I fly - a lot. I know many of you do too. Our whole livelihood in the Travel industry is dependent frequently on a few folks. The life of a pilot used to be glamorous - perhaps not quite so any more - but its still a great job.
I have always felt that there is a correlation between the task and the enjoyment resulting in a better performance the more you enjoy a job. I always used to use Pilots as an example of that.
Recently I came across a site with an view on airline financials. Bob Herbst runs Airline Financials. Its a great site for information on airlines. It is done with a lot of care and an eye on demystifying much of the jargon in airline investing. I highly recommend the site www.airlinefinancials.com.
However on the site he writes a commentary which I found gave me pause for thought.
I encourage you to read it. It gave me a slightly better and more open view of the value of a pilot. The site is very useful... book mark it.
Cheers
Saturday, November 21, 2009
EU Ruling on Flight Delays Compensation Makes US Rules Look Decidedly Inadequate.
The decision last week to mandate that any delay of 3 hours or more is the same as a flight cancellation was a victory for consumer protection and an abject lesson for those willing to understand it.
Formally on November 19th, European Court of Justice in Luxembourg decided that passengers who are forced to wait three hours or more will be compensated 600 euros, the same as if their flight had been cancelled.
There is a lot of documentation on this but there are three critical factors that we should pay attention to:
1. The scope of compensation was broadened to cover delays as well as cancellation. Just as an aside here - this may have a negative effect in that if an airline deems that a flight delay is beyond the threshold then the decision to cancel will be taken early and passengers could be left compensated but stranded - just a thought).
2. The delay time has dropped from 5 hours to three hours
3. The definition of what could be compensated - IE the reasons behind the delay was made less precise with the impact that other traditional "reasons" now become "excuses".
All this makes the US scheme even the proposed Bill of Passenger Rights look decidedly weak.
In my humble opinion the US should enact a clear set of rules along with penalties to force compliance by the airlines in the delivery of their product. At the moment the whole contract process is decidedly one-sided. The airlines can decide what they want to do to modify their part of the contract yet the consumer has little or no ability to do so. That to me is unfair.
And no - for once I am not picking on the airlines - I just fundamentally believe that the contract between two parties should be fair and equal. Currently this is not the case based on arcane rules that stem from the propeller era when the product was a lot less reliable. This is no longer the case and the travelling public in the USA deserve a clear set of rules.
And what do you think?
Cheers
Formally on November 19th, European Court of Justice in Luxembourg decided that passengers who are forced to wait three hours or more will be compensated 600 euros, the same as if their flight had been cancelled.
There is a lot of documentation on this but there are three critical factors that we should pay attention to:
1. The scope of compensation was broadened to cover delays as well as cancellation. Just as an aside here - this may have a negative effect in that if an airline deems that a flight delay is beyond the threshold then the decision to cancel will be taken early and passengers could be left compensated but stranded - just a thought).
2. The delay time has dropped from 5 hours to three hours
3. The definition of what could be compensated - IE the reasons behind the delay was made less precise with the impact that other traditional "reasons" now become "excuses".
All this makes the US scheme even the proposed Bill of Passenger Rights look decidedly weak.
In my humble opinion the US should enact a clear set of rules along with penalties to force compliance by the airlines in the delivery of their product. At the moment the whole contract process is decidedly one-sided. The airlines can decide what they want to do to modify their part of the contract yet the consumer has little or no ability to do so. That to me is unfair.
And no - for once I am not picking on the airlines - I just fundamentally believe that the contract between two parties should be fair and equal. Currently this is not the case based on arcane rules that stem from the propeller era when the product was a lot less reliable. This is no longer the case and the travelling public in the USA deserve a clear set of rules.
And what do you think?
Cheers
Dynamic Packaging Protection - UK Battle
When is a package not a package?
This is at the core of the argument now being hotly debated in the UK. At the centre of the battle is the case of CAA v Travel Republic and Kane Pirie (TR's Managing Director).
The case was brought by the UK's regulatory body the CAA (Civil Aviation Authority) who is the official regulator for a number of things in the UK including Passenger Safety and the bonding of sellers of products (typically Tour Operators) through its ATOL licensing scheme.
The pursuit of Travel Republic is seen as a test case for the CAA in enforcing its recently broader based view that virtually all holiday sales of flights plus accommodation require ATOL cover. Dynamic packaging has been around for a while - some might say it rose to prominence about 5 years ago but the practice of bundling products has been around for years. The CAA and the bonding process in general has been viewed as inadequate especially following the very high profile collapse of the XL group in 2008. So why now and why pursue Travel Republic?
The answer lies in the contested issue of whether regulations cover the sale of "all" travel products. Further with concentration in the intermediary channels - there is a need for the CAA to get tougher. But there is another reason. The CAA's bond pool has been sorely tested by the recent demise of many retailers and wholesalers. Some have indicated that the bond pool may indeed be under water. The CAA has tried in recent years to broaden the pool by offering smaller retailers reduced rate schemes. Of course the real target are the Online Travel Agencies particularly Expedia. So it is a market dynamic issue that pits the traditional wholesalers (now largely concentrated among a few players) vs the OTAs and the consolidators. Also at stake is a possible advantage commercially in how the VAT is treated.
The case was filed in a lower court - Westminster Magistrates and was moved to Stratford before district judge Nicholas Evans - and TR/Pirie were both charged with 20 counts each of breaching the 1995 regulations. it was clear at the time that the case would ultimately end up in a higher court maybe even all the way to Europe's highest court.
Well Round 1 went to Travel Republic on November 11th.
The following day a number of comments were published by the UK's TTG. Check here to read them.
No one really denies Travel Republic has the best intentions at heart despite the stream of vitriol from the Government's QC who compared Pirie personally to Bernie Madoff. However this is a case that will run and run.
Ultimately we can speculate that if TR is successful - then the government will have to mandate a new scheme for consumer protection. However the government seems to have already jumped the gun by raising the APD much higher. While ostensibly a fee related to Aviation uses it is regarded more as a straight revenue tax to help HM Government pay its somewhat large (and growing) total revenue shortfall.
But caveat emptor is always the case. Should the Government win in the ultimate battle - then the face of consumer protection across Europe will change.
Gotta love those lawyers!
Cheers
This is at the core of the argument now being hotly debated in the UK. At the centre of the battle is the case of CAA v Travel Republic and Kane Pirie (TR's Managing Director).
The case was brought by the UK's regulatory body the CAA (Civil Aviation Authority) who is the official regulator for a number of things in the UK including Passenger Safety and the bonding of sellers of products (typically Tour Operators) through its ATOL licensing scheme.
The pursuit of Travel Republic is seen as a test case for the CAA in enforcing its recently broader based view that virtually all holiday sales of flights plus accommodation require ATOL cover. Dynamic packaging has been around for a while - some might say it rose to prominence about 5 years ago but the practice of bundling products has been around for years. The CAA and the bonding process in general has been viewed as inadequate especially following the very high profile collapse of the XL group in 2008. So why now and why pursue Travel Republic?
The answer lies in the contested issue of whether regulations cover the sale of "all" travel products. Further with concentration in the intermediary channels - there is a need for the CAA to get tougher. But there is another reason. The CAA's bond pool has been sorely tested by the recent demise of many retailers and wholesalers. Some have indicated that the bond pool may indeed be under water. The CAA has tried in recent years to broaden the pool by offering smaller retailers reduced rate schemes. Of course the real target are the Online Travel Agencies particularly Expedia. So it is a market dynamic issue that pits the traditional wholesalers (now largely concentrated among a few players) vs the OTAs and the consolidators. Also at stake is a possible advantage commercially in how the VAT is treated.
The case was filed in a lower court - Westminster Magistrates and was moved to Stratford before district judge Nicholas Evans - and TR/Pirie were both charged with 20 counts each of breaching the 1995 regulations. it was clear at the time that the case would ultimately end up in a higher court maybe even all the way to Europe's highest court.
Well Round 1 went to Travel Republic on November 11th.
The following day a number of comments were published by the UK's TTG. Check here to read them.
No one really denies Travel Republic has the best intentions at heart despite the stream of vitriol from the Government's QC who compared Pirie personally to Bernie Madoff. However this is a case that will run and run.
Ultimately we can speculate that if TR is successful - then the government will have to mandate a new scheme for consumer protection. However the government seems to have already jumped the gun by raising the APD much higher. While ostensibly a fee related to Aviation uses it is regarded more as a straight revenue tax to help HM Government pay its somewhat large (and growing) total revenue shortfall.
But caveat emptor is always the case. Should the Government win in the ultimate battle - then the face of consumer protection across Europe will change.
Gotta love those lawyers!
Cheers
High Look2Book Rates? Pegasus Says STOP!
As Pegasus follows Sabre down the outsource the data center route to HP/EDS, they are trying to find solutions to some of their more pressing issues. It is clear that they are getting creamed with lots of searches aka looks. Quoting CEO Mike Kistner in the Beat this week:
"These systems were built to manage a look-to-book ratio in the 10 to 50 looks for every revenue producing transaction, and we have seen it as high as a half million to one. It just can't sustain that," Kistner attested.
Well The Professor wants to take Kistner and everyone else who is moaning about it to task on this subject.
GET OVER IT!
Search is what it is. We as an industry have to find a way around this problem. While not belittling the issue - we have to figure out a solution to enabling search. As long as we treat this as a problem rather than a way to better serve the consumer - it will be the industry's Achilles Heel. But it can be and must be solved.
Frankly the problem sits in the architecture of the business and the commercial models around it. Constraining business by charging for looks has hardly served the GDS market well. So too will it be for Pegasus. The Search Genie is long out of the bottle. He must be served.
Tsk Tsk. Time to get real and SOLVE the problem not try and legislate it away
Cheers
"These systems were built to manage a look-to-book ratio in the 10 to 50 looks for every revenue producing transaction, and we have seen it as high as a half million to one. It just can't sustain that," Kistner attested.
Well The Professor wants to take Kistner and everyone else who is moaning about it to task on this subject.
GET OVER IT!
Search is what it is. We as an industry have to find a way around this problem. While not belittling the issue - we have to figure out a solution to enabling search. As long as we treat this as a problem rather than a way to better serve the consumer - it will be the industry's Achilles Heel. But it can be and must be solved.
Frankly the problem sits in the architecture of the business and the commercial models around it. Constraining business by charging for looks has hardly served the GDS market well. So too will it be for Pegasus. The Search Genie is long out of the bottle. He must be served.
Tsk Tsk. Time to get real and SOLVE the problem not try and legislate it away
Cheers
Friday, November 20, 2009
OMG Twts Decl in Oct!
First reported last week by Comscore, Twitter traffic is headed downwards. Now Nielsen is confirming the trend. However by some very big numbers:
According to data provided to eMarketer by Nielsen, traffic to Twitter.com was down a dramatic 27.8% between September and October 2009, falling to 18.9 million unique visitors.
Could this be the end of Twitter - hardly - but it does confirm that there is a solid pattern into technology usage.
Once abandoned technology is seldom if ever re-adopted. If you dont believe me come and have a look in my garage.
Interestingly Facebook continues to power ahead
Ouch!
What's Missing In All This? Reflections from the PhocusWright 2009 Conference
Typically a PhocusWright conference is looking forward to a future better world. Innovation etc etc.
We see people coming up with a compelling story but not necessarily a compelling history. One question Philip Wolf was constantly asking a question to which he never got a satisfactory answer - When/how/will a new brand/competitor emerge?
So in the Professor's inimitable style - I want to ask the question why this is the case or more importantly why not.
Over the next few days I shall be posting some insight on public and some private observations.
The show this year was a bit more upbeat than last year when the world was collapsing in total fear. The meteoric rise in Expedia's stock and now the market cap for PCLN being over $2Bn more than Expedia has shaken the traditional views. The market is as one analyst put it "more of a voting machine than a weighing machine"
It has now been effectively 15 years of innovation driven from the web. Perhaps now is a good time to reflect as clearly suppliers and almost everyone associated with the travel value chain are beginning to show.
But one of the stars of the Show has to be Marvin the Dinosaur. Not to mention a reference to dogs!
Cheers
We see people coming up with a compelling story but not necessarily a compelling history. One question Philip Wolf was constantly asking a question to which he never got a satisfactory answer - When/how/will a new brand/competitor emerge?
So in the Professor's inimitable style - I want to ask the question why this is the case or more importantly why not.
Over the next few days I shall be posting some insight on public and some private observations.
The show this year was a bit more upbeat than last year when the world was collapsing in total fear. The meteoric rise in Expedia's stock and now the market cap for PCLN being over $2Bn more than Expedia has shaken the traditional views. The market is as one analyst put it "more of a voting machine than a weighing machine"
It has now been effectively 15 years of innovation driven from the web. Perhaps now is a good time to reflect as clearly suppliers and almost everyone associated with the travel value chain are beginning to show.
But one of the stars of the Show has to be Marvin the Dinosaur. Not to mention a reference to dogs!
Cheers
UK Traffic Numbers - Really Not Good
Despite a weak sterling which should have encouraged international inbound traffic... the UK numbers both in and outbound look pretty bad.
The number of visits abroad by UK travelers slumped by 14 per cent or 9.8 million to 60.8 million in the year to September.
Inbound travel to the UK was down by nine per cent or three million to 29.9 million in the same 12 month period.
A 24% drop in business travel to the UK in the year to September contributed to a continuing fall in total arrivals.
http://www.statistics.gov.uk/pdfdir/ott0809.pdf
Cheers
The number of visits abroad by UK travelers slumped by 14 per cent or 9.8 million to 60.8 million in the year to September.
Inbound travel to the UK was down by nine per cent or three million to 29.9 million in the same 12 month period.
A 24% drop in business travel to the UK in the year to September contributed to a continuing fall in total arrivals.
http://www.statistics.gov.uk/pdfdir/ott0809.pdf
Cheers
Wednesday, November 18, 2009
Old Varig RIP
Oh this is a sad one.
In Brazil, the judicial administrator of Flex just asked to be able to resign, since without operating, the purpose of this creation (to “hold” the old VARIG debt became senseless
With just one plane, a $2 billion debt load and the hopes of so many former Varig workers (for their pensions) riding... it would never work.
So finally they flew their last flight and Old Varig/Nordeste and Rio Sul are no more.
Cheers
In Brazil, the judicial administrator of Flex just asked to be able to resign, since without operating, the purpose of this creation (to “hold” the old VARIG debt became senseless
With just one plane, a $2 billion debt load and the hopes of so many former Varig workers (for their pensions) riding... it would never work.
So finally they flew their last flight and Old Varig/Nordeste and Rio Sul are no more.
Cheers
Monday, November 16, 2009
BA Unions to Willie - Un-Merry Christmas
BA Unions specifically UNITE/Cabin Crew - have started to ballot their members about Christmas strike action. Willie and the Boys are not going to have a Merry Christmas and - even worse - nor will their customers it would appear. I spoke to many BA staff yesterday - about 20 on the ground and a further number Cabin Crew as I wandered around T5. The sentiment was very much against the management. The word "bitter" was brought to mind. I also spoke to a station leader who confirmed that the station was almost 100% for voting for strike action.
It would appear that BA is on a collision course with its staff and the customer as usual will suffer. With BA having slimmed down significantly over the last 24 months - one can only imagine that the ability of "management" staff to step in has been almost eliminated.
Perhaps time to look at alternates for the Xmas break
This is going to end in tears for a lot of people.
It would appear that BA is on a collision course with its staff and the customer as usual will suffer. With BA having slimmed down significantly over the last 24 months - one can only imagine that the ability of "management" staff to step in has been almost eliminated.
Perhaps time to look at alternates for the Xmas break
This is going to end in tears for a lot of people.
Sunday, November 15, 2009
Improvement? Yes - But What Degree?S
So ARC has pushed out its Oct figures and they confirm that there are some better news along the way.
Rather than try and figure out who is telling the truth here - I went to the source. I am presenting here ARC's figures for October.
As I noted before the precipitous drop in bookings last year in September and October could only mean that this year would not be quite so bad. Indeed the Y/Y comparisons 2009 vs 2008 might look good. However - when compared with 2007 it doesn't look so hot.
So I present here 3 separate charts from the same source:
Total US bookings for the month
YTD cumulative figures
$ Value of all transactions.
The numbers I believe speak for themselves.
Cheers
Friday, November 13, 2009
The OpenGDS - A New Dawn
Reprinted with kind permission of The Beat:
The Beat ~ a travel business newsletter
New York City
11/9/09 2:32 PM
For many of us who have been involved in travel distribution, it has been an open secret that the global distribution system technology at the core of distribution was if not obsolete at the very least obsolescent--a case that has existed from at least the 1990s and, in my opinion, from before then. This was driven both by the business model of the legacy GDS as well as the strictures of the GDS core software based on IBM's venerable TPF [Transaction Processing Facility] operating system.
Over time, the pure TPF core was supplemented by auxiliary processors, Web front ends etc. IBM, too, started to move further and further away from its core business of application software and hardware to a more services-oriented model. In recent years we have seen IBM pull back from providing functionality common in TPF to being a pure operating system and coupled hardware provider. This caused many TPF users (not just airlines but banks as well) to migrate to more open systems such as Unix and Java-based programming for both cost and functionality reasons. There was considerable grumbling over the most recent upgrade to the Z class processors and the associated zTPF operating system product from IBM. The reason was that the "upgrade" created little or no additional capabilities for the user community.
The traditional GDSs were happy to pick up the development of new functions as they tried to differentiate themselves in the fiercely competitive market. Amadeus for one at its inception never included fares and pricing within the core TPF environment, and that gave them a certain flexibility in their fares products. Sabre had a heavy investment in DEC Vaxes (remember them!). So the move away from the holistic TPF based environment was an inevitable progression when the Web and its associated technologies came along.
Finally, we are beginning to see the results of these efforts in the GDS functionality. Last year Sabre in its briefing sessions on the new profile system outlined a vision of the open architecture which will see a flattening out of the capabilities of the GDS. Last week The Beat reported on what has been another open secret--that Travelport is doing the same thing with its now named Journey Manager and associated universal desktop and new profiles. Amadeus is likely not to be too far behind here.
I will not be presumptuous to describe how each player is now going down the path, but I believe it is now appropriate to state that the legacy GDSs are finally moving to what I call the Open GDS model--a novel concept when stated, but it becomes obvious when you reassess the world through open eyes. It is quite interesting to see how each of the major players is now clearly inching towards this concept and in some radically different ways. However, there are some common characteristics.
• New front end user interfaces/experiences and API/Web services for access
• Unbundled, open ports for supply access
• Advanced customer file management including PNR and Profile services
• New application frameworks
Coincidently, the emergence of credible GDS alternatives using software-as-a-service-based architecture (what used to be called "GNEs") are finally here and, more importantly, in production. Companies like Farelogix have become core to this shift to pry open the GDS model. This is now leveling the playing field with different supply players such as American Airlines, Emirates Airlines and Lufthansa--amongst others--taking legacy GDS Lite or Free approaches to both the commercial model and the technology. Other software providers such as Datalex and OpenJaw now are providing major functions that previously were the exclusive purvey of the legacy GDS world. In fares, too, we are seeing a next-generation of players independent from the GDSs, such as ITA Software and the Microsoft-Worldspan jointly developed ePricing capability.
I would be remiss if I didn't also state that the large online travel agencies have had all this capability for quite some time. So, the ability of an OTA to connect directly to the supply chain and in effect support their own versions of the Open GDS is really already in place. Orbitz before its acquisition by Cendant had already deployed its direct marketplace solution. The OTAs' white-label booking engines are clear examples of this.
While much of this is not new, it is clearly not a revolution but an evolution of the GDS model. And it comes none too soon. However, there are benefits and challenges that come along with this new world order.
The Open GDS model shows that responsibilities for distribution are now more evenly matched at different ends of the value chain. We will now see differing models emerge commercially to match this new open environment. The one-size-fits-everything model is, as I have written before, now clearly on the way out and the coffin has several nails in it already. The Open GDS model is a natural, and in my opinion unavoidable, result of fragmented content. I want to make clear that this was not a chicken and egg story. Fragmented content was always there. The GDSs just didn’t like to accept that fact.
Both ends of the distribution value chain now need to recognize that there are new realities. The suppliers now need to adopt better tools for distribution management, a role that used to be exclusively the domain of the legacy GDSs. Now no more. For the intermediaries and sellers of travel products, multi-source supply is not a nice-to-have but a must have, and in most parts of the world already a fact of life. New systems to support a more bilateral versus multilateral model of supplier relationships must be implemented, and quickly. This cannot be just a bolt-on capability; it must be at the core of the intermediaries' capability.
For the traditional GDS companies in the middle, these are new challenges--not least of which is how to demonstrate that their value remains consistent to suppliers and sellers alike. It would seem that the legacy GDSs are getting poked and prodded from all sides and seemingly all at once. They have fought a good battle, but now it's time to stop the rear-guard action and welcome the 21st Century. The next round of GDS/airline PCA (participating carrier agreement) negotiations will change the commercial landscape of the distribution market. The world will be a very different place in 2013, when the re-contracting season will come to an end. That season is now upon us and the battle lines are drawn.
Welcome to the new dawn. Welcome to the age of the Open GDS.
The Beat ~ a travel business newsletter
New York City
11/9/09 2:32 PM
For many of us who have been involved in travel distribution, it has been an open secret that the global distribution system technology at the core of distribution was if not obsolete at the very least obsolescent--a case that has existed from at least the 1990s and, in my opinion, from before then. This was driven both by the business model of the legacy GDS as well as the strictures of the GDS core software based on IBM's venerable TPF [Transaction Processing Facility] operating system.
Over time, the pure TPF core was supplemented by auxiliary processors, Web front ends etc. IBM, too, started to move further and further away from its core business of application software and hardware to a more services-oriented model. In recent years we have seen IBM pull back from providing functionality common in TPF to being a pure operating system and coupled hardware provider. This caused many TPF users (not just airlines but banks as well) to migrate to more open systems such as Unix and Java-based programming for both cost and functionality reasons. There was considerable grumbling over the most recent upgrade to the Z class processors and the associated zTPF operating system product from IBM. The reason was that the "upgrade" created little or no additional capabilities for the user community.
The traditional GDSs were happy to pick up the development of new functions as they tried to differentiate themselves in the fiercely competitive market. Amadeus for one at its inception never included fares and pricing within the core TPF environment, and that gave them a certain flexibility in their fares products. Sabre had a heavy investment in DEC Vaxes (remember them!). So the move away from the holistic TPF based environment was an inevitable progression when the Web and its associated technologies came along.
Finally, we are beginning to see the results of these efforts in the GDS functionality. Last year Sabre in its briefing sessions on the new profile system outlined a vision of the open architecture which will see a flattening out of the capabilities of the GDS. Last week The Beat reported on what has been another open secret--that Travelport is doing the same thing with its now named Journey Manager and associated universal desktop and new profiles. Amadeus is likely not to be too far behind here.
I will not be presumptuous to describe how each player is now going down the path, but I believe it is now appropriate to state that the legacy GDSs are finally moving to what I call the Open GDS model--a novel concept when stated, but it becomes obvious when you reassess the world through open eyes. It is quite interesting to see how each of the major players is now clearly inching towards this concept and in some radically different ways. However, there are some common characteristics.
• New front end user interfaces/experiences and API/Web services for access
• Unbundled, open ports for supply access
• Advanced customer file management including PNR and Profile services
• New application frameworks
Coincidently, the emergence of credible GDS alternatives using software-as-a-service-based architecture (what used to be called "GNEs") are finally here and, more importantly, in production. Companies like Farelogix have become core to this shift to pry open the GDS model. This is now leveling the playing field with different supply players such as American Airlines, Emirates Airlines and Lufthansa--amongst others--taking legacy GDS Lite or Free approaches to both the commercial model and the technology. Other software providers such as Datalex and OpenJaw now are providing major functions that previously were the exclusive purvey of the legacy GDS world. In fares, too, we are seeing a next-generation of players independent from the GDSs, such as ITA Software and the Microsoft-Worldspan jointly developed ePricing capability.
I would be remiss if I didn't also state that the large online travel agencies have had all this capability for quite some time. So, the ability of an OTA to connect directly to the supply chain and in effect support their own versions of the Open GDS is really already in place. Orbitz before its acquisition by Cendant had already deployed its direct marketplace solution. The OTAs' white-label booking engines are clear examples of this.
While much of this is not new, it is clearly not a revolution but an evolution of the GDS model. And it comes none too soon. However, there are benefits and challenges that come along with this new world order.
The Open GDS model shows that responsibilities for distribution are now more evenly matched at different ends of the value chain. We will now see differing models emerge commercially to match this new open environment. The one-size-fits-everything model is, as I have written before, now clearly on the way out and the coffin has several nails in it already. The Open GDS model is a natural, and in my opinion unavoidable, result of fragmented content. I want to make clear that this was not a chicken and egg story. Fragmented content was always there. The GDSs just didn’t like to accept that fact.
Both ends of the distribution value chain now need to recognize that there are new realities. The suppliers now need to adopt better tools for distribution management, a role that used to be exclusively the domain of the legacy GDSs. Now no more. For the intermediaries and sellers of travel products, multi-source supply is not a nice-to-have but a must have, and in most parts of the world already a fact of life. New systems to support a more bilateral versus multilateral model of supplier relationships must be implemented, and quickly. This cannot be just a bolt-on capability; it must be at the core of the intermediaries' capability.
For the traditional GDS companies in the middle, these are new challenges--not least of which is how to demonstrate that their value remains consistent to suppliers and sellers alike. It would seem that the legacy GDSs are getting poked and prodded from all sides and seemingly all at once. They have fought a good battle, but now it's time to stop the rear-guard action and welcome the 21st Century. The next round of GDS/airline PCA (participating carrier agreement) negotiations will change the commercial landscape of the distribution market. The world will be a very different place in 2013, when the re-contracting season will come to an end. That season is now upon us and the battle lines are drawn.
Welcome to the new dawn. Welcome to the age of the Open GDS.
Travelport First To Cut Deal with BA
Far from its one time part owner Travelport (Galileo and Worldspan) has now concluded a deal with BA.
The deal extends the current opt in/opt out arrangement for significantly less than the regular Legacy GDS segment fee.
It should be noted that in the UK Home market - the moving of content out of GDSs by BA has been under way for some time with the Lime Management.
We can expect to see more content moved out of the legacy GDSs to systems such as Lime over time.
FYI The Agency pays for the Lime service a rather hefty ticketing fee.
Cheers
The deal extends the current opt in/opt out arrangement for significantly less than the regular Legacy GDS segment fee.
It should be noted that in the UK Home market - the moving of content out of GDSs by BA has been under way for some time with the Lime Management.
We can expect to see more content moved out of the legacy GDSs to systems such as Lime over time.
FYI The Agency pays for the Lime service a rather hefty ticketing fee.
Cheers
BA-IB Agreed - Now The Fun Begins
As the details emerge of the deal - it has been agreed - the regulatory fun begins.
The Professor understands the deal will be very similar in appearance (to the customer) as the AF/KL with the retention of brands and coordinated activity. However since AF/KL was a takeover - the process of protracted approvals will be long and complicated.
It is not quite a merger of equals. I believe it is a 55%45% split in favor of the former British Carrier.
However the harmonization of rules particularly union contracts will take years to accomplish. Regulatory approval is another matter with the 4 way atlantic alliance still not agreed. BA will have to give up some slots at LHR and IB some at MAD.
With no viable local Spanish Carrier (Air Europa perhaps) able to pick these up in MAD then it becomes a little harder to work out. Virgin is of course going to make a lot of noise about things at LHR.
So let the fun begin!
Cheers
The Professor understands the deal will be very similar in appearance (to the customer) as the AF/KL with the retention of brands and coordinated activity. However since AF/KL was a takeover - the process of protracted approvals will be long and complicated.
It is not quite a merger of equals. I believe it is a 55%45% split in favor of the former British Carrier.
However the harmonization of rules particularly union contracts will take years to accomplish. Regulatory approval is another matter with the 4 way atlantic alliance still not agreed. BA will have to give up some slots at LHR and IB some at MAD.
With no viable local Spanish Carrier (Air Europa perhaps) able to pick these up in MAD then it becomes a little harder to work out. Virgin is of course going to make a lot of noise about things at LHR.
So let the fun begin!
Cheers
Monday, November 09, 2009
Shock Horror- AZ Makes Profit!
Say it can't be so... but it is.
AZ made Euro 15 Million in the last quarter. A good deal better than last year at this time when it lost a boat load of cash.
All the metrics look good. Load factors and progressions since the first of the year.
So perhaps Alitalia might be a phoenix in rising... just like its southern neighbour Olympic.
Cheers
AZ made Euro 15 Million in the last quarter. A good deal better than last year at this time when it lost a boat load of cash.
All the metrics look good. Load factors and progressions since the first of the year.
So perhaps Alitalia might be a phoenix in rising... just like its southern neighbour Olympic.
Cheers
Sunday, November 08, 2009
Outted in DE, Available at WTM and PCW
Oh dear!
The Professor has been publicly outted in a German trade magazine - FVW.
So now my terrible dark secret is out in the public domain. Not that it was hidden that well anyway! A simple Google search will suffice.
With that having happened - I will be traveling for the next few weeks. Next week at World Travel Mart in London, I shall be there on Wednesday and Thursday. I shall be roaming the halls.
The following week - I am at PhocusWright in MCO - you will find me somewhere amongst the blogger group. Plus propping up a bar or two. Since I cannot afford the outrageous prices at the Omni - I am staying with a VERY select group at the HI Express. We will be having a great time there I can assure you the walls will be rocking!
if you wish to meet up - let me know. my email as always is ProfessorSabena@gmail.com.
Cheers
The Professor has been publicly outted in a German trade magazine - FVW.
So now my terrible dark secret is out in the public domain. Not that it was hidden that well anyway! A simple Google search will suffice.
With that having happened - I will be traveling for the next few weeks. Next week at World Travel Mart in London, I shall be there on Wednesday and Thursday. I shall be roaming the halls.
The following week - I am at PhocusWright in MCO - you will find me somewhere amongst the blogger group. Plus propping up a bar or two. Since I cannot afford the outrageous prices at the Omni - I am staying with a VERY select group at the HI Express. We will be having a great time there I can assure you the walls will be rocking!
if you wish to meet up - let me know. my email as always is ProfessorSabena@gmail.com.
Cheers
Stupid Airline Web Tricks
Since its the weekend it is time for my (occasional) round up of stupid airline tricks - this weeks focus is airline behavior on their websites.
My candidates this week are members of the SkyTeam family. So listen up Delta and Air France - this applies to you. Equal billing BTW for one of the awards goes to Amadeus.
This week's award for "making things unnecessarily complicated and making me annoyed" goes to Delta for the formal inclusion of the name in the sign in process. With due deference to DL - they may have been required to do this for some arcane reason but since no other major airline makes me do that - I am surprised. it is an unnecessary annoyance. So now every time I use Delta.com - I have to go through this annoying extra step.
Thank you the World's largest airline for making me do things that are really unnecessary and constantly reminding me of this fact every time I use your website.
The second award goes jointly to Amadeus and Air France's subsidiary CityJet. The award for "completely inane form of bilingual user experience because I am too lazy to ask the customer what is his preferred language and because I am telling him what to do" goes to these two Air France subsidiaries. (Amadeus still counts Air France as a parent with airline's 23.14% Shareholding in the GDS giant).
It is so pervasive throughout the booking ticketing and itinerary process that I am just flabbergasted at the extent of the nature of the problem.
By now AF as a global airline should be able to have its subsidiaries support a reasonably decent customer experience. But no ... here is one of the transgressions I have encountered - there are so many!
I am flying from one English Speaking Country to Another. So why show me the information in French at the top in bold vs English at the bottom in light type!!!
The translations themselves are appalling. Some of the worst Franglais I have seen.
The Award goes jointly to Amadeus and Air France/CityJet because the engine is an Amadeus one and it lets you know throughout the process that it is Amadeus powering the transaction. So they get equal billing on this one.
Enjoy the rest of the weekend. And Airline Webmasters (are you still called that) I shall be watching you...
Cheers
Saturday, November 07, 2009
So How About Them Bloggers?
With apologies to anyone who is a Dodgers fan...
I was probably a little late to the Blogsphere - but as I approach 1500 blog entries - I think I have been getting used to it.
But what about other Bloggers? Is there something that tends to bind us Bloggers together. Until about 18 months ago - I had regarded it as a solitary exercise. Since then I have started to collaborate with other Bloggers and Tweeters.
You can see some of my efforts on The Beat, 4Hoteliers and Tnooz amongst others.
So it was very interesting to see how Bloggers see themselves. I hope you wont find this piece too self serving. I think its interesting.
Check out the report as part of Technorati's annual state of the Blogsphere.
Have fun with it
Cheers
I was probably a little late to the Blogsphere - but as I approach 1500 blog entries - I think I have been getting used to it.
But what about other Bloggers? Is there something that tends to bind us Bloggers together. Until about 18 months ago - I had regarded it as a solitary exercise. Since then I have started to collaborate with other Bloggers and Tweeters.
You can see some of my efforts on The Beat, 4Hoteliers and Tnooz amongst others.
So it was very interesting to see how Bloggers see themselves. I hope you wont find this piece too self serving. I think its interesting.
Check out the report as part of Technorati's annual state of the Blogsphere.
Have fun with it
Cheers
Try Not To Be So Subtle
Ancillary Revenue is all about how you can persuade customers to part with extra money after they have already made the decision to buy your base product.
Bangkok Airways bills itself as Asia's Boutique Airline. And it does a nice job. I have flown on them several times to and from Thailand.
They are converting their fleet from Boeing 717s to Airbus A319s. Additionally they have ATRs for the shorter haul flights.
So on boarding I was impressed with a little sign on the front of the cabin. Look carefully and you will see the word "SELL" on the panel to the right as you enter aircraft.
The cabin crew denied knowing what it meant. But I think they might just have been embarrassed. They need not be...
If its effective - then do it.
Cheers
Thursday, November 05, 2009
Psst Want Free inflight Wifi?
Then you will need to be my friend (or any number of other GoGo Inflight Wifi users).
Right now all the Flying Wifi players are trying to get adoption and traction.
Go on try it... so far i have seen it is both very cool and very practical. And the performance on the 4 times i have used it is very acceptable.
If you want some free wifi - contact me seperately via email and I will mail out an invite to you
Cheers
Timothy
Right now all the Flying Wifi players are trying to get adoption and traction.
Go on try it... so far i have seen it is both very cool and very practical. And the performance on the 4 times i have used it is very acceptable.
If you want some free wifi - contact me seperately via email and I will mail out an invite to you
Cheers
Timothy
New Age Direct Distribution aka IMD
Dear Reader….
So what is this thing Direct Distribution that seems to have created a bit of a buzz – what does it really mean?
While I would love to do a full primer on the subject – and perhaps I will one day – there are some important distinctions that both suppliers and intermediaries need to consider. So here are some - well lets just call them Cliff Notes For Distribution Dummies. And a special thanks to Professor CG for suggesting this article.
Firstly if I had to chose a term I would not have selected Direct Distribution. The environment has been opened and we are now in the new age of open distribution. Thus I would have preferred to use the alternative term - Independent Managed Distribution. And no this is not a semantic. The reason is that for me the big missing tool in all of this has been a supplier managed tool that allows the inventory owners and their distribution partners (up to “n” tiers) to work together. I have always said (and I have squillions of diagrams with the concept in it) that we need is a DCM – a Distribution Channel Manager - that sits within the Supplier’s environment or is a controllable hosted tool. In the main for airlines this capability went with the GDSs when there was the schism of Church (airlines) and State (GDSs). It should have properly stayed inside the Airlines house. The GDS have used this capability (or lack thereof) to obfuscate the issue.
Since that time, it has been used as a lever by the GDSs to control distribution and force it down the GDS pipe alone. While successful for some airlines – this has proved to be unsustainable. As witnessed by the LCCs bailing out of GDSs.
Secondly we need to be clear that not everything goes through airline.com. What smart airlines have been doing is building a set of DCM tools either directly into the PSS or via independent solutions such as Farelogix. The complexity of the fragmentation of distribution that is VERY real (and has been so for many years) demands a suite of distribution tools. These tools can no longer be one size fits everything. They must acknowledge that distribution via intermediaries is NOT A BAD THING. Thus a critical component of IMD is the tools to integrate supplier product into the workflow and environments of the intermediaries.
Sadly in my opinion, the PSS vendors who also are GDS vendors have a conflict here. Where these PSS vendors are failing to service their customers is in bolting on the legacy GDS commercial terms into the PSS agreement, and the lock in technology that accompanies it. I have personally reviewed several airline contracts that show at least one vendor (who is quite big in this space) is doing just that. More the fool the airline(s) who have or will have signed that contract.
Thirdly IMD has two parts to it. The reseller/intermediary has to have the tools in place on their side. The distribution model has moved from a ubiquitous single multilateral model with GDSs stuck in the middle to a more technology and (commercially realistic) based bilateral model between the airline and its intermediary partners - via any channel and any medium. Thus the Intermediaries now have an obligation and have to step up and make sure that they have access to all content. This cannot be just another bolt on – the Intermediaries need to have better ways to manage the relationships they have with their suppliers. The old single size multilateral market model cannot be exclusive. Content is and never has been full via the GDSs. One only needs to look at private fares to realize this fundamental truth.
Over the coming months as PCAs come up for renewal – I expect this debate to grow in intensity. I for one am not waiting for the next coming. My team and I have developed methodologies and tools to address this need for IMD. While this may be a shameless plug for my own consulting business, I think it is critically important that the suppliers and intermediaries work hard at developing IMD solutions that are the differentiators in their respective businesses. You’ll be sorry if you rely on the old ways and the old tools. You have been warned.
Cheers
So what is this thing Direct Distribution that seems to have created a bit of a buzz – what does it really mean?
While I would love to do a full primer on the subject – and perhaps I will one day – there are some important distinctions that both suppliers and intermediaries need to consider. So here are some - well lets just call them Cliff Notes For Distribution Dummies. And a special thanks to Professor CG for suggesting this article.
Firstly if I had to chose a term I would not have selected Direct Distribution. The environment has been opened and we are now in the new age of open distribution. Thus I would have preferred to use the alternative term - Independent Managed Distribution. And no this is not a semantic. The reason is that for me the big missing tool in all of this has been a supplier managed tool that allows the inventory owners and their distribution partners (up to “n” tiers) to work together. I have always said (and I have squillions of diagrams with the concept in it) that we need is a DCM – a Distribution Channel Manager - that sits within the Supplier’s environment or is a controllable hosted tool. In the main for airlines this capability went with the GDSs when there was the schism of Church (airlines) and State (GDSs). It should have properly stayed inside the Airlines house. The GDS have used this capability (or lack thereof) to obfuscate the issue.
Since that time, it has been used as a lever by the GDSs to control distribution and force it down the GDS pipe alone. While successful for some airlines – this has proved to be unsustainable. As witnessed by the LCCs bailing out of GDSs.
Secondly we need to be clear that not everything goes through airline.com. What smart airlines have been doing is building a set of DCM tools either directly into the PSS or via independent solutions such as Farelogix. The complexity of the fragmentation of distribution that is VERY real (and has been so for many years) demands a suite of distribution tools. These tools can no longer be one size fits everything. They must acknowledge that distribution via intermediaries is NOT A BAD THING. Thus a critical component of IMD is the tools to integrate supplier product into the workflow and environments of the intermediaries.
Sadly in my opinion, the PSS vendors who also are GDS vendors have a conflict here. Where these PSS vendors are failing to service their customers is in bolting on the legacy GDS commercial terms into the PSS agreement, and the lock in technology that accompanies it. I have personally reviewed several airline contracts that show at least one vendor (who is quite big in this space) is doing just that. More the fool the airline(s) who have or will have signed that contract.
Thirdly IMD has two parts to it. The reseller/intermediary has to have the tools in place on their side. The distribution model has moved from a ubiquitous single multilateral model with GDSs stuck in the middle to a more technology and (commercially realistic) based bilateral model between the airline and its intermediary partners - via any channel and any medium. Thus the Intermediaries now have an obligation and have to step up and make sure that they have access to all content. This cannot be just another bolt on – the Intermediaries need to have better ways to manage the relationships they have with their suppliers. The old single size multilateral market model cannot be exclusive. Content is and never has been full via the GDSs. One only needs to look at private fares to realize this fundamental truth.
Over the coming months as PCAs come up for renewal – I expect this debate to grow in intensity. I for one am not waiting for the next coming. My team and I have developed methodologies and tools to address this need for IMD. While this may be a shameless plug for my own consulting business, I think it is critically important that the suppliers and intermediaries work hard at developing IMD solutions that are the differentiators in their respective businesses. You’ll be sorry if you rely on the old ways and the old tools. You have been warned.
Cheers
Heartfelt Apologies vs. Kudos
Acknowledging that the SabreSonic CSS cutover had been less than stellar – despite my earlier congrats – Westjet offered its apologies for a number of snafus with the cutover. It probably still has a way to go.
Still this is a pretty fast install. Sometimes its better to just do it rather than wait.
Cheers
Still this is a pretty fast install. Sometimes its better to just do it rather than wait.
Cheers
Remember Remember the 5th of November
This is a common rhyme in Britain to describe the events surrounding the Guy Fawkes plot to blow up the houses of Parliament.
So I thought I would relate the cautionary tale of a flight I took recently to Australia on Qantas.
My fellow blogger Tim Hughes has been quite critical of QF’s inflight service and product. I have found them OK – and in general better than their partner BA in service. So I was quite surprised to find out that QF and the Australian Federal Police think that I may be a threat to the security of the airline and its passengers.
I am an airplane nerd. I love taking pictures particularly out of the window because it gives an interesting view. On this flight there was a phenomenon of a rainbow as can be seen in these pictures. So I happened to take a lot of them. I was also seated near but not next to the emergency exit. Someone – presumably a QF employee regarded this as a security threat. The Aussie Fed Police launched an investigation. And voila – I am now probably now on a watchlist somewhere. If they could only see my passport – they would see that I have a squillion visas from such strange places as Saudi Arabia, Russia, China and India as well as other weird places such as Brazil and Australia. Clearly I represent a threat!
So remember this Guy Fawkes day – be careful what you take pictures of. They might get you in trouble
Cheers
Wednesday, November 04, 2009
Despite Fee Cuts OTAs Still Face Defections
As an analyst - I spend a lot of time explaining the travel market place to Financial and Wall Street types.
One of the common perceptions amongst the general public (is that an archaic term yet) is that everyone is an expert in travel to some form of degree. Everyone is opinionated that is for sure.
As experts one question I always ask an external analyst is how they do their own booking. The vast majority always state that they book the majority of their travel particularly airlines on the airline.com website or via the call center. (The latter is for International reservations).
The OTAs are pretty much in the same situation as meta and regular search companies if offering a service that provides context to the search and selection process of a trip. In my own case - and it would seem there are many who do the same thing - I always look in the generic places first (at least 1 OTA and meta search site) but rarely do I book via that OTA. The only time I do is if I find a lower rate (without any corresponding loss of value).
PhocusWright has done a study on conversions. Here is the interesting part of their release:
"The fee cuts have not eliminated the defection of OTA air shoppers to airline Web sites. Despite the removal of most service fees on airline tickets, OTAs still lose over half of their air shoppers to supplier Web site for booking. This signals that there is more to the switching behavior than just the fee element. OTAs lose more bookings to air suppliers than they do car or hotel shoppers."
While much of this is obvious - the very facts speak volumes. Car and Hotel shopping is a dark art and the car.com and hotel.com sites are still not doing as good a job as the airline.com sites. Air Shoppers are commodity buyers.
I think its safe to say that the opaque models don't stay opaque very long. Suppliers know this and are acting accordingly. OTAs who managed to show some value here are losing that advantage.
Bottom line - chaps the search process is changing and the OTAs better wise up and do a better job of showing value or they will continue to lose share of conversions.
Cheers
One of the common perceptions amongst the general public (is that an archaic term yet) is that everyone is an expert in travel to some form of degree. Everyone is opinionated that is for sure.
As experts one question I always ask an external analyst is how they do their own booking. The vast majority always state that they book the majority of their travel particularly airlines on the airline.com website or via the call center. (The latter is for International reservations).
The OTAs are pretty much in the same situation as meta and regular search companies if offering a service that provides context to the search and selection process of a trip. In my own case - and it would seem there are many who do the same thing - I always look in the generic places first (at least 1 OTA and meta search site) but rarely do I book via that OTA. The only time I do is if I find a lower rate (without any corresponding loss of value).
PhocusWright has done a study on conversions. Here is the interesting part of their release:
"The fee cuts have not eliminated the defection of OTA air shoppers to airline Web sites. Despite the removal of most service fees on airline tickets, OTAs still lose over half of their air shoppers to supplier Web site for booking. This signals that there is more to the switching behavior than just the fee element. OTAs lose more bookings to air suppliers than they do car or hotel shoppers."
While much of this is obvious - the very facts speak volumes. Car and Hotel shopping is a dark art and the car.com and hotel.com sites are still not doing as good a job as the airline.com sites. Air Shoppers are commodity buyers.
I think its safe to say that the opaque models don't stay opaque very long. Suppliers know this and are acting accordingly. OTAs who managed to show some value here are losing that advantage.
Bottom line - chaps the search process is changing and the OTAs better wise up and do a better job of showing value or they will continue to lose share of conversions.
Cheers
Tuesday, November 03, 2009
Alliances - Face Heightened Scrutiny
The good old days of carte blanche acceptance of Alliances may be coming to an end.
The Oneworld proposal seems stuck in no man's land. It was supposed to be given the green light (with changes of course) last week, but so far nada.
On both sides of the Atlantic - the regulators are watching much harder. The last approval (Continental + Star) was given the all clear by the DoT over the objections of the DoJ. It wont be that easy next time round. On the EU side - the regulators sent a 400 page document to the participants. Probably this will mean that there needs to be slots to be surrendered at LHR which seems to be over Willie's dead body.
This is a song that is going to be sung for quite a while yet.
Cheers
The Oneworld proposal seems stuck in no man's land. It was supposed to be given the green light (with changes of course) last week, but so far nada.
On both sides of the Atlantic - the regulators are watching much harder. The last approval (Continental + Star) was given the all clear by the DoT over the objections of the DoJ. It wont be that easy next time round. On the EU side - the regulators sent a 400 page document to the participants. Probably this will mean that there needs to be slots to be surrendered at LHR which seems to be over Willie's dead body.
This is a song that is going to be sung for quite a while yet.
Cheers
Monday, November 02, 2009
A Public Service From The Professor
Dear All
I am a great believer in transparency. And was doing some research on several things - including CEOs.
I found this wonderful site - you might want to look at:
http://www.connectotel.com/marcus/ceoemail.html
It's CEOs email addresses - for the UK only.
well its interesting to see how transparent people are.
Enjoy it!
Cheers
I am a great believer in transparency. And was doing some research on several things - including CEOs.
I found this wonderful site - you might want to look at:
http://www.connectotel.com/marcus/ceoemail.html
It's CEOs email addresses - for the UK only.
well its interesting to see how transparent people are.
Enjoy it!
Cheers
BA to UK TMCs: Time To Rethink Those Cheques
BA has decided (clearly this must have taken a few months to come to the conclusion) that the premium and business traffic is down and going to stay down for a long time. With their planes configured for a larger premium traffic share - they are probably wringing their hands over the loss of this valuable and higher yield business.
But what to do about it? Earlier this year the airline opened up the tier system to discount tickets. Now the shoe is about to drop on the Biz Travel Agents
In a conversation with the UK's TTG-Business Trade Magazine, Scott Davies, BA’s head of TMC relations, told ttgbusiness.com he had finished a period of careful consideration regarding SMAs and would be informing agencies about how the agreements will work in the future.
Davies said: “BA’s sales and marketing agreements for TMCs have followed a similar structure for the best part of ten years. The market has changed dramatically in recent times and we recognised the need to re-evaluate our approach.
“We consulted with key trade partners during the summer regarding the most mutually beneficial approach to take and we have opted for two key changes.”
He said BA would firstly update the activities TMCs need to complete to trigger payment, which will make the agreements more relevant to today’s market. ttgbusiness.com understand this means TMCs will have to work harder for their SMA.
The airline had “re-visited” its fixed and variable payments within the agreements, said Davies. “This is key as variable payments provide TMCs with a more interesting upside as the market begins to recover.”
He said updates to SMEs would take effect in the New Year.
My team has been on the phone to a few TMCs in the UK and so far no response as the issue is very sensitive. Given BA's footprint in the UK no one is making any statements. However smaller TMCs are saying that so far they have not been contacted - that will likely mean they will lose out. However that is speculation on my part. I believe it will be the bigger players with footprints that straddle the Atlantic who will get the best dea;s but the guaranteed payments are likely to go in favor of a pure variable incentive model albeit at a lower number than before with some high thresholds. Small and Mid size players will find this hard to achieve.
Other airlines are likely to step into the breach and provide some level of value to the players. With the Transatlantic market now very competitive, BA needs to tread very carefully.
Could it be that old cosy (and some might say unhealthy) relationship between GBTA and BA moves to a new and more financially conservative basis? Inquiring minds want to know.
Cheers
But what to do about it? Earlier this year the airline opened up the tier system to discount tickets. Now the shoe is about to drop on the Biz Travel Agents
In a conversation with the UK's TTG-Business Trade Magazine, Scott Davies, BA’s head of TMC relations, told ttgbusiness.com he had finished a period of careful consideration regarding SMAs and would be informing agencies about how the agreements will work in the future.
Davies said: “BA’s sales and marketing agreements for TMCs have followed a similar structure for the best part of ten years. The market has changed dramatically in recent times and we recognised the need to re-evaluate our approach.
“We consulted with key trade partners during the summer regarding the most mutually beneficial approach to take and we have opted for two key changes.”
He said BA would firstly update the activities TMCs need to complete to trigger payment, which will make the agreements more relevant to today’s market. ttgbusiness.com understand this means TMCs will have to work harder for their SMA.
The airline had “re-visited” its fixed and variable payments within the agreements, said Davies. “This is key as variable payments provide TMCs with a more interesting upside as the market begins to recover.”
He said updates to SMEs would take effect in the New Year.
My team has been on the phone to a few TMCs in the UK and so far no response as the issue is very sensitive. Given BA's footprint in the UK no one is making any statements. However smaller TMCs are saying that so far they have not been contacted - that will likely mean they will lose out. However that is speculation on my part. I believe it will be the bigger players with footprints that straddle the Atlantic who will get the best dea;s but the guaranteed payments are likely to go in favor of a pure variable incentive model albeit at a lower number than before with some high thresholds. Small and Mid size players will find this hard to achieve.
Other airlines are likely to step into the breach and provide some level of value to the players. With the Transatlantic market now very competitive, BA needs to tread very carefully.
Could it be that old cosy (and some might say unhealthy) relationship between GBTA and BA moves to a new and more financially conservative basis? Inquiring minds want to know.
Cheers
The Winter Of Discontent - Unions Unhappy
Three big Union stories over the last few days. Most of them unconnected but perhaps there is a thread of a change on the labour front.
Amongst airlines - both Hawaiian and British Airways face union trouble probably around Christmas time. For both carriers this is not the time. For Hawaii a disruption at HA will be devastating given the amount of traffic that is now on that airline.
Amongst the airframers - the impact of the decision by Boeing to open up a second line in South Carolina seems on the surface to be simply a cost issue. With Boeing stating that SC is 40% cheaper than Washington state (my home state btw) it is hard to see how Boeing could not have made this call. The union leadership in Washington should head the lesson of California. The labour market there was priced so high that ultimately it became too expensive for the manufacturers to remain in the region and operate profitably. Storied names like Douglas, Convair, etc etc have progressively left the market for cheaper locales or in most cases just headed into the twilight.
And let's not forget Airbus - they have a strong currency problem - the rise of the Euro means that essentially Airbus is now 40% more expensive. That means that Boeing should be able to take advantage of that. So if that is the case why does the A320 consistently outsell the 737NG?
What is needed is for a more honest and open dialogue between management and workers in these critical areas. Otherwise it becomes a game of who has the largest toy.
Sad really - lets hope they all kiss and make up.
Cheers
Amongst airlines - both Hawaiian and British Airways face union trouble probably around Christmas time. For both carriers this is not the time. For Hawaii a disruption at HA will be devastating given the amount of traffic that is now on that airline.
Amongst the airframers - the impact of the decision by Boeing to open up a second line in South Carolina seems on the surface to be simply a cost issue. With Boeing stating that SC is 40% cheaper than Washington state (my home state btw) it is hard to see how Boeing could not have made this call. The union leadership in Washington should head the lesson of California. The labour market there was priced so high that ultimately it became too expensive for the manufacturers to remain in the region and operate profitably. Storied names like Douglas, Convair, etc etc have progressively left the market for cheaper locales or in most cases just headed into the twilight.
And let's not forget Airbus - they have a strong currency problem - the rise of the Euro means that essentially Airbus is now 40% more expensive. That means that Boeing should be able to take advantage of that. So if that is the case why does the A320 consistently outsell the 737NG?
What is needed is for a more honest and open dialogue between management and workers in these critical areas. Otherwise it becomes a game of who has the largest toy.
Sad really - lets hope they all kiss and make up.
Cheers
Sunday, November 01, 2009
New Poll On Professor's Blog
I am going to ask you all to post your votes on American Airlines new aim for a 100% direct distribution model.
I have given you four possible options.
Yes - emphatic response
No - also an emphatic response
? - Not sure - think time will tell
I really cannot decide right now
Think carefully and all the best on your voting
Cheers
I have given you four possible options.
Yes - emphatic response
No - also an emphatic response
? - Not sure - think time will tell
I really cannot decide right now
Think carefully and all the best on your voting
Cheers
Poll Results on Twitter
So here you go final results on Twitter are as follows:
I am a Luddite (60%)
I find it useful (18%)
I am a sneek peeker (12%)
I am a manic Tweeter (9%)
So this represents you as readers. FYI the Results represent about 1% of readers.
Cheers and thanks for participating
I am a Luddite (60%)
I find it useful (18%)
I am a sneek peeker (12%)
I am a manic Tweeter (9%)
So this represents you as readers. FYI the Results represent about 1% of readers.
Cheers and thanks for participating
Shock Horror – Online Spend Passes TV
So what does this do for me?
I have a very good friend who is a media maven. Having worked in Advertising world in the 1970s and 1980s, we often get together to discuss how Media has changed with the onset of the Web as the pervasive method of human interaction – entertainment, information and communication. So it was inevitable that Online spend would one day overtake the traditional media stronghold of TV. However none of us could have predicted the speed. In the UK – one of the largest TV markets in the world – it has already happened. Full Article
So my friend and I were discussing the way we used to do things and comparing it with the validity of the methodology of ad spending today. Frankly I am glad that I am not in that game fully any more. I have been unhappy with what to me has become in effect a derivative market possibly as sleazy as the financial instruments that got us into the GFC. We both lamented that the manipulation of scant pieces of data into business cases for ad spends has now reached – I would personally say – fraud proportions.
It seems that the “hucksters” didn’t die out when the era of “Mad Money” passed, they have reincarnated themselves as SEO, SEM or tool specialists. Now I am not saying that everyone is bad, but I am saying the ability for an objective evaluation of how to spend ones scarce Ad and Marketing budget is getting harder. The tools are suspect and the results still quite abstract in a large number of cases that purport otherwise.
As an aside – it would seem that the honest approach of brands to delivery of the promise is also something that seems to have been lost. So – while this is a bit of a stretch – I found Gerry McGovern’s article a few weeks back on the delivery against the brand promise quite interesting in the same context as the Ad spend debate above. Either we are all drinking a lot of Cool Aid or we need to have our heads examined.
I remain perplexed as to what to do about this. I don’t want to suspend my beliefs for a flawed metric. And I really don’t want to keep shoveling cash (mine and clients) into the Google machine.
Cheers
I have a very good friend who is a media maven. Having worked in Advertising world in the 1970s and 1980s, we often get together to discuss how Media has changed with the onset of the Web as the pervasive method of human interaction – entertainment, information and communication. So it was inevitable that Online spend would one day overtake the traditional media stronghold of TV. However none of us could have predicted the speed. In the UK – one of the largest TV markets in the world – it has already happened. Full Article
So my friend and I were discussing the way we used to do things and comparing it with the validity of the methodology of ad spending today. Frankly I am glad that I am not in that game fully any more. I have been unhappy with what to me has become in effect a derivative market possibly as sleazy as the financial instruments that got us into the GFC. We both lamented that the manipulation of scant pieces of data into business cases for ad spends has now reached – I would personally say – fraud proportions.
It seems that the “hucksters” didn’t die out when the era of “Mad Money” passed, they have reincarnated themselves as SEO, SEM or tool specialists. Now I am not saying that everyone is bad, but I am saying the ability for an objective evaluation of how to spend ones scarce Ad and Marketing budget is getting harder. The tools are suspect and the results still quite abstract in a large number of cases that purport otherwise.
As an aside – it would seem that the honest approach of brands to delivery of the promise is also something that seems to have been lost. So – while this is a bit of a stretch – I found Gerry McGovern’s article a few weeks back on the delivery against the brand promise quite interesting in the same context as the Ad spend debate above. Either we are all drinking a lot of Cool Aid or we need to have our heads examined.
I remain perplexed as to what to do about this. I don’t want to suspend my beliefs for a flawed metric. And I really don’t want to keep shoveling cash (mine and clients) into the Google machine.
Cheers
Why and How TMCs Hate LCCs.
As an observer of the Travel Industry I have watched the different sections of the value chain behave in different ways. Of late I have been thinking about the whole value chain and in what ways different parts of it are affected by fragmentation of content and differentiation of customer needs and providers capabilities. In looking at the corporate market it has somewhat worried me that the typical TMC has shunned the LCC market. It seems that even when the LCC footprint is pretty significant (the top two branded airlines on the planet are both LCCs – WN and FR) TMCs have shunned them and vice versa. I am not going to debate who shunned who first but it is still a pretty interesting view.
It seems to me that TMCs have done a remarkable job in deflecting the basic need to provide the corporate customer with the full product as a neutral provider in exchange for operational efficiency and service excellence.
This is an interesting concept but this blinding flash of inspiration came from one of my fellow Professor’s who wishes to remain anonymous. But that is a pretty fundamental view that on reflection I now whole heartedly agree with.
So how do they do this? Firstly their almost unhealthy relationship with the GDSs and tying themselves to the legacy model has resulted in a shunning of LCC products. The focus on “saving money” sends them into deep activity on intra product as opposed to inter product (to wit – getting the best price on the itinerary booked vs checking first whether the trip is necessary and secondly what is the most efficient way to address the needs that drove the trip request in the first place).
Then the lack of attempt at providing a service proposition to LCCs by the TMCs seems to be a significant failing on their part. Being passive while airlines such as Jetstar says let the customer book direct only seems to indicate an unwillingness to embrace the LCCs and help the customer to make a decision about the most efficient way to get from A to B. I am sure there will be TMCs who will say that this is not true and that the real problem is the unwillingness of the LCC to play ball with the TMCs. Well I think that argument is academic. The issue is the fact that little is done by the TMCs.
The promotion of operational excellence is almost tied to the concept that the legacy airlines have in differentiating their products when in reality it really is a commodity. TMCs don’t want to stray outside of the box because it means that they would have to do more work and pay for something. So the legacy TMC model doesn’t endear itself to the servicing of LCCs. Even though the customer would ultimately save money by using the LCC more frequently. One could also say that TMCs are too operationally focused - just like legacy airlines are.
So chaps – the continued shunning of each other (TMCs and LCCs) is set to stay. But given the amount of possible market share that LCCs command – this cannot continue. The mature US based TMCs now have only a few pockets of pure LCC activity. However Europe has a very large LCC footprint where in quite a few cases the ONLY option is an LCC. The TMCs (and their attendant service partners) therefore must change their position or risk seeing themselves disintermediated as a result.
Recent efforts by Travelport and others to bring LCCs to the GDS environment have only shown that the GDS model is increasingly flawed. With AA now moving to a 100% pure direct model - can the TMCs ignore the LCCs any longer. That does not require an answer.
Food for thought?
It seems to me that TMCs have done a remarkable job in deflecting the basic need to provide the corporate customer with the full product as a neutral provider in exchange for operational efficiency and service excellence.
This is an interesting concept but this blinding flash of inspiration came from one of my fellow Professor’s who wishes to remain anonymous. But that is a pretty fundamental view that on reflection I now whole heartedly agree with.
So how do they do this? Firstly their almost unhealthy relationship with the GDSs and tying themselves to the legacy model has resulted in a shunning of LCC products. The focus on “saving money” sends them into deep activity on intra product as opposed to inter product (to wit – getting the best price on the itinerary booked vs checking first whether the trip is necessary and secondly what is the most efficient way to address the needs that drove the trip request in the first place).
Then the lack of attempt at providing a service proposition to LCCs by the TMCs seems to be a significant failing on their part. Being passive while airlines such as Jetstar says let the customer book direct only seems to indicate an unwillingness to embrace the LCCs and help the customer to make a decision about the most efficient way to get from A to B. I am sure there will be TMCs who will say that this is not true and that the real problem is the unwillingness of the LCC to play ball with the TMCs. Well I think that argument is academic. The issue is the fact that little is done by the TMCs.
The promotion of operational excellence is almost tied to the concept that the legacy airlines have in differentiating their products when in reality it really is a commodity. TMCs don’t want to stray outside of the box because it means that they would have to do more work and pay for something. So the legacy TMC model doesn’t endear itself to the servicing of LCCs. Even though the customer would ultimately save money by using the LCC more frequently. One could also say that TMCs are too operationally focused - just like legacy airlines are.
So chaps – the continued shunning of each other (TMCs and LCCs) is set to stay. But given the amount of possible market share that LCCs command – this cannot continue. The mature US based TMCs now have only a few pockets of pure LCC activity. However Europe has a very large LCC footprint where in quite a few cases the ONLY option is an LCC. The TMCs (and their attendant service partners) therefore must change their position or risk seeing themselves disintermediated as a result.
Recent efforts by Travelport and others to bring LCCs to the GDS environment have only shown that the GDS model is increasingly flawed. With AA now moving to a 100% pure direct model - can the TMCs ignore the LCCs any longer. That does not require an answer.
Food for thought?
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