December 22, 2008
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If you'd like some good news about travel, mine is that technology is evolving in ways which helps travelers organize their trips to a "t."
TripIt is the site that is captivating me right now, because of its simplicity, neutrality, utility, and the fact that it is an independent site that goes its own way. TripIt is like powering your itinerary with a whole new social networking engine.
It works by having you simply email your travel plans to TripIt; then TripIt updates, revises, and expands your itinerary with time- and money-saving options you might never have thought of. For example, if I booked my travel on Expedia, I would forward that itinerary to TripIt and receive back an email with links to all sorts of travel options.
For business travelers, one of TripIt's most intriguing features is its link to LinkedIn.com, which is perhaps the most popular of the business social networking sites. TripIt will tell the people with whom you are linked on LinkedIn where you are traveling and will also show you where your LinkedIn network is traveling. What would otherwise be an impossibly complex and chaotic task -- constantly comparing schedules with dozens of your business associates to identify opportunities to meet on the road -- becomes a simple and direct networking interface.
TripIt also provides an easy way for you to share your travel plans with friends and family, and thus reshape your itinerary around shared family/friend events and interests. So it's far more than just a Web site that gives you hotel and sightseeing and other options. It's a place to touch base with people you know and some you don't. What I really like is that you can control where your trip information is shared.
You have to register with TripIt, but because the site is independent, that's an advantage. I prefer not to concentrate my travel information and social networking data at the site where I purchase my travel.
TripIt is emblematic of the next generation of social networking sites. Hopefully they'll all try to be as useful as TripIt, because for my money TripIt represents the kind of travel technology we need more of; and it's one of the few new developments that's making travel easier.
Have you tried TripIt yet? What do you think?
Airline Futurist • Miami • www.us.amadeus.com
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December 10, 2008
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Getting the best airline deals is an important way to save your company money. But the Internet is a crowded and complex place. If you're hoping to find one website where all of the lowest prices live, forget it.
Finding the lowest airline prices takes legwork.
Finding the best airline deals takes even more legwork. But first you've got to define what "best" means to you.
Here is my advice for getting the best airline deals:
* Don't try to be an all-knowing travel expert. Be honest with yourself. Recognize which simple bookings you can do yourself and which complicated ones are best handled with the assistance of a travel professional.
* Doing Internet research is a double-edged sword. The more you surf for savings, the more of your own time you're investing. There will come a point when you'll ask yourself, "What price do I assign to my time?"
* So, if it seems like your online research is going to consume too much time, consider enlisting a travel agent. Most have access to powerful reservations databases called global distribution systems (GDSs) that link travel suppliers and travel buyers around the world. Savvy agents can save you time and money by accessing GDSs and other resources, such as airline consolidators, that you weren't even aware existed.
* When you find a good travel agent or agency, cherish them. Send them flowers. That's because when you have a dedicated agent working for you, you're leveraging a magnitude of experience and access to information that only travel professionals possess.
* Having dispensed with my Caveat emptor! prologue, my first actual tip for getting a great airline deal is the one most frequently ignored: Book early. The days of last-minute airfare deals are all but over. Booking early is easily the most important thing you can do to save dollars on virtually anything anywhere related to travel.
* Know which air carriers serve not only your cities of arrival and departure, but your stopovers as well. Yes, you can visit your favorite airline's website and check pricing -- but what you will be missing is learning which other carriers fly to those connecting cities.
* So by all means visit the big travel agency sites online, where you'll learn which carriers fly to which connecting cities. But remember, those big websites may not include regional or low-fare carriers and airline-specific Web fares. The only surefire way to discover that information is to click over to those carriers' individual websites as well.
* Also remember when you're scrolling down the pages of the online travel sites, the impression that you're getting all of the pricing information that exists may not be an accurate one. Many of the airfares are there, but a fair share may not be.
* What you may not realize is that a seemingly low airfare found on a travel website may many times be even lower on the airline's own website. That's because today many of airlines maintain their lowest fares on their own websites.
* Another overlooked fact about airfares is that often your ticket's cost comes down to how much competition there is on your particular route. The more competition, the more competitive the pricing will be.
* Some experts say that websites that employ so-called "predictive modeling" (FareCast.com is one example) can not only track the up and down patterns of certain airfares, but can predict when particular airfare deals will emerge.
* To me, the "best" airline deal is the one that gets me on an uncrowded plane. Business travelers usually don't have much choice about when they travel. But if you ever do get the gift of that sort of flexibility, use it wisely. Consider where you are flying -- and when! Try to avoid the high seasons for vacations. Think about leisure travelers' favorite travel dates and how they'll compete with your own travel schedule.
* "Bots" or Web agents that surf websites to reap data can save you the trouble of searching each site one by one. These sites compile schedules and fares from a variety of airlines, from full service to low cost carriers, to provide you with a side-by-side comparison of your air travel options. But be aware that some low-cost carriers have turned off the bots, as have some travel websites.
* Airline websites have also gotten a lot more user-friendly. For example, Lufthansa and Air Canada have popular consumer websites that offer one-way combinable fares and "family fare" features. Their sites' online calendars even enable you to perform low-fare searches within a given date range, which is a boon to any business traveler who values that sort of booking flexibility.
* Decide what "best" really means to you and your company. Does it mean booking a trip where you get the lowest cost but arrive at your destination late or haggard or missing your luggage? Or does it mean booking a trip where you arrive on time and fresh and ready to conduct business?
* There are many considerations that trump low cost, including comfort, convenience, and choice. For many business travelers, options like flexible ticket changes, seat upgrades, and bonus loyalty miles are worth paying more. So weigh your choices before clicking "Buy."
Here's a short of the most important how-to points:
* Recognize when your itinerary is too complex for you to book yourself.
* Value a good travel agent.
* Remember that your time has value, too.
* Travel agents can call upon resources you can't hope to match.
* Book early.
* Know the cities along your flight route.
* Online travel agencies are great, but not 100% comprehensive.
* Don't forget to check out the airlines' own websites.
* Your ticket's cost is a function of competition.
* Check out a "predictive modeling" websites.
* Factor in the impact of leisure travelers' high seasons.
* 'Bots can save time.
* Airline websites are getting easier to use.
* Figure out what "best" means to you.
* Low cost is far from the only measure of a best airline deal.
Remember, figuring out how to get the best airline deals is not as easy as it looks, nor do the lowest prices always deliver the best value.
Airline Futurist • Miami • www.us.amadeus.com
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December 4, 2008
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Fuel prices and future fuel hedging strategies will continue to heavily influence the financial performance of airlines in the coming year. And interestingly, the fuel price situation may present opportunities for carriers that have the financial resources to secure smart hedging deals.
But although fuel pricing will be a major factor in 2009, it won't be the only significant thing affecting airline profitability. What also will be a critical part of the equation is consumer confidence and travel behavior.
U.S. consumer confidence right now is at a 40-year low. It isn't just the airlines that are worried about the future. That means air carriers have to worry whether consumer travel will continue its downward slide in 2009.
Airlines will also face other challenges. Upgrading the air-traffic control system is a top priority, but of course, that's on the federal government's plate. There is a huge opportunity here, because the traffic congestion issue could be solved if only air-traffic technology would be modernized.
More challenges — and opportunities —- are entwined with the imminent second phase of the little-publicized Open Skies agreement. Open Skies can open U.S. domestic routes to foreign carriers, putting more pressure on U.S. carriers to redesign their pricing strategies. In turn, U.S. carriers will be permitted to fly between two points in Europe; however, the agreement precludes them from flying point to point within the same country. U.S. carriers haven't yet embraced intramarket travel in Europe, perhaps because most already have alliances with European carriers.
If the next administration can make headway on the issues of air-traffic control and Open Skies, there still remains the local, county, and state government issue of upgrading and expanding airport infrastructure.
For some time now the U.S. has been moving sideways on these issues. The technologies exist to solve many of the challenges facing the airlines and the flying public. The path to adopting these technologies is never a straight line, though, and I think that will continue to be the case in 2009.
Airline Futurist • Miami • www.us.amadeus.com
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November 27, 2008
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The a la carte model seems to be the topic du jour these days in the world of air travel. The airlines' move to an unbundled, or a la carte, strategy is forecast by many to be one of the biggest evolutions in airline retailing since carriers started selling tickets.
But in years past when one airline moved in a direction, whether cutting commissions, setting air fares, and so on, the rest of the airlines would inevitably follow suit. But that may not be the case when it comes to a la carte.
What we will see are airline retailing strategies in many shapes and forms. Some carriers may decide to go 100 percent a la carte, some carriers may see a competitive advantage in not going a la carte at all, while other carriers may pursue a hybrid retailing model.
On one end of the spectrum you have Southwest Airlines. At least for now, Southwest is banking on maintaining and touting the "traditional" retailing approach, which includes amenities in their base ticket price.
But Amadeus's business partner Air Canada has gone to a more hybrid approach, offering a four-tier set of "fare families" that puts the consumer at the center of that airline's value proposition. Those four levels of options are specifically designed for specific demographics of Air Canada's customer base. There's the bare-bones package option, and then greater-value packages as the customers "buy up."
In addition to the packaged options, Air Canada travelers can also buy up or buy down specific amenities based on what they want or will use. The four-tier approach has been quite successful for Air Canada. That's because Air Canada shows you the value. That "transparency" lets you see what you are paying for.
There are a multitude of approaches that can and will be successful for the airlines, but one thing is clear — "choice" (aka a la carte) is the wave of the future.
Airline Futurist • Miami • www.us.amadeus.com
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November 19, 2008
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No one ever before asked consumers in a survey what they thought of à la carte airline pricing, so Amadeus decided to. Passengers were polled about the new fees for everything from bags and food/beverages to pillows and seat assignments.
The results of this, the first survey of airline passengers on à la carte reveals that while consumers aren't happy about the fees, they are willing to pay for their choice of services — and don't consider it "nickel-and-diming." But the majority of air travelers (85 percent) dislike paying fees for services they received free as little as a year ago.
Don't charge me for my baggage! is one of the key findings of the new "Flying A La Carte" survey. Seventeen percent indicate blankets and pillows should be free, while 15 percent want free seat selection. Fifty-seven percent have or would pay for food and beverages on a flight and 37 percent have or would pay extra for checked bags.
Half (52 percent) understand why airlines have begun charging for services that used to be free, and half (53 percent) like getting the cheapest base ticket so they can decide what other optional products/services to buy.
Less than one-third of respondents think airlines have gone too far with new fees.
Willingness to pay extends outside the fuselage, especially when it means greater flexibility and convenience. Fifty-seven percent report that they would pay extra for the ability to make ticket changes without penalty. Nearly 40 percent indicate that they would pay for less hassle and more time savings in the form of priority check-in and boarding, priority baggage handling, and the ability to fly with an additional carry-on.
Beyond that, à la carte pricing presents an opportunity for airlines to differentiate themselves and to use service options to build brand loyalty. Fewer than two in 10 fliers wanted an all-inclusive ticket.
This tracks exactly what airlines at the cutting edge of a la carte pricing, like Air Canada, have learned — fliers love choice. What fliers don't like is being charged extra when they have no other option. That's where they feel nickel and dimed. They don't feel nickel and dimed if they have a clear choice, however.
Consumers want pricing transparency.
At the end of the day, however, travelers’ priority is getting to their destination. By a 10:1 margin, passengers agree that schedules and routes trump available amenities and services.
Bottom line, no matter how the economy evolves, airline fee-for-service models are here to stay.
When it comes to holiday travel and the economy, consumer reaction is mixed. Of those who intended to fly, some are sticking with their holiday air travel plans (20 percent), while others are not (15 percent). Still others remain undecided about whether to stay or go (9 percent). But consumers remain optimistic for 2009 and expect to fly as much or more (63 percent) than they did this year.
The move to à la carte is reinventing the airline retail experience for the first time in decades and creating an opportunity for airlines to deliver real differentiation among their competition and value for consumers.
The phone survey of 2,000 random adults in the U.S. (ages 18 or older) was conducted Oct. 16-20. Completing the survey were 735 adults (366 men and 369 women) who had flown at least once in the last 12 months. The margin of error is +/- four percent.
Full survey results are available at http://tinyurl.com/6nvtag.
Airline Futurist • Miami • www.us.amadeus.com
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November 12, 2008
09:46 am | 1 recommendation | 3 comments
The aviation market is under tremendous cost pressure, with not only high fuel prices but a softening economy impacting air travel and causing carriers to slash capacity. And these factors are pushing carriers to become quite dynamic in their day-to-day operations.
Price sensitivity is one of the airlines' key concerns. The secret to an airline's success is being able to satisfy customer demand while meeting operational costs. Carriers are diversifying how they derive their income, leading some down the path of charging for baggage, seat assignment, or other formerly "free" options. What we are really seeing is the push for ancillary revenue being born out of economic necessity.
But the à la carte model in air travel, if approached strategically, ideally places the customer at the heart of an airline's business. The consumer argument in favor of à la carte is that it really represents value-added service. Is it nickel-and-diming when you are exercising choice and paying only for services that you want above the base fare price?
In fact, if customers have been paying consistently for a service — like an airfare that includes free baggage check-in — and then suddenly airlines start charging for baggage check-in without making adjustments elsewhere to the base fare, then it might look like nickel-and-diming. But as carriers start to think more long-term about ancillary revenue, they will begin to better understand their entire product offering. By "unbundling" everything that they used to charge for in the price of a ticket, they might look at adjusting the base fare downward. Then they can price various options individually and thereby ask the customer, "What do you value? What are you willing to pay for? What is and isn't important to you?"
A good example is airline meals. In the past, consumers used to expect and get meals on every flight. But what was the quality like? Fair or not, airline food has been the butt of many jokes over the years. Today what we see is that the airlines have identified that the consumer didn't value that meal service, yet it represented a significant cost to the carrier.
So now carriers have an opportunity to replace that, perhaps with a better brand or selection, so that maybe the customer is willing to pay a $7 premium to have a good meal. And that strategy goes a long way toward enhancing the brand value and brand image of the airline.
And also leaves everyone full and happy.
Airline Futurist • Miami • www.us.amadeus.com
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November 5, 2008
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It's no surprise that Americans are traveling less during the credit crunch era. One of the pillars that had been supporting domestic carriers in the downturn, however -- international travel -- is now also showing signs of slowing. What started out as a tough year for air travel has become a very difficult one, with operating costs still high, and capacity reductions tied to those high costs.
But airline challenges go beyond the current credit crunch. Airlines derive credit from a variety of sources, so air carriers are not tied to just the banks involved in the credit crisis. It's more complex than that. With credit tight, IT investments made by airlines are also at risk -- ironically, the same investments that would enable them to be more nimble and efficient in tight credit situations. But I believe that if a particular technology carries with it a proven return on investment, those types of projects can and will get done. The technology that airlines really want and need is that which allows them to most effectively manage their operations, including enabling more passengers to manage their own air travel.
Airlines are focused like never before on projects that will ultimately cut costs, drive revenue growth, and, logically, profits. For example, a robust technology that enables airlines to more efficiently manage passenger and cargo load factors or departure operations will help them save money and resources. Also, expect to see more customer relationship management-based pricing. This is ticket pricing derived on your value to the airline. Basing prices on a formula that uses your historical data, credit data, etc., is something none of the airlines are doing yet. But other businesses do it successfully, so it's on the table.
It is hard to say how soon this all may happen. But realize that in the not-too-distant future, airlines will be able to recognize you and your history with that carrier just as other hospitality companies do. You will someday soon be identified when your ticket is booked, which will trigger an automated system of weighting your customer value to the airlines. To reap the rewards, of course, you will need to provide more information up front so that the airline will be able to recognize you, log in your loyalty program number, and apply their reward policies. Bottom line: The credit crunch is accelerating change among the airlines. Although what the future holds is unclear, you can be sure the way in which carriers and customers interact will be far different. And there's no going back.
Airline Futurist • Miami • www.us.amadeus.com
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October 29, 2008
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As I gaze into what the future holds for air travel, I see that it is undergoing such a vast change that everything will be different in two years and everything will be unrecognizable in five years.
I predict that most network carriers will be charging for seat selection in the next 12 months. I predict that European carriers and U.S. carriers will merge, perhaps not officially, but unofficially in ways that will get around the U.S.'s concern about foreign ownership of air carriers. Even more cities will be abandoned by the network carriers. Other carriers will move into the vacuum where it make financial sense. The low-cost airline model will completely take over at all of the major carriers.
Some other factors that will shape the future of air travel:
— Open Skies negotiations between the U.S. and the EU
— Airline consolidation
— Merchandising to offer consumers greater choice and maximize revenue
— Fuel costs
— The FAA's outmoded air traffic control system
— The introduction of the Boeing 787, and to a far lesser extent, the Airbus A380
The biggest overlooked factor in what's hobbling U.S. airlines is their IT systems, which are so old and outdated that most of the big airlines do not have the data capacity to adapt to changing times. I predict that either they will adopt new IT systems soon, or they will fade away.Operating costs are still high, and capacity reductions are tied to high costs. Americans are traveling less, and we are starting to see that slowdown in international markets as well.
Suffice to say that 2009 will be a very difficult year for the airlines.
Airline Futurist • Miami • www.us.amadeus.com
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October 9, 2008
08:04 am | 2 recommendations | Be the first to comment
Here’s a notion you might find difficult to stuff in your overhead bin: Airlines haven’t gone near far enough when it comes to "à la carte" pricing. In the airline world today, "à la carte" means experimenting with delivering products and services for an additional fee with the ultimate goal of growing revenues. And when network giants like Continental forecast netting $100 million from its checked bag fee, airline CEOs see an experiment worth pursuing.
Airlines have long sought the opportunity to charge passengers for the Cokes they drink, the bags they check and the pillows they use, but none dared take the plunge for fear of a customer backlash. But due to recent soaring fuel prices, ancillary revenue fees are now a matter of business survival for most players. They have also given carriers the chance to push the envelope. The new fees cause passengers to grumble and blogs to sound off, but they are teaching airlines what passengers will pay for. At Continental and other carriers right now, it’s checked bags. At United, it’s apparently not $9 salads over the Atlantic.
The business intelligence gathered today, airline CEOs believe, will lead to better, higher value products tomorrow as the experimenting moves beyond the cabin. They’re on to something. In addition to a window seat with leg room, how about a parking spot in A-Lot, adjacent to the terminal? Would you pay $5 for expedited check-in or a special pre-screened security lane? How about $20 or maybe $50 for a day-pass to the platinum flyer lounge for that layover in Chicago?
Beyond short term survival, the quest for ancillary revenue is a huge opportunity for airlines to listen to consumers, understand where there’s value and how to deliver it best. And there’s no shortage of partner opportunities with other service providers that touch the flying experience.
Ultimately, over time, airlines will take à la carte pricing to extremes. But it will evolve from today’s perceived “nickel and diming” to differentiated product offerings that give customers choice, value for their money, and service that meets their individual needs.
Airline Futurist • Miami • www.us.amadeus.com
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September 24, 2008
08:37 pm | 3 recommendations | 2 comments
As big as the Airbus A380 is, its impact in the U.S. market will be muted for the first few years simply because there won't be a lot of them flying here. In fact, to date no American carriers have even ordered the plane.
The impetus for the A380 really rests with other markets and the real impact will be felt where the plane is configured like a giant bus to carry up to 850 passengers. Which speaks
to its purpose: To provide major point-to-point, global, long-haul flight capacity.
Still, the A380 is scheduled to fly into L.A. starting in November, and LAX had to make a host of airport alterations to accommodate the mammoth jet. Among these changes was extending and hardening runways, expanding gates, and modifying departure control systems to handle the flood of passengers boarding from or disembarking into the terminal.
One of the benefits of the A380 is that since more passengers can be carried on one flight, fewer flights are needed to a destination. Therefore, it will open up more gates, and, in turn, invite more competition, which is good for fliers. Also good is that with a greater number of passengers carried per flight, greater efficiencies in fuel consumption result.
On the other hand, consolidating seat capacity into one big plane also consolidates the
schedule, meaning fewer schedule options for fliers.
Qantas is doing the first flight into LAX, and one factor that will smooth introduction of the new plane into a new market is that Qantas will be using the most-advanced departure control system technology. This new-generation technology will enable the airline to streamline its operations, including easing seat-swapping, expediting boarding, and more easily reaccommodating passengers if flight schedules are disrupted.
So, the story of the A380 isn't just the technology that made it possible, but the technology that the airport and the airline have to adopt to take full advantage of everything the A380 has to offer.
The immediate impact may be limited, but as more A380s take to the air, you will begin to see a demonstrable improvement in efficiency and customer service across airlines and at airports that are flying the super-jumbo.
Airline Futurist • Miami • www.us.amadeus.com
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