September 2009


The other day I made reference to data from Google showing declining visitor numbers on the British Airways website, saying I hoped to dig into the story deeper. And yesterday I printed out part of the PhoCusWright’s Online Traffic and Conversion Report, September 2009, but that is still sitting unread for the time being; so I was glad to see Timothy O’Neil-Dunne on the new Tnooz.com website picking up this theme and adding a bit more to the story. I still think there is a lot more to this than first meets the eye, but if ever I am going to find out the answer, this week is the week. It should be an interesting topic of discussion with some of the approximately 150 airline delegates attending the Amadeus e-Commerce conference in Cannes over the next few days.

But at the moment all I have are questions, a few theories, but no time to properly research the answers I know are out there somewhere. One thing I did read recently was an interesting article from Canada’s Globe & Mail called, A losing legacy – the decline of business class and in it they mentioned a 1970’s ad from Southern Airways. Great depiction of what business class could be (some would say should be), but at least from what I’ve seen, definitely isn’t.

And then whilst I was watching that one, an even better one followed. With today’s computer generated graphics this would be nothing special, but take a look at the 1972 flight attendant from Southwest, and just ask yourself how many takes were filmed, and how much hearing loss did she suffer, before they finally got this one right? Very impressive ad.

Too early to criticize the BA move to charge for advanced seat selection in business class, as maybe it will be a watershed in the industry. For now I’ll just use the term gutsy, which is a nice way of saying: brave move going first on this one. But all the press reports I have seen (eg. here, here, here) have totally buried the lead. At least the story on Business Traveller contains a great comments thread where readers have picked up the significance of this move.

The story here is not:

Liberal Democrat Transport spokesman Norman Baker who has campaigned on air ticket transparency said last night: ‘This is fundamentally dishonest. I am disappointed that British Airways is adopting Ryanair-style tactics.’This is not about listening to customers at all. It’s about getting extra revenue.’Mr Baker said: ‘It looks like those willing to pay will be able to jump the queue. 

The real story is in fact the idea to move the ancillary revenue juggernaut toward the front of the plane. Economy class passengers have swallowed all of this with the occasional grizzle, but more often than not have paid up (just look at the numbers); making it harder for airlines like Southwest to maintain their opposition to so called nickel and diming, especially when faced with pesky stock analysts. But will business class travellers be quite so accommodating? The global financial crisis has hit the front of the plane very hard, and this is what makes the recent move from BA even more gutsy. Personally I’ve been a big fan of BA business class in the past (specifically the seat configuration), so I would dearly love to see the internal research that lead up to and supported this decision. To date it really has been positioned as a premium product and I’ve always received my preferred seating allocation at time of booking without paying additional fees. 

I hope for the sake of BA this move pays off – assuming it does, it really could make the career of the airline executive who pushed it, as no doubt the rest of the industry will follow if indeed it is proven to be revenue positive. If the move fails, well the knives will be out.  

And before I finish with BA, if you work with airline websites, this link is a must click. I suspect the real story here is much bigger than one airline, so if I get the time I hope to dig into this issue of apparent declining website traffic a little deeper on a subsequent post.

I’ve recently tried to limit the amount I write on social media and airlines, as I’m getting the feeling the whole thing is being a bit overhyped. Not that airlines shouldn’t be taking it seriously, just that too many people are pushing their own agenda and this may not align with the interests of the airline in all instances. And then I see hilarious diagrams like this one here from David Armano, and it reinforces my view to ease up on this topic!

PrismRecently I referred to a social media report for airlines, and it looks like the same report gets another mention this week on ATW. But the ATW article has some interesting quotes, one of which is: “The burnout rate on Twitter is “significantly high,” he said. “One of the big problems is lack of resources. Another is airlines’ inability to determine who this project ‘belongs’ to: Is it the marketing department, communications, customer service?” The reality, he said, is that the effort “needs to span all those departments. It can’t be kept in a silo.” I’ve borrowed the quote before about Twitter being the next Second Life, but on the other hand I did see another travel industry blogger recently talking about its value.

The PR and Marketing world for airlines is changing, and this story from Advertising Age is well worth a read for anyone working in the field. “… with the rise of social media and the need for ultra-quick turnaround in creating and launching campaigns, could the day soon come when internal PR departments are steering the marketing ship full time?” It is especially relevant for people in the airline industry as the article contains quotes from Roger Frizzell, VP Corporate communications and advertising at American Airlines and Tony Cervone, Senior VP-chief communications officer, United Airlines.

On a different topic, I’ll be at the Amadeus e-Commerce customer conference in Cannes next week, and from what I hear a record number of airline delegates will be attending. If you are reading this and have already registered your attendance (I believe new registrations are being waitlisted as the venue is packed to the rafters), then I look forward to meeting you there, and maybe you’ll even get me into a conversation on airline social media despite my promises to go easy on the subject.

 

Last week I made a very brief mention of United, but then got side tracked retelling an unrelated poor customer service story. Today I am fully focussed on United and looking at the recent launch of what they call Premier Travel and Premier Travel Plus. Here is what how The Wall Street Journal described it:

“Premier Travel, which can be purchased online when booking or when checking in, lets you check two bags at no charge, use premium security and boarding lines, get a seat in United’s “Economy Plus’’ coach section with about five inches of extra legroom and earn a 25% mileage bonus. With Premier Travel Plus, you get double miles and access to United’s airport clubs in addition to the other benefits. For the shortest trips, Premier Travel starts at $47 each way and Premier Travel Plus starts at $84 each way. If you had to pay $40 or even $50 in baggage fees, for example, you might as well get the other perks. The options are available for both domestic and international trips.”

This reminds me a little of why insurance is so successful on airline websites – people generally don’t read the policy, but assume they are covered for everything and therefore buy it because they don’t understand it. That was not a typo. Just trying to sell one item like lounge access often looks quite expensive, but when you bundle them, especially with harder to measure items such as priority lines and extra frequent flyer points, I am sure the take up is going to be much greater than trying to sell multiple items than can be more discretly valued, and which often look like inferior value for money. Whether you charge extra for the bundle of benefits as an add on, or do it via upsell to a higher fare family as Froniter did quite well, at the end of the day, it is more money going into airline revenue, which has to be a good thing for the industry.

But what is more interesting in that WSJ piece is the comment from someone calling himself UAL Man:

“To be honest as an United Premier Executive this does make me question my constant patronage of United. As it is having status with United is becoming more and more hollow. One of the primary reasons chose to give my business to only two airlines is that having status on each saves time with priority services. In the few months I’ve noticed how Priority Security with United is becoming more and more of a joke. I’ve noticed priority screen lane lines growing. Adding more people to the priority category only serves to devalue its existence, and the benefits of loyalty. Despite the irritation, I’ll stick with United as my primary for now. The benefits of free extra leg room in Economy Plus are invaluable to someone who is over 6 ft. 3 in. and mostly legs. However, the moment that seats in Economy Plus become scarce for elite members is when I switch all of my business over to my secondary carrier.”

Almost everything has a trade-off, and this may be the trade off here. How much do you devalue what top tier frequent flyers receive as part of their status, and will the extra revenue from selling Premier Travel compensate for this decline? That is a much bigger question than I can answer here.

I really should be writing today about the excellent idea from United to bundle various ancillary items into an opaque package and offer them as an upsell, but instead I’m going to have a personal rant about the hotel I stayed at in Beijing earlier this week. Everything was good at the Crowne Plaza Sun Palace right up until the point I was checking out. So this complaint is more directed at whoever set up the card accceptance system (probably linked to their reservation system) and failed to properly train the staff in its use. Nothing undoes the good work of hotel staff more than a customer feeling like he has been cheated on his bill.

The crux of the problem comes down to dynamic currency conversion. I’ve talked about DCC before when discussing the payments process for airline websites, and when going over some AVIS financial results, and I’ve always been a big supporter of DCC as a revenue generator for airlines with large domestic networks who sell direct to visitors living in countries with a different currrency. It really is a nice source of ancillary revenue, even if sometimes the implementation is not as straightforward as one might hope – one airline once told me 5% of passengers on the website used DCC for their purchase. But the airline passenger is always given a choice to choose to pay in the airline’s currency, or the currency of his own credit card. This is where the Crowne Plaza Sun Palace lost me.

The credit card slip, just above the area requiring a signature, contained the text “I declare that I have been offered a choice of payment currencies and my choice is final. I understand that the currency conversion is not provided by VISA.”

The card terminal picked up that my card issuer bills me in Euros, so the amount I was signing for was denominated in this currency – it looks like they’ve added a margin of around 4-5% onto the exchange rate. I asked instead that the charge be processed in local currency, especially given that I clearly was being told that I had a choice. A Mr E. Y. Kim whose title was guest relations manager was very friendly, but neither he nor the lady behind the counter had any idea how to fix it and give me te choice I was supposedly being offered! In fact, he tried to explain to me that it was VISA doing the conversion until I showed him what was printed on the payment slip to the contrary. I remember when AVIS in France launched DCC and whenever I rented a car in Nice they wanted to charge me in Australian dollars, and the staff rarely knew how to change it. I used to have to tell them to override the country code in the address field as this was what drove the default currency in their system – unfortunately at Crowne Plaza I had no idea how to tell the staff to override the default in their system, so their lack of training meant my complaints were going nowhere. As I had a plane to catch I had no choice but to just sign it and leave; next time I’m in that part of the world I’ll definintely be looking for alternate accommodation – hopefully a hotel that trains their staff better before letting them loose on the paying guests.

Yesterday I returned from a week long business trip to Hong Kong and mainland China – three different airlines flown and meetings with three different airlines. The headline of this post is really just an excuse to use this photo of a huge key from Beijing’s Forbidden City, but as it was my first time in China, I walked away with a much better understanding of some of the opportunities, but also the challenges in this region insofar as it pertains to IT for the airline industry.

Unlocking the Chinese Market

Unlocking the Chinese Market

Getting to Hong Kong was a less than pleasant flight. I was sitting near the very front of the lower deck of a 747, but I can’t name the airline as they are getting close to buying something I have been working on with them for close to a year. I’m sitting in seat 4A on the tarmac and drips of water are coming down from the air conditioning vent above my head. Maybe only one drip every 2 minutes, but very, very annoying. I mention this fact to the flight attendant but she just wipes the vent with a rag assuming this will stop the problem – it didn’t.  Another vent was even dropping a tiny fragment of ice onto my head about once every 5 minutes! The guy in front of me put a cap on his head, and it looked like even seat 2A was affected. Luckily once the plane got in the air the dripping stopped, but then as we got close to landing in HKG it started again. But the worst part was the vent where the ice had dripped prior to take off. At this point in the journey a horrible noise that sounded like a bucket of ice being shaken around commences above me. For the next 10-15 minutes until I got off the plane, I was sitting there fearing a bucketload of ice was about to be dropped on my head – fortunately that never happened, but it is a flight I won’t forget in a hurry.

Fortunately the subsequent flights were both much better experiences. Dragonair really had a quality product and great service, and the seat on the Air France 777 coming home was the best business class seat I’ve experienced in a long time. And for a good recent story about one big new opportunity in the Chinese market, take a look at this story on the opening up of flights between China and Taiwan.

More news I missed whilst on vacation. In October British Airways will be launching something that has taken hold with a number of US carriers – selling advertising on boarding passes.

The move aims to capitalise on the 500,000 daily visitors to ba.com and the 12m online boarding passes issued by the airline to enable advertisers to target people by individual flights and specific demographics.

At a recent conference I shared a meal with Duane Woerth from Sojern. I liked his Victor Kiam styled story about how he got involved with the company – great to see people so passionate about their work. In July 2008 Sojern announced American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines and US Airways as launch partners, but I’m not sure who is behind the BA initiative, or whether it is all in-house.

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