Airlines


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.

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.

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.

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.

Hat tip to my colleague Eric Olesen for pointing me in the direction of today’s post. Last week I wrote about Ryanair signing a deal with INK to show ads on their boarding passes: (the media model is a hot topic right now). I’ve reproduced part of that post below:

With much of the world apparently moving more to a Groupon-like model, maybe the Ryanair idea of concentrating more on airport offers than on destination content might result in a better take-up (and definitely better trackability) of the offers. In the article, the CEO of Ink (company behind the solution for Ryanair) seems to be implying this, claiming that initial contracts are already being signed with advertisers priced at several times the rate for similar web ads.

Speaking of Groupon, I recently received a new home phone number and it turns out to be the old number of one of the many Groupon clones in existence. Now my home phone is running off the hook with bizarre enquiries which I am sure you can appreciate is a far from my ideal way to spend evenings at home! But back to INK.  It seems not everyone is happy with the Ryanair deal. The text below was posted on a Linked-in forum in response to a comment by the ancillary revenue manager at Spanish LCC Vueling, Maria Cardenal.

Mark Scott: Maria, You are right airlines have been doing this but not in a dynamically targeted way ie most messages are fixed. Sojern does something like this on Passes but not on all document types, eTicket Confirmations, mobile and Print-at-Home. Securidox does and introduced INK to the proprietary concept when they sold advertising on VLM’s confirmation. We are currently taking legal advice

This is the same Mark Scott as quoted below in an April 2010 press release about Qantas and their mobile boarding passes.

Mark Scott, Managing Director of Securidox, explains “Research shows that traditional check-in systems cause significant dissatisfaction at the airport with the process being too time consuming and stressful. The mobile check-in system offers a convenient solution for passengers and positive brand reinforcement for the airline. There are also excellent opportunities for revenue generation through advertising targeted to the passenger profile.”

So Securidox are on the record with this idea almost a year ago, and maybe they’ve had it for longer than that, but it seems whenever the topic of ads on boarding passes comes up, everyone finds the need to refer to Sojern. I asked Patrick Fisher who is their VP of Business Development to respond:

Sojern has strategically partnered with the leading airlines and travel industry organizations to deliver dynamically targeted and useful destination information and offers for Travelers since 2008. In essence, every boarding pass with Sojern content is customized in real-time based on the trip details of each particular trip. Sojern’s innovative approach also allows advertisers to reach audience segments throughout the travel continuum and increase campaign performance on premium web sites as well as impactful airline space such as print-at-home boarding passes and itineraries.

But with all this bickering over who was first to really understand the potential of segmented promotions in passenger communications (and to implement!), please read this link from a few years ago, as it was none of the companies mentioned so far in this post. The funny part is that Eric Olesen actually played a big role back then in making it happen.

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