Shearwater Blog

It was only recently that I was presenting to an airline partly on the topic of redemption programs and the concept of mixing miles and cash, so I was interested this week to see an article in the New York Times on airline reward programs making it easier to spend your miles.

Starting next month American Airlines plans to let its frequent fliers use miles to book car rentals and hotel stays online.

Online is the key word above, as most programs offer the ability to redeem cars for points, but speaking from experience, it is not the easiest process in the world when you have to call the contact center and then be mailed a voucher. The article continues:

Alternative awards attempt to address “the perception that may exist among some travelers of difficulty in using their miles,” said Tom O’Toole, chief operating officer of Mileage Plus Holdings for United, which has also been promoting a guarantee that any open seat on its plane can be booked with frequent-flier miles — so long as you’re willing to dole out enough miles. “We study intensively what travelers want in a loyalty program, and travelers told us they want to be able to use their miles.”

That last line is a classic understatement. I hope they didn’t have to pay a market research firm too much to discover that insight.

Delta and United also offer the option of using a combination of miles and cash to book travel. Delta frequent fliers without enough miles in their account get a message during the payment process to let them know. “We’re sorry. You do not have enough miles to redeem for your total itinerary. But don’t worry — you can still pay using a combination of miles and money.”

Even nicer than the message referred to above was the message I received when trying to redeem flights on Iberia last year – giving me a credit when I was just short of the required points, that really was an impressive touch.

If you want to see something nice with Miles & Cash take a look at the slider on sites like Finnair, Etihad, Qantas or a growing number of others where the anyseat redemption concept allows a virtually infinite number of combinations for the passenger to choose how much cash and how many points/miles he wants to spend to acquire a given seat. Where I see this trend going in future is a much deeper integration between commercial and redemption to the point where in order to compete even more effectively against OTA’s and metasearch, there may be a point in the future where the commercial booking flow and the redemption booking flow may merge into one. That is true Miles & Cash.

Another night away from home sitting reading a magazine in a hotel restaurant on my own – the lonely life of the traveling salesman! Tonight is was the October 2010 copy of Fast Company that I had picked up in San Francisco a couple of weeks ago. The reason I purchased it was because I saw that on the cover they had a story on JetBlue.

Here is the quote that inspired me to write a blog post (I managed later to find the article online)

“We invented the in-flight experience 10 years ago,” Morrisson says, “and now we’re trying to do it again.” As the economy takes a toll on the industry, other airlines keep finding new frontiers in charging for things that used to be free, such as early boarding. Rather than follow suit, JetBlue is working with the Boston office of the design firm Ideo to add services that customers, namely the business travelers JetBlue hopes to attract, are willing to pay for. “This is huge for us,” she says, though she’s coy about the details. (The project won’t begin rolling out until next spring, by which time Steven “Two Beers, One Slide” Slater, the runaway flight attendant, will be a distant memory.) “Unlike a lot of airlines and businesses that have nothing to lose by making changes, we have 10 years of customer goodwill,” says Morrisson. “The foundation of everything we do is asking, How does this make people feel?”

It turns out the main person featured in the article is a fellow Australian working at JetBlue by the name of Fiona Morrisson, but what will be more interesting for readers here is that Ideo is the company I mentioned recently given its founder Tom Kelley spoke at Horizons on innovation and I’ve also mentioned this company before in relation to the work they did at Air New Zealand. I will be very interested to see what comes out of this engagement for JetBlue – I’m tipping something a litting more creative than advising them to start charging for the first checked bag!

The Amadeus e-Retail IBE has had an upsell teaser panel as part of the airline website experience for a while now, but I was interested to see how United have implemented a similar concept on their site. Last seat availability showing which flights only have a few seats left is a fairly recent innovation that has been an effective call to action on a number of airline websites I am familiar with, but United have kind of taken this concept of “hurry or you’ll miss out”  and applied it to the upsell teaser panel.

Notice the yellow panel in the middle of the screen with the red text that started at 2 minutes and is counting down until the offer expires. What is interesting is that at this point the credit card has been taken, but presumably not yet authorized. They are giving you 2 minutes to choose to spend more, but without the risk (as can happen with shopping baskets) that you will suffer from sticker shock and back out of the purchase completely. My overall verdict – quite nicely done, and I think we’ll see this type of approach popping up at other airlines websites in future.

You may have heard of the Google Bypass campaign from OnHolidayGroup in the UK, but here is a new one specifically relevant to airline websites – I’m calling it the TMC Bypass.

I was on a flight home yesterday from Madrid to Chicago and got talking to the gentleman sitting next to me. The original discussion was about in-flight entertainment systems as I saw he was watching a movie on the small screen he had brought with him, but when I told him about my job, he asked which airline websites I thought were the best.

That question did remind me of the recent study which I have been meaning to mention here. It was from Spyre Studios and looked at Delta, Virgin America, Qantas, Emirates and Singapore Airlines – a post they titled 5 Leading Airline Booking Forms Tested for Usability. I’ve actually got a couple of half written website booking flow reviews of my own that I hope to post here in the coming weeks, but in the meantime here are the key takeaways as per the Spyre Studios analysis

But rather than my opinion (or that of Spyre Studios), what I was much more interested in the opinion of the man sitting next to me yesterday and which airline websites he preferred – here is where the TMC bypass line in the title comes from.

According to this frequent traveler working for a well known large corporation, he told me that the flight charges booked via his employer’s chosen travel management company appear on his company issued credit card statement and then he submits this through his expense claim. Now I am one of the least knowledgeable people on the ins and outs of the TMC business, but I personally never see the cost of flights on my credit card as they are charged directly to my employer. So what he told me next would not apply to me personally if I wanted to try his idea, but I wonder how widespread the issue really is?

He told me that he really likes American Airlines as if he books via AA.com then the charge on his credit card statement looks identical to if he had booked through the TMC, whereas if he books on Delta.com, the credit card statement makes it clear that he booked directly on the airline website as the merchant is shown as Delta.com and therefore it is clear that he violated corporate travel policy.

I heard Evan Konwiser from Flight Caster talk recently on the topic of corporate travelers using whatever technology they preferrered and futility of corporations trying to restrict this (I’m not sure the audience of largely TMCs and corporate travel managers was quite as enthusiastic about the message as Evan), but clearly if TMC bypass is indeed a substantial market, then airline website executives need to be aware of whether they are friendly or unfriendly to this gray market,  thereby ensuring that their own websites are not missing out on new high ticket value sales opportunities.

Every two years Amadeus puts on a great airline conference called Horizons – if you missed it this time around, well, I’ll try and give you a feel for some of the things I got up to and the speakers that I found most interesting. I’m not intending to be as comprehensive as Dennis Schaal at Tnooz who also wrote about the conference. I’ll try to make this piece a bit more aimed at people working in direct channels, even though the conference was much bigger than this. 

First of all, I had some great conversations on e-Commerce trends with guys like Andy Newman from ba.com, John Lonergan from qantas.com, Nate Holm from usairways.com and Guido Van Til from AF/KLM online - plus a number of others including a few non e-Commerce specialists who nonetheless still wanted to engage in some wide ranging discussion on what the future might hold for airline online direct distribution, including mobile. Three of the four mentioned above have told me they read this blog occasionally, and the fourth is only new in the job, so we probably shouldn’t hold it against him! Always great to meet people in the industry reading what I write. Hopefully I’ll meet more of you at Phocuswright in Arizona in November.

The quote of the conference: ie. the one that was so good I even wanted to retell the story to people outside of the industry, came from outgoing Amadeus CEO David Jones. I’m paraphrasing extensively here, but basically he was asked on stage about his long time in the industry and the most profound technologies he had seen over this period. His initial answer got a crowd response that my jokes on stage could only dream of. He recounted the story of his first trip from London to the United States in the early 1960′s and how when he arrived stateside, the airport doors opened by themselves, and how this was such an amazing and profound technology he had never witnessed before. He later went on to talk about Amadeus getting into the airline IT business with new generation inventory, reservations and a departure control system, but the comment about the automatic doors was priceless.

Another great comment came from John Lonergan on stage when we did what he does best – cut through the hype to give an opinion that is not afraid to go against the majority. When the conversation got onto Facebook, he said something like: We see Facebook as similar to the pub or the cinema. Our customers are spending time there and we want to be part of the conversation they are having, but we don’t take bookings there, so why should we in Facebook?

One final observation I will make is on the running of a successful panel. I’ll leave it for others to pass judgment on the success of my panel where I interviewed John Lonergan from Qantas and Jason Wynn from Amex on the topic of airline ancillary services - but at least I have yet to recieve any negative feedback, even indirectly (feel free to be the first if you were in the room and believe something could have been done better!)

It was the first panel I’ve ever moderated, and it is tougher than you first think, but I watched other panels at the same conference and I’ve come to the conclusion that 3 guests plus a moderator can work, but once you get 4 or more guests on the panel it is so much more difficult for the moderator to really engage with all participants and make it a dynamic conversation - and there were some great moderators up there, but I’ve decided that if and when I am asked back next time, I’ll be setting three guests as the limit to any panel to which I agree to moderate – and if the guests are good enough (as I was fortunate to have), then you don’t need more than two. Just my opinion – maybe you’ve seen great panels with 5 or 6 guests on stage?

I was back in Chicago for two nights after Horizons but my Iberia flight is now boarding for Madrid and then Nice (I’m writing this from the airport lounge), so I move from a week where I spent a lot of time talking with airline customers to a week of internal meetings. Thanks for reading.

Hawaiian were one of the many airlines I spoke with at Horizons last week; nothing formal, just a chance discussion that I enjoyed a lot. But prior to Horizons I had been notified of a position they were hiring (given that it mentioned the words “ancillary revenue”) and it struck me as a quite a wide ranging role. I’ve pulled some earlier written text it out of the vault and posted it here – maybe someone reading feels like throwing their hat into the ring.

In the fifth of a number of categories outlining job responsibilities for the role of Senior Manager Marketing Analysis, Hawaiian Airlines are looking for someone who can:

5) Search for opportunities
a) Analyze available data in search of opportunities to increase revenue per available seat mile and to generate ancillary revenue.
b) Find new ways to use existing data and new sources of data to support marketing decision making.

After reading the job description in full, it sounds like the job of a team of people rather than one person. Good luck to whoever gets it.

I know there are a few people coming back here looking for updates on the Horizons airline conference in San Francisco, but it really is proving tough to find time for proper updates during the event. If you want up to the minute news and thoughts from the Twitter crowd, search on #Horizons10.

The first day went well. Tom Kelley from Ideo did a great speech on innovation and gave a very topical example of the decline of the rubber tire (tyre) industry in his hometown of Akron, Ohio at the hands of a French innovator Michelin and their radial tires - very nice tie in to the Amadeus story whose main development centre is France.

My panel where I interviewed John Lonergan from Qantas and Jason Wynn from Amex on the topic of ancillary services seemed to be well received by what was a good few hundered people in attendance  – nice to get so many in the room when there were two others sessions running in other rooms at the same time, and a number of side meetings were also taking place. I was happy with the way it all went, although I suppose people only ever come up to you afterwards if they have something good to say, but it was rewarding to get a number of compliements on what was the first panel I have ever hosted at a conference - definitely helps to have some great talent on stage with me like I had!

Finally, if you want to see the original clip that I assume inspired the skit Dwayne Ingram used to introduce Philippe Chereque, I have embedded it below – very, very funny stuff.

It has been quite a while since I wrote anything on airline industry forms of payment and the associated topic of payment card industry compliance, but I saw a blog post from Tom Kemp at Centrify talking about the work his firm had done with my employer Amadeus, and even taking my Amadeus hat off for a while, it is an interesting read. So if your work ever sees you trying to get your head around PCI compliance issues (and I’ve seen some horrors stories within certain unnamed airlines in the past), or if you’ve ever heard people talk about tokenization or 3D Secure and wondered what language they were speaking, then getting more familiar with issues around payments is never a bad thing.

I’m hoping to bring some interesting news from Horizons in San Francisco later this weeek, but in the meantime, I hope you enjoy reading about PCI compliance.

A totally tongue in cheek post today, but has Kevin or Dennis at Tnooz written something so provocative that it has offended the mighty Google? I was reading my Gmail account on the weekend and tried to click through to an article on some SITA market research, when I got the following screen shot in Google’s Chrome browser.

Tnooz considered dangerous by Google!

So I truncated the URL and tried again. Next screen.

Someone at Tnooz must have really offended Google

Still undeterred, I ignored the warnings and went on to read some interesting claims. Very interesting claims.

SITA says those using airline websites to book accommodation jumped from 21% in 2009 to 38% in the latest, 2010 edition of the annual study. A similar figure – 19% to 35% over a 12 month period – could be found for those opting to buy car hire.

Now I may have a been a little too harsh on SITA and the last piece of market research they put out, but this one really raises some eyebrows. I know some airline websites that are genuinely kicking goals with ancillary revenue from cars and hotels, but I know many many more that are still way under-selling when it comes to achieving what is truly possible.

But SITA have many smaller to medium sized airlines using their IT for their internet booking engine, so surely by asking their airline customers for data that would then be then aggregated and published, then this must be extremely reliable?

Hmmm, not so fast. Here is how they did it – again from the Tnooz piece.

The study interviewed passengers at seven major international airports around the world, including Moscow, Atlanta, Mumbai, Sao Paolo and Johannesburg.

At this point I will copy a paragraph from a previous post written here.

Survey’s are great, but be careful relying solely on asking people what they think, as just as Ideaworks have written (PDF) in their good analysis on the impact of recent changes to US checked bagggage fees, sometimes what people say they will do bears little relationship to what they actually end up doing.

So you get the point – why survey people when you are either sitting on the real data or at least can get it without too much effort. But enough on Google and SITA. This coming week I look forward to catching up with again with Jay Sorensen from Ideaworks plus a large number of airline execs at the Amadeus Horizons conference in San Francisco. If you are a regular reader here and are attending the conference, please be sure to introduce yourself to me. It is always good to meet new people whom I previously did know read my work either here on Shearwater Blog, or the stuff I write over at Tnooz – actually, I hope I’m not the one who offended Google!

Things have been a bit slow on this blog recently, but you can take that as meaning I’ve been pretty pre-occupied elsewhere. Part of it being preparing for Horizons in San Francisco next week, but a lot more than that as well.

Last week Google ran their Think Travel invitation only event in New York, and I know of a few people that attended.  Long time readers will remember my Bow Tie model data which relied heavily on Google numbers showing an average of 22 travel sites visited over 12 sessions in 47 days prior to the travel booking being made.

The latest Google numbers shown at the conference last week show very little change. Twenty two travel sites is still being used as a statistic, but the number of searches is now being claimed as 9.5 on average prior to booking. I did not see any reference to the lead time prior to booking (previously 47 days), but I was speaking to someone today who was trying to make a case for mobile apps having the potential to significantly reduce the booking window, especially in non air.

I’ll wait for the data, but on the face of it, it might be true?