December 2009


The title has nothing at all to do with direct channels, but after flying from Warsaw to Riga this morning on an ATR 42 I experienced something new – sitting in business class and being seated in the final row of the cabin – row 12 in this case. The concept took me by surprise, but it actually worked pretty well in this instance. My visit to Riga is totally unrelated to anything on direct channels, but it is business nonetheless. After my last two posts on reviewing 2009 predictions and then coming up with 2010’s predictions, today’s should be much easier to write.

Riga, LatviaAs I’m looking for an easy post, I’ll recount a few of the things I’ve been reading lately. A list of 5 ways to avoid a la carte fees has it’s first recommendation being to buy packaged deals – not sure I agree with that one, but I did predict rebundling would be a trend for 2010. I also found myself disagreeing with most items from a list of 7 trips you should never book online eg. I have written before about around the world travel being bookable online; but maybe the idea about not booking a honeymoon online has merit as then you can both blame the travel agent rather than each other if it turns out bad!

That much hated hotel practice of resort fees received some great comments from readers here. I also found some interesting data regarding travel applications on Facebook meeting with an underwhelming response from users. And to kind of sort of bring it back to where I started, I saw this news from Finnair:

The airline recently received its fifth A330, which has been equipped with a business class seat that reclines to a fully horizontal position. A new layout has also been designed for the plane, reportedly offering more privacy.Markku Remes, Finnair’s customer experience development manager, said: “The seats have been arranged so that nearly 90 per cent of passengers have direct access to an aisle.    

There is one thing I haven’t yet started reading, but which a thoughtful reader of this blog gave me as a Christmas gift. I was very impressed that the hint I dropped a while ago on this blog found it’s way to me in the form of what I am sure will be a very interesting read. A public thank you – you know who you are.

The ink is hardly dry on the assessment of my 2009 predictions for the travel industry, and the airline direct channel in particular, but now it is time to see if I can do any better in 2010. I haven’t read too many other travel industry predictions (although I do find them interesting and hope to remedy this over the coming weeks), but I did see one person, also called Martin, using word for word one of my 2009 predictions as his 2010 prediction. Pure coincidence of course, but I mention this for the sole reason of covering myself in case by some another industry pundit has made a similar prediction to one of mine below.

1. Death of Twitter as a model for customer service

Despite being a fan of almost anything Web 2.0, I have no time for the evangelists pushing Twitter as the model for customer service. In 2010, someone will do a decent study comparing the cost of using traditional methods versus social media for dealing with customer complaints. I saw some initial hints on this prediction in 2009, but those hints were far outweighed by news like US cable TV company Comcast now employs 12 people to field customer service enquiries through twitter and stories such as Twitter: the killer app for customer service.


After watching the above video, I need to make one caveat. If Twitter is manned by volunteers who are advocates for your product, then this is very different to actually employing people to use Twitter as a customer service tool. In this case, it is just a modern version of the bulletin board or user forum; and there is no doubt that pushing passengers to online self service is a winner. Below are some interesting stats regarding online forums.

In an airline environment, the volunteer help model is far less applicable than in consumer electronics, but what I am really hoping to see in 2010 is a study showing that the way to really improve customer service in a cost effective manner as a combination of call centre and online support, with Twitter being the domain of people in the airline PR department.

2. In flight entertainment will move beyond the cabin

Virgin America was generating some good hype about the potential of their in-flight system back in 2007, although I don’t think anybody ever expected the games to appeal to true gamers. But there is something potentially very interesting here. In June 1999 they were running a puzzle solving game that could be played in flight to win some decent prizes, and I heard of another interesting but unverified example from Air New Zealand. With Linux OS  and Panasonic popular (and taking at least 48 technicians to install and maintain for Turkish) there is a need to show a more direct link between IFE and revenue generation. The obvious stuff is pay per view and food ordering, but with open source software and a flexible environment for installing new apps, there is huge potential to do so much more – maybe even to blur the line between in flight and pre flight IFE, for want of a better term.

I was recently looking at a 2009 summary of the main US carriers and their IFE’s, and also thinking of Guestlogix expanding what is sold in flight, but despite the title of this prediction being pretty clear, I’m still being a little guarded on details. The airline that gets it right first will be copied quickly by others – unfortunately this IFE related prediction doesn’t offer the same defensible first mover advantage that building a successful travel social network would have, but it certainly would make the career of the first airline marketing executive able to pull it off. I think 2010 will be the year that an innovative airline manages to tie their website to the IFE product beyond just listing what movies are playing, and be able to show increased revenue as a result.

3. Semantic will fizzle, not sizzle

For as long as I’ve worked with airline websites (approximately five years) I can remember certain people trying to say the future of search was semantic; the only thing that changed was that until about a year ago, they never seemed to use that term, but now they love it.

In a way, part of this has already happened with general web search, as the average number of words per Google search has increased; but this is different to travel and airline websites, as you are only searching content rather than content AND availability. In this latter case, returning thousands of results with inaccurate availability is really not useful at all if the internet user still has to do a second, old fashioned  non semantic search, at the end of the inspiration piece in order to book flights.

Be careful not to misinterpret my dismissal of semantic search on airline websites for more than it really is – I am dismissive of long free text queries, but when it comes to bringing airlines further to the left of the Bow Tie Model through the use of wider search criteria and cached availability data that can be sorted using sliders in the browser, then this I am absolutely in favour of. Remember one thing, those searches will be best facilitated by structured inputs. Maybe one day I’ll be able to enter a free text semantic search into a travel booking website, but even for those that offer it in 2010, the results will be nowhere near as good as when the same user enters it in a structured format using drop downs and check boxes to set preferences, and therefore semantic in travel booking sites will not be widely embraced by consumers in the coming year. And probably not for quite some time beyond 2010 either.

4. Rebundling is the new A La Carte

OK, so the title may be a bit provocative, but no-one in the industry can deny that ancillary revenue and a la carte pricing have been done to death during the past 2 years. Hey, I’ve been fanning the fames, so it is kind of like the sad but frequently true story of the volunteer firefighter who was actually found to have lit the fire in the first place!

I first mentioned rebundling in March 2009, but back then I was still a little skeptical. Then in April, seeing the apparent success SouthWest was having, I started looking at this topic in a different light. And then in October, my mind was made up. A la carte will not go away, and nor should it, but what happened a lot in recent times was airlines pandering to stock market analysts and reporting growing ancillary revenue numbers whilst at the same time not remembering one of the most beautiful things about the internet for airlines is the ability to properly brand airline tickets into fare families. Thinking back to what I wrote in May on Frontier or in July with the iPhone example, upselling is something that a lot of people talk about, but few really get right. 2010 will see an increased focus on better defining the customer value differences between fare families, and as a result an increased focus will be placed on ticket revenue PLUS a la carte fees, rather than just the slavish regurgitation of ancillary revenue stats that we saw in 2009.

5. Data will transform travel

This prediction will probably be the most difficult one for me to rate the success or otherwise of in 12 months time, but I am convinced that so much more can be done with data. Starting with what already exists in the PNR, and then moving to the loyalty database, the data warehouse and wherever else passenger data resides.

The data and analytics market has seen considerable action this year, from Merkle’s deal for CognitiveData to Adobe’s acquisition of Omniture. Even credit card giant American Express launched an analytics and consulting division last month that promises to help marketers make their campaigns and research more relevant. Leading Hotels of the World is working with American Express to supplement the analytics work it does based on its customer data. The sales and marketing distribution company markets its services to upscale independent hotels.

I have no idea in what form this prediction will come true, but there is no doubt airlines and their partners have a mass of data that can either be used in house, or even merged with third party sources to create extra value to shareholders, and 2010 should be the year in which this becomes a reality. Maybe the Super PNR will be part of the answer, but it is not the only contender.

Back in January this year I made 5 predictions that I thought would be key travel industry trends applicable to airlines seeking profitable innovation in 2009. The time for self assessment has come. Were any of them on the money, or was I living in a land of self-delusion eleven and a half months ago?

I’ve rated the accuracy of each prediction in percentage terms – 100% means I was a visionary (at least in my own mind), whilst 0% means I was had no idea what I was talking about. Here we go.  

1. Nudge is the new Push (Prediction Accuracy 50%)

Here I was basically saying that marketing to customers will get even more sophisticated, more segmented, and less obtrusive. What I wrote on BlueKai back in April was one example of this trend (albeit with some privacy concerns), and retail data specialists dunnhumby fitted this trend as well, but in June when writing on passenger fare alerts it was becoming clearer to me that this prediction probably wasn’t going to score 100% when it came time to write this review. Maybe if more airlines were following the ancillary revenue model of Air Pacific, I might have scored better on this one.

For more on this trend, especially how it ties into social, go to the 10 minute mark of the interesting video below from Rich Wong at Accel Partners. He claims we are  only 5% of the way to understanding how social will impact marketing. Some of his relevant quotes are: “Social is the new SEO” and “The new emerging space (in marketing) is the use of these social techniques” and “any marketer… that doesn’t understand how to use social is going to miss out.” Maybe social will become the ultimate embodiment of Nudge Marketing, but we are clearly a long way from that today.

I liked a lot of what he was saying, as we now have so much data that enables us to market better to customers, but how many of us are actually using it in an intelligent way?

2. Defriending (Prediction Accuracy 10%)

From a recent WSJ article:

Just as Facebook turned friends into a commodity, it has likewise gathered our personal data – our updates, our baby photos, our endless chirping birthday notes— and readied it to be bundled and sold.

So I give up. Rather than fighting to keep my Facebook profile private, I plan to open it up to the public – removing the fiction of intimacy and friendship.

But I will also remove the vestiges of my private life from Facebook and make sure I never post anything that I wouldn’t want my parents, employer, next-door neighbor or future employer to see. You’d be smart to do the same.

I really thought more people would react the same way when I predicted a mini backlash against what one might call social networking just for the sake of it. To me personally a social network only makes sense when it adds value to my life. Linked in is really only useful in that it is a way to keep email addresses up to date for people who I might only want to contact once in a blue moon (actually the Tripit plug in is also a plus) – ask youself, what value do you really get from the site? Massive potential, but I could have said exactly the same of Linked in back in 2005 when I first signed up. This year I’ve even been turning down some connection requests, and reducing the amount of personal information available. So whilst there hasn’t been a big move towards defriending, I am sensing from the behaviour of those around me that many are becoming more discerning in their use of social networking.

Twelve months ago a number of airlines (well, almost any company in any industry really) had the “build it and they will come” mentality with social networks –  so they did built it, but the users didn’t come as expected, and those that did rarely came back. Defriending may not have panned out the way I expected, but people working in social applications now are taking a very different approach to how they grow the network, especially when you look at the rise of OpenID and Facebook Connect combined with the novelty having worn off social networking just for the sake if it. Maybe I need to think of a new term, as defriending doesn’t properly capture what is happening in this market.     

3. Location, Location, Location (Prediction Accuracy 100%)

This was my best prediction of the lot! Back in February I was writing about Latitude, and then a few weeks ago I saw a Morgan Stanley report claiming mobile internet will be twice the size of desktop internet. But this prediction was not just about mobile travel apps, it was specifically about using a person’s current location to sell to them more effectively, such as the potential BA or Sojern have if they do it right (some lower tech examples of location marketing). The best example of location, location, location I have seen in travel is from Lastminute. I was recently alerted by Eye for Travel to the Topsee iPhone app. They wrote:

You just shake the iPhone and 9 pictures appear floating on the screen as well as their distances from you. The pictures are of food, coffee, sweets, some are statues, bars, signs, works of art, dancing, caves or beds or just about any of the wonderful things you can find in London, or any cosmopolitan city. When you select a pic it gives you a better explanation of the attraction and access to its address, phone number and a street map showing where you are and where you have to go. If you don’t like the selections shake it again and 9 more images float up to you. It’s a great mixture of good looking intuitive design, interesting copy and map content.

Outside of travel you have really innovative companies like Foursquare, but for travel, take a look below at this lastminute demo of their app.

Then go back to the first video of Rich Wong, specifically the 13.30 mark where he says, “I think that mobile location space is a pretty interesting space; it’s a space that many of us continue to look at.” His firm funded AdMob that was sold to Google, so he definintely has credibility on mobile.

Without even thinking about this too hard I can visualize something I’d love to try with an airline that involves using location, location, location and building a simple yet compelling app with real revenue generating potential aimed at business travellers. My location prediction above might score full marks, but unfortunately I am not seeing airlines really take advantage of what is possible. There are too many me-too apps from the majors, but the real innovation is being left to start-ups. It almost brings tears to the eyes of someone like me who is such a strong believer that innovation and intrapreneurship really can exist within large companies.

4. One efficient airline direct channel back office (Prediction Accuracy 25%)

I’ve been working with airlines such as Qantas, Mexicana, Aegean, V Australia, El Al, Cathay Pacific, Avianca and others during the past year on different initiatives aimed in part at making their direct channel back offices more efficient. Despite achieving some really good successes at a number of airlines, I have to be honest and say that I am not sensing a groundswell of opinion developing within the wider airline commuity to aggressively go after these costs in a structured manner that will yield long term benefits. There are some very interesting initatives in the pipeline with various existing and prospective customers that I can’t disclose here at this point, but even these are not widespread enough to warrant a score above 25%.  

One thing I’d love to do is host a conference and get airlines to share ideas, problems and success stories in this area, but unfortunately at the moment it is not something currently in my plans for 2010. Noboby would deny that it is hardly the sexiest of  topics, but in a market over-crowded with conferences on ancillary revenue and mobile, a conference on back office automation (maybe even tied in with fulfillment of ancillary services and electronic miscellaneous documents) would be something guaranteed to show a very positive ROI for airline industry participants.   

5. Web 2.0 Killer App (Big Fat Zero Percent)

When I wrote my 2009 predictions I knew that this prediction was a long shot. At the time I said it only had a 20% chance of coming true. But something inside of me was really hoping I would be able to write about a massive success story at the end of the year. Alas, it wasn’t meant to be. I wrote about valiant attempts from Air France KLM, Amercian, and The Virgin Group to claim the crown on this and by June I was practically begging any airline to do it properly. Many of the ideas I had for this category a year ago are still waiting for an innovative airline to grab hold of – things like maximising use of existing PNR and loyalty data, targetting travellers on competitor flights with a compelling social offer tied to your own flight operations, linking the pre flight experience to the in flight experience via social marketing to generate incremental sales, and so many more. As of writing, the throne sits conspicuously empty, or at least no-one in the airline industry can claim to occupy it. Maybe the championship title will be awarded in 2010, or then again, maybe not.

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.

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.

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.

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.

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