It’s been an amazing six years working for Amadeus – I’ve learned a lot and had a great time in the process, but after occupying a variety of mainly airline e-commerce related roles in both Madrid and Chicago, the time has come to return to Australia and embark upon a new challenge. I have accepted a role with MasterCard based in Sydney; so new location, new employer and a new industry. I did work for Commonwealth Bank of Australia in the past and also have some payments experience from Amadeus, so the industry is maybe not completely new to me, but I’m excited by the prospect of still having so much to learn.

I first met the people from MasterCard about three years ago when Qantas chose the MasterCard Internet Gateway Service (MiGS) as part of their plans to improve direct channel payments. Now there are about twenty airlines (mainly in the Middle East and Asia Pacific region) using MiGS. At the time, I was on the Amadeus end negotiating terms for airlines using MiGS to link directly to the Amadeus Payment Server so it will be interesting to work on the other side going forward. Amongst other things, I’ll also be involved in the rapidly evolving mobile payments space, an area that I am convinced is set to really take off. MasterCard are investing heavily in this area and appear well positioned to play a major role.

Writing this blog has been an immensely satisfying experience since I started back in January 2009. Now over 2 years and 375 posts later, The Shearwater Blog is taking an extended break, possibly even permanent. I’ll keep the site up and hosted on WordPress at least until the end of the year – the reason being that search engine traffic to these pages indicates people are still interested in reading the older material, but even that traffic should drop off without new content being added. Maybe prior to the end of this year I’ll have a change of heart, but the commitment required to produce 3-5 posts every week should not be underestimated. Maybe this is why I occasionally have people telling me they want to start blogging, only to give up after a few unread posts – for the first 3 months here it sometimes seemed like the only people reading my stuff were friends and family, and not even many of them!

Earlier this year I was quite happy to reach a milestone and see that over 100 people had subscribed to this blog. For such narrowly focused subject matter this made me quite proud. I am genuinely grateful that over 100 people found my material interesting and relevant enough that they would subscribe, plus that many again visiting the site most weekdays in recent months.

Even though I will cease blogging here, I still intend to contribute occasional articles to Tnooz. Despite the growth in traffic and subscribers that The Shearwater Blog has achieved, it is dwarfed by the number of people who read anything I write for Tnooz. My job with MasterCard will be much bigger than just the travel sector (with a smaller geographic reach – A&NZ will seem small compared to my Amadeus job covering North, South and Central America), but I do enjoy writing so it will be difficult to give up completely. Given that about 25 times as many people read my stuff on Tnooz compared to the average number reading a post here, I’m sure I’ll find some way to maintain a reduced social media profile. Don’t be surprised if those pieces have a bit more of a payments focus in future.

With MasterCard I’ll be working in an office just off the right side of the picture below, so if you find yourself in Sydney for any reason and were a subscriber to this blog, I think that at least should see me paying for the first drink.

Since I started telling friends and colleagues that I was moving to Sydney I must have had close to ten people ask me to keep an eye out for them as they would also love to live and work in Australia. For everyone else (ie. those not yet sold on the benefits of Australia), I’ve added another shot just to help you understand that even for a Melbourne boy like me, Sydney really isn’t such a bad place to live and work. The MasterCard office in North Sydney is to the left of the bridge in the photo below.

To all the airline executives, industry suppliers, even competitors – in fact to anyone that was a regular reader of this blog over the past few years, I really appreciated your support; even if that support was simply showing up in my site statistics letting me know that I wasn’t writing into a vacuum. The opportunities this blog has created for me in terms of invitations to speak at conferences, meeting a wide range of new people, and probably most importantly, in clearly positioning me away from being perceived as a foot-in-the-door product salesman, have been profound. On that last point, being seen more as a consultative seller frequently being asked by airline executives to discuss not only the products I represent but the wider industry trends, sometimes other players in the industry, and then how airline direct channel sales departments need to respond to the rapidly changing online (and now mobile) environment – this has been the most satisfying outcome of the many late nights or early mornings I sat at home writing a blog post and wondering if anyone would want to read it.

I can still be contacted via this form (forwards to my personal email address), so even though I am leaving full time involvement with the travel industry, I have no intention of leaving behind the many personal and professional relationships I have build up over the last six years working with so many great people in such a dynamic space. Even though I’ll be focused on the payments industry going forward, I’m sure I’ll still find time to keep an occasional eye on innovation in the online travel sector – working for Amadeus and then writing this blog has been too much fun to forget it completely.

Tnooz have put up an article written by me looking at data from six airlines and the various bounce rates from different mobile phone operating systems. The results highlight wide differences not only between phone types, but also between different airlines – a good indication of how mobile friendly (or unfriendly) their web sites really are.

Click here to read the article in full.

I know I have done an about face and become one of the cheer leaders of the mobile web in the past six or eight months, but is it really 15%? I saw 10% quoted only a few weeks ago. I got the 15% number from a recent Google report, but I suspect that like in a previous report, Google are counting a lot of the Maps traffic as travel related. This is definitely a grey area – local versus travel as readers of this blog would define travel are very different things. That said I think Google Maps is one of the stickiest mobile apps around with a ton of upside to disrupt travel, especially the destination content space. But whatever the true number for the proportion of travel search being done on the mobile, there is no question that it is growing at an incredible rate.

Regarding mobile, it is a nice change from all the Silicon Valley news to start to see stories such as Africa leading the way in mobile emerging from the recent SXSW conference in Austin, and I also noticed recently that Adobe’s Omniture May Build, Acquire or Partner Its Way Into Mobile Even More – Omniture being a company very familiar to many readers of this blog.

Finally, hat tip to Brett Snyder for alerting me to the site of Indonesian carrier PT. Tri-M.G. Intra Asia Airlines. The fact that you are reading this means there is an extremely high probably you have some interest in airline website design. In order to get the day of to a great start, turn up the speakers, imagine yourself jumping into the hot tub time machine, and now click on this link to experience an airline website like no other you have ever seen before. Remember to turn those speakers up loud.

There seem to be so many people starting new travel related websites these days that I really don’t spent that much time trying to keep up with everything happening in this area. That said, I did take notice of a recent profile of TripAha that was featured on Tnooz. This post is not an analysis of the TripAha site itself, but more as a lead in to a wider piece on blending social into the travel purchase process.

What I did like were some of the quotes from the team behind TripAha on social search.

TripAha will change that [low trust, unpersonalized content farms] by creating a massive database of trusted content by sourcing recommendations from your extended social graph. Your social graph will be naturally incented to write and share recommendations via our “shared context” technology. Shared context is – “What do you and I have in common”? These attributes could be – “friend” “Fof”, common school/college/workplace, common travel interests, common demography/ethnicity/place-of-origin.

And then towards the end of the profile:

They [so called travel industry experts]think social travel has been tried before. We disagree. We don’t believe people understand social. Social is more than slapping facebook connect. Its about shared context – “what do you and I have in common?”.

Like I said, I’m not endorsing TripAha, I just thought some of their comments were worthy of being repeated here.

Just last week I was sitting through a demo from a group building a Facebook iPhone travel app. The team in question was sitting on a golden egg and they didn’t even realize it – instead of trying to turn some proprierary travel related data they had into something giving social insight, they instead were more focussed on using the Facebook API to get the same information about someone’s network that anyone else building a travel app on the Facebook API would also be able to access. 

Back when I made my travel tech predicitons for 2011, I wrote the following:

I was surprisingly impressed at Phocuswright with Tripalertz and their model of bringing a group buying dynamic to hotels. No-one can argue with the success of Groupon; how this trend finds its way into online travel will almost certainly be much clearer by the end of 2011 than it is today. Paypal have launched Shoptimist, Facebook have set up a commerce partnerships unit, the rise of sites like RueLaLa during 2010 brought many immitators, and even KLM got into the act with a flight for ravers filled in 5 hours using a social group buying dynamic. Social commerce is only going to get bigger, but this is not a tide that will lift all boats – some airline websites will really struggle, thereby losing power to individuals when those individuals act in a concerted and socially interconnected manner.

So whilst no one has yet cracked social and travel, I am convinced that in order to be useful it needs to be much more than just looking at my friend network – even if I have 1,000 so called friends on Facebook, the usefulness of my “fringe friends” will be nowhere near as good as data from people outside of my network but who share similar interests to me and have purchased or intend to purchase similar vacations to those that I am interested in.

The lesson here is, don’t get so hooked on the social graph that you ignore the taste graph. Blending the two will be key to getting sufficient sample size to drive a meaningful social context into the online travel search and shopping experience.

In the past I’ve looked at the question of to whom the head of online sales in an airline should report, but I’ve never really thought that much about the most suitable background for someone taking on the role leading ancillary revenue initiatives. That was until I was recently alerted to this current position available at Ryanair.

Reporting to the Deputy Chief Executive & Chief Operating Officer and managing a small team, you will be expected to build on Ryanair’s pre-eminent position as the number one airline for ancillary revenue per passenger with continued development of existing revenue streams and innovative and imaginative growth of new sources of ancillary income.

The most interesting sentence in the job spec is the following one:

Preferred background will be in the FMCG sector, ideally with experience of internet sales and marketing.

One of the main problems I’ve seen in the years I’ve been keeping a very close eye on the airline ancillary revenue scene has been the lack of understanding of the technological implications of implementing crazy ideas. This problem mainly comes from people outside of the airline industry hired as salespeople for vendors who see their “innovative” product as a natural fit for airlines hungry to grow ancillary revenue, but who have absolutely no idea of what it takes to implement such a product for both online sale and fulfillment.

On the other hand, I’ve also at times been a little surprised by a lack of imagination on the part of some airlines, even though I for one know that the challenges in turning these ideas into reality is not always a road without bumps.

That said, I definitely don’t fall into that camp I see all too often – the camp which says that unless you have work experience mirroring my own, then you are the problem and not part of the answer. The sentence usually goes something like, “The problem with this company is that they don’t hire enough of X” with X either being “people with extensive airline experience” or ” people from outside the airline industry with fresh ideas.” Whichever one you insert as X always seems to be the one that matches your own CV!  

If there is any airline where airline experience is less relevant for the current role Ryanair want to fill, then Ryanair would be the one. They operate very much as their own island, so the technological understanding of processes related to ticketing, revenue accounting and interlining etc insofar as they relate to ancillary revenue really fade into the background. Instead you can spend more timing thinking about to how to implement previous wishes from your CEO such as coin operated bathrooms and stand up seating!

Without thinking too hard, airlines like Delta hiring from Target, Alaskan hiring from Microsoft / Amazon and TAM hiring an ex brewing executive come quickly to mind as all having looked outside the airline in recent times when it came to finding someone to head up online sales.; likewise, there is no reason why an airline hiring from the fast moving consumer goods sector for an ancillary revenue director shouldn’t do well with this approach. But it is a one way path? The head of online at US Airways recently announced he was leaving, but rather than show FMCG types how to do things, he is off to do a similar job at Etihad.

If you want the job with Ryanair in Dublin, you’ve got about 10 days left to apply.

Extremely short post today, but when it comes to airline ancillary revenue, Air Asia are almost certainly the Asian nomination to join Ryanair and Allegiant as the masters in this category. So when Air Asia founder and CEO Tony Fernandes talks on the topic, people tend to listen. His quote below is something I’ve never actually heard an airline boss single out in quite this way. Normally you get passengers complaining about having to pay for any unbundled service without being specific, whilst airline bosses talk about how great checked bag fees are; which  makes the quote below even more revealing.

“I’m on Facebook and Twitter and the only one (ancillary charge) that people seem to dislike is the convenience fee for using credit cards.

You can read the full article here.

The title of this post comes from the takeaways slide at the end of  a comScore webinar I was on earlier today. I’ve lifted the two most interesting slides from that presentation (or at least ones I didn’t see in the original report) and added them below.

There is no doubt that when I sit on a train here in Chicago there seems to be a growing number of people each and every week using their phones to connect to the web, and the most common thing I see is people using this time to check out Facebook. Too bad I’m closer to the News demographic above. At least when it comes to my BlackBerry OS I’m using version 5.0 so this puts me back in touch with a more technologically hip younger crowd according to the next chart.

I had a regular reader of this blog ask me recently why there seemed to be so much on mobile and less here on ancillary revenue these days. Apart from the fact that mobile growth is going through the roof and all airlines I talk to seem to be struggling to keep up with the pace of change, the real reason is that the industry discussion on ancillary revenue seems to have moved away from third party sources and more towards GDS standards – a topic I never intended to cover here in any great detail. All feedback is good feedback.

A few months ago I was given a book by Frank Grasso, CEO of e-channel search, and the subject really hit home with a topic I am always interested in; debunking old wives tales in marketing and replacing them with real science. Long time readers here will know that this is especially true when it comes to questioning insights gained from marketing driven customer survey data from some of the dubious press releases masquerading as market revelations. I finished the book in question this week on my flight to Brazil – it is by Byron Sharp and is called How Brands Grow: What marketers don’t know.

Firstly, any marketing book that cites Karl Popper is immediately going to get at least one star from me. Popper was potentially the greatest philosopher of the 20th century, but how does his advancement of the scientific method or this book from Byron Sharp have any applicability to airlines? Popper held that every scientific hypothesis must be testable, and the way to test it is to search for circumstances in which it does not hold. Sharp’s book picks apart many so-called marketing theories and in the process goes head to head with marketing gurus like Kotler and Aaker. The end result is a thought provoking book that takes a very different view on brand loyalty and loyalty programs in general – a topic of interest to any airline these days.

Loyalty certainty exists, but it is tempered by opportunity. People who buy from a category less often have less opportunity to be disloyal. Similarly people who shop from stores that stock fewer brands also appear more loyal (e.g. people who live in smaller towns).

The second sentence above is interesting as airlines always perceive top tier frequent fliers to be more loyal than non program members or those in the lower tiers. But one of the things that differentiates airlines from the supermarket loyalty program Sharp despises so much is, in my mind, the fact that for one of these the most active members are typically not spending their own money. Similar to what I wrote recently about the IBM booking duration data, it is much easier to be loyal when you are spending someone else’s money.

Back at the Phocuswright conference in November last year (where I first met Frank Grasso), one of the most profound on-stage comments that I recall came from Rich Barton when he said something like:

Don’t spend money on advertising because it lets companies get lazy about product

It definitely hit a note with me, as too often the lack of science in marketing leads to so much money being wasted, money that would have been much better spent on enhancing the product. If an airline website has enough compelling functionality and a UI layer that stands out from its peers, then maybe this is like the quote from the book about people buying from stores that stock fewer brands appearing more loyal – maybe spending less on generic airline branding and more on website (ie. store) functionality is a much better use of scarce resources.

Most of a brand’s customers think and care little about the brand, but the brand manager should care about these people because they represent most of the brands sales; the brand needs these people if it is to increase sales.

I’ve put another contentious quote from the book above, but in the video below, the author Byron Sharp uses a great example to debunk the often claimed story about how much Harley owners love the brand. Even more compelling, he illustrates how little profit these so called “loyal”  customers actually represent.

Maybe it is a tenuous link to discuss this book on a blog site dedicated to the airline direct channel, but I would challenge anyone to show me an industry where so much is spent on advertising aimed at influencing our perception of brand attributes and product differentiation with so little apparent impact. A little more science in marketing would do the airline industry a world of good.

Just to set the scene:

Brazil’s airports handled a record 155 million passengers in 2010 (that’s more than all airports in France combined), an impressive increase of 21.3% on 2009. Domestic traffic still dominates as almost 90% of airport passengers travel within Brazil. This year has also started well, with both domestic and international passengers up around 16% in January.

And GE is predicting Brazil’s air traffic could double in the next three years. I’m currently sitting in a hotel room in Sao Paulo listening to planes buzz overhead about once every two to three minutes. Brazil was almost certainly the fastest growing mobile internet market in 2010 with an over 500% increase in mobile search queries, and the payments innovation in this market is also something I’ve also written about before.

Another interesting thing about Brazil is that it is one of the rare markets where Facebook is not the leading social network. Google’s Orkut product is around three times bigger and outgoing CEO Eric Schmidt recently said:

Brazil is, for example, already on its way to becoming our sixth-largest country in revenue.

With so much growth in aviation and in mobile, Brazil will continue to be an important market for airline direct channel trend spotters to keep an eye on in the the months and years ahead.

Sometimes people mistakenly complain about unbundled airfare pricing when I believe they would be better off focusing their attention on the advertising and display of non-final airline ticket prices – that is, fares that it is simply impossible to purchase for the displayed price.  Carol Pucci in the Seattle Times has a piece looking at this practice in the US by comparing the websites of all the majors with what is being displayed on the main OTAs.

Federal laws require airline and online travel sites to disclose the total price (base fare plus taxes and fees), before customers click to buy a ticket, but how and when the airlines do that varies. Most travel websites quote a bottom-line price in their initial fare displays. Some airlines don’t, making it appear their price may be lower than it is.

I suspect one reason why this is not a more contentious issue in the US is that it is common to not know the final price when buying just about anything in a shop here. Most merchants add sales tax at the cash register, so this makes it more difficult to sustain an argument against airlines, even if the so called taxes assessed are far from identical across airlines. Angus Kidman at Lifehacker writes that the competiton regulator in Australia has been taking a more dim view of this practice.

Now the airline industry has come under fire, after a review of the sites for several of the most active airlines in the local market — Jetstar, Tiger, Air Asia, Air New Zealand, Malaysian, LAN, Etihad and American — found that they were not displaying prices in accordance with the law. (You’ll note that the dominant local players, Qantas and Virgin Blue, aren’t on that list.) Each of the airlines was told to change its sites so that all international airfares out of Australia, plus any domestic activity, clearly displayed a full price. That’s happened, but ACCC chair Graeme Samuel made it clear that any further non-compliance will be costly

So just when most markets outside the US appear to have forced airlines to show final prices at every stage on the website and not just on the payment page, a new idea comes out of left field:

In a filing to the Department of Transportation, Allegiant wants to have the option of offering a fare that could fluctuate based on the price of oil. This would mean you could buy a ticket for uber cheap now and then possibly have to pay more later if the price of oil goes up.

There is actually a very good interview with Andrew Levy, president of Allegiant Air in today’s Las Vegas Sun. In the article he goes into quite a bit of detail about how his airline (considered to be one of the leaders in ancillary revenue) will take it to the next level. He talks about plans to launch a fee for carry-on cabin baggage in the first half of this year, the tax advantages of ancillary revenue versus putting it on the ticket, and even whether the airline might introduce a loyalty program.