Here is the chart I showed yesterday, when I asked you to think about the story it tells:

Seasonality and 2009 bigger bracket

But before I explain how I am using this diagram, take a look at some of these quotes from senior US airline executives:

“We did see more close-in bookings in December and in January”
Laura Wright, CFO, Southwest, January 22, 2009

“We’re also seeing the booking window narrow which makes our forecast more difficult to predict.”
Richard H. Anderson – CEO, Delta, 27 Jan 2009

“Our forward booking curve is moved closer to departure as customers have been deferring purchase decisions”
David Barger, CEO, JetBlue, 29 Jan 2009

“On the revenue side, travelers continue to book much closer to the time of travel, making projections difficult.”
Maurice J. Gallagher, CEO, Allegiant 20 April 2009

“Less visibility that we’re seeing, closer end bookings, everything that that means as well. That usually means less change fees because people are booking closer in.”
David Barger, CEO, JetBlue, 23 April 2009

Interesting, but then you look at the chart above and the 2009 dotted line for air sales seems to contradict the quotes. So is one of them wrong? Well, like most statistics, sometimes you need to look a bit deeper to really understand what is going on. In this case I suspect the booking window overall really is narrowing, but the chart I am showing is only internet B2C sites.  Many airlines are making up for the loss in business travellers by discounting and selling more leisure fares. The other factor to be aware of is that the growth in online B2C is in international, with the domestic share of total online sales falling progressively over time. International has a much longer lead time than domestic as I illustrated very clearly in a presentation in Budapest late last year. Plus the data is heavily biased away from the USA, so all of these factors explain why the air lead time in the chart is increasing slightly even though the quotes above tell a different story.

But clearly the hotel data I have (or to be more fair, the data Mireille Boyer consolidated for me) shows a narrowing of the booking window for hotel sales. What implication does this have for managers of B2C airline websites wanting to sell more ancillary products? The answer lies in the Bow Tie Model, as the longer you wait between making the sale and trying to sell a car or hotel segment, the more chance that the passenger will buy on another website or in a location where the airline receives no commission. The reason why I added arrows to the rental car and hotel line is because an airline wanting to maximize conversion rates will be doing everything possible to drag those lines up and closer to the black line representing air sales, thereby reducing the external influence factors felt by your passenger. This is exactly what Air Pacific are doing with hotels. Any effort where you are successful in moving the average rental car or hotel sale leadtime up closer to the air leadtime will be an effort that was very well worth making.