November 2009


If you aren’t familiar with Aldi, they are the very successful German supermarket chain that has expanded into many other countries with a simple model. They stock about 1,400 popular food items (a typical grocery store has 30,000).

More fundamentally, Aldi concentrates on selling core, high-volume grocery products, like ketchup, cereal and coffee. Want a choice? Forget it. By offering a single brand, usually a private label in a single size, Aldi executives say they can substantially undercut conventional retailers on 90% of the products the store sells.

It is not often you see a mainstream publication doing an side by side analysis of various airline websites, so well done to  Christopher Hinton for getting this published: The title of the piece was Airline Web sites battle it out for fewer customers and some of it I don’t agree with, but quotes like the one below really got me thinking about the Aldi analogy.

But industry observers and Web designers say the major network carriers are falling behind their low-cost rivals in producing dynamic, easy-to-use sites that help establish customer loyalty. That’s a problem because the number of business and leisure travelers using the Internet to find and book airfare has grown substantially.

Well not this industry observer (ie. me), but I saw The Economist picked up on the article and followed pretty much the same line about network carrier websites being dinosaurs. But back to my Aldi comparison, and my reference to the number of items stocked; consider all the Origin and Destination combinations between a network carrier website and an LCC point to point only website. Then look at the photo and imagine you put a shopper at the entry to an Aldi supermarket and a traditonal supermarket. The two shoppers have a race to see who finds the box of Crispy Oats first. Clearly the Aldi shopper will win. It is quicker and easier to find something when you are in a shop with less choice, assuming of course that the shop stocks that item. The same applies to airline websites. Not to say that network carriers can ignore user experience; in fact all the majors I know personally do take it very seriously, and tend to do a pretty good job at it. But they definitely have a tougher job on their hands with so much more product on the shelf, so to speak.

I’ll add a few more quotes from the article and my comments on each.

“In general these days, if I’m doing something fast and domestic, I feel more comfortable on the budget airlines,” said Jill Walters, a 35-year old technology director in Raleigh, N.C.

OK, So this is exactly what I was saying about simple – ie. domestic. Let’s see how she fares when she wants to book a connecting flight.

Walters said her favorite Web sites belong to Southwest Airlines and AirTran because they are easiest to navigate and don’t add last-minute fees.

Now are we talking website ease of use, or are we actually talking about a preference for an airline overall because their business model is less a la carte pricing?

Among the network carriers, she prefers the Delta Air Lines site. US Airways and Continental run second, but they don’t show the final price until the end, and they don’t show return flights until a departing flight is selected, which is sometimes important, she said.

I don’t even know if this is true, as I thought the practice of not showing final pricing until the end had disappeared well over a year ago, at least amongst any reputable carriers. I spent most of my time working outside of the USA, and there are plently of people focussed on writing about that market, so I won’t talk too much more on that, except to say the point about not showing inbound until outbound is selected is almost certainly a fare filing issue as they are probably filing round trip itinerary fares rather than one way combinable. Fare filing policy is nothing to do with the airline website.

“I really hate it when I can’t see all the flight options or it gives me prepackaged itineraries,” she said. “I have also really started to dislike sites that don’t include the taxes and fees, as it makes it hard to compare.”

Pushing packages to a person only wanting flights is definitely a bad idea, but she doesn’t mention which airline she is referring to. And not including taxes is similar to my point above – you’ll never ever hear me defending that practice as any website doing it will just drive passengers to the OLTA channel.

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Hat tip to a post called How To: Be Active On Twitter Without Getting Burned Out! by Diana Adams for pointing me in the direction of the video below. Very, very witty stuff. Or very tragic if you can identify with any of the participants!

When you think about it, many of the things that used to called sins are are now more commonly known as diseases. Gluttony is now chronic over eating disorder; what use to be called sloth would these days more likely be referred to as chronic fatigue syndrome or any one of a number of similar ailments; even what was the sin of anger or wrath might now in some cases be referred to as attention deficit hyperactivity disorder. If that is the trend, then I’m waiting for the day when someone has to take sick leave from work after being diagnosed with Chronic Social Media Addiction.  

And to switch tracks completely, how about this: If you read the New York Times today you might almost be forgiven for wondering if they we using my recent November 11th post here as a source for story ideas! More likely a co-incidence, just as I found out yesterday with my “jumping the shark” line, but nice to live in a world of illusion every once in a while.

I saw a very impressive effect fom Twitter a couple of days ago. A few people tweeted and retweeted my post on Icelandair, and traffic to this site quadrupled in a day. Gives me much more respect than I shown previously, but does the medium have legs, or will the tweeters get burnt out? Or is monetisation the shark to be jumped? I actually wrote the title for this post plus half the text, and then did a Google search only to found another site called Threeminds had recently used a very similar title, and had written a much funnier article than I ever could! But I stuck with it anyway.

Probably the slide in a presentation I have seen most often that irks me (and I’ve seen it in a similar from from 4 or 5 different presenters over the past year) is where in order to sounds like a guru on social media, the presenter pulls out a chart passing judgement on the social savvy of an airline by drawing a direct correlation between social savvy and twitter followers. As most airlines experimenting with Twitter are using it as a one way communication tool for sending special offer notifications,  the number I really want to see is Twitter followers next to opt in email subscribers for that airline, and then add the two together to give me some basis for comparison. It is not a “social media” measurement, but then again, solely sending offers via Twitter is hardly displaying social savvy. Take a look at this post from Dennis Schaal, where he demonstrates how this can be a double edged sword. Surprise, surprise – the danger of setting high expectations is that some people might actually hold you reaching them, and then criticize when you don’t.

On a totally different topic, I’ll close with this quote, taken from a good LCC summary written by The Centre for Asia Pacific Aviation:

Ryanair is less sanguine about the future of ancillary revenues. “Ancillaries are maxing out,” says Cawley. “We are already deriving up to about 22% of revenue and this is getting close to the natural limit. From here on, ancillary revenue will only grow in line with traffic.” Anyway, other opportunities for sales are not core: “We’re not retailers. We’re not into selling life assurance.”

I’ve mentioned it before, but in flight wifi is starting to look like it will end up as product evolution to be included in the ticket price rather than as a new source of ancillary revenue. I saw the following on the Orbitz blog:

…GoGo, it is struggling to find a market for the service it offers on AirTran, American, Delta and Virgin America flights. So it has cut the price of its 30-day pass to $24.95. That’s a 50 percent reduction.

And then this in the same post:

Bangkok’s Suvarnabhumi Airport now offers free Wi-Fi service, but you’ll have to present your boarding pass at an airline ticket counter to get a user name and password. The airport already has 126 computer kiosks that offer free Internet access.

I remember travelling through Vienna Airport a few years ago and being impressed with the free wifi. Don’t know if they still do it, but Bangkok is similar to Vienna in that it is an airport with a lot of through traffic, rather than solely a destination airport. Business travellers often have a fair bit of flexibility whether to choose or avoid airports like Vienna or Bangkok, so anything these airports can do to make themselves more attractive as a place to spend a few hours waiting for an aeroplane to refuel is a good thing. Wifi in travel is being redefined as a must have service,  which doesn’t really sit with the definition of ancillary I just looked up: Of secondary importance.

 

 

Even though Datalex is a competitor to Amadeus in the internet booking engine space, I have occassionally written some positive things about the company. Unfortunately today is a different story, as you can see below:

Three weeks ago Flight Centre terminated the contract, and began breach of contract proceedings against Datalex in the Queensland Supreme Court two days later. It is suing for $US5.3 million it paid to Datalex, and a further $9.35 million in ”wasted expenditure” Flight Centre incurred.

And that is not the only bad news for Datalex, as you can see from this story that was published a few days ago.

Shares tanked over 8pc yesterday to close down 2 cent at 17 cent, valuing the company at just over €12m. Investors were concerned at the outlook, which is significantly worse than analysts and the company itself had envisaged.

The Sabre purchase of EB2 earlier this year was something I didn’t see coming, but I wonder if Datalex was under consideration for that transaction, and if not, whether they are now maybe wishing they were?

I only heard about this conference as it was fininshing, but I imagine it would have been quite interesting to attend.

International airline Icelandair will share how targeted email marketing has helped the company boost customer satisfaction and increase online sales during a presentation at the European Email Marketing Conference in Barcelona Thursday.

The airline plans to continue to expand its use of ExactTarget in the coming months by integrating data from its Web analytics provider Google Analytics to build automated email campaigns to customers based on their browsing of Icelandair.com. The company also plans to integrate its existing social media strategy into its email efforts using ExactTarget’s Social Forward technology to enable customers to share email content with up to 50 social network sites including Twitter and Facebook.

The phrase “build automated email campaigns to customers based on their browsing of Icelandair.com” is by far the most interesting part; in the past I’ve talked about Expedia going down this path, but I personally don’t know of any airline websites doing it; not to say it isn’t happening, just that I don’t know about it. This type of activity that Icelandair are proposing is a step in the direction of the EveryYou concept that Tim Hughes has been talking about in recent months. On first thought, using email means it could only apply to frequent fliers or others with a registered profile that happen to be logged in when using the website, but if it is done properly, it could be a tie in to smarter use of passenger fare alerts, an area where there is a lot of room for greater personalisation along the lines of what Kayak do, and then taking it even further based on past flights flown or even past online searches. For most airlines I imagine this would be a cheaper way of dipping a toe in the water of customisation, rather than a full website redesign.

I remember reading an online comment somewhere a month or two ago from a person advising other airline website users to delete cookies after browsing, because airlines used this information to dynamically raise fares everytime you returned so that you would soon learn to purchase the first time instead of delaying your purchase. Somehow I think he was giving airlines and their technology vendors more credit than they deserve, and it is much more likely that he was really just experiencing decreased availability combined with across the board airline revenue management practices. Just doing a quick search on this topic, I think I now know where the story may have started, but I still don’t believe it.

With all this talk of increased personalisation…. and for the past 5 years I’ve heard many people talk about travel websites learning from Amazon in terms of making personalised recommendations… even the best today are probably still no better in this respect than where Amazon was five years ago – ie. how long have they had “other customers that bought that also purchased this.” So I need to add an anecdote of caution. I recall the story of one major airline that purchased Broadvision around the time of the dotcom boom. The strategy behind the purchase was totally correct – increased personalisation of the website experience through greater customer segmentation –  but the timing was wrong (too far ahead of its time), as all the other pieces of the puzzle, including the airline internally, just weren’t ready to take advantage of such a major change in their selling approach. So whilst it may be tempting to say Amazon or maybe Expedia have mastered selling based around smart use of customer segmentation, you also need to remember that they are companies that were born on the internet. For those companies born of an earlier time, seemingly small steps like what Icelandair are talking about really deserve a lot of credit if they can get it right. I’ve heard many airlines talk about it over recent years, but precious few have actually implemented, so I wish Icelandair best of luck and will be very keen to write about a success story post implementation if they or ExactTarget want me to.

No, not Vtravelled, but Taxi2. If you’re confused, you are not the first. If rule number one of building a social network is establishing an actively engaged community, then fragmentation must surely be the enemy. I can’t work it out. And the guys in Brisbane from Virgin Blue whom I’ve always got a lot of time for were having their fair share of bad luck last week. I actually received the email in question and was very surprised at the time given that I’m not even sure if I have any points in that scheme. Doesn’t seem to stop me receiving more marketing emails than probably any other program I can think of; but I can’t complain as I suppose I could always unsubscibe if it really annoyed me.

Onto subjects closer to home, I’ve just heard that my colleagues at PhoCusWright in Orlando are cracking open the champagne as they’ve won the award for most innovative travel solution. I’m sure there will be more about the topic tomorrow on the new Amadeus amateur-expert traveller blog. I mention that blog for two reasons.

Firslty, I’ve been dying to find any excuse (even if I have to draw a long bow) to use the great diagram above, and secondly, it is good to see any company trying to do things a bit differently. Definitely take a look at their blog, as unlike what I do, this one is coming out with the official corporate stamp of approval, so I wish them well. The trick will be to ensure it doesn’t seem bland and written by committee, but the people behind it seem keen on really giving it a good go and trying to find a unique niche to appeal to. Delta have occassionally used their blog to get out messages about innovation on their website, and Google do a great job of constantly pushing their message of innovation via blogging, so no reason why other companies can’t join the conversation by going social. I still haven’t read the book I want to on corporate blogging despite mentioning it here previously, but maybe one day.

I’m in Nice again this week for work and hence the total inability to maintain my goal of getting at least three posts out a week. But I did see one interesting things I’ll mention briefly. Air Tran will be launching seat back advertising.

The patent-pending, self-enclosed, advertising system is provided by the OnBoard Media Group (www.onboardmediagroup.com), an Atlanta-based, aviation media company and is in use by more than 10 airlines worldwide, including Jet Airways in India and Air Arabia in Dubai. AirTran Airways is the first U.S. airline to install this FAA-approved advertising device.

And I know I promised the write part 2 of the online / offline ticketing date post, but I still haven’t got around to doing it yet.  I will, eventually, but to end on a half humourous and half cynical note, I’ll quote an anonymous source:  “The sooner I fall behind, the more time I have to catch up.”

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