August 2010


I’ve written a new post for Tnooz that combines innovation in flight selection user experience, the changing world of travel tech public relations, and coverage of startups Hipmunk and Wanderfly plus the Qantas entry in the travel inspiration space – all of this whilst also manging to work in references to Silicon Valley, Fortitude Valley and the Hunter Valley. Enjoy.

Hipmunk Hype: A tale of two Valleys 

By now you would have seen the recent comment from John Tague at United Airlines about airline ancillary revenue only being in the third innings in terms of revenue potential. I couldn’t agree more. So today I’m back on the hobby horse of favored topics that no-one in the airline industry has picked up on yet – or at least if they have, it has been very much under the mainstream radar.

The first one I was reminded of came via this story saying nearly 60% of people wanted child free zones on the plane in an online survey from Sky Scanner. I’m not normally a huge fan of online surveys, but in this case I suppose I’ll do like just about everyone else and forget my reservations as it backs up my own opinion! Ah, but 60% said so in a survey, so I must be correct. With every airline now keen to sell exit row seats, why is no-one trying to set up a child free zone? Call it the business travel quiet working zone or whatever you want, but just remember, 60% are with me on this.

The other one is price drop protection insurance on an airline direct website – I really think this would drive much faster channel shift for international itineraries especially. And then there is always the poor weather insurance idea. Insurance is easy easy money, but some sites (not too many these days) still don’t even offer basic travel insurance in the booking flow. 

Maybe you could make a few of these suggestions whilst interviewing with Wizz air in Geneva for the Ancillary Revenue Manager job they are currently hiring.

And whilst on the topics of jobs in the industry, I almost felt like someone has posted part of my own job description online last week when Dennis Schaal wrote a story in Tnooz with the title Amadeus seeks to move in on ITA Software turf — US market. I’ve got a much broader remit than just selling online shopping in the US, but there is no doubt that now is an interesting time to be working for Amadeus in airline IT in North America.

Not a publication I can say I read too often, but in a July story from Retail Customer Experience there is an interesting piece written by Matt Nitzberg, Executive Vice President, Manufacturer Practice at dunnhumbyUSA. The article is titled Seven requirements for becoming customer-centric. It is not the first time I’ve mentioned his company on this blog, as once I was at a conference where Simon Hay presented and there is no doubt that consumer brands use checkout data in ways to understand non-registered buyers (ie. like non frequent flyer members) that airlines can only dream of doing. So I’ve lifted a few quotes from the article.

Happily, some retailers and brand owners are starting to turn the question around. Instead of asking “why are customers disloyal to us?” they are asking “how loyal are we to our best customers?” These leading thinkers are rebalancing investments and refining strategies and tactics in order to earn and grow customers’ lifetime loyalty.

And

An insight from Edwina Dunn, CEO of dunnhumby ltd., connects the dots between relevance, efficiency, and effectiveness: “The more targeted the offer, the fewer gimmicks you need to sell it. It will sell itself because it’s what people want.”

That last point leads me to airlines and merchandising and the need to really get fare families correct. This might even be one of the most obvious problems I see on airline websites in general, as there is no use having 4 or 5 different brands (fare families) on the shelf if the buyer does not perceive any difference between each. Air Canada and Frontier have both been pushing their credentials for a while in this regard, but most airlines have been late to the party. And I know why – it is not easy. It cannot be fixed by the head of online alone, or even the head of direct sales. How fares are packaged and marketed can have an impact offline as well, meaning buy-in from across the airline. But it is worth getting right, and lately I’ve seen a lot more people taking merchandising much more seriously in the airline world.

Back to check-out data; I’ve been thinking a lot recently about improving customer centricity on airline websites through a more personalized experience. If I think of data sources the website could incorporate into the rules engine driving contextualization and personalization, I can think of three sources. The first is airline related databases like frequent flyer profiles or even GDS data like what is in the face of the PNR or past searches performed by other users on the site. We’ll call this first category proprietary travel data. The second source is lacking a name at the moment (at least from me), but it is all the information on the internet that can be publicly searched and classified – think of the tools that do reputation management and social media monitoring today; this is the kind of thing I am thinking of. The third category is what I am calling proprietary non travel data. This is check-out data, credit card company data or any other type of data that helps you better understand what people are doing and how they are spending their money, but is outside of the scope of data normally used by the travel industry.

Airlines have traditionally not been users of this type of data, relying more on MIDT and their frequent flyer profile databases, but I’m really wondering if the next generation of airline content management systems may end up pulling data from all three sources in order to deliver a level of personalization that most have not even dreamed of yet. Getting it right means we almost certainly have not even scratched the surface of what is possible in ancillary revenue.

I’ve seen the RSVP numbers and they are looking good for the Amadeus Horizons airline conference in San Francisco in mid October – as a result, I’ve also started thinking more about the session I am hosting on ancillary services, and ensuring it delivers interesting and thought provoking content for those executives in attendance. I’ve copied references below to a few pieces I have seen in the last week or so that I have been finding interesting. With US passenger airlines reporting seven straight months of increased passenger revenue times are better now than they have been in a while, but a good ancillary revenue strategy will make the good times better, not mention the protection it offers during the bad times.

The most comprehensive article I saw recently was a USA Today summary of what various US carriers are doing with unbundling in their offers to pasengers:

“We believe premium coach is the fastest-growing segment of the business and leisure” market, says Robin Hayes, executive vice president and chief commercial officer for JetBlue. “Business travelers are … happy to pay $10, $20, $30 (for an) upgrade, but they don’t want to be gouged. In terms of leisure travelers … many of them are willing to pay a small premium to sit in an additional-legroom seat.”

And it continued,

“This is about offering passengers options to enhance and personalize and individualize their travel,” says Tom O’Toole, senior vice president and chief marketing officer for United, who says certain options have dramatically increased passenger satisfaction. United’s Economy Plus, starting at $9 per flight, gets you a seat near the front of the economy cabin with extra legroom. The Premier line package, starting at $19, lets you check in, go through security screening and board more quickly. Its Choice Menu offers coach passengers on most North American flights such selections as a Thai chicken wrap, an assorted cheese tray or gourmet chocolate. For $35, any passenger can purchase a day pass to the Red Carpet Club, United’s elite-traveler lounge

In addition, there was news of AirTran upping their first check bag fee from $15 to $20 and American Airlines adding a new fee for what they are calling Express Seats – those near the front of the economy/coach cabin.

Express Seats will be available only via the airport self-service check-in machines from 24 hours to 50 minutes before departure for flights

That quote above probably indicates a fulfillment issue, as I’m sure they would love to integrate their merchandising efforts more tightly into the booking flow. It is possible, but it definitely increases the complexity when it comes to managing the inventory schedule changes and equipment changes, plus the voluntary changes as requested by the passsenger – and a whole lot more on top of that such as correctly defining fare families and the multi-channel opportunities. It really illustrates the need to think about merchandising in a much more integrated way than most people think of it today. The tactical moves are good, as no-one should ever wait for the IT solution to stop evolving (ie. wait until it is perfect) before moving, but every airline really needs to be thinking beyond the tactical when it comes to merchandising. This topic is only getting bigger and more valuable as time progresses.  

And this brings me back to the topic of the panel for Horizons. I’m always preaching the benefits of social business (although much less here these days than in the past) and part of this involves engaging with the community and genuinely listening to what people want. Don’t be surprised if you see a poll on this blog in the coming weeks. I’ve never run one here before but I think this might be the right time to try it. The idea would be to have readers give some input into what some of  the focus of the Horizons panel should be. If you talk the talk, you really must walk the walk.

The current title is Ancillary services: the multi channel approach and delivery dilemma solved, so as you can see, it gives me plently of scope to work with. The only thing holding me back from putting a poll up on the site today is that I’m not convinced what the exact question and then the response choices should be. Naturally I already have a very clear idea for the topic I intend to cover on stage with my two industry experts (names to be disclosed later), but if you have any views on how a reader poll on this site could be run I would love to hear them (privately, or via a comment). I’m mainly looking for what the one question should be (concise yet compelling and with clarity), and then suggestions for the 3-5 choices offered as responses to that question.

Remember who is hosting the conference, so no immature wisecrack anti-GDS suggestions please.

Back in the days when I was working and living in Madrid (not really that long ago at all), I was involved in one part of a larger deal with Saudi Arabian Airlines, with my part primarily being selling the suite of tools to automate website bookings post PNR creation. I remember when working on that deal thinking how much potential there was to increase automation to improve customer service in so many areas of the airline, but in most cases I tend not to write about clients here unless I see something elsewhere making it very clear that what I am writing is close to material already in the public domain.

With that in mind, I saw a story recently on changes taking place in the Saudia call centre, and I read the following quote:

“At present only three percent of sales are done through the website,”…“We expect that 25 percent of sales would take place through the website by the year 2013,” he said, adding that the increase in website use would also reduce pressure on the call center. He said most calls received by the center were unrelated to bookings or cancellations… “Our website is much developed now and you can do your booking, get your ticket and your boarding pass within five minutes, especially for domestic flights,” Jan said. People can also check seat availability through the website. “They need not call us if there are no seats available on the website.” By the end of May, 1.89 million reservations were made through the website.

That article is choc full of good information and statistics, and remember that Saudia is around 17.5 million schedule pax per year (last time I looked), so it is far from being a small airline.

I’ve been reading other material recently around some of the latest technology in speech recognition for call centres, and it was only the other day that I mentioned what Varolii is doing with airlines such as Alaska and United to reduce cost in their call centres. It is still hard to imagine an airline with only 3% direct online penetration, especially now that I’m living in the US where numbers of 40% and above are more common, but on the other hand, it is great to read that Saudia are really starting to take advantage of some of tools that have proven so effective for airlines and their direct sales channels elsewhere.

Back in late April when I was writing a piece for Tnooz called Five untapped opportunities for mobile and travel I was coming across some news that didn’t really fit into that article – but I put it into a placeholder post here, and now, quite a few months later, have only just realized that I never actually posted it on the site.

One item was news from United Airlines who had announced some enhancements in this area:

In addition to using the more environmentally friendly paperless boarding pass option, customers may also access http://mobile.united.com to check flight status, flight availability, itineraries and Mileage Plus accounts.

Customers can also sign up for notification of any changes to flight status via email, phone or text message.

With the My Itineraries function, customers can view their itineraries and, in the event of missed connections, see the flights on which they have been automatically rebooked, rather than waiting in line at the airport for agent assistance.

While not currently enabled, United eventually plans to let consumers search for flights and buy tickets via its mobile Web site.

The most interesting part for me is around what I’m hearing people refer to as service recovery, and is captured in the part above about seeing which flights you have been automatically rebooked on in the event of a missed connection. I still think this information is most importantly pushed to a customer via email or SMS, but where it would be extremely innovative is if the aircraft has in flight wifi (or even more impressive, pushed to the seat back entertainment screen) and the passenger knew before touching the ground that the missed connection was already taken care of and that some type of compensation like a meal or a lounge pass was being offered as a sweetener.

Another example of service recovery I saw recently (recently meaning a good few months ago in this case),

Airlines have developed notification solutions for last-minute switches. Airlines once used their agents to notify passengers of problems, but that was time- and labor-intensive, said Robin Rees, the director of public relations and customer programs for Varolii, which creates systems used by such airlines as Alaska and United. “Automated communications technology can proactively reach much larger numbers of passengers much more quickly,” Rees said. “If an airline contact center has 30 agents, and each agent can make 10 calls an hour, that’s not very much. Varolii can do 20,000 to 50,000 in an hour.”

Maybe this post should have been titled “never throw anything away, just save it for a slow news day.”

Jessica Vascellaro at the Wall Street Journal has written a fascinating article on the ethical dilemmas Google are facing as they try to fend off their valuable advertising business from competitors with much less to lose and a much lower regard for user privacy. Even if you don’t read the article, the graphic that accompanies it (click here) is an incredibly powerful and eye opening way to get across the point of which websites are stripping us naked and figuratively selling the photos to anyone that asks.

I touched on this issue of third party tracking cookies recently when I reviewed the new KLM website redesign, but at the time I wrote most people never really think about privacy settings on their computer anyway and it is true – it may change one day, but for now, stories like the one in the Wall Street Journal will probably have no lasting impact. Not that airlines shouldn’t be aware of the issue, but the backlash won’t come from passengers unless someone with a vested interested gives it a good push along.

If Google get it wrong, people theoretically could defect in large numbers from using Gmail or from using them as a default for search; but it would have to be an extremely severe screw-up. That said, clearly it is an issue that keeps some people at Google awake at night.

One issue keeping many airline people awake at night is what exactly Google plan to do in travel. Whilst many have their theories (including me), it was very interesting to see a story that a regular reader alerted me to that appeared on Travolution back in June regarding some companies other than Google who are also on the radar of people working within the mobile space at various airlines. It is not only Google that appear to be keeping some airline people awake at night.

Chris Carmichael, British Airways manager for mobile innovation made a very insightful comment implying companies such as Worldmate and Tripit may be a bigger threat than rival airlines when it came to mobile.

My customers are giving them all their information. There is a group of companies that now know more about our customers than any one of us. What is the opportunity for them to intermediate or start selling them alternatives? It is something we all have to be aware of.

Nadav Gur from Worldmate and Gregg Brockway from Tripit were quick to respond in the comments as these guys are very keen to work with airlines and not be seen as enemies of each airlines’ own mobile initiatives. As I inferred a couple of days ago when discussing the Southwest court case to protect online check-in, most of the airline owned mobile apps on the market today could really benefit from getting a strategic rethink about why exactly they exist in the first place.

To end with, I’ll regurgitate some text written on Tnooz way back in April.  

Moving to the next untapped source of value coming out of a well executed mobile strategy. Imagine getting your hands on how much passengers paid to travel when they flew with a competitor and what share of wallet of their annual travel spend you are receiving. This is where the Tripit model really stands out. There is a wrong way to get this information, but having passengers on a competing airline voluntarily sending you their itinerary receipts is pure genius. 

If you are still thinking of launching a boring airline specific also-ran mobile app, probably best to go back to the drawing board and come up with something a little more adventurous before cracking open the champagne. If you don’t, then you can always wait for Google to do it!

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