breached. FareCompare has actually called the airlines bluff.
http://www.farecompare.com/articles/cheapest-airline-guarantees/same_day_cheapest_airline_ticket_guarantees_hype_or_hope.html
Read the article and start collecting the bonus certificates. It will take a few weeks for the airlines to start reacting. But NOW they also have a new tool to change their fares. It makes reading fare notices from ATPCo even more fun.
Sadly the fix will be that the airlines will "cheat" and push out the effective dates of the fare change so this "freebie" process will only work for a short time. But its still a great day that the consumer is able to compete on fair terms with the airlines historical obfuscation processes.
Again - Bravo to Neil and Rick!
Gentlemen my hat is off to you
Cheers
Timothy
http://www.farecompare.com/articles/cheapest-airline-guarantees/same_day_cheapest_airline_ticket_guarantees_hype_or_hope.html
Read the article and start collecting the bonus certificates. It will take a few weeks for the airlines to start reacting. But NOW they also have a new tool to change their fares. It makes reading fare notices from ATPCo even more fun.
Sadly the fix will be that the airlines will "cheat" and push out the effective dates of the fare change so this "freebie" process will only work for a short time. But its still a great day that the consumer is able to compete on fair terms with the airlines historical obfuscation processes.
Again - Bravo to Neil and Rick!
Gentlemen my hat is off to you
Cheers
Timothy
07 April 2007
Airline Product Unbundling - A comment
This is a view of the unbundling of airline products and services.
The basic laws of economics work pretty simply. The airline business has traditionally been exempt from them due to - well lets just say unwise management decision. However in this current boom cycle - we are now seeing some interesting trends. One of which is the unbundling of services.
Clearly this is not new. However in the more recent past what has happened has been the imposition of fees for services normally provided. Examples of this are Ryanair charging for bags (now followed by both other LLCs and even a few Network Carriers). The model was add a service - then consider adding a fee.
However we are now seeing a trend towards unbundling on a greater scale. IE you pay for everything. Airlines have ALWAYS been afraid of pricing changes. But its not hard to see if the airline is moving - lets say 10 million passengers and the GDS fees are $5 per segment - then that is going to be more than the traditional net profit for that airline. Ditto in many other areas of cost vs revenue..
Examples of product unbundling come from all areas. Air Canada for example has unbundled services with its line of Tango fares. Resulting in the now famous GDS clause to accommodate it. Interestingly the results of such a GDS clause came to light during the recent Expedia vs AA cat fight. Spirit Airlines, not known for following conventional wisdom now offers its best discounts to people who will pay to join a club. Many European airlines charge for food on short haul runs. A recent example crossed my desk from AA. www.traavelperks.com Not sure I want to sign up for that just yet.
Apart from the economic situation - why are the airlines doing this and why now?
I have 3 basic reasons:
1. The core economic - supply vs demand situation. Tight supply gives pricing power to the airlines, something they have not had for a long while
2. Because they can. Emboldened by recent wins against distributer, the airlines now feel they are pretty powerful and they are flexing this power
3. There is no more savings to be had anywhere in the system. We postulated last year that when the GDS fee issue had been "resolved" the airlines would be hard pressed to find any other sources for net yield growth by cutting further costs. So this is the other shoe, revenue growth - IE more fees
We are going to see more examples of this as the airline accountants scour the system looking for more revenue opportunities. This will continue to boost the bottom line of many airlines. However be prepared for the backlash from the consumer. Remember she/he is getting smarter and will not tolerate gouging. Further expect during a run-up to the next US presidential election that the issue of price gouging by the airlines could become a popular target by at least one of the large field of candidates from either side.
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
The basic laws of economics work pretty simply. The airline business has traditionally been exempt from them due to - well lets just say unwise management decision. However in this current boom cycle - we are now seeing some interesting trends. One of which is the unbundling of services.
Clearly this is not new. However in the more recent past what has happened has been the imposition of fees for services normally provided. Examples of this are Ryanair charging for bags (now followed by both other LLCs and even a few Network Carriers). The model was add a service - then consider adding a fee.
However we are now seeing a trend towards unbundling on a greater scale. IE you pay for everything. Airlines have ALWAYS been afraid of pricing changes. But its not hard to see if the airline is moving - lets say 10 million passengers and the GDS fees are $5 per segment - then that is going to be more than the traditional net profit for that airline. Ditto in many other areas of cost vs revenue..
Examples of product unbundling come from all areas. Air Canada for example has unbundled services with its line of Tango fares. Resulting in the now famous GDS clause to accommodate it. Interestingly the results of such a GDS clause came to light during the recent Expedia vs AA cat fight. Spirit Airlines, not known for following conventional wisdom now offers its best discounts to people who will pay to join a club. Many European airlines charge for food on short haul runs. A recent example crossed my desk from AA. www.traavelperks.com Not sure I want to sign up for that just yet.
Apart from the economic situation - why are the airlines doing this and why now?
I have 3 basic reasons:
1. The core economic - supply vs demand situation. Tight supply gives pricing power to the airlines, something they have not had for a long while
2. Because they can. Emboldened by recent wins against distributer, the airlines now feel they are pretty powerful and they are flexing this power
3. There is no more savings to be had anywhere in the system. We postulated last year that when the GDS fee issue had been "resolved" the airlines would be hard pressed to find any other sources for net yield growth by cutting further costs. So this is the other shoe, revenue growth - IE more fees
We are going to see more examples of this as the airline accountants scour the system looking for more revenue opportunities. This will continue to boost the bottom line of many airlines. However be prepared for the backlash from the consumer. Remember she/he is getting smarter and will not tolerate gouging. Further expect during a run-up to the next US presidential election that the issue of price gouging by the airlines could become a popular target by at least one of the large field of candidates from either side.
Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
Mobile (US) +1 425 785 4457
Mobile (International) +44 7770 33 81 75
Fax +1 815 377 1583
UNIVERSAL VOICEMAIL BOX +1 425 749 4221
www.t2impact.com
05 April 2007
BA Bags... Stardate 4-1-2007
No this is not the April fool's joke.
BA lost over 1 million bags last year based on 36 million passengers. So lets assume that on average one bag for every 1 people is checked. That means that the airline looses one bag for every 36 that it handles. Either way you cut it that's a pretty poor number. So what was BA's answer to this problem? New baggage procedures including limiting the the number of bags to be checked etc. Oh yes and lets not forget the outsourcing of bags at LHR.
What is our insight into this?
You have a 1 in 36 chance of having your bag not arrive with you on BA. But wait... just dont forget that you are ONLY allowed 1 carry on at/in/through LHR. So that means that now you have a really tough time.
So BA - do you think this is a good number? Or should you perhaps recall some of those baggage handlers you let go and SOLVE the problem. Of course let's not ask the question whether the percentage of bags lost affected the back of the bus passengers or the front more?
Having had my bag either damaged, destroyed, delayed and well mis-routed countless times on BA, I can tell you that in my experience it is better not to fly on BA if you can possibly avoid it. Particularly if you are transiting or leaving from LHR.
And this is no joke. BA fix this PLEASE
BA lost over 1 million bags last year based on 36 million passengers. So lets assume that on average one bag for every 1 people is checked. That means that the airline looses one bag for every 36 that it handles. Either way you cut it that's a pretty poor number. So what was BA's answer to this problem? New baggage procedures including limiting the the number of bags to be checked etc. Oh yes and lets not forget the outsourcing of bags at LHR.
What is our insight into this?
You have a 1 in 36 chance of having your bag not arrive with you on BA. But wait... just dont forget that you are ONLY allowed 1 carry on at/in/through LHR. So that means that now you have a really tough time.
So BA - do you think this is a good number? Or should you perhaps recall some of those baggage handlers you let go and SOLVE the problem. Of course let's not ask the question whether the percentage of bags lost affected the back of the bus passengers or the front more?
Having had my bag either damaged, destroyed, delayed and well mis-routed countless times on BA, I can tell you that in my experience it is better not to fly on BA if you can possibly avoid it. Particularly if you are transiting or leaving from LHR.
And this is no joke. BA fix this PLEASE
Caveat Emptor
OK... this is a real doozy of a story. A cautionary tale for anyone who takes as gospel what you read online.
Most people have a perception that humans can make mistakes but machines cannot. Therefore what ever you see posted by a machine (for example Expedia or Orbitz) engine then it must be accurate.
This was posted on Register.com by a SF based Attorney. I am sure he was pretty fuming by the end. However he realizes that the outcome is really his own fault. I doubt a class action suit will come of it. Just think you too could have made this mistake...
Orbitz TLC campaign leads to online booking bloodbath
Reg hack in serious condition as inscrutable itinerary blows up in face
By Burke Hansen in Dakar → More by this author
Published Wednesday 4th April 2007 16:50 GMT
Like this story? Receive others like it in your inbox Find your perfect job - click here from thousands of tech vacancies
Product review Who knew that the online booking crew recently threw their throwback jerseys on?
In a bizarre series of events that brought back the flying nightmares of yesteryear, the Register's ICANN Lisbon correspondent found himself living out of an airport hotel in Dakar, Senegal, on a flight path only Google Maps could love.
The quickest route from Lisbon to San Francisco at this point most definitively does not pass through Dakar.
After a last-minute non-refundable booking went through online travel service Orbitz's approval routine, which proved to be the only available booking that returned to SFO in time for my annual UIGEA-approved fantasy baseball draft, your hard-pressed author clicked the "I ACCEPT" button and went about his business. Only later did I check the itinerary and realize that Orbitz's booking software had an unsavory return itinerary of Lisbon-Dakar-New York-and-about-fucking-time-San Francisco.
Uh, you mean Dakar...in Africa?
Here's the final timeline, from start to finish.
Hour 0:
9pm, Portugal time. Check in at Transportes Aereos Portugueses (TAP) counter. Joke with lady at counter about checked luggage making it from Portugal to San Fran via Senegal. Priority means priority to make it or priority to get snagged? Asks why I am routed through Senegal to get to New York, with all the major airports in Europe to go through. Not quite sure, I say.
Hour 1.35:
Hour and a half layover in Dakar scheduled. Should be easily makeable in a backwater airport like Leopold Sedar Senghor Aeroport in Dakar, Senegal. Only 20 minutes behind schedule.
Hour 2.00:
File in to what looks like the approach to the plane, only to find that it funnels us into a motorcoach, which then chugs off across the tarmac toward the plane. Stop in front of the plane - feeling pretty good, until I realize they're not actually opening the glass doors for us.
Pressed to the glass like sardines, and forced to observe the unnerving efforts of the flight crew flailing around desperately trying to get the back door of the plane to close. Guy on tarmac driving ladder truck repeatedly bashes the extended stairway into the stubborn door, finally knocking the jam loose.
Now 45 minutes behind, and cutting it close, but at least we're on the go. Quickly pass out after long week.
Hour 3.25:
Shake myself out of strange dream to the whirring of jet engines and the scrape of tires on tarmac. Check the time on my cell - over 1 hour spent waiting on tarmac. Latent anxiety rises to surface.
Hour 7.50:
Rubber hits road in Dakar. Grab carry-on. Final call for flight to NY over PA. Flash copy of itinerary to airport security. Waves me over to mass of flesh in disembarcation area. Transit line mysteriously closed.
As situational urgency sets in, long lost high school French makes comeback. Find helpful security agent, who takes me to the line for boarding. Am informed that flight is closed. Shamelessly beg to grab checked luggage and go. Luggage nowhere to be found. Adios, flight to NY.
Hour 8.00:
Last piece of luggage rolls off baggage claim. Thar she blows.
Hour 8.50:
Warren of offices in depths of Dakar airport. Argue with local TAP rep for hotel room for night. No dice.
It's not our fault, he says. Why should we pay?
Your flight was two hours late. It's your responsibility.
How were we supposed to know you had a connecting flight to New York? Who ever heard of such a thing?
Point, counterpoint. Too tired to argue any longer.
Hour 9.00:
Now in office of South African Airlines, one of four airlines somehow involved with this trip. Am told there is only one flight daily to NY. Am promised slot on next flight. Come back tomorrow.
Hour 9.25:
Slog upstairs to airport hotel. Besieged by late night scumbags offering assistance. Can't they clear these vermin out of the airport?
Hotel closed until 6am, local time. 45 min to go. Wait it out with beer at 24 hr restaurant across from hotel with other stranded travelers. Part of airport marketing plan? Slip 1 euro piece to meth-addled asshole to be left alone at last.
Tomorrow is the Prophet's birthday, they tell me. It's a national holiday.
Hour 10.00:
Check in to hotel. "Concierge" checks out bald eagle-bedecked passport.
So, you are American. Just one night?
Yes, I'm on my way to New York.
So what are you doing here? he laughs.
I don't know.
Enter room. Disgusting. Undershoots even my already abysmal expectations. Hotel Hellhole is almost a palindrome. Crash out.
Hour 23.50:
Back in SAA offices. No way I will miss this one. Promises me I am connected all the way to SF.
Back to 24 hour restaurant to wait it out. Fading quickly. Just enough afro-francs left for a beer. Last beer and testament.
Hour 26.50:
Down to check in. Absolute chaos. Now traveling on expired ticket, which exasperates my African hosts.
Hoping security's real tight on the Prophet's b-day.
Hour 27.00:
Tight enough- not letting me through due to expired ticket. Manage to flag down SAA manager from night before, who smiles and waves me through.
Hour 27.50:
At counter at last.
This ticket was for last night, the lady says.
Yes, my flight from Portugal arrived two hours late. I had to spend the night.
Well, have you paid the penalties?
Penalties?! They told me last night I didn't have to pay any penalties! That's crazy - I already had to pay for a hotel and this wasn't even my fault.
Who told you you didn't have to pay the penalties? Who?
The manager, last night. He was just here...
A tall man?
Yes, where is he...
Don't actually remember anything about penalties, but am starting to figure out how this game works. Huge and growing crowd behind getting restless.
Well if you don't pay the penalties, then I have to pay the penalties. A manager must approve this.
Continue eyeballing stirring crowd. She folds.
Hour 28.00:
Security keeps squinting at me over lapsed ticket. Retell story.
Hour 29.50:
Out on tarmac at last. One more carry-on inspection. Happy for that.
Only xanax can help me now. Now that's a palindrome.
Hour 43.50:
Arrive at JFK. Attempt to check in.
Sorry, but all the flights to San Francisco are booked.
But they told me in Senegal I was booked all the way through to SFO?
Well, they did something wrong. You can fly standby. It's the start of the holiday week.
You've got to understand, I've been travelling for two days. I'll take anything, whatever you've got. Through Denver, Chicago, anywhere.
I explain the situation about TAP and the itinerary. He's Portuguese and we chat about how much I loved Lisbon.
Well, I'll see what I can do. Tap, tap on the magic keyboard.
Well, we have a flight at 1 through Chicago, but it's out of La Guardia?
I'll take whatever you can guarantee me.
Hour 44.00:
Now on bus from JFK to La Guardia for flight to O'Hare. La Guardia, airport number 4 of 6 on return trip alone.
Hour 47.50:
Guy at JFK at least gave me real travel vouchers. Security no longer giving me the look. Chicago, here I come.
Hour 50.50:
O'Hare at last. Layover in Chicago at this point is nothing. I piss on your layover.
Hour 53.25:
Home stretch - O'Hare to SFO. Forgot how ghetto United is.
Hour 57.00:
Hard to believe I'm back. Thank god I've got Limost picking me up. I need a beer.
Grand total: 57 hours, 6 airports, and 8,362 miles.
Now that's what I call TLC. ®
Most people have a perception that humans can make mistakes but machines cannot. Therefore what ever you see posted by a machine (for example Expedia or Orbitz) engine then it must be accurate.
This was posted on Register.com by a SF based Attorney. I am sure he was pretty fuming by the end. However he realizes that the outcome is really his own fault. I doubt a class action suit will come of it. Just think you too could have made this mistake...
Orbitz TLC campaign leads to online booking bloodbath
Reg hack in serious condition as inscrutable itinerary blows up in face
By Burke Hansen in Dakar → More by this author
Published Wednesday 4th April 2007 16:50 GMT
Like this story? Receive others like it in your inbox Find your perfect job - click here from thousands of tech vacancies
Product review Who knew that the online booking crew recently threw their throwback jerseys on?
In a bizarre series of events that brought back the flying nightmares of yesteryear, the Register's ICANN Lisbon correspondent found himself living out of an airport hotel in Dakar, Senegal, on a flight path only Google Maps could love.
The quickest route from Lisbon to San Francisco at this point most definitively does not pass through Dakar.
After a last-minute non-refundable booking went through online travel service Orbitz's approval routine, which proved to be the only available booking that returned to SFO in time for my annual UIGEA-approved fantasy baseball draft, your hard-pressed author clicked the "I ACCEPT" button and went about his business. Only later did I check the itinerary and realize that Orbitz's booking software had an unsavory return itinerary of Lisbon-Dakar-New York-and-about-fucking-time-San Francisco.
Uh, you mean Dakar...in Africa?
Here's the final timeline, from start to finish.
Hour 0:
9pm, Portugal time. Check in at Transportes Aereos Portugueses (TAP) counter. Joke with lady at counter about checked luggage making it from Portugal to San Fran via Senegal. Priority means priority to make it or priority to get snagged? Asks why I am routed through Senegal to get to New York, with all the major airports in Europe to go through. Not quite sure, I say.
Hour 1.35:
Hour and a half layover in Dakar scheduled. Should be easily makeable in a backwater airport like Leopold Sedar Senghor Aeroport in Dakar, Senegal. Only 20 minutes behind schedule.
Hour 2.00:
File in to what looks like the approach to the plane, only to find that it funnels us into a motorcoach, which then chugs off across the tarmac toward the plane. Stop in front of the plane - feeling pretty good, until I realize they're not actually opening the glass doors for us.
Pressed to the glass like sardines, and forced to observe the unnerving efforts of the flight crew flailing around desperately trying to get the back door of the plane to close. Guy on tarmac driving ladder truck repeatedly bashes the extended stairway into the stubborn door, finally knocking the jam loose.
Now 45 minutes behind, and cutting it close, but at least we're on the go. Quickly pass out after long week.
Hour 3.25:
Shake myself out of strange dream to the whirring of jet engines and the scrape of tires on tarmac. Check the time on my cell - over 1 hour spent waiting on tarmac. Latent anxiety rises to surface.
Hour 7.50:
Rubber hits road in Dakar. Grab carry-on. Final call for flight to NY over PA. Flash copy of itinerary to airport security. Waves me over to mass of flesh in disembarcation area. Transit line mysteriously closed.
As situational urgency sets in, long lost high school French makes comeback. Find helpful security agent, who takes me to the line for boarding. Am informed that flight is closed. Shamelessly beg to grab checked luggage and go. Luggage nowhere to be found. Adios, flight to NY.
Hour 8.00:
Last piece of luggage rolls off baggage claim. Thar she blows.
Hour 8.50:
Warren of offices in depths of Dakar airport. Argue with local TAP rep for hotel room for night. No dice.
It's not our fault, he says. Why should we pay?
Your flight was two hours late. It's your responsibility.
How were we supposed to know you had a connecting flight to New York? Who ever heard of such a thing?
Point, counterpoint. Too tired to argue any longer.
Hour 9.00:
Now in office of South African Airlines, one of four airlines somehow involved with this trip. Am told there is only one flight daily to NY. Am promised slot on next flight. Come back tomorrow.
Hour 9.25:
Slog upstairs to airport hotel. Besieged by late night scumbags offering assistance. Can't they clear these vermin out of the airport?
Hotel closed until 6am, local time. 45 min to go. Wait it out with beer at 24 hr restaurant across from hotel with other stranded travelers. Part of airport marketing plan? Slip 1 euro piece to meth-addled asshole to be left alone at last.
Tomorrow is the Prophet's birthday, they tell me. It's a national holiday.
Hour 10.00:
Check in to hotel. "Concierge" checks out bald eagle-bedecked passport.
So, you are American. Just one night?
Yes, I'm on my way to New York.
So what are you doing here? he laughs.
I don't know.
Enter room. Disgusting. Undershoots even my already abysmal expectations. Hotel Hellhole is almost a palindrome. Crash out.
Hour 23.50:
Back in SAA offices. No way I will miss this one. Promises me I am connected all the way to SF.
Back to 24 hour restaurant to wait it out. Fading quickly. Just enough afro-francs left for a beer. Last beer and testament.
Hour 26.50:
Down to check in. Absolute chaos. Now traveling on expired ticket, which exasperates my African hosts.
Hoping security's real tight on the Prophet's b-day.
Hour 27.00:
Tight enough- not letting me through due to expired ticket. Manage to flag down SAA manager from night before, who smiles and waves me through.
Hour 27.50:
At counter at last.
This ticket was for last night, the lady says.
Yes, my flight from Portugal arrived two hours late. I had to spend the night.
Well, have you paid the penalties?
Penalties?! They told me last night I didn't have to pay any penalties! That's crazy - I already had to pay for a hotel and this wasn't even my fault.
Who told you you didn't have to pay the penalties? Who?
The manager, last night. He was just here...
A tall man?
Yes, where is he...
Don't actually remember anything about penalties, but am starting to figure out how this game works. Huge and growing crowd behind getting restless.
Well if you don't pay the penalties, then I have to pay the penalties. A manager must approve this.
Continue eyeballing stirring crowd. She folds.
Hour 28.00:
Security keeps squinting at me over lapsed ticket. Retell story.
Hour 29.50:
Out on tarmac at last. One more carry-on inspection. Happy for that.
Only xanax can help me now. Now that's a palindrome.
Hour 43.50:
Arrive at JFK. Attempt to check in.
Sorry, but all the flights to San Francisco are booked.
But they told me in Senegal I was booked all the way through to SFO?
Well, they did something wrong. You can fly standby. It's the start of the holiday week.
You've got to understand, I've been travelling for two days. I'll take anything, whatever you've got. Through Denver, Chicago, anywhere.
I explain the situation about TAP and the itinerary. He's Portuguese and we chat about how much I loved Lisbon.
Well, I'll see what I can do. Tap, tap on the magic keyboard.
Well, we have a flight at 1 through Chicago, but it's out of La Guardia?
I'll take whatever you can guarantee me.
Hour 44.00:
Now on bus from JFK to La Guardia for flight to O'Hare. La Guardia, airport number 4 of 6 on return trip alone.
Hour 47.50:
Guy at JFK at least gave me real travel vouchers. Security no longer giving me the look. Chicago, here I come.
Hour 50.50:
O'Hare at last. Layover in Chicago at this point is nothing. I piss on your layover.
Hour 53.25:
Home stretch - O'Hare to SFO. Forgot how ghetto United is.
Hour 57.00:
Hard to believe I'm back. Thank god I've got Limost picking me up. I need a beer.
Grand total: 57 hours, 6 airports, and 8,362 miles.
Now that's what I call TLC. ®
03 April 2007
GOL inches towards GDS wide distribution - signs with Worldspan
Being the 3rd of 4th in a two horse race is always a problem. But in Brazil Worldspan does have some reach. As GoL's aspirations rise so does its need for distribution. But not TOO far. Recognizing that it has a growing corporate travel market - we believe that GOL's distribution strategy is not changing rather subtly it will open up the spigot for the higher yielding fares to these "more expensive" channels.
In like a Lion - out like a Lamb - BA signs WSP deal
Well clearly someone caved... and pretty quickly.
Given that most of the WSP management are lame ducks I suspect no one had the energy or inclination for a battle so they basically took what BA offered them and rolled over.
So interestingly this looks a heck of a lot like last year when AA was making nasty noises about Sabre and sidling up to WSP. Look how that changed. Now the ONLY GDS not signed up is Amadeus. I doubt that there is going to be a huge fight there. BA has still many years to run on its Res hosting contract (remember that Altea is in fact -according to some - just a sooped up version of BABS.
Reading the press release... there are the same superlative words like "Preferred" How BA can give all 4 GDS the same status is of course beyond the logic of mere mortals like you or I.
I do wonder what happened to that scrappy old Worldspan of yore?
Soon to be swallowed into the Blackstone debt laden abyss
Given that most of the WSP management are lame ducks I suspect no one had the energy or inclination for a battle so they basically took what BA offered them and rolled over.
So interestingly this looks a heck of a lot like last year when AA was making nasty noises about Sabre and sidling up to WSP. Look how that changed. Now the ONLY GDS not signed up is Amadeus. I doubt that there is going to be a huge fight there. BA has still many years to run on its Res hosting contract (remember that Altea is in fact -according to some - just a sooped up version of BABS.
Reading the press release... there are the same superlative words like "Preferred" How BA can give all 4 GDS the same status is of course beyond the logic of mere mortals like you or I.
I do wonder what happened to that scrappy old Worldspan of yore?
Soon to be swallowed into the Blackstone debt laden abyss
01 April 2007
Heathrow Slot Action - Comment
The recent spate of activity at LHR indicates a further rush to gain access to the arguably most important airport in the world.
Certainly access is some of the most expensive. As noted earlier - this is the most fun in years.
However did Sir Michael Bishop sell the slots too cheap? Is there something else about this deal we don’t know about? The deal sounds pretty darn good. BMED had 73 slots, BMI sold 51 slots. That leaves 22 slots (enough for 3 daily RTs and then the odd RT to a funky destination). You can be damn sure it’s not going to use all of those slots if it can make money out of them elsewhere.
The BMED slots (the only real assets acquired by BMI) and some funky route authority it operated on behalf of BA under Franchise agreement still smacks of something that is missing here. Agreed BMI picked them up for a song right under the nose of BA who was then forced to pay GBP 30 million for something that is not actually supposed to be traded and was possibly theirs to start off with. Perhaps this is part of the new BA which is striving for the sort of domination in its home markets as AF/KLM (in AMS and CDG) and LH (in FRA and MUC) have. Lets consider the following:
BA sold BA connect (the old Brymon and co regional services) to Flybe but in return granted Flybe some pretty good code sharing deals. Since BMED is under contract to BA for Franchise services to Central and Eastern Europe and the Middle East you can be sure that there will be a follow on agreement between BA and BMI for code sharing and co-servicing at LHR. And these routes wont all go away. So where will BMI move the routes to? If there are no slots at LHR and LGW is pretty constrained those services could be combined into multi-hop flights in the region with larger aircraft. For example running a A321 to Damascus and Lebanon on a triangle would save a slot even without any 5th or 6th Freedom rights.
This creates a new order in the UK. With BA once again reaching a dominance unheard of since it acquired BCAL. With only Virgin on the Long Haul as the indiginous challenger BA is starting to look positively imperial again. But it needs to do that to fend off the challenge of the American Carriers.
So lets consider now the whole picture. BMI is no stranger to code-sharing and being everybody’s "Ho". At one time there was a BD morning flight LHR-LBA with no less than 23 code shares on it... ON A DC9!!! BMI continues to be all things to all people (imagine a flight with both Star and BA passengers on it!) BA gets market coverage additional and market carve up. Can anyone say the word monopoly???
But still this is but a mere raindrop compared to the whopping market shares that AFKL and LH have in their home markets.
All in all its starting to look like fun. My long time dream of One Terminal at LHR for each of the Alliances is starting to look very realistic. Too bad LHR will continue to be a 3rd world airport for the next few years even after T5 opens. Darn it but I do so hate changing planes there.
Cheers
Timothy
Certainly access is some of the most expensive. As noted earlier - this is the most fun in years.
However did Sir Michael Bishop sell the slots too cheap? Is there something else about this deal we don’t know about? The deal sounds pretty darn good. BMED had 73 slots, BMI sold 51 slots. That leaves 22 slots (enough for 3 daily RTs and then the odd RT to a funky destination). You can be damn sure it’s not going to use all of those slots if it can make money out of them elsewhere.
The BMED slots (the only real assets acquired by BMI) and some funky route authority it operated on behalf of BA under Franchise agreement still smacks of something that is missing here. Agreed BMI picked them up for a song right under the nose of BA who was then forced to pay GBP 30 million for something that is not actually supposed to be traded and was possibly theirs to start off with. Perhaps this is part of the new BA which is striving for the sort of domination in its home markets as AF/KLM (in AMS and CDG) and LH (in FRA and MUC) have. Lets consider the following:
BA sold BA connect (the old Brymon and co regional services) to Flybe but in return granted Flybe some pretty good code sharing deals. Since BMED is under contract to BA for Franchise services to Central and Eastern Europe and the Middle East you can be sure that there will be a follow on agreement between BA and BMI for code sharing and co-servicing at LHR. And these routes wont all go away. So where will BMI move the routes to? If there are no slots at LHR and LGW is pretty constrained those services could be combined into multi-hop flights in the region with larger aircraft. For example running a A321 to Damascus and Lebanon on a triangle would save a slot even without any 5th or 6th Freedom rights.
This creates a new order in the UK. With BA once again reaching a dominance unheard of since it acquired BCAL. With only Virgin on the Long Haul as the indiginous challenger BA is starting to look positively imperial again. But it needs to do that to fend off the challenge of the American Carriers.
So lets consider now the whole picture. BMI is no stranger to code-sharing and being everybody’s "Ho". At one time there was a BD morning flight LHR-LBA with no less than 23 code shares on it... ON A DC9!!! BMI continues to be all things to all people (imagine a flight with both Star and BA passengers on it!) BA gets market coverage additional and market carve up. Can anyone say the word monopoly???
But still this is but a mere raindrop compared to the whopping market shares that AFKL and LH have in their home markets.
All in all its starting to look like fun. My long time dream of One Terminal at LHR for each of the Alliances is starting to look very realistic. Too bad LHR will continue to be a 3rd world airport for the next few years even after T5 opens. Darn it but I do so hate changing planes there.
Cheers
Timothy
First there was CPC then CPA now PPA
Good article from WebPro News on Google's hush hush beta trial of PPA - Pay Per Action.
Way back when the world was new we used to surmise that the infinite real estate of the web would mean lower marketing and advertising costs. We surmised that everyone would have an equal chance at each sale whether you were a conglomorate or a Mum an Pop shop. Boy were we ever wrong. Clearly that has not happened and we are back to the sharp pyramids of havs vs have nots.
With Google Keyword search and CPC rates continuing to climb to almost obscene levels Google needs something new to drive new forms of ad revenenue. Enter PPA.
I cant help thinking that (and those who read this blog will know I have espoused this view before) - that Google is fast becoming a bigger (and badder) monopoly than Microsoft ever was. Hello - anyone awake at the DoJ??? Elliot Spitzer are you too busy with your politcal ambition. Nellie where are you? However just one caveat. I am a huge fan of what Google has done. So my concern is the level playing field for everyone particularly the small guys with niche products who cannot hope to compete with the big players.
Read on:
Google Whispers More Details About PPA
David A. Utter Staff Writer
The pay per action beta test for Google AdWords recently debuted, and spurred plenty of advertiser interest.
Since last week's announcement that Google would start offering AdWords PPA ads, where the advertiser pays only when a predetermined conversion has taken place, plenty of buzz has swirled around the plan.
A lot of that buzz has focused on a few distinct questions about PPA on AdWords. The Inside AdWords team at Google posted answers to some of the more frequently asked questions they have received about the plan.
International advertisers will have to wait to participate, as Google has opened this limited test only to US-based clients.
Advertisers must have a billing address in the United States, so even if an international business focuses on US customers, that isn't enough to be eligible yet.
PPA ads only show up through being displayed on sites that participate in Google's content network. They won't appear on Google or in its search network.
An advertiser concern of content networks has been the prospect of being displayed on less than desirable partner sites. Since the condition of PPA requires some kind of conversion to take place, typical worries about click fraud with pay per click ads should not be a problem.
On the content network side, AdSense members can sign up for a referrals program. Search marketers managing clients through the AdWords 'My Client Center' product can select individual accounts to participate in the PPA beta.
The fixed rate provision of PPA through the new program probably won't change in the near term. Some advertisers had asked about paying the PPA as a percentage of a sale, but Google is only doing the beta with a fixed price as the cost of conversion.
Way back when the world was new we used to surmise that the infinite real estate of the web would mean lower marketing and advertising costs. We surmised that everyone would have an equal chance at each sale whether you were a conglomorate or a Mum an Pop shop. Boy were we ever wrong. Clearly that has not happened and we are back to the sharp pyramids of havs vs have nots.
With Google Keyword search and CPC rates continuing to climb to almost obscene levels Google needs something new to drive new forms of ad revenenue. Enter PPA.
I cant help thinking that (and those who read this blog will know I have espoused this view before) - that Google is fast becoming a bigger (and badder) monopoly than Microsoft ever was. Hello - anyone awake at the DoJ??? Elliot Spitzer are you too busy with your politcal ambition. Nellie where are you? However just one caveat. I am a huge fan of what Google has done. So my concern is the level playing field for everyone particularly the small guys with niche products who cannot hope to compete with the big players.
Read on:
Google Whispers More Details About PPA
David A. Utter Staff Writer
The pay per action beta test for Google AdWords recently debuted, and spurred plenty of advertiser interest.
Since last week's announcement that Google would start offering AdWords PPA ads, where the advertiser pays only when a predetermined conversion has taken place, plenty of buzz has swirled around the plan.
A lot of that buzz has focused on a few distinct questions about PPA on AdWords. The Inside AdWords team at Google posted answers to some of the more frequently asked questions they have received about the plan.
International advertisers will have to wait to participate, as Google has opened this limited test only to US-based clients.
Advertisers must have a billing address in the United States, so even if an international business focuses on US customers, that isn't enough to be eligible yet.
PPA ads only show up through being displayed on sites that participate in Google's content network. They won't appear on Google or in its search network.
An advertiser concern of content networks has been the prospect of being displayed on less than desirable partner sites. Since the condition of PPA requires some kind of conversion to take place, typical worries about click fraud with pay per click ads should not be a problem.
On the content network side, AdSense members can sign up for a referrals program. Search marketers managing clients through the AdWords 'My Client Center' product can select individual accounts to participate in the PPA beta.
The fixed rate provision of PPA through the new program probably won't change in the near term. Some advertisers had asked about paying the PPA as a percentage of a sale, but Google is only doing the beta with a fixed price as the cost of conversion.
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