Shearwater Blog

After reading the Delta blog for the first time recently (thanks to Brett Snyder for pointing me in that direction) I’m about ready to take back what I said recently about most corporate blogs being bland. Delta is an exercise

in how it should be done – not aiming to compete with what comes out of the PR or marketing department, but detailed content written by real people aimed at customers who are actually interested to know more about the company. But this post is not to praise Delta on their blog, rather to praise them on some new functionality that was announced recently on the blog.

I’ve added one image  from the five available on the Delta site, so if you work in online innovation for an airline definitely take a look at the original post. I’ve talked a lot in the past about web 2.0 and social networking for airlines, but I’ve always emphasised my opinion that the regional winners in this space will be the major airlines that can leverage existing information they hold and put it in a single location to make the passenger want to return many times to the airline website prior to travel – think of what most airlines today call their ”manage my booking” page as being maybe one twentieth of the way there. Delta has just put some very valuable, sticky and magnetic information online; other airlines should take this is a very big pointer of the direction in which innovation should be headed.

Just saw an article quoting a consultant from Oliver Wyman saying something unexpected:

“Unbundling was the trend, and that did create lots of value in the airlines. The future is in rebundling”

And I saw a comment today on this blog from a highly respected airline industry veteran (he identified himself to me via email) posting under the pseudonem Godzilla echoing similar themes and singing the praises of Air Canada’s approach to a la carte fees. 

Is the tide turning? Travelocity are copying Expedia by dropping air booking fees - not really related to the above, but will we see fees disappearing all over the place. My guess is probably not. I recall a senior airline exec (head of online for a major airline) giving me his prediciton that OLTA’s would cut or drop their air booking fees, but he said this to me 12-18 months ago. Before the comment from Godzilla and the quote from Oliver Wyman, I’ve never really heard too much serious discussion on this topic before – maybe I’ll be wrong and a la carte fees will go the way of OLTA air booking fees, but I wouldn’t bet on it.

Even though this blog is aimed squarely at people working in airlines, I tend to get a few colleagues browsing these pages. Today I thought I’d do a quick roundup of other Amadeus blogs out there, so if I have missed anything, please add the URL via the comments section.

My favourite would have to be Hotel Blogs by Guillaume Thevenot who works for Amadeus in London. Even though the subject matter of hotels is very different to my specific area of interest (airline direct sales channels), he sometimes goes out on a limb, is never afraid to express his opinion, and writes with a passion that indicates he really enjoys the area in which he works and writes. The other blogs I have seen from individual employeees both come out of our Miami office and tend to be updated less frequently. Owen Wild works in marketing and writes about a range of travel related issues, whilst Robert Buckman, Director of Airline Distribution Strategy for Amadeus North America often takes a futuristic view and writes on trends in the airline industry. 

Most corporate blogs rarely even register on my radar as they tend to be quite bland and feel as if they are written by a faceless committee; that said I was quite impressed with the initial content that the rail team were writing, but unfortunately the most recent post is from November 2008 so it looks like that venture has ceased.

Amadeus.net have been doing some occassional blogging, mostly related to their product, but I notice the latest post is asking readers about their upcoming travel plans. Good luck to Adrian and the team there as they work on making the content more varied and compelling for users of Amadeus.net. It’s been a while since I’ve really spent time on that site but it makes me think I should catch up with Adrian one of these days and find out his views on what airline websites can learn from Amadeus.net, and maybe even vice versa. 

Finally, I saw this event blog from 2008 Horizons in Bangkok. Naturally the blog has closed as the event is long past, but it got me thinking that maybe at some of the events I am planning on attending this year I could increase the frequently of posts during the events with conference specific topics. So if you see me at an industry conference and want to be interviewed for this blog (and hopefully have something interesting and relevant to say), just let me know.

A colleague in Nice once said to me it was important to write decent headlines in order to attract readers to a blog. I was skeptical, and besides, I had said when I launched this blog that my goal was to aim for a very narrow audience – if by the end of 2009 I could get 100 subscribers (or maybe substitute part of this number for regular unique visitors if people don’t use RSS readers) then I’d consider this venture a success. With these modest expectations, it was a pleasant surprise to see a reasonable increase in subscribers and overall website traffic to my recent article on Ryanair. Maybe it was all due to the headline about winning €1,000!

My own contribution to Ryanair’s request for suggestions might have been charging for child free rows. When it is my own child then it is great, but if I am travelling economy class and expecting to get some work done on the flight, the last thing I need is a childing jumping around and spilling food on me or my computer. On a 3-4 hour flight, I’d think this would be worth €20-50, and at least as much as I’d be willing to pay for an exit row seat. But I’d definintely pay for both of these options before I’d ever pay Emirates for a vanity frequent flier number. 

On a totally different topic, I’ll recount part of an interesting conversation I had with an airline employee today that presented a problem I’d never encountered before. His airline is considering moving their PSS to Amadeus and he was discussing a few items that he thought sounded like gaps. Naturally I can’t name the airline, and I’d rather not name their current PSS, even though I think the problem lay more with systems from different suppliers not talking to one another rather than an inherent problem in the existing system. The request was for a kind of “super button” to be created that could be pressed whenever a ticket failed to be issued, and this button would override the errors and issue the tickets in the online channel. At first I was totally confused, as when I see errors in the ticketing process they arise for a legitimate reason and we would normally queue the PNR for manual review (with a remark in the PNR detailing the problem to be fixed); the aim being that a back office airline employee would fix that particular error and then if appropriate send the PNR back to the Robotics platform for TTP/ET and subsequent automated actions. If the error messages are resulting from non critical errors, then I’d recommend just changing the business rules contained in the pre-ticketing checks that are throwing up these rejects  – a much better solution than a “super button” to override the errors. But if an airline finds it too difficult or costly to fix existing systems so that error messages don’t spit out contant false negatives, maybe it is time to look at moving suppliers after all.

Take a look at this page posted yesterday on the Ryanair website. Rather than getting concerned about bad publicity airlines are getting from charging fees for everything under the sun, Ryanair are actually running a competiton asking people to suggest new fees they could be charging passengers! 

“Since we confirmed that we are considering a toilet charge we have received a huge number of ancillary revenue suggestions from passengers and we want more. We are asking passengers to submit their ideas with the most creative winning €1,000 cash. “

I’m far from knowledgable on the Navitaire system, and I’d only suggest fees thatI know are easily implementable from a technical standpoint  and that don’t cost more in business process changes to implement than they deliver in new revenue; but the press release from Ryanair is more about fun than about a serious analysis of new sources of ancillary (a la carte) revenue. Not sure if employees from other airlines are eligible to enter, but if you have any great or amusing ideas, comments are more than welcome.

Was planning to post about United Airlines cutting off an email alert service for weekend special deals on flights, but then came across an even more interesting topic. Royal Caribbean Cruises did something very innovative in the social media space and suffered somewhat of a backlash. 

To read more click here, but the crux of the story is that the marketing team at Royal Caribbean identified a number of people that were speaking highly of the company on online message message boards and other social media forums and invited these people to join a program that gave them free cruises and other special benefits. Basically they were trying to ensure that their most vocal supporter stayed positive and continued saying nice things about their cruises, but it seems some others found out and started writing some very negative things about this marketing approach and about Royal Caribbean. 

Whilst in hindsight it is easy to say they could have made the program seem less like ”cash for comment” and more like getting customers to trial new services, there is no denying this was a very innovative approach to marketing. I don’t have data to support this, but I am pretty sure word of mouth is much more important when choosing between different cruises than it is when choosing between one airline and the next, but don’t discount the fact that some (maybe many) of your customers are searching online forums for information on your airline from what they belive to be other passengers (it could always just be airline employees or competitors writing such comments). I wrote on this theme once before, but to ignore online reputation is a serious oversight by any marketing department.

One of the recurring themes within this blog has been the difficultly in nailing down an accounting definition of ancillary revenue to asssist in comparisons between airlines.  Therefore I was interested to be emailed the following from Chris Staab at Airline Information the other day in reference to an upcoming conference at which I am speaking.

Definitions: For this conference ancillary revenue is defined as: “Revenue other than through the sale of tickets that is generated by direct sales to passengers, or indirectly as a part of the travel experience” and a-la-carte revenue is defined as: “Revenue generated from selling products or services separately, which have traditionally been included in the price of the airline ticket.”

I tend to use the term ancillary revenue to cover both of the above categories, as airline executives in their financial commentary usually do likewise, but there was a decent article in the Wall Street Journal the other day looking at what Amadeus and Sabre are doing in supporting a-la-carte fees across various sales channels via the GDS central system. There is no doubt the GDS’s need to invest heavily in this area, and are doing just that, but it will always be the airline internet sites that can move first in this area as individual airlines do not have to wait for agreement on industry standards. Part of this innovation may come from airlines always trying to keep one step ahead of the effect mentioned below in the WSJ article.

“The new tools being developed by Sabre and Amadeus could make the world of airline fees far more competitive and bring down prices for consumers. If a higher baggage fee pushes one carrier’s fares to the bottom of display screens, the carrier may cut the fee to match prices, just as airlines typically do with base fares.”

Today I am already working with airlines wanting to implement a-la-carte pricing before it is available via central system, and we are using a variety of methods to achieve this. Eventually doing this via central system will make the accounting for this revenue simpler, as well as take better advantage of other products offered by the GDS’s such as internet booking engines, but I do not see individual airline innovation being replaced by industry standards; there will always be airlines thinking up creative new ways of getting extra revenue and wanting to get a jump on other airlines by implementing these ideas ahead of their competitors. If it means having to write eventually redundant code, or creating back office workarounds, the revenue potential of being an innovator in this area can make these drawbacks seem very small indeed.

I may have taken a decent break from blogging and most things work related, but it’s good to see that news on innnovation and ancillary revenue in airline direct sales channels hasn’t slowed during this period. I’ve probably missed a lot of interesting stories recently during my hiatus but here are a few things I’ve seen, some of which I may follow up on in more depth in coming days.

The big OLTA’s in the US are all seeing declines in average daily rates for hotels. This is a global trend, and is relevant for any airline relying on a percentage of the hotel selling price to make their ancillary revenue budget this year. The OLTA’s might be putting on a brave face saying they hope the lower prices will cause an increase in nights sold, but for airlines relying on cross selling to flight customers it is crucial to look at the conversion rates as you are much more likely to be relying a more limited set of potential buyers. My recent holiday was actually interspersed with discussions with a few airlines on exactly how to achieve this, as the smart airlines are all focussed on increased conversion for ancillary revenue right now rather than just adding a wider range of under-performing products. 

Viator announced a “completely redesigned and revitalized affiliate distribution platform.” I’ve worked with competitors to Viator (Isango and Unaira), plus I’ve got airline customers who use Viator, and I am big believer in this type of product. But the way it has been implemented to date by airlines is not doing the product justice and conversion rates are nowhere near where they should be. I’m working with one small carrier at the moment to remedy this, and hope to be in a position in coming months to be able to fully disclose the data on this. Ancillary revenue is not just for the big airlines, and any airline not giving this topic full attention is letting money slip through their fingers. 

Iberia.com announced they have redesigned their website . The following image reads something like: A new form of buying in only 3 steps

1. Flights according to price, time and flexibility
2. Passenger information
3. Buy or Reserve.

I haven’t had a proper look at the new booking flow, but congratulations to Javier Perez Rios and his team for continuing to push ahead in online innovation. One thing I am impressed with on their site is their implementation of affinity shopper, but I’ll probably revisit this topic in the future and write about it in more detail, as it warrants a post in it’s own right.

Spirit Airlines in the US now charges a lower fee to customers buying at the airport than those buying online.  Apparently Allegiant is doing something similar. Charging fees for higher cost channels is understandable, and customers can probably accept it, but telling customers the lowest price is only available from a difficult to access higher cost channels could end up looking like a cynical way to advertise fares that most people will be unable to purchase. It will be interesting to see if this approach catches on elsewhere – I hope we are not going back to the bad old days of advertising fares exclusive of all the taxes and charges.

One observation from taking time off is that you talk to non airline people a lot more than usual – this can be quite enlightening, as too often we in the industry think that because we understand something related to flight, then the rest of the population must understand it equally as well; or they are stupid if they don’t. First example was talking to someone booking an around the world trip and she had been looking at the oneworld site and gave me some unprompted positive feedback – this was rewarding given that I sold the original solution to oneworld, although the real credit should go to the teams from Innovata and Amadeus who worked on the implementation. Second example was sitting next to a shopfitter from Melbourne on a Thai Airways flight in economy class. Here was a guy telling me work was really drying up due to the global financial crisis, so one would expect he might be more sensitive to saving a few dollars, but he was scathing of his past experience flying Air Asia X to Kuala Lumpur and was sworn off the LCC long haul model (obviously not his terminology) saying he would never do it again. One negative opinion will not make or break an airline, but it was interesting to hear nonetheless. I’ve since had a look at their website, and it is one of the less user friendly implementations of Navitaire I have seen. Then again, Ryanair probably don’t win any awards for website design, but it doesn’t stop them successfully selling millions of flights online.

Finally, I went through Bangkok airport twice in the past month, and was disappointed / frustrated both times with how long it takes to get past immigration, and also through the security checkpoint. I don’t want to step on the toes of my friend Tom Merkli and his Late Departure blog, but what is it about efficient queue management that they seem impossible to implement. Thai Airways is a good airline (apart from the fact that I can’t buy an infant ticket online), but BKK airport was a below par experience;  luckily my frustration in BKK did not result in me reacting the same way as this woman who missed her flight from Hong Kong to San Francisco recently.