Shearwater Blog

This one is being pitched to airlines as a new form of ancillary revenue, and whilst an interesting product, I’m not sure Czech LCC SmartWings will be making a fortune on it. But I’m happy to stand corrected if proven wrong.

MeteoBonus is a new-to-the-market service that allows travelers to protect their travel investment against weather disruption. Developed by Airsavings, Meteobonus provides customers booking with SmartWings (and eventually other carriers) to purchase financial assurance against both rainy weather and lack of sunshine. MeteoBonus is not trip insurance, however, which is designed to protect passengers from the unanticipated calamity. Rather, Meteonbonus a financial derivative created to help consumers hedge against the two most typical holiday-busters: rain and lack of sunshine. The MeteoBonus process is straightforward: a traveler buys the weather protection, and if more rain than average falls in their destination during their trip (or if less sunshine is recorded), a predetermined amount of money is automatically paid to them. Meteorological data is based on the nearest weather station to the destination, and corroborated by the World Meteorological Association.

I’ve written many times on travel insurance and how profitable it is for airlines. EasyJet revealed earlier this year that travel insurance income had dropped due to regulatory changes, so maybe airlines are looking to make up for the drop elsewhere. Time will tell if Airsavings can tap into any of this opportunity in a meaningful way.

You may have noticed I described the Airsavings product as insurance, whereas they have been very careful not to use this word. Smart move on their part, as in some markets the use of the word insurance is restricted by legislation to genuine insurance companies only. This is why you see words like assurance or protection being used in its place.

In other ancillary revenue news of interest I’ve seen in the last day or so. Qantas owned LCC Jetstar boss Bruce Buchanan did an interesting interview, and here is one line from that story.

Only a third of Jetstar passengers, he says, buy meals on board. A third of them bring their own food and the rest are happy to go without

Last piece of ancillary revenue news I saw was from in-flight technology vendor GuestLogix. They have reported slightly improved profitability on much better revenue for the second quarter of 2010.

Three Google references in one post today, so let’s begin. I was very surprised to see the comment below in a Google forum recently.

A regional airline I work with has decided to ditch google translator from the website because (a) the translator inserted the words Delta Airlines in the translation (a competiting airline). And, the spanish is so bad that it make the company look very unprofessional to their spanish-speaking customers.

I honestly never knew people were genuinely thinking auto translate tools were good enough for such purposes, and therefore using them in that way. It is impossible to know which airline the person above is referring to but the fact that he says Delta is a competitor, and the fact that he doesn’t have native Spanish speakers on hand to translate the site, one has to assume he is working for a North American regional carrier. So if you are the person who left the above comment please contact me, for reasons that are about the become apparent.

Here comes the sales pitch. Whether you like or dislike Amadeus and the e-Retail internet booking engine, there is no dispute that with 24 fully supported languages, no other booking engine comes close if you are looking at a serious international push for your airline website. Numerous Chinese and other Asian carriers only use the international version due to restrictions on having to use a local CRS for domestic bookings; American Airlines and US Airways use e-Retail for international bookings, primarily for the language support. In fact AA even came out on top in assessing the best internationalization of an airline website in a recent study from Bytelevel Research.

Second Google mention of the day. If you were interested in the recent topic here regarding bidding on competitor trademarks in AdWords, then here is a subsequent and related story to that post, this time from a court in France.

Third Google mention, and it is a great read from Tim Critchlow on the official Google Analytics blog. If you are using Google Analytics on your airline website, then this post is a must read as he details an error that results in a massively lower conversion rate for customers using IE8. This same problem doesn’t impact browsers like Chrome or Firefox.

I find it very difficult to believe that any airline of any size would not have already noticed the difference in conversion rates and picked up the error already, but it is a sobering story nonetheless.

It was only a little over a week ago that I was having an interesting discussion with a Google employee around the question of bidding on the names of competitors. He was telling me that in the UK this practice was OK, but in other European markets such as Germany this practice was not permitted.

Now, only a few short days later, and it appears his response is already out of date. News last week was that the highest court in Europe has upheld and confirmed a decision by a previous court that bidding on trademarked keywords in search engines does not infringe on European trademark law.

From the Wall Street Journal article on this topic:

The European Court of Justice in Luxembourg ruled that Google isn’t liable for trademark infringement when it sells linked ads to a brand’s competitor. The court held that the search giant is merely a host for ads and that it is an advertiser’s responsibility to make clear if its product is different from that searched for. However, the court opened the door for brands to demand that Google take down ads that confuse consumers…Advertising makes up 97% of Google’s annual revenue, which totaled $23.7 billion last year… The ruling was the first time a court as high as the EU’s Court of Justice has ruled on the legality of Google’s AdWords. The court’s opinions apply to all 27 European member countries.

Personally I’ve never had a problem with this practice, but then again I’m not happy with comprehensive laws on ambush marketing either, so I’m probably not representative of the community view in the area of aggressive marketing techniques. I’m still waiting to see an airline the treated customers well during the ash cloud debacle using this as the basis for a comparative marketing campaign – ask yourself this: how many airline advertising campaigns fail to make any impact at all? Avianova being an obvious exception, but maybe for the wrong reasons. Going head to head and naming competitors or bidding on their trademarks so long as any claims are factual and customers are not  deceived should never be illegal in advertising.

On a different topic, if you are following what various airlines are doing with social, Tom Bates, the Air New Zealand social media and viral marketing head was quoted on the weekend discussing some of the initiatives they are undertaking in this space.

And in something unrelated to direct sales channels, but interesting for people working in the airline industry, I was looking at some numbers from Innovata on the word’s biggest airlines. I’ve only shown 1o of the top 20 below, and it is based on available seats kilometres whereas normally I am personally more interested in passengers boarded, but I has not previously spent much time looking at Innovata data and they also have some good stats on the growth of individual airlines in Middle East and China if you are interested.

GLOBAL TOP 20 AIRLINES – REFLECTING MERGERS – JULY 2010

Operating Airline ASKs/week

1. United Airlines + Continental 7,281,071,837
2. Delta Air Lines 7,130,185,986
3. American Airlines 5,048,206,129
4. Air France + KLM 4,868,923,205
5. British Airways + Iberia 4,257,303,280
6. Lufthansa + Austrian/Air Dolomiti/BMI 3,751,548,302
7. Emirates 3,632,461,247
8. Southwest Airlines 3,246,409,787
9. US Airways 2,459,020,063
10. China Southern Airlines 2,277,092,040

Sometimes I have people asking me what sort of jobs are available within Amadeus and what sorts of skills the company is looking for. Read below for one small part of the answer.

The project topic is the integrated disruption recovery for airlines, a critical and fast growing area of airline operations research, with many opportunities for exciting and challenging research for a new PhD. The PostDoc project will build upon significant achievements of the Amadeus-ENAC partnership in the field of disruption recovery. Simply put, the project aims at finding novel ways to address the disruption recovery problem and eventually propose a generic, accurate, fast and high quality solver.

Lest you think I am as smart as the person we are looking for above, please think again! I may have sold a related solution in the past, but there is a big difference between selling something, and actually building the complex mathematical model behind how it all works.

Disruption management may not be a direct “sales” function, but it does have a huge impact on the direct channel as it is the call centre and airline website that people usually turn to first when there is a problem.

Whether you call it Service Recovery, Disruption Management or some other name, there is no doubt from the airlines that I talk to that this is becoming a major area of interest as it not only improves customer satisfaction, but when done properly it will also have a major impact on lowering costs within the airline.

Sometimes people are surprised that I have only cautiously advocated the use and usefulness of Twitter in an airline environment, but my failure to unequivocally embrace all the new technology without question doesn’t even come close to the quote below.

The internet’s completely over… The internet’s like MTV. At one time MTV was hip and suddenly it became outdated. Anyway, all these computers and digital gadgets are no good. They just fill your head with numbers and that can’t be good for you.

Who said it – luckily not anyone working in the airline industry, but it was someone you will all know of. It was Prince; yes, he of Purple Rain fame.

The reason I lead in with this quote is because I left a reply comment here yesterday that I later decided warranted being put in a post, and the quote from Prince seemed to fit in nicely with the same theme. The story was along the lines of a senior airline executive making the comment that he didn’t “believe in social media.” My response (not to him, as I only heard the comment second hand) was “Yes, I don’t believe in word of mouth either.”

Sometimes the only way to highlight the ludicrous nature of something is to confront it with something equally ludicrous. Would it be fair to say that if you strip away all the hype, social media at it’s core is really just word of mouth amplified using technology? If so, how can you not believe in it?

I think what the executive meant to say was “I don’t buy into all the hype around social media” but this is a very different sentiment to what was communicated to me.

If you are reading this blog regularly, there is a good chance you have already made the short list for a job being currently advertised by Aer Lingus. Applications close on Friday 9th July, so get in there if you think this is your calling.

Retail Manager (Specialist Grade)

Managing the Retail/Ancillary Revenue function within Aer Lingus and reporting to the Director of Network Distribution, the successful applicant will be required to develop strategies to exploit new ancillary revenue opportunities and to maximise revenue from existing ancillary revenue products such as hotels, cars, insurance, on-board sales and baggage and seat fees.

And then more taken directly from the job description

Key Responsibilities & Deliverables include:

• Develop and deliver the Aer Lingus retail strategy, to include product definition, selling, collection, reporting and target setting at all touchpoints. IBE, Kiosks, Airports, GDS etc.
• Working with Catering and the In-flight sales teams, maximise in-flight sales margin and contribution.
• Identify, evaluate and develop business cases for new ancillary revenue opportunities.
• Negotiate contracts with suppliers and set targets for revenue generation from new and existing products.
• Benchmark non-fare revenue streams against other airlines and the broader retail environment.
• Analyse the competitive airline and broader industry for current and future consumer-buying behaviour.
• Develop and manage the relationship between external ancillary partners delivering the core ancillary products of hotels, car hire and insurance.
• Develop and deliver strategy for packaging of flights, hotels and car hire.
• Develop promotional activities with key partners and with the Aer Lingus Marketing Department.
• Monitor ancillary revenue performance per passenger through development of structured tracking and reporting mechanisms down to route and flight granularity.
• Track historical customer demand through quantitative analysis.

If you throw your hat in the ring, feel free to let me know how it goes – not for publication of course!

So much discussion over the past week on Google and ITA and the implications for travel, but a topic I’ll steer clear of given that it is a little too close to home. But I did see a nice diagram recently from PPC Blog that they are calling How Google Works and which I’ve reproduced below. Click the link in the prior sentence if you can’t see the image clearly enough.

This diagram reminds me a little of a company for which I have a lot of time, even though I don’t know any of the people there personally. I’m referring to XPlane. To massively oversimplify their business model, you pay them a lot of money and they give you very little in return – but this is the beauty of the model; it is all about quality and not quantity. There are few things that cut through the clutter like a really nice clear diagram or other visual representation of a process or a set of relationships. This is why I like things like the above diagram, and why companies like XPlane that specialize in the art of getting across a point in one page rather than a 50 slide deck in Powerpoint are of such interest to me.

Extend the analogy to your airline website, or any airline IT process, and to take a line written by Paul Coby when he wrote on the topic of Corporate IT just got interesting again – 6 IT mega-trends that are changing business:

Ease of use – it’s intuitive, you don’t need training

Simplicity is a beautiful thing, but I suppose one of the keys reasons Google choose to buy and not build their travel capability is the fact that airline IT is anything but simple.

Hat tip to my colleague Francois Henry who last week asked me if I ever read the blog of BA CIO Paul Coby, and with a blank look on my face I had to admit that I was not even aware of it. Over the past few days I’ve managed to take a look, and it is actually very well done. The blog is hosted on a non BA site (via WordPress), but still with a semi-corporate feel about it.

Writing with a similar theme to the views I’ve expressed in the past of the importance of social to infiltrate every aspect of an airline business if the carrier is genuinely interested in harnessing the power of this new model, Coby made the following comment in a post titled The Social Networking Revolution early last month.

What does it mean for companies and producers? Well, people matter more now than technology. We need to be pro-active in solving problems and to be open in managing customer problems and interactions. We need to manage all channels: online, mobile, sales, services and customer relations in an integrated way. People expect to be treated as individuals. That means they want personalisation and customisation, and when they ask questions they expect answers. This means that IT, marketing, sales, and customers service have to join up much more seamlessly in the new social networking revolution, than ever before.

And in another post written in May called Three Popular Misconceptions about IT Investment he writes something that I have found myself thinking more and more about lately.

when you look at a business transformation, the IT is only part of the equation. We all know that new IT systems – whether ERPs, CRMs, web sites or social networking – succeed or fail, not on whether the IT works, but on whether the processes are thought through and aligned with the IT, and – most importantly – on whether customers or colleagues can actually use it.

It is kind of strange for me as someone who sells IT for a living, but lately I’ve found myself in situations where I’ve actually been trying to advise customers against rushing into an IT purchase – for exactly the reason Coby was writing above. Occasionally I’ve seen airlines more focussed on getting their hands on the product than in getting the processes in place to ensure maximum success from implementing the product, and these days I’m much more conscious of the risks in going down this path, both for supplier and buyer.

The importance of ensuring the entire ecosystem around travel inspiration being first established is one such example for airlines looking at technology solutions in this space, but I can also think of other examples in the use of back office automation (or as Coby would prefer, Support Services) or even that old issue of fares filed primarily for offline channels being suitable for fare family branding purposes in the online channel. These are just a few examples that easily come to mind of cases I’ve seen in airlines where a rush into implementing the IT solution can yield lower returns than if a little more time was spent on the initial planning phases.

But in the pure self interest of someone who does sell IT for a living, clearly I’m hoping that in the cases where I do advise customers not to rush into a purchase, that the longer term benefits for the airline will also yield longer term benefits for me by having a very happy reference customer to assist in subsequent sales. I suppose that is what people these days refer to when they use that seriously overused phrase of win-win; the concept makes sense, but if you overuse the phase it ends up sounding like you are trying to convince yourself.

Finally, in the tradition of Danny Sullivan giving Bill Gates advice on his blog, here is my advice for Paul Coby. I love the human feel the blog has, the quality/relevance of the content is spot on, and the fact that it is updated regularly covers off three of the most important points in setting up a corporate (or semi-corporate) blog; but an important fourth pillar should be trying to get a sense of community and engagement amongst readers. People leaving comments want to know they are being read, both by the author of the blog and by other readers – occasionally responding to the more well thought out comments on the site goes a long way. One other thing that I did recently and which I wish I had done sooner was adding an RSS feed in the side column of the homepage to make reader comments visible to anyone visiting the site. Too many blogs bury the reader comments whereas often the discussion on a post can end up being more interesting that the original post that started it all. A small point, but easy to implement and it really makes quite a difference. Other than that small point the blog is very hard to fault and I am looking forward to reading more of Paul Coby’s posts in future.

It’s my second post in a week on a Navitaire customer, but after just returning from a short break for a friend’s wedding at a castle in Ireland, I saw an email from Iberia’s LCC sibling Vueling telling me they have launched a search by fare product, so I had to take a look.

Travel inspiration is definitely the hot topic in travel search at the moment, and there are so many ways an airline could slice it to carve out their own niche, so I was interested to see what Vueling’s take on this space was. At first I was disappointed, but after thinking about it some more, I started to see it a little differently. Below is a screen shot of the search interface.

You can try out this product for yourself here, but the screen shot above pretty much tells it all – this is a very basic product, but one that does exactly as it promises. One problem is that the first reaction is to think your search has not been performed correctly as you need to scroll down to see the list of results – note the word list rather than map, which is the display method favored by many other sites.

It would be wrong to really call this a contender in the travel inspiration space, even though any comprehensive travel inspiration site would need to incorporate search by fare somewhere within the offer. I actually think that the Price Calendar on the Vueling site is a much better interface for finding a cheap flight, but they have put both up, as they probably at this point in time don’t have the ability to combine them into one flow. So you have wide range of prices with only one origin and destination, or the new search which allows for a single date and duration, but with multiple destinations.

A much nicer display is to have all of this data within the user interface layer (within the browser) and allowing the use of dynamic sliders to turn the screen into a sandpit or playground for undecided travelers; but Vueling appear to be looking for a relatively cheap entry into trying to understand consumer preferences when it comes to the future of travel search. That is, without spending a lot of money, but wanting to dip a toe in the water.

To see how this combined flow could work, although I’ve never seen this with a Navitaire hosted carrier (I suspect it is only a matter of time), just take a look at the search by both fare and attributes that Vueling’s stablemate Iberia have had for some time now.

But despite some good attempts, no-one has got this travel inspiration piece quite right yet; given Vueling’s closeness to Iberia, the probable functionality available within their platform, and their desire not to invest heavily in this area at the present time, they are probably happier right now sitting back and watching the results  of others. Iberia and Spanair are both making plays regarding influencing the undecided traveler.

Being first is nice if you have the strength of your own conviction, but being second can also have its merits.