Prediction assessment time is nearing

I’ve already noticed a few other travel writers putting their 2009 industry trend predictions to the blowtorch recently to see how many came true; I’m not too confident of getting a pass mark of over 50% on my predictions when the time for assessment comes…and it is approaching.

One thing that didn’t make the official predictions list, but which I wrote about back in April was Southwest and their free checked baggage policy. At the time I felt like I was swimming against the tide of industry opinion

But the point with Southwest above is that as much as the incremental revenue from a la carte fees will be a good thing for the airline industry, there will always be branding positions that if well enough defined and properly appreciated by consumers, mean that one or a few airlines can go against this trend, and maybe even benefit.

So it is with a small sense of  ”I told you so” that I repeat this comment from an article in USA Today.

Gary Kelly, Southwest’s CEO, says the no-fee policy has helped the airline increase its share of the domestic market by about 1%, or $800 million to $900 million

I need to indulge myself in a very small pat on the back here, as I’m pretty sure I’ll be eating humble pie when the official predictions are reviewed!

To wrap up this post: In other direct channel news I saw in the last couple of days, Qantas are tightening the terms of their frequent flier program, and Cathay have added some new functionality in their online servicing flow.

 

Somehow I doubt that making seven figures is really this easy

Last week I saw a press release that couldn’t be ignored. Unfortunately for Spirit Marketing who put it out, I’m walking away a skeptic. Here is one part:

It is anticipated that airlines with more than 20 holiday routes will earn well into 7 figure incomes, with little moreto do than making a few links, and Spirit Marketing completing the experience.

Anything promising something that ”for the airlines will probably be the largest ancillary revenue product they will have” certainly gets me wanting to know more, but in this case, the more you dig, the more likely you are to hit rock rather than a pot of gold.

Airlines wishing to join this will simply have to include a link in the booking path and we will do the rest.

That line is clearly from someone that has not had much experience selling via airline websites before. But I was still curious to know more about Spirit Marketing, so I took a look at their website. Success has many fathers whilst failure is an orphan, but one success they do claim is involvement in FHM’s guide to Britain that is apparently a very popular online destination site; when I searched on Google I could not actually find the FHM guide, and in fact found another site claiming Wicked Media were behind it – but I still couldn’t actually see this guide myself.

Maybe Wicked Media and Spirit Marketing are one in the same, as both sites are claiming to be the creators of in-flights city guides for various airlines. Who knows, but one thing I am pretty certain of is that earning “7 figure incomes” take a lot more than adding a link in the booking flow.

 

Air Asia has the most fans on Facebook

British Airways may have had an unfortunate outage with their website last week, but today I am much more interested in a statistic from Asia. Apparently Air Asia have the most fans of any airline on Facebook, but what does this mean for other airlines?

Meanwhile, the airline’s website airasia.com attracts 20 million unique visitors per month, http://blog.airasia.com is ranked as the world’s second most popular blog site by an airline, and AirAsia Group CEO Tony Fernandes’s blog http://tonyfernandesblog.com is the most popular in Malaysia by a corporate leader. The airline’s blog site, launched in September 2008, registers an average of 55,000 unique visitors per month. Tony’s blog was launched a month afterwards.

I recently caught up with a colleague from Bangkok who was speaking very highly of Air Asia and telling me that most people don’t realize that they are the same size in terms of passengers flown as some of the much better known airlines in the region. It was interesting to read their blog as well; I’m still planning to do a proper follow-up to my previous post on airline blogs, but one thing they are doing right is getting across the personality of the brand through the personality of employees.

In the words of CEO, Tony Fernandes (who also happens to be their number one online personality)

AirAsia’s culture of innovation called on us to explore and fully utilize new media and social networking as communication and marketing tools. By adopting these, we ride on technology to very quickly and conveniently give tens of thousands of people constant up-to-the-minute updates about AirAsia. In turn, these people – social networkers – help us tremendously by spreading word about our services and providing feedback for our improvement.

Back to the Facebook page, and when I took a look, the main item was “What are your bad experiences with AirAsia?” with various people giving their opinion. This is exactly the reason why so many airlines are afraid of social media. But what is even worse than ignoring it completely is to dip a toe in the water and then run away scared. Sometimes it is better to be seen as ignorant rather than intimidated. Air Asia is certainly neither of these.

 

Blogging – Seemed Like A Good Idea At The Time

No, I’m not quitting blogging. I’ve borrowed the title of this post from a great article on the Travel Trends website where they illustrate with examples a number of travel companies whose blogs have gone stale, a kind of graveyard of past high hopes.

The only airline blog I´m subscribing to at the moment is from Delta, but I haven´t really been following it very closely latey. In the past I´ve followed stuff from Southwest, and also had feeds set up from Qantas and Iberia, although the last two weren´t really blogs as such. It got me thinking about how airlines should have a presence in the blogosphere.  For a start, the 4 Cs of Blogging illustrated here is a good reference point. Also try reading the article How To Blog With Passion and Purpose and if you are still not getting buy in across the organization, try 9 Ways To Convince The CEO To Use Social Media and Enter The 21st Century.

I´m hardly the right person to talk about syndication, especially given my own blog only appears in one place, but airlines have numerous web properties where a blog can be given visibility. I haven´t noticed airlines really promoting the fact that they have a blog when I´ve been to other pages on the website (of any airline), and this seems a little shortsighted. It is a chance to really get a across a bit of personality behind the brand. Getting customers to read the blog regularly will almost certainly have a more positive brand impact than many other means of achieving the same end, and it would definintely be a much cheaper way of doing it. One problem is language, as websites are typically set up in various languages, but the blog will only be written in one; or at least I find it hard to imagine how a blog can have much credibility if it is translated into other languages – then it would risk being seen as marketing versus blogging. But it just means promoting the blog only on pages rendered in the same language.

This post is really just a starting point, and I plan to come back to this point in future when I have time to properly look at what would and wouldn´t work for an airline. I´m in London this week for work, and probably won´t get a chance to blog much at all, but I´ll definitely come back and expand on this post at some point in the future, as I think blogging is an untapped opportunity for most airlines.

 

Ryanair have opened my eyes to a potential new stream of ancillary revenue

I recently saw news on Ryanair that was a good payments example of putting some power back into the hands of the merchant. They are dropping the fee free status currently held exclusively by Visa Electron:

Under a new arrangement passengers must now use MasterCard Prepaid if they wish to escape the costly surcharge, which adds £40 to a return trip for a family of four.

No doubt Mastercard is paying for the privilege, and maybe even Visa were paying before them. I’d never thought about it until I saw this, but I’ve seen numerous new payments methods trying to get off the ground, but user apathy really makes getting adoption difficult. Giving a large chunk of the advertising budget to a large merchant in exchange for making your payment method the only one without a payment type surcharge is a brilliant idea, whilst at the same time being a potential winner for the airline. The airline needs to be very careful that a competitor is not offering a different (more widely held) form of payment as fee free, especially if it is one that passengers prefer or is easier to sign up for, but on the whole it is a very interesting idea, and potentially a nice new source of revenue for airlines with a dominant market position.

If you don’t like that idea for trying to make a bit of extra airline revenue, then you could instead follow Mango, the South African LCC. They’ve just announced lending their brand for a pre-paid non inflight internet service. It appears you can actually purchase the service during the flight booking flow on the website and pay one amount at the end. Another idea I wouldn’t have thought of – let’s just hope it doesn’t distract users from actually completing the purchase of the flight.

 

The Aldi supermarket analogy when comparing airline websites

If you aren’t familiar with Aldi, they are the very successful German supermarket chain that has expanded into many other countries with a simple model. They stock about 1,400 popular food items (a typical grocery store has 30,000).

More fundamentally, Aldi concentrates on selling core, high-volume grocery products, like ketchup, cereal and coffee. Want a choice? Forget it. By offering a single brand, usually a private label in a single size, Aldi executives say they can substantially undercut conventional retailers on 90% of the products the store sells.

It is not often you see a mainstream publication doing an side by side analysis of various airline websites, so well done to  Christopher Hinton for getting this published: The title of the piece was Airline Web sites battle it out for fewer customers and some of it I don’t agree with, but quotes like the one below really got me thinking about the Aldi analogy.

But industry observers and Web designers say the major network carriers are falling behind their low-cost rivals in producing dynamic, easy-to-use sites that help establish customer loyalty. That’s a problem because the number of business and leisure travelers using the Internet to find and book airfare has grown substantially.

Well not this industry observer (ie. me), but I saw The Economist picked up on the article and followed pretty much the same line about network carrier websites being dinosaurs. But back to my Aldi comparison, and my reference to the number of items stocked; consider all the Origin and Destination combinations between a network carrier website and an LCC point to point only website. Then look at the photo and imagine you put a shopper at the entry to an Aldi supermarket and a traditonal supermarket. The two shoppers have a race to see who finds the box of Crispy Oats first. Clearly the Aldi shopper will win. It is quicker and easier to find something when you are in a shop with less choice, assuming of course that the shop stocks that item. The same applies to airline websites. Not to say that network carriers can ignore user experience; in fact all the majors I know personally do take it very seriously, and tend to do a pretty good job at it. But they definitely have a tougher job on their hands with so much more product on the shelf, so to speak.

I’ll add a few more quotes from the article and my comments on each.

“In general these days, if I’m doing something fast and domestic, I feel more comfortable on the budget airlines,” said Jill Walters, a 35-year old technology director in Raleigh, N.C.

OK, So this is exactly what I was saying about simple – ie. domestic. Let’s see how she fares when she wants to book a connecting flight.

Walters said her favorite Web sites belong to Southwest Airlines and AirTran because they are easiest to navigate and don’t add last-minute fees.

Now are we talking website ease of use, or are we actually talking about a preference for an airline overall because their business model is less a la carte pricing?

Among the network carriers, she prefers the Delta Air Lines site. US Airways and Continental run second, but they don’t show the final price until the end, and they don’t show return flights until a departing flight is selected, which is sometimes important, she said.

I don’t even know if this is true, as I thought the practice of not showing final pricing until the end had disappeared well over a year ago, at least amongst any reputable carriers. I spent most of my time working outside of the USA, and there are plently of people focussed on writing about that market, so I won’t talk too much more on that, except to say the point about not showing inbound until outbound is selected is almost certainly a fare filing issue as they are probably filing round trip itinerary fares rather than one way combinable. Fare filing policy is nothing to do with the airline website.

“I really hate it when I can’t see all the flight options or it gives me prepackaged itineraries,” she said. “I have also really started to dislike sites that don’t include the taxes and fees, as it makes it hard to compare.”

Pushing packages to a person only wanting flights is definitely a bad idea, but she doesn’t mention which airline she is referring to. And not including taxes is similar to my point above – you’ll never ever hear me defending that practice as any website doing it will just drive passengers to the OLTA channel.

 

Is Social Media Addiction a Disease?

Hat tip to a post called How To: Be Active On Twitter Without Getting Burned Out! by Diana Adams for pointing me in the direction of the video below. Very, very witty stuff. Or very tragic if you can identify with any of the participants!

When you think about it, many of the things that used to called sins are are now more commonly known as diseases. Gluttony is now chronic over eating disorder; what use to be called sloth would these days more likely be referred to as chronic fatigue syndrome or any one of a number of similar ailments; even what was the sin of anger or wrath might now in some cases be referred to as attention deficit hyperactivity disorder. If that is the trend, then I’m waiting for the day when someone has to take sick leave from work after being diagnosed with Chronic Social Media Addiction.  

And to switch tracks completely, how about this: If you read the New York Times today you might almost be forgiven for wondering if they we using my recent November 11th post here as a source for story ideas! More likely a co-incidence, just as I found out yesterday with my “jumping the shark” line, but nice to live in a world of illusion every once in a while.

 

When will Twitter Jump the Shark?

I saw a very impressive effect fom Twitter a couple of days ago. A few people tweeted and retweeted my post on Icelandair, and traffic to this site quadrupled in a day. Gives me much more respect than I shown previously, but does the medium have legs, or will the tweeters get burnt out? Or is monetisation the shark to be jumped? I actually wrote the title for this post plus half the text, and then did a Google search only to found another site called Threeminds had recently used a very similar title, and had written a much funnier article than I ever could! But I stuck with it anyway.

Probably the slide in a presentation I have seen most often that irks me (and I’ve seen it in a similar from from 4 or 5 different presenters over the past year) is where in order to sounds like a guru on social media, the presenter pulls out a chart passing judgement on the social savvy of an airline by drawing a direct correlation between social savvy and twitter followers. As most airlines experimenting with Twitter are using it as a one way communication tool for sending special offer notifications,  the number I really want to see is Twitter followers next to opt in email subscribers for that airline, and then add the two together to give me some basis for comparison. It is not a “social media” measurement, but then again, solely sending offers via Twitter is hardly displaying social savvy. Take a look at this post from Dennis Schaal, where he demonstrates how this can be a double edged sword. Surprise, surprise – the danger of setting high expectations is that some people might actually hold you reaching them, and then criticize when you don’t.

On a totally different topic, I’ll close with this quote, taken from a good LCC summary written by The Centre for Asia Pacific Aviation:

Ryanair is less sanguine about the future of ancillary revenues. “Ancillaries are maxing out,” says Cawley. “We are already deriving up to about 22% of revenue and this is getting close to the natural limit. From here on, ancillary revenue will only grow in line with traffic.” Anyway, other opportunities for sales are not core: “We’re not retailers. We’re not into selling life assurance.”

 

WiFi redefined

I’ve mentioned it before, but in flight wifi is starting to look like it will end up as product evolution to be included in the ticket price rather than as a new source of ancillary revenue. I saw the following on the Orbitz blog:

…GoGo, it is struggling to find a market for the service it offers on AirTran, American, Delta and Virgin America flights. So it has cut the price of its 30-day pass to $24.95. That’s a 50 percent reduction.

And then this in the same post:

Bangkok’s Suvarnabhumi Airport now offers free Wi-Fi service, but you’ll have to present your boarding pass at an airline ticket counter to get a user name and password. The airport already has 126 computer kiosks that offer free Internet access.

I remember travelling through Vienna Airport a few years ago and being impressed with the free wifi. Don’t know if they still do it, but Bangkok is similar to Vienna in that it is an airport with a lot of through traffic, rather than solely a destination airport. Business travellers often have a fair bit of flexibility whether to choose or avoid airports like Vienna or Bangkok, so anything these airports can do to make themselves more attractive as a place to spend a few hours waiting for an aeroplane to refuel is a good thing. Wifi in travel is being redefined as a must have service,  which doesn’t really sit with the definition of ancillary I just looked up: Of secondary importance.

 

 

 

Datalex and Flight Centre to face off in court

Even though Datalex is a competitor to Amadeus in the internet booking engine space, I have occassionally written some positive things about the company. Unfortunately today is a different story, as you can see below:

Three weeks ago Flight Centre terminated the contract, and began breach of contract proceedings against Datalex in the Queensland Supreme Court two days later. It is suing for $US5.3 million it paid to Datalex, and a further $9.35 million in ”wasted expenditure” Flight Centre incurred.

And that is not the only bad news for Datalex, as you can see from this story that was published a few days ago.

Shares tanked over 8pc yesterday to close down 2 cent at 17 cent, valuing the company at just over €12m. Investors were concerned at the outlook, which is significantly worse than analysts and the company itself had envisaged.

The Sabre purchase of EB2 earlier this year was something I didn’t see coming, but I wonder if Datalex was under consideration for that transaction, and if not, whether they are now maybe wishing they were?