Fare Market Value

An Interesting Twist

2009-05-13T15:21:00.006-06:00

Air Jamaica has added an interesting twist to the old checked baggage fee. As reported in Travel Weekly (which is online daily), Air Jamaica will charge $25 to carry a second bag on certain routes. However, they may not put that bag on the passenger's flight. Rather, they will get extra bags to the destination within a seven day window [Did they hire a cable installer to consult on this deal?], and the passengers have to come back to the airport to claim them.

Well, upon first read we about flipped reading this. Yet upon further review it seems the carrier is specifically targeting ethnic nationals traveling home for the summer. We guess many will have the flexibility to live with the deal. We can also sympathize with the carrier that may be faced with too much baggage for the flight. However, it would sure be an ugly trend if this were to get traction in a broader application -- so let's hope nobody matches without the fine print.

Turn Back the Clock Month

2009-05-04T12:44:00.005-06:00

Continental comes up big today by bringing back a fan favorite: 500 bonus miles for booking online.

The expiration date suggests that this is a response to OTA's pulling booking fees. However, there's no way to tell just yet if it's an offensive or defensive type of tactic. In other words, has CO seen a drop in online bookings that is offset by higher OTA share? Or is it more like Swine Flu, where fear necessitates some sort of action, even if a direct threat is not yet detected?

Either way, you can be assured that if there's a patron saint for the points-obsessed, travellers are praying that other carriers match.

Late to the Party...

2009-04-07T11:56:00.007-06:00

Looks like Orbitz is finally joining the "No Booking Fee" Party:

Online travel agent Orbitz Worldwide Inc., moving to boost traffic at a time when recessionary pressures have squashed business and recreational travel, said Tuesday that it will waive its normal booking fees on flights booked by May 31.

- Stay tuned because the interesting stat will be how much keeping the fees affected their market share. FMV originally predicted Orbitz would drop fees on March 23rd, so kudos to them for holding out an additional 2 weeks...

- We also wonder if this now starts a race to the bottom scenario for OTAs. We all know that hotels and cars are where the true money is for these guys - how long until the first OTA starts to subsidize airfares if the customer also buys a hotel product? This may be crazy talk, but let's see what Priceline has to say about it...

- Will low hotel occupancy combined with an OTA revenue drought bring back the glory days of "merchant model" hotel bookings? Will carriers be willing to dial up incentive payments to OTAs under the guise of "share shifting" schemes? Everything old is going to be new again as no stone goes unturned in a hunt for OTA revenue. The OTAs - Orbitz, especially - have bills to pay, too.

Oh Henry !

2009-03-25T10:50:00.005-06:00

Dreaded SDC (Second day of conference) update from CASMA.

Energy is definitely lower for the SDC, but we’ve only seen a handful of conferences that’s figured out how to keep momentum going into the second day. Today, Henry Harteveldt gave a keynote speech, and while he was mostly a Debbie Downer in his message, he does have a great message.

One sentence summary: "We are going through a second coming of the Great Depression and airlines must fundamentally change how they look at distribution and embrace Merchandising" .

- Henry (having heard him speak a ton - we think are close enough to be on a first-name basis now) believes that its time to stop looking at “Distribution”, but look at airline industry as an opportunity for “Merchandising” and capitalize on consumer emotion during the selling process.

- Money Quote: “Distribution is passive while Merchandising is active”. It’s the difference between shopping at Wal-Mart (cram the store with products at a low price) vs. shopping at the Apple Store (every detail from spacing to lighting to the shelve color is carefully considered for the shopping experience). The key is to somehow bring emotion into the shopping equation. This is a huge, fundamental shift to selling.

- Example: Many people feel that the check-in / security process is painful, but if you can offer products like United’s Premiere Line (you get to go thru security with the elite fliers) – they will gladly pay.

- "Times are tuff all over" and it’s really the rich people’s fault the airlines are hurting. Families making over $100,000 a year make up about 30% of the population – but they make up 45% of all travelers. However, they are nervous and just not using their money to travel on grand vacations.

Overall, you can tell that CASMA really scaled it down this year. They usually have some pretty fancy off-site event, but this year they simply had a band and dinner in the ballroom. That’s not a bad thing at all given the economic times. However, the best news of the entire conference was the announcement of their next conference location:

VEGA$ BABY!!!!

Can’t wait.

CASMA Dallas - Howdy !

2009-03-24T15:01:00.005-06:00

Hello from Dallas where we are covering the CASMA conference for our loyal readers. The conference is definitely a big step up from the last one in New Zealand – both in terms of content and participation. Still down from the good ol' days, but we think you will see attendance down across the board throughout this entire year.

The conference started off pretty strong, with a panel of airlines talking about Merchandising and Ancillary Revenues. And the best part was that they actually had good hard facts ! Or, as they say in Big D, "Yee Haw!"

- Mark Mees of Air Canada stated that 47% of all passengers buy up from the Tango fare class to Tango-Plus class or higher. He didn’t specify the breakdown between Leisure or Business passengers, but that’s still good info.

- A very interesting set of numbers is that Air Canada generated over $245 Million in Ancillary Revenue in 2008. However, AC also allows a passenger to "opt out" of certain services to get a lower price ($5 off if you don’t check a bag, $3 off if you don’t want any miles, etc). Mees stated that passengers opted out to the tune of approximately $500K. When compared to $245 million – that’s not too bad, and they surely earn some goodwill for allowing their customers this simple choice.

- Jim Young of Frontier actually broke down the upsell-rate by channel. 38% of Frontier.com online customers buy up to a higher class; 50% of travelers buy up when they book through Frontier's call center, and only 5% buy up via the Travel Agent channel. The main issue is that travel agents (especially OTA's) are so focused on Low Fare Search that the higher classes are always at the bottom and the customer never sees them.

- This is fascinating to FMV since it means that Frontier actually invested money to redesign their Call Center interface so that 1) their agents can see all of the fares classes, and 2) the call center agents can now convey that information to the traveler. We’ve always thought that airlines, who have a ton of information about the passenger, could definitely increase revenues with just a little amount of extra data for their agents, and this is great confirmation. It may also mean that a call center agent w/ personality persents a better pitch than a static GUI.

- Priceless moment of the day – Sabre challanged Frontier if this means Frontier.com now had higher yields than the GDS channel. Jim Young answered with a clear “Yes”. The look of dejection from the GDS was pretty priceless.

Finally - it’s clear that there is a lot of angst around how airline shopping will be done in the near future with the expansion of bundled fares and attributes. How do you accurately compare a fare class with free bags vs. a fare class with priority seating and a window seat? We think the first site that can do that well with instantly gain massive share with full airline backing.

The Gnome says "Me Too"

2009-03-18T12:50:00.005-06:00

WAAYYY back at the end of 2007 – we did a blog post on Priceline announcing that they would be dropping their booking fees for airline tickets. At time we stated:

Don't look for other OTAs to match, because they've invested too much in pitching their service proposition to throw away that revenue stream. Unless Priceline is able to make up some ground in share of course, which may be unlikely, but actually could happen. Especially through savvy partnership with meta's.

Well, Priceline WAS able to make up some market share and it looks like the big boys have had enough. Expedia announced they would drop their booking fees last week, and today the Gnome has also joined the bandwagon. Actually, the Gnome plays marketing catch up in two aspects:

1) They counter the “No Booking Fee” move by Expedia and Priceline, and

2) They counter the “Orbitz Price Assurance” gimmick:

Travelocity also is expected to launch a long-term price guarantee of sorts on vacation packages, promising to refund a price difference, from $10 to $500, if a different Travelocity customer buys the same package for a cheaper price at a later date. The "PriceGuardian" program is similar to an offering competitor Orbitz.com makes on airline tickets called "Price Assurance."

This is well played since it ups the ante by throwing in the holy-grail of “Vacation Packages” as the teaser. So what's this all mean? Here's our takeaways:

- If you wanted to see the short term affects of the recent Meta-Search space growth with Trip Advisor and TZoo, here you go (on top of Yahoo getting out). It really ups the pressure on OTAs along with the incumbent meta's. We think it’s going to start to be a brawl because the entrance of these two is comparable to another Hotwire and Priceline entering the OTA Market.

- FMV starts the betting on March 23rd as the Over / Under for Orbitz to announce dropping their booking fee. They will take the weekend to look at how this affects their bookings, then they'll make a deck and discuss it, but they will eventually need to take action.

- FMV could never really figure out why travelers use OTA’s and pay the fee in the first place. Yes – some OTA’s do provide value and we understand that (especially for flights using different carriers not in the same alliance); but for simple, roundtrip flights, it’s always been a mystery. [Note: That's why the PCLN commercial showing NoFee breaking vases is so perfect].

- Finally, the Gnome's latest moves may also be a tacit admission that 1) the real money is basically in hotels and cars, thus 2) selling airline tickets is now simply a necessary cost of doing business and loss leader for other travel transactions.

In clsoing, back to that service mark, "Price Guardian". Really? That's all you've got? Hopefully no AIG-sized bonuses handed out for that creative gem. Unless they show him slugging it out with Shatner and NoFee in a commercial.

Farewell Farechase - HE GONE !

2009-03-13T07:48:00.007-06:00

The meta-search space was starting to get really really crowded since travel-media heavyweights like TripAdvisor and Travelzoo started to crash the search party. However, it looks like field has been narrowed a bit as Yahoo! decided to scrap Farechase five years after they purchased it in 2004.

As reported by Travel Weekly (which is updated daily):

[The decision] coincides with two other developments. Carol Bartz replaced Jerry Yang as Yahoo CEO in January, and in late February Yahoo signed a new agreement that has Travelocity continuing its role as the primary booking engine for Yahoo Travel. In the past, Travelocity sparred with Yahoo over the prominent role that Yahoo gave FareChase on Yahoo Travel.

OK - this is basically the same old Hollywood story of Man - Wife - Mistress.

- Yahoo was pretty much married to Travelocity, but then met the alluring FareChase

- Five years of drama where Yahoo tried to juggle both

- Finally, Yahoo re-ups with a new Travelocity Agreement and realizes its never going to leave The Gnome so it's time to end it with FareChase.

The field is starting to rationalize itself a bit with Kayak / Sidestep as the heavy, Microsoft / Live Search / FareCast as the contender, Mobissimo as the falling star, and Trip Advisor and Travelzoo as the new guys.

FMV's predictions: 1) Mobissimo is the next to go thru a takeout, 2) Hybrids coming to a website near you as media plays try to go into the travel realm, and travel sites try their hand at media plays, and 3) OTA's have a problem, but Expedia may have the answer...

Everyone Take a Deep Breath....

2009-02-27T10:10:00.007-06:00

So - we bet that the media will be all over the latest news that seems to come straight out of the Onion:

Ryanair is considering charging passengers to use the toilet on its aircraft. According to the Belfast Telegraph - The airline's CEO, Michael O'Leary, is touting the idea of putting a coin slot on the toilet door as a means of raising "discretionary revenue".

OK - we know that's pretty mind-boggling - but we think this is going to be WAAYY overblown. Let's take a look at what O'Leary actually said, as reported by Today in the Sky:

"One thing we have looked at in the past and are looking at again is the possibility of maybe putting a coin slot on the toilet door so that people might actually have to spend a pound (about $1.43)... in future."

Well, that outrageous statement is actually hedged pretty well. Look - we know we joke about how far airlines will go to make an extra dollar (we even have a tag for "25 cents to use the bathroom") - but we just can't get worked up about it that much. We just don't think it'll happen.

However, if it does happen - FMV will be the first to test how water resistant their air sickness bags are...

Cold Cash Better than Kind Words

2009-02-19T09:40:00.006-06:00

We saw a fluffy piece here that's a bit of a backhanded compliment to the on-line travel industry. Apparently, there is an "American Consumer Satisfaction Index". This index suggests that, in general, consumers were less satisfied with e-commerce last year. E-commerce satisfaction dropped from 82 to 80 (out of 100). However, satisfaction with the travel segment of e-commerce did NOT decline.

More specifically:

"Expedia (+2.7) and the All Others category (-2.5 percent) tie for first at 77. Travelocity comes in second place (+2.7 percent to 75) followed by Orbitz (+1.4 percent to 74). Priceline.com falls one percent to 72"

We're not surprised to see Priceline lagging in this index, as their opaque model is a bit more vulnerable to lingering ill will if the consumer has a bad travel experience. In related news, Priceline reported 4Q revenue up 21% last night after the bell. So I guess we'll believe the consumers voting with their wallets rather than those voting in the "index". Even if you were burned by a bad opaque buy, if price is your main driver, you're probably going to go back to their well time and again.

Sonic Is On A Roll

2009-02-18T21:25:00.014-06:00

An understated press release recently came out that announced Jetblue has chosen SabreSonic as their new host system. It gives a hint of JetBlue branching out to expand partnerships:

Rick Zeni, JetBlue's Vice President of Change Management-Passenger Service System. "Sabre will allow JetBlue to offer greater revenue-producing codeshare and interline partnership opportunities... "

A few notes:

- Looks like some consultant got the final say to Zeni's title "Change Management - PSS"?

- This is actually the second announcement of Sabre scoring a host win in 2009 – the other being a recent WestJet announcement. We know that Amad-oose is pounding the market with Altea – but Sabresonic has some momentum going for it.

- Even more interestingly – both of these airlines used to be on the Navitaire platform. JetBlue probably decided to look around since they had to migrate to the New Skies platform anyway. It just seems telling that Navitaire wasn’t able to keep Jetblue in the fold despite all of the features New Skies is supposed to add.

- The timing is also interesting right after Sabre's purchase of EB2. We assume that Sabre is planning to incorporate EB2 as their new IBE platform (the Frontier migration to Datalex would have been the first clue they had to do something) – but we wonder if JetBlue will be the launch partner for that platform (or Westjet).

- The press release says that Jetblue will take control of Sonic in 2010. FMV is always amazed at how long integrations projects like this take, so we’ll be watching to see if JetBlue is any different. We'll also see if they can implement the IBE in that timeframe as well.

- Finally, we can’t help but love the name “Sabresonic”. It always reminds us of “Sonic the Hedgehog” which is one of our favorite video games. Any reason to dredge up Sonic once again is ok in our book. Though "Grand Theft Airline" has a snappy, edgy ring to it, too... Maybe next time.

Stimulous we can believe in

2009-02-18T15:33:00.005-06:00

We saw in the paper today that, for the next few months, JetBlue is offering passengers a full refund if they buy tickets and subsequently get laid off. Granted, knowing that you're getting a refund isn't going to make you feel any better while you box up your cubicle. If you're that worried about getting canned, you probably won't book a trip to the islands anyway.

However, it appears that more and more people aren't buying anything (especially luxuries like travel) just because they are afraid that they should be afraid. A promo like this is just what it might take to get some of those people off the sidelines. In fact, in such cases, the promo won't cost JetBlue a dime (even before you get to the fine print). More importantly, the promo might swing some share toward JetBlue.

Kudos to JetBlue.

Travel 5.0 on Web 2.0 with New Skies 3.0

2009-02-12T13:56:00.005-06:00

FMV ran across this pretty good article that covers JetStar’s migration to Navitaire’s New Skies 3.0 system. JetStar is the first airline to launch on this platform, and it appears that everything went pretty smoothly. Although it’s pretty amazing that their ENTIRE computer system had to be taken down for an entire day!

“You couldn’t book, you couldn’t change any bookings, you couldn’t check in somebody at the airport -- you couldn’t do anything that an airline would normally use a computer system to do. We were completely without IT support for 23 hours,” said Jamie Perry, GM of distribution and commercial systems at Jetstar.

Wow.

Jetstar is the first Navitaire customer to go live with New Skies 3.0; Ryanair, AirTran, and Gol are all currently live on 2.1. Additional functionality seems to include code-share and thru-checking functionality, as well as improvements on their IBE side.

Too bad for the short term pain to JetStar, though this is something Navitiare had to do for the long term. It’s clear that even “LCC’s” are moving up the functionality chain – where partnerships / alliances and ancillary revenue are becoming a big part of their strategy. Navitaire has to add functionality to stem the tide of their larger customers moving off of Open / New Skies and on to the big boys of the PSS world.

Best Airline Blog of 2008!

2009-02-12T13:41:00.007-06:00

Flight Global has announced their 2008 Webbie Awards, including the BEST BLOG OF 2008! Whoo! Whoo! High Five! Wait. What? Fare Market Value wasn't even nominated?

Cue Phil Collins:
"...There must be some misunderstanding,
There must be some kind of mistake..."

Well, there's always next year. They'll probabaly sweeten the prize money by then, too. In the meantime, congratulations to the winner, http://www.jetwhine.com/ and finalists, crankyflier.com and http://www.blogsouthwest.com/. Fine blogs, every one. Keep up the great work!

Don't Call Us...

2009-02-12T10:41:00.008-06:00

We need to take a short pause today to commemorate the birthday of one of our greatest leaders. President Lincoln? Sure, him too. We were thinking Jenn, the virtual agent, at Alaska Airlines. We're a touch belated, as she actually turned one a couple days back. [For pure comedic value, as well as some background on the project, read this interview with Jenn that appeared in Travel Weekly last March.]

Jenn

Alaska notes that Jenn has facilitated 1.5M chat sessions in her first year of life. Think of the benefits that provided. Let's assume she improved site conversion, driving a little revenue and possibly removing some channel costs. She has to have saved a few dollars in the call center, answering the easy questions that choke the lines for other customers. Throw on a little free publicity, and we're guessing Jenn's paid for herself already.

Jenn's milestone comes as United Airlines announced it will no longer allow customers to lodge complaints over the phone. Surely this will result in a more consistent, and probably better, response to complaints. Not to mention it probably will save money.

American also AAnnounced new cAAll center AAutomation.

As the industry continues to look for cost savings, and customers adapt to self-service, we expect to see much more fine tuning in the call centers. Especially if consumers start to question the value they are receiving for call center transaction fees.

You are Free to Move Around Rewards

2009-02-06T14:05:00.009-06:00

The Wall Street Journal's "Middle Seat" reported today on a speech from Laura Wright, Southwest’s chief financial officer during the Raymond James Growth Airline conference:

Southwest is working on revamping its frequent flier program... Ms. Wright says the revamp is expected late this year or early in 2010. Southwest also plans to overhaul its Web site, which she says ranks third in use among travel Web sites, between Mapquest and Google Maps.

Currently, Southwest’s Rapid Reward program offers free tickets based on only on the number of trips you fly. It seems a long time coming that the program would transition to rewards that scale with the value of the flight. FMV definitely expects that to change – towards something more in line with Miles Flown or Dollars Spent. What will be more interesting is if they start offering tiers of elite customers, including priority boarding, free drinks and point bonuses.

However, this change coupled with the revamp on the website announcement leads us to believe that there is a lot of new technology coming to LUV. FMV wonders if they can hit the right combination of revenue-enhancing changes while keeping their "little scrappy airline" image. The public comments following the WSJ article suggest we are not alone.

Morning 'Zoo

2009-02-02T10:34:00.014-06:00

On Friday, Travelzoo announced, and Travel Weekly reported, that they purchased the Fly.com domain name for $1.8M. Well, it turns out that maybe the bigger story is that over the weekend they launched an air meta-search product using said domain name. Way to come out blazing. Did they have a commercial during the Super Bowl that we missed?

Taking a quick spin, we're not seeing anything truly unique on the look/feel of Fly.com vs. other established meta's. However, it is pretty interesting that Travelzoo deals are dished up along with the air search results. Let's be honest, they manage to promote some pretty darn good hotel rates from time to time. Does this mean a return to the ~$100/share TZOO glory days of late 2004?

Probably not, but we do love the smell of synergy in the morning. Although there are a lot of hurdles to transition from a media-centered advertising player to a meta-travel site - T'Zoo has a lot going for it. With its existing consumer base, and a decent air search to go with their ads, it seems that the 'Zoo may be able to carve out some room from the established meta's a challenge.

And can this crowded meta market offer any silver lining to the OTA's? We can't really think of one.

Real Airline of Genius ?

2009-01-30T10:13:00.013-06:00

It looks like Spirit had a plan to advertise Bud Light on aprons worn by their flight attendants, but the Association of Flight Attendants-CWA (AFA-CWA) have put out a Press Release saying they aren’t happy about it:

"Turning flight attendants into walking billboards is unacceptable," said Deborah Crowley, AFA-CWA Spirit President. "The proposed aprons diminish the primary and federally mandated role of flight attendants as safety professionals and our role as first responders onboard."

The pilots have also risen up in umbrage:

"The pilots join them in demanding that this management stop these campaigns and run this company more like an airline and less like a frat house,” said Capt. Sean Creed

Umm – first of all, FMV has to point out that the correct term is “Fraternity” not “Frat”. That’s demeaning.

Second, FMV has chronicaled Sprits’ willingness to go gutter in their advertisements:

They have had a “MILF” Fares campaign. No PR by flight attendants about it.
They have had a “We’re proud of our Double-D’s” campaign. No outrage by the pilots.
They have even had “score some strange”! No objection whatsoever.

We're pretty sure there have been other low brow gems, but we quit keeping track. So now the company tries to capitalize on the clientele attracted by such promotion, and the employees are blocking them. "ENOUGH IS ENOUGH – We completely draw the line at selling Bud Light !!"

Well, FMV supports the employees' position, but with a bit different rationale. We just can't get behind Bud Light. Drinkability? We think not. It's the Campari of beers. That leads us to the more important point. Couldn't this A-team marketing department line up a different partner? Never during brainstorming did the whiteboard read, "Beer, Wine, or Spirits brand"? Hello? Spirits on Spirit? That's not just a layup, you gotta dunk that one. Sigh.

Nickels & Dimes Add Up

2009-01-27T11:38:00.012-06:00

For anyone not on the ancillary revenue and service fee bandwagon, check out this investor presentation from United Airlines (Dec 2008). Yes, maybe United is not the fiscal role model all airlines should aspire to be, but their nickels and dimes may be adding up to real money. $1.2 Billion in 2009 to be exact. We beeline to Slide 14 for a summary of their ancillary revenue growth:

That's a pretty ambitious target for 2009, given the 2008 data and declining capacity in a global economic downturn. Yet the growth of the previous years suggests it's within reality. Keep in mind, over half of the target comes from good old fashioned service fees tied to a captive audience (e.g. ticket change fee, call center fee, etc.), as shown in this table:

Look at it a different way. UA reported 63 million mainline revenue passengers boarded in 2008, a 7.7% decline from 2007. Yet they were able to grow the ancillary revenue 28%. That's pretty good. And if passengers remain flat in 2009 (optimistic?), and UA meets their ancillary revenue target, they'll collect ~$19 per mainline pb in ancillary revenue. That's approaching $50 per ticket sold. Pretty good stuff.

All in the [Fare] Family

2009-01-23T09:34:00.008-06:00

Frontier has launched its new “fare families” – and taking a cue from the recent inauguration festivities – there has been ton of PR and a slew of Rah Rah press about this. The system is very reminiscent to Air Canada’s structure of different bundles of goods for different prices – which is no surprise since Sean Menke (Frontier’s CEO) was a former Air Canada Exec.

If you need a Frontier AirFairs Primer:

Economy Fares: Lowest price, seat assignment 24 hours from departure, bag fees ($15 for first bag, $25 for second bag), Change fees, miles

Classic Fares: $20 higher than Economy, Advance seat assignment, 2 bags free, Direct TV included, lower change fees, 125% miles

Classic Plus: $60+ higher than Economy, Fully refundable, no bag fees, no change fees, free snacks and beverages, 150% miles.

A few notes, observations and comments:

Frontier notes with obvious pride that almost 40% of travelers have chosen to pay more to the “Classic or Classic Plus” levels over the Economy. However – look at the pricing: Classic is priced only $20 more than Economy, however you get your bags for free, which is a $15-$40 value. As a result – most people with luggage will only be paying $5 for an advanced seat assignment, Direct TV and 25% more miles. The real key here is how many people checking at least 1 bag upgrade?

Sabre estimated 12 – 18 months to implement this. Wow. It’s of interest to us that Frontier still uses Sabre as their pricing engine, and Datalex as the shopping engine / Internet Booking Engine (IBE).

It’s no wonder that Sabre recently bought EB2 in order to shore up shopping and IBE capabilities. We’re not sure if EB2 is enough to get Sabre over the hump though – seems like they have a long way to go to get back to being competitive in this space.

In the end – FMV bets that several of the technology companies will rapidly try to extend their reach to avoid just this type of situation. Sabre needs to greatly improve their shopping / IBE offerings in connection with their PSS / host offerings. It’s a pretty glaring weakness in the online channel that is so important.

The Southwest Effect

2009-01-21T15:26:00.017-06:00

You've probably heard of The Southwest Effect. Of course you have, it's got a Wikipedia page. This is when a certain carrier enters a market and miraculously brings low fares to the previously persecuted denizens of the region. Not unlike a Robin Hood for air passengers.

We always kind of figured there was a little bit of bravado in such claims. Consider it a touch of marketing for the good ole boys to discuss at Rotary meetings in Podunk, USA. No longer. A colleague was buying flights to Minneapolis (MSP) from Chicago this week, a day tripper, business meeting. It resulted in a severe pain in the wallet, and he came to FMV for help.

As it turns out, help is on the way. Do yourself a favor, and spot check CHI-MSP fares, using the distribution channel of your choice, for a day-trip in February. Then lather, rinse, and repeat in March. Chart it all up, and you'll probably find something like this:

Look at that. You can go ahead and guess the general date that the market welcomes a new entrant. Or maybe the winter tourism business drops off in March or something. Draw your own conclusion, but Minneapolis probably hasn't been this happy since Garrison Keiller moved to Lake Woebegon. And now we're believers.

Now Boarding......

2008-11-13T11:37:00.004-06:00

FMV is not sure what's going on here - but we flew United last night and it looks like they had the "First Day of the New Program Jitters"

The gate agents were all over the place and therefore they thought the new program allowed Premier Exec AND Premier members as part of Boarding Area 0.5. Question: Who else was left? Nobody. The scene was such that Boarding Area 0.5 was simply the same as previous Boarding Area 1.

We're told that other flights did it correctly, and only Premier Execs were part of the 0.5 - but we also had this thought. By making the Premier Executive benefit so public - you also make the Premier benefits less valuable since you took away something they previously had....

Boarding Zone 0.5 ??

2008-11-11T22:09:00.007-06:00

FMV recently recieved the following email from United:

Dear FMV: Beginning November 12, our Premier Executive members and Star Alliance Gold guests will board before Seating Area 1 customers through the Economy Lane.

The new boarding order will be as follows: Global Services, 1K and customers sitting in United First will continue to board first through the Red Carpet Lane, followed by our United Business customers. Our Premier Executive and Star Alliance Gold members will then be invited to board.

After all of our most-valued guests are on board and getting settled, the regular boarding process of seating areas 1 through 4 will begin.

Previously, there wasn't a ton of obvious difference between Premier Execs (50,000 miles flown) and "regular" Premier (25,000 miles) members. Yes, you had priority for waitlists and maybe upgrades, you could book exit row seats, and you had the nebulous Star Gold benefits - but it wasn't very obvious. Especially for international travellers. On the contrary, Seating Area 0.5 changes this and makes a very public benefit.

Most airlines are pretty blatant that their elite fliers matter more than the causal flier. On one hand, it causes some bitterness, on the other hand FMV is Premier Exec so YAY !!

Fed Ex Airlines

2008-10-30T21:59:00.008-06:00

WAAYYY back in May, 2007 - FMV had this thought:

FMV considers [the idea of] carriers partnering with the baggage shippers to provide more customer options and deflect complaints about baggage fees.

Well - it's come true courtesy of United, who introduces their "Door-to-Door Baggage" Program:

Stop lugging your luggage around. Instead, send it ahead with Door-to-Door Baggage. Purchase this service at united.com, and FedEx will pick up your baggage from your home or office and ship it directly to your destination. Or if you prefer, you can drop off your baggage at a FedEx Office location or any other FedEx authorized shipping center.

The unique feature about this program is that United has tied FedEx into their passengers' itineraries. Once you sign in to your United.com account and press the "Door to Door Baggage" link - the site automatically starts the FedEx process using the dates and cities of your itinerary.

The kicker is the boastful tagline:

United is the first airline to save you time and money with this simple and convenient service.

Save you money?!! How much do they charge for this?? Starting at $149 !! (vs. $15 for a first bag fee??). Hey, thanks for the money savings United !

Hence, this program isn't really about cash savings. It's about time savings. This is for the guy that kind of wanted to send his golf clubs ahead to avoid the hassle of checked bags. He also didn't trust the airine not to lose his clubs. The same logic could hold for business people who don't want to shlep business materials and simply say "eh, I'll just ship it and expense it".

However, the real winner here is FedEx, who picks up some highly qualified leads over its competitors. If UA can skim some of that value, and spin it as a positive for their customers, good for them. It's time to fly.

Poke in the Eye (4 Travel)

2008-10-06T22:17:00.004-06:00

We were at the Eye 4 Travel North American Conference – that now combines 3 conferences into one: Distribution / Ancillary Revenue / Revenue Management. Man has this conference really taken a hit. Fairly brutal in terms of content (weak), speakers (boring) and attendance (low), and there is only ONE thing that saves it from being a complete waste:

VEGAS BABY !!

By our definition – any trip to Vegas is time well spent. And since the craps tables were kind to us this year, we’d probably categorize this as a great trip overall – even if the conference was pretty much a waste.

Basically – the morning has only two items of note, both from Frontier Airlines:

Jim Young – VP Distribution had some actual numbers regarding:

1) Travel insurance. Finally !! It looks like only 0.5% of travelers buy insurance if it outside the booking path, and about 5% if the option to purchase travel insurance in within the booking path.

Finally – some real hard numbers that make sense. 1 in 20 buy insurance – those are numbers we can believe in.

2) Also – Frontier says that 50% of travellers check in a first bag, and 5% check in a second bag (which is down from 11% since they instituted a fee).

Young was asked, if oil continues to go down – will the baggage fees stay? While noting that carriers always have to keep an eye on competition, he believes fees are here to stay now that they are introduced to the market, are big money for airlines, and seem to be accepted as a cost of doing travelling now. Can't beat honesty ! We concur. No one pulls a legit revenue stream (except maybe Blockbuster late fees).

CWT and UA Make Nice Nice

2008-10-06T22:03:00.004-06:00

This is mostly to close up an ealier post and let everyone know that CWT and United has once again agreed to be friends. From the Travel Weekly (which is updated daily):

"Carlson Wagonlit Travel and United Airlines have come to terms on a preferred-supplier agreement...CWT spokeswoman Shannon Coughlin said no further comments or deails would be released...."

Sheesh - they made their spats so public, but then take their make up private. How's a blog supposed to make a living??

Afraid of Travelling

2008-09-24T16:08:00.006-06:00

FMV gets really irked when companies market fear in order to sell their products. Travel insurance seems to do this – which may explain some of its new-found popularity. Well, as we’ve said – we’re constantly told it’s popular even though we don’t know anone that really buys it reguarly.

Eye 4 Travel (yes, we know it’s a PR wire) had this bit of advertising astroturf (it appears to be a real grass roots story, but it’s fake once you really examine it) that had the shocking, just shocking headline:

"[R]esearch has indicated that one in four Brits (24 percent) still plan to go on holiday this year without travel insurance.

Chris Rolland, Head [of] American Express Insurance Services, said, "As the cost of living rises and there is less money left over at the end of each month, our research shows that one in four Brits are struggling to meet the cost of holiday insurance. If it is a case of people cutting back on travel insurance in order to afford their holidays then perhaps they should think twice before booking. Should something happen, the current economic market means that the last thing Brits need now is an unexpected bill."

A few notes:

1) “Head” is a sucky title for Mr. Rolland

2) This “article” basically says that 76% of Briton’s buy travel insurance on a regular basis. Can that be?

3) We can’t seriously believe that American Express is saying “if you can’t buy the travel insurance, you shouldn’t really be travelling…” Way to advertise fear Amex !!

Interestingly - the article goes on to mention that the "research" was performed by a group called Yougov. Well, we did some digging and found this story:

"A May [2007] survey for Norwich Union, conducted by YouGov, found that a quarter of all British travellers go without insurance. The study also found that while travellers believe that lost baggage is the main reason why they might need to make a claim, in fact medical emergency and cancellation are far bigger risks. And those can be a lot more costly than a missing suitcase."

Hmmmm - Same study performed a year earlier with same results... Great work if you can get it.

Consumers Redeeming Miles for Travel

2008-09-24T12:30:00.014-06:00

A woman named Mary Jane Credeur wrote a really nice article for Bloomberg this week that was published in many papers (Greetings from Asbury Park). It explains that consumers are burning miles for travel more than in the past, as evidenced by growing redemption tickets. Awards become more attractive as fares have increased. Further, banks are buying and giving away miles like drunken sailers. [Ed. note - Have we learned nothing from the mortgage crisis?] IdeaWorks is cited as claiming that half of all miles earned are not from flying.

We thought it was interesting to compare the reported increases in redemptions with the carriers' published traffic statistics:

Pretty clearly the redemptions are up much more than capacity, load factor, and passengers carried. Taken as a whole, this table is a roundabout way of confirming that carriers were selling fewer tickets in the first half of the year (ARC transactions were down 3.9% in 1H08). Hence the flurry of capacity cuts announced for 2H08 and 2009.

Interestingly, it also suggests how important banks' money from buying miles is for the overall airline revenue eco-system. If consumers won't directly buy air travel; let them do it indirectly via credit card purchases! As such, we'd like to see carriers continue to invest in tools that make it easier to redeem miles. And get a little more creative about how they manage the "price" of a ticket in miles. We'd also like to see a Cubs vs. White Sox World Series...but there's only so much an airline can do.

CWT QSI on UA ASAP !

2008-09-18T22:17:00.005-06:00

According the an article in TravelWeekly.com (which comes out daily by the way) - It looks like CWT is having a spat with United and "continues to move market share away from the carrier"

The Beat is also on it saying that UA canceled its U.S. CWT agreement in June, so CWT in turn cancelled its International agreement - and they have not come to terms on a commission structure.

As a result - "[CWT] have shifted a substantial amount of traffic away from United... We are still shifting business away from United when all else is equal. Where there are markets served by United as well as other major carriers, and scheduling and pricing is as good for our clients, we have taken business away from United in favor of primarily one of the other big four U.S. carriers."

Overall - this seems pretty crazy. We know UA is taking aim at their huge commission costs, but UA also relies very heavily on agency corporate business. CWT being the biggest out there - seems like a tough fight. In addition, IF it's true that they are successfully moving business away from UA - it seems like this will only get worse once CWT starts to broaden the reach of online Symphonie initiatives and can easily automate rules to their clients.

UA used to place a huge emphasis on the QSI metric - the "Quality of Service" that is the marker for how much any agency should be selling on any route. We wonder if they have moved away from this - or if CWT really wasn't selling much of UA to begin with...

We're Back - And We Remember

2008-09-11T20:39:00.002-06:00

We've been pretty silent the last few months - Combination of our day job really hitting us hard, and the fact that it was a great summer weather in Chicago. If you're from Chicago - you know you have to really maximize the summers in order to slog it through the 8 months of crappy winter hits.

However, FMV had a really interesting conversation the other day that we thought we should share.

We were flying on Weds (Sept. 10th) and sat next to a older couple who kindly asked "do you fly often?" We said "all the time - what about you?". She responded - "Well, this is our first flight since 9-11 since we were pretty scared about air travel, but they seem to have it pretty under control now.."

It took us a few minutes for that to sink in - and kind of amazing that it took SEVEN YEARS before this couple decided that they should get moving again. Those of us in the airline business prolly forget about things like that.

We actually flew on 9-18, the next week after the attacks - and we can still remember how tense it was. It's a world different now, but we guess it shouldn't be taken for granted. We remember and we guess it's time for us to get moving as well.

We're back to doing posts, and hopefully some interesting stuff will hit so we don't have to work too hard during halftimes of Bears wins !!

Where Are You !!?

2008-07-31T20:42:00.005-06:00

Sigh.

Yes - we know thatwe have been absent lately. But to tell you the truth - there is not much going on. Check that - there is - but it can all be boiled down to five math equations:

1) The price of oil is very high = Airlines in trouble;

2) Airlines are in trouble = Airlines cutting flights;

3) Airlines cutting flights = Airlines sell less tickets;

4) Airlines sell less tickets = Airlines charging fees;

5) Airlines charging fees = travellers are not happy.

That's really it. So we're not dogging it - we're just not seeing blog-worthy stuff to bore you with besides Carrier A cutting capacity, Carrier B is losing money, Carrier C now charging fees, etc. Sure, there's higher fares and bankruptcy speculation in the mix - but you can read that anywhere.

The only really interesting thing is the whole AA vs. Kayak kerfuffle - but we are putting a 3 week (subject to change without notice) blogging ban on it because we think it will be all resolved by then. Time will tell...

AA and the High Life!

2008-06-17T07:23:00.008-06:00

FMV now has confirmed that there are some people at AA who are smart, rationale – and are willing to put some reasonable limits on the latest round of “fee-mania”.

According to the Travel Weekly (which, by the way, is updated daily):

American Airlines’ new checked baggage fee does not apply to duty-free liquor purchases in the U.S. Virgin Islands, according to Tourism Commissioner Beverly Nicholson-Doty. “It is a great relief and a show of good faith that American granted us this special waiver," Nicholson-Doty said.

Visitors to the USVI can bring home $1,600 worth of duty-free items, double that of other Caribbean destinations, including four liters of liquor (five if one liter is a product made in the U.S. Virgin Islands).

Think about that - up to $1,600 worth of booze. Welcome to the AA High Life!!

BONUS CONSUMER TIP:

Oh, wait - only 5 liters duty free allowed? That must be really good stuff! Let's run the numbers:

USVI top shelf duty free booze purchased on AA: $1,600 for 5,000 mL is $0.32/mL.

US Airways in-flight cocktail: $7 for 50 mL bottle is $0.14/mL or $700 for 5,000 mL.

If you're not too choosy - you're better off buying 100 mini-bottles on US and paying the $15 to check them.

US Goes Service Fee Nuclear

2008-06-12T15:24:00.003-06:00

Bypassing GO! and collecting $200 for anything that is not nailed down, US Airways has introduced almost too many service fees and cost reduction efforts to list:

$15 for the first bag. Well played - pioneers get the arrows, settlers get the land. AA has already taken a beating, United has already jumped on board, pretty safe move....

New fees for certain NRSA employee guests. We get it, if you're dead weight and burning fuel, you're paying for it...

Boosting the call-center and ATO ticketing fee to $25-$45. Get yourself on the information internet superhighway or pay a toll for the slow call center lane. Makes total sense....

$2 for a can of soda onboard. Fine, whatever, buy it before you board...

$7 for liquor onboard. Fine, makes sense, wha - - - WHAT?

This means it's $9 for a rum and coke? What kind of a world do we live in? US AIR - You just lost your right to sell the High Life, is what you did!! This has gone WAY too far now....

Victory for the Lowest Common Denominator

2008-06-12T11:35:00.007-06:00

It turns out that UA has "matched" AA's $15 fee for the first checked bag. This to us was a matter of when, not if. We have to assume this charge will become the norm in the market (except for Southwest - who will really start to ramp up the PR machine on this fee now).

If so, then consumers don't really need to worry about cross-shopping confusion. The bag fee is just another necessary expense of travel, like airport parking, little tiny in-flight liquor bottles (hold the ice), and cigars at the duty-free shop...

BetaBlue: Still Free, Less Limited

2008-06-08T08:51:00.000-06:00

There was about a 1" tall article in the WSJ this week explaining that JetBlue has expanded their Beta test of inflight Wi-Fi. WSJ subscription required, so link here instead. Here is why you can ignore this progress:

The service is still only offered on one plane. Not a typo, one plane.

The service now allows access to one web site, Amazon.com. Not a typo, one web site.

Here's why it's kind of interesting:

E-mail now available via Gmail, Microsoft, and AOL

One can conclude that the limited test to date has been successful, allowing [extremely nominal and arguably negligible] expansion of the pilot. Hopefully this means a full and worthwhile deployment may follow in our lifetimes.

We have to assume, given how much convention hotels charge for Internet access, many passengers would gladly pony up say $5/hour or $10-$20/flight (or more) for e-mail access. Corporate travel buyers may not be giddy about that prospect, but certainly Jetblue is. That aside, a nice round of applause for the PR person that padded their release count with this "news".

AA: The bag fee is no biggie

2008-06-05T15:23:00.009-06:00

OK - this is the last AA Baggage Fee posting, we promise. But this one isn't our fault because AA is on the PR offensive and is contacting media outlets to explain "The Fee". Our headline paraphrases the situation, that this new bag fee really won't impact summer trAAvel. Per this story:

They estimate that 25% of passengers will be affected by the $15 first bAAg fee;

That's because (same story), 75% of summer travelers have already bought their tickets and thus won't be asked to pay the bag fee;
Thus, travellers need not worry about being inconvenienced [oh, and please book on AA ASAP].

Makes perfect sense - until you start looking further:

- Back when the fee was announced, AA said that only half of their passengers check a bag. If true, then only 50% of the 25% percent (of passengers that haven't bought summer tickets yet) may pay the fee.

- Then remeber that a bunch of those pax are international and / or elite and / or bought a full price ticket - so no bag fee applies.

- Now figure that less people will be willing to check a bag because they now have to pay $15.

Now we're figuring maybe 5-10% of summer travellers on AA will pay this first bag fee? Hmmm..

At $15 a bAAg, that's still a lot of money. But AA is certainly getting a TON of bad publicity for this and they don't seem to know how to make a bad story go away. FMV's advice - just zip it already! Don't keep trying to explain it, don't keep trying to justify it, and for goodness sakes - DON'T try to tell your customers that it's actually a "bargain" !!

"The airline defended the fee, saying it was a bargain compared with the cost of shipping a 45-pound bag overnight on a package-delivery company. A spokesman for the airline said the cost of sending a bag from Dallas to New York would range from $150 to $230 or more."

FMV is also thinking of making this a paid site for our new customers for $10 a month. We figure it's a huge bargain compared to paying for online newspapers, CNN.com, espn.com and others! oh wait, those are free too....

Southwest = Complete Clarity

2008-06-03T10:31:00.005-06:00

Once again, we have to hand it to Southwest. With the US majors struggling to boost revenue and cut costs, not a day goes by without a carrier looking like an anti-consumer enemy of the state in the news. Yet Southwest emerges with their value proposition as clear as ever: Basic air transportation at a decent price with no nickel-diming.

They drove it home with a full page ad in today's WSJ (and likely elsewhere) featuring a coupon (redeemable only on Southwest) reading "DON'T #$*!% ME OVER". The coupon is followed by a list of the various fees Southwest does not impose. The message is simple, and brilliant, and it will resonate not only with Johnny Lunchbucket trying to enjoy some R&R, but also with the coveted business crowd.

They also unveil a new tagline, "Fees Don't Fly With Us". Of course, neither do we (three letters for you, MDW). However, we can understand why people do. And we suspect many more will. Pass the peanuts.

DiAAling up the fees!

2008-05-21T21:54:00.004-06:00

The big news today, AA has announced a $15 fee to check a bag. That's for every bag, starting at the first one checked. A second bag is still $25 to check. Yes, yes, some restrictions apply (e.g. Elites, strollers, international travellers, etc.). However, this is a huge step up in the ticky-tack approach we've seen in the market to date.

Consider some of the major ramifications:

Travellers really can't cross-shop carriers now. This is effectively a $30-$80 fare increase for most leisure travellers that is opaque during shopping.

Airport operations just got more complicated. It's usually quite a wait to check a bag, so we rarely do. Now every stooge in that line has to complete a payment transaction, too. Not to mention AA probably needs more cash in the drawers at the airport.

Overhead bin space goes from endangered to extinct. No further explanation required here.

Gate checking proliferates. This can't speed up the boarding process. Unless AA follows this jab with the haymaker of reduced carry-on size allowance.

This is a pretty strong move by AA. Are they committed if no one else follows? This will be a fun one to watch.

Though possibly not for travellers....

What's in a Name?

2008-05-21T13:50:00.005-06:00

We have to wonder what’s going on in the world of naming travel companies. It just seems like there must be a master list of names, or that there is simply too many companies so that naming them is really really hard now.

The latest example is the new airlines from British Airlines called “Openskies”. Yes – it seems to be predicated on the “Open Skies Agreement” that frees up competition for international routes, but it also unfortunately shares the same name as the Navitaire Host system. Painful.

But it gets worse.

Even names that we thought were pretty unique have close twins. Check out the names of YAPTA (known for flight tracking) – and its bizarro-world twins called YATRA (online travel portal). And seriously – check out the logos - even those are similar!!

But it gets worse.

One of the original names WAS Bezurk, an Asian based Metasearcher– but they decided to rename themselves WeGo.com. Which is an awful name to switch to because there is already a WeGoLo.com, which is an European LCC meta. Looks like Bezurk just didn’t go low enough.

There is now TripAdvisor, TripConnect, TripIt, InsideTrip, TripDoor, and CTrip. It’s a complete marketing nightmare. Don't get us started on the fare names. Farelogix, FareCast, FareCompare, etc.

Where is the creativity? Now on the other hand, behold the name Fare Market Value. That's a beaut.

Insurance Against Bad Reporting

2008-05-16T11:09:00.000-06:00

We all know that a huge Ancillary Revenue stream for airlines is “Travel Insurance”. Although FMV will admit that we don’t know anyone that actually buys it – we are repeatedly told by airlines that everyone does.
A NY Times article last week explained that people who buy travel insurance tend to think that they are then less likely to lose their bags, get sick or have an accident. The psychology of buying insurance is fairly interesting, but then the NY Times had go and mess it up:

“These results presumably come as no surprise to marketers of travel insurance, which is now purchased by half of American leisure travelers — a fivefold increase since 2001, according to the United States Travel Insurance Association.”

Huh? *HALF* of leisure travelers now purchase travel insurance?? That sounds pretty unbelievable that so many travelers would add this premium to their vacation travel costs. As a result, we decided to do our own research at the US TIA website:

“Utilizing industry and government statistics we estimate that approximately half of Americans who took a cruise, tour or international leisure air trip in 2005 purchased a per trip insurance policy,” notes Brad Finkle, USTIA president.

AHHHH - That still sounds high to FMV, but a little more believable. It's not all leisure travellers, it's the subset purchasing cruises, tours, and international. It's especially logical for tours - because in some cases the cost of travel insurance is actually baked into the package price. However, FMV feels vindicated that the NY times was wrong. We maintain it's going to be a stretch to get half the hapless rubes on the redeye from Vegas to buy insurance. Unless the dealer's showing an ace, of course.

CASMA Panama.... YAWN....

2008-04-21T07:38:00.001-06:00

Sigh –

Ok, Ok – A lot of loyal FMV readers have emailed asking us when we'll post our CASMA recap. But, the fact of the matter is that we’ve been lazy to post it because …. Well… there just wasn’t a lot to report.

Yes, there were a lot of panels and workshops, but we bet that you’ve already heard it all. We’re serious. It’s a slow distribution news year – and so there’s basically only one thing everyone talked about at CASMA: “Merchandising”

With the very closely-related popular brother… (Wait for it)… “Ancillary Revenue”

And the 2nd cousin that everyone admires from afar - “Fare Families”.

- Yes, Paypal had yet another lunch keynote speech. And Yes, there were the federally mandated panels about E-Ticketing (Hey – isn’t that IATA Deadline coming up?), Alternative Payment Methods (Credit cards suck), and Agency Booking Habits (Drat them!). These are CASMA staples.

- The Panels this year were seemed LONNNGGGG (90 minutes?! Uggg).. And the major panels were about…. (Wait for it)….. Ancillary revenue! The punch-line of this was that the panel was “moderated” by Maruice Coleman – who seemed to have only two main points. 1) Hey - Did you know he used to work at Aer Lingus (he mentioned this no less than 11 times) and 2) Ryan Air is the BEST AIRLINE EVAH !! (mentioned Ryan Air no less than 28 times).

- The other major panel seemed to be Technology Providers talking about…. (Wait for it)…. Ancillary revenue. The panel can be summed up like this:

Sabre: "Hey - Did I tell you we're great?!... well, we are great!".

Amade-oose: "Industry Buzz Word #1, Industry Buzz Word #2, [Insert a remark about Altea]"

WorldTravelSpanPort: Most Reasonable of the bunch - "We can't expect airlines to be standardized"

ATPCo: "umm - don't know why we're up here"

ITA Software: "This stuff is hard, we'd love to hear what the airlines are looking for"

So there you go readers. Sorry for the letdown – but it can’t be all breaktaking news all the time. We’ll save that for the next Airline that charges for an aisle seat...

FareCast XP

2008-04-18T07:24:00.003-06:00

Just remember readers - You didn't read it first at the Seattle PI, You didn't read it at CNN, You didn't read it at MSNBC - But you did read this prediction at FMV !!

It's official: Microsoft is the mystery buyer of FareCast... Microsoft did not confirm the purchase price, but a source says the figure is in the $100 million range.

Looks like the price tag has increased from the previously reported $75 million. Screw drinks - DINNER is now on you guys!

Congrats to the FareCast crew.

FareCast = "He Gone"

2008-04-15T22:14:00.005-06:00

Way back in December, when SideStep got taken out by Kayak - FMV posed this nugget of wisdom:

It’ll also be interesting to see what happens now with FareCast and Mobissimo.

Well, it looks like our crystal ball rocks because FareCast just got purchased for $75 million - but here's the wierd part - Buyer unknown:

"Farecast has been sold in a deal that values the Seattle online travel search startup at more than $75 million, according to a source with knowledge of the situation. The buyer was not known and Farecast Chief Executive Hugh Crean declined to comment. "

The rumor getting the most play is that Expedia ponied up the cash to purchase the local site - but to FMV, this seems like an expensive proposition for a million visitors or so a month. Also - doesn't seem like their fare prediction algorithim would mesh for the largest OTA on the block.

Who else then? The only other name we can think of would be MSN - simply because they already have a relationship, they are local, they are always looking for unique content to drive their travel site, and who knows how long they will keep their expedia relationship. It'll be interesting to find out...

But otherwise - congrats to the Farecast crew, not a bad run to clear $50 million or so! Drinks on you guys if we ever meet. Not the kind with cream and sugar. Only so we can stay clear of the Starbucks vs. DD dilemma, of course.

Airline Merchandising 101

2008-04-11T07:03:00.006-06:00

If you spend any time at travel conferences, you're going to hear airlines talking about "merchandising". It is quite probably a federally mandated talking point. What does it mean?

We can enjoy Slide 18 from this PPT from United Airlines for a peak behind the curtain. UA is targeting a $1B revenue increase (roughly 5% over current ~$20B revenue) in five years from the following initiatives:

Seat upsell, $300M/year

Unbundling product (e.g. Baggage Fees), up to $300M/year

New products, $400M/year

We wish we knew more about the "new products" (c'mon, pay toilets!), but we speculate that means things like entertainment, buy-on-board, new lounge purhcase plans, etc. Wait and see.

PS, FOR NERDS ONLY:

This is all interesting stuff, but the humor is found in the math error. Note that the slide indicates that seat upsell "can DOUBLE to $300M/year". That means the incremental benefit is only $150M. That means the total target only adds to $850M, not $1B. Not to mention that a $100M range was cited for "unbundling product". Oops, now we're down to $750M. Fine, fine, $250M is a rounding error when you're talking about $20+B in total. However, they may want to hire a consultant to check the other consultants' work (yes, FMV Available)

Another Low (i.e. Gutter) Fare Promotion

2008-04-08T22:01:00.018-06:00

You have to hand it to them. They've got a Spirit that just won't quit. From the airline that brought you the MILF sale comes a suggestion that it may be time to score some strange:

"Bored with your marriage to high fares? Spice up your travel with some strange new fares from Spirit. Life is better with some strange!"

If you're not understanding the reference, get yourself over to the Urban Dictionary for some remedial education. If you're not sure why this promo is probably going to be successful, you may not be spending enough time in the bar at convention hotels...

Jump back, what's that sound?

2008-04-07T07:04:00.005-06:00

Greetings from CASMA at the Intercontinental Playa Bonita Resort in Panama!! (bonus points to any of you readers that understand the Van Halen reference in this entry's title).

Yes - it looks like conference season has started for 2008 and FMV travels far and wide to keep our loyal readers up to date. This year CASMA has picked a great resort to host the conference - and FMV will highly recommend the Intercontinental. The conference has even arranged transportation to the hotel - which is about 45 minutes from the airport. The only problem is that Panama City itself does not seem very inviting to explore, and there is a general consensus that there is not much enthusaism for going into the city and seeing the sites (which doesn't seem much after you get past that big canal thing).

In terms of attendance - seems well attended in terms of numbers, but not as much in terms of companies and organziations. For instance - out of a total of about 200 people, COPA has 18 people attending (ok, that makes kinda sense since it's home turf for them), ARC has 19 (huh??), and each of the GDSs have 9-10 as well (which also makes sense because let's face it - CASMA is a bit of a GDS love-fest after all...).

Buzz words we predict to watch out for today during the gatherings:

1) Some reference to "4 carriers going under in the same week..."
2) Anciliary revenue (with multiple references to Ryan Air)
3) Price of oil

It's enevitable - airline people just can't help themselves. For those of you that can't be here, go ahead and "ease the seat back", we'll post updates as noteworthy things happen and time permits.

Ryanair: Apparently Not-So-Low LCC

2008-03-27T08:41:00.007-06:00

Hey, it turns out that high fuel prices really hurt airlines' profits. In fact, especially if you think you can give away tickets and make it up on ancillary revenues, you really need to cut costs. At least that is the current state of affairs at Ryanair, who hopes to cut $621-Million in annual costs in various areas, including labor, due to extraordinary high fuel costs.

Yes, Ryanair also hopes to boost the top line through higher baggage and credit card fees. But we have to say, when the poster child of LCC's is talking about a need to tighten the belt, this is not going to be a good year for airlines. You can save yourself a call to Jamie Baker, Robert Mann, or Terry Trippler. You just read it in The FMV.

Emirates: Thank you very little

2008-03-26T08:05:00.006-06:00

We saw this fairly disturbing news last week. Apparently Emirates allowed the "first authorized mobile phone call made from a commercial flight" last Thursday. This follows the several million unauthorized wireless calls, texts, bbery messages, etc. made daily on US flights - - you know who you are.

This was no gimmick - Emirates plans to roll this "service" out on all flights. That's right - - now you can enjoy a trip around the globe while receiving continuous sidestream updates on some blowhard's all-important business deal, Aunt Polly's gout, and how much Pookums misses their Little Boo, and conversations that end with "No, I love you more - you hang up first..." The silver lining? Apparently only six of these goofs that don't recognize the value of a few hours unplugged can talk at one time.

A bit off our core topic, but inevitably carriers will charge for this service, or offer legitimate distribution services via inflight wireless devices, so we figured we'd keep the FMV audience up to date. In the meantime, note to self: remember not to fly Emirates. And also:

From "Today’s Cartoon by Randy Glasbergen", displayed with special permission. For many more cartoons, please visit Randy's site @ http://www.glasbergen.com/. Thank you, Randy!

Some Economy Seats are More Economy Than Others

2008-03-20T20:11:00.007-06:00

Since FMV moved it’s headquarters to Chicago late last year – we find ourselves flying United a lot. You may think it’s because of their weird faux-cartoon ads that they plaster everywhere – but it’s really because of their “EconomyPlus” seating with extra legroom. After earlier hints, JetBlue has officially jumped on that bandwagon:

JetBlue will reconfigure its Airbus A320 fleet to offer seats with more legroom, and will charge more for those seats. JetBlue is calling the product Even More Legroom, which will offer 38 inches of pitch in the second to fifth rows plus emergency exit rows 10 and 11... The airline will charge $10 each way for short-haul flights (under 600 miles), $15 for medium-haul flights (601 to 1,500 miles) and $20 for long-haul flights (over 1,500 miles).

That’s actually great – but there is also another kicker:

The airline won't be selling Even More Legroom in the GDSs because of "technological limitations," JetBlue said. But the airline added that clients who book via a GDS can go to the Manage Your Flight link on JetBlue's Web site to purchase the extra legroom.

A few FMV points:

1) OK, we just assumed that JetBlue’s marketing department had a down day when they branded their new refundable fare product “Refundable Fares”. But seriously, “Even More Legroom”? Please try a little harder to imply that the old coach seats don't have crappy legroom. You know who will REALLY hate this name?? The call center agents who face this scenario happening 100 times a day:

JetBlue Agent: “Hello, You have reached JetBlue – how may I help you”

Customer: “Uhh, Hi – I bought a seat for my upcoming trip, and I know I get a roomy seat, but I’d now like to purchase EVEN MORE LEGROOM!! Ha Ha Ha”

2) This also has “Ancillary Revenue” written all over it and kind of goes against the Jetblue vein. Fine – you don’t have a “business class” – but you now have the beginnings of tiered system…

3) Finally – and most importantly - we love the fact that this purchase option is not available in the GDS. It’s the mythical “Fourth Cabin” limitation of GDSs; they cannot inventory control this type of stuff, and therefore can’t sell it. But FMV will bet you $10 (Even More Legroom for a short-haul flight) that the GDSs come out and blame the airline as not being “buyer focused” for doing this to them. It's classic GDS victim-hood at it's best (see Air Canada).

So while you won't catch us flying JetBlue just yet (simply not enough flights from ORD), we applaud them for providing meaningful product differentiation (i.e. not just a seatback TV and faux-hipster vibe). We also applaud mother nature, for dumping a (late) winter storm on Chicago today, giving us the perfect excuse to duck out early to watch the NCAA tournament. For those stuck on a cot at ORD - sorry, but these things happen for a reason.

Ouch Redux: Northern Exposure Edition

2008-03-20T04:35:00.001-06:00

What goes on here? Just last month we wrote about Ryanair shutting down their reservations for 3 days to upgrade their systems.

Now comes word that Alaska Airlines will shut down access to their mileage plan systems in April for a week! No redemption, no mile-based upgrades, no signing up for the program, etc.

We suppose the business impact is relatively small. They gave loyal customers a month notice, and most passengers will be able to figure it out and work around the outage. But you can rest assured that some know-it-all customers will be pretty hacked off to find out that they can't redeem their miles right-then-and-there for that all-important dream trip to Anchorage.

It just seems hard to believe that system migrations like these can't happen a little quicker. A few days we get - but a week?? A $3.5-Billion bank like Bear Stearns can teeter on the brink of bankruptcy, get bailed out by the Fed, nearly fail again, then get liquidated by a quasi-partership of the government and an opportunistic white knight in just two days -- and an airline can't migrate a few customer profiles in less than a week? What kind of a world do we live in?

Booking Bonus Days AAre Gone

2008-03-17T16:08:00.005-06:00

Well it is official. Mileage bonuses for booking direct on a cAArrier website are just not happening anymore. If any carrier is still doing it, it's probably due to a technical error or a staffing restriction (i.e., the guy that was supposed to pull the promo got laid off). Cue the Little River Band classic, "Reminiscing".

The latest sorrowful news came to us courtesy of the American Airlines DealFinder tool. No more booking bonus at AA.com after AApril.

Sigh. Now how are we going to earn our reward tickets to Tulsa? Hmmm. What to do? Note to self: Pitch ncAA "tournament pool for miles" idea to AA.

Baggage Fees Save Airlines Money

2008-02-26T11:36:00.004-06:00

You didn't need Nostradamus' skills to predict that there would be followers to United's fees to check a second bag. Sure enough, US Airways will begin charging passengers if they check a second bag.

What is interesting about the news, is that US states that 8% of their passengers check a second bag. As we noted in our post about United's policy, we estimated that it would take well over 16% of passengers checking a second bag to generate United's targeted benefit. We consider this proof that a big portion (maybe half) of the benefit of the fee is cost savings, not ancillary revenue. Carriers claim the savings deals with fuel, we suspect it's as much about the labor associated with handling the bags.

The ultimate source of the savings is fairly irrelevant. The multi-million dollar question is in fact, will a $25 fee really persuade the general travelling public to pack lighter? It probably depends. Imelda Marcos type shoe fiends? Probably no. Family of four going to Disney World? Probably yes. We'll just have to stay tuned, and see if they dial the fee up to $50 to know for sure.

Ryanair: Ouch.

2008-02-15T09:15:00.002-06:00

There are a lot of things to find pretty entertaining and arguably admirable about Ryanair. For example, when they issued a press release calling travel agents "deadwood" and "rip-off middlemen". We think it's pretty awesome that they've been so aggressive with their direct distribution strategy. But - It's not without risk.

The downside of their position becomes startingly clear with the news today that Ryanair will have to go without selling tickets for 73 hours later this month, while they migrate their booking platform in order to comply with new UK requirements regarding the proper presentation of fares, taxes, fees, etc. to consumers. We're pretty sure that 73 hours is more than 3 days, even across the Atlantic. That's almost 1% of their selling opportunity for a typical year. Fortunately, the migration falls during leap year!

We've heard some pretty astounding anecdotes of consumer deception in their marketing, so no real sympathy that they need to take this hit. However, there had to be some pretty dour planning meetings as the reality of the migration details became clear. No worries, they'll make it up with a 73 hour 1 Euro fare sale (some restrictions apply, fare not valid on most days ending in "y", seating additional, passengers subject to cabin door use fee).

Ancillary Revenue: Not Just for Pillow Sales

2008-02-13T16:25:00.007-06:00

All too often, when pundits talk about airline ancillary revenue, it's all about selling snacks on board or charging passengers to use the bathroom. Today, a special thanks to a yawner article about JetBlue for reminding us that ancillary revenue can come from the most basic form of nickel and diming: change fees.

Today's ATW Daily News reports that JetBlue expects a 50% year-on-year increase in ancillary revenue in 2008, bringing annual nonfare income to over $250M. For comparison, 2006 "other revenue" was $139M, and we estimate the 2007 number will be around $190M (based on JBLU 3Q07 Form 10-Q). That got us wondering exactly how they make that money.

It turns out, that for the third quarter of 2007, their filing footnotes explain that most of the other revenue increase was "primarily due to higher change fees and excess baggage fees...resulting from more passengers and increased change fee rates". Sweet! That is so old school! Hundreds of millions of dollars from simply selling nonrefundable fares, and then charging people to reclaim the purchase after their plans change.

Sports cliche: Sick to the fundamentals, Take it game by game, Give it 110%, don't get fancy.

If you actually read that article, it also turns out that JetBlue will try to boost passenger revenue by, we paraphrase, copying United's EconomyPlus seating model. But they WILL NOT, we repeat WILL NOT, emulate United's 2nd bag policy. Hip, nimble, JetBlue can't go for that legacy carrier stuff.

But Look On The Bright Side...

2008-02-08T00:04:00.000-06:00

It’s no secret that many airlines have recently started to add luggage fees for checked bags in an effort to raise revenue. Some airlines do it modestly, some do it very blatantly. Spirit Airlines, a pioneer in baggage fees, has now increased their fee – charging $10 per bag if you pre-reserve your luggage online, or $20 per bag if you check your bag in at the airport.

However, you have to really admire the ability of Spirit’s PR department to spin a simple luggage fee. In their recent press release of the luggage fee – Spirit claims that adding the fee is really a GREAT thing for their customers!

“Instead of raising every fare across our entire network in response to ever increasing fuel prices, we are proud to introduce our new luggage policy, which gives our passengers the opportunity to control their cost of travel by packing lighter,” said Barry Biffle, Spirit’s Senior Vice President and Chief Marketing Officer.

Biffle PR Translation: Yes - we’re adding a luggage fee… but hey, we’re not raising fares. So there’s some good news out of all of this!!

Biffle FMV Translation: Hate the Game, Not the Player.

And seriously – this is a great statement that is mentioned TWICE in the PR: “Our luggage policy… gives our passengers the opportunity to control their cost of travel by packing lighter”

Huh?? This basically says “Passengers will get charged for a bag – but you have the option of not checking in a bag… Man we’re great!!”

After all this, FMV management has decided to fire its PR firm and find a new agency that can spin like Spirit’s new luggage claim carousel. However, rest assured, we will also give the firm the option of packing lighter….

UA Baggage: The People Have Spoken

2008-02-06T10:00:00.000-06:00

Lest you miss it, America's Finest News Source, The Onion, has some fairly comedic public feedback on the new United Baggage Fees. Yes, it's a parody - but we suspect if you asked enough real people in ORD Terminal 1, eventually you'd get these exact responses. OK, maybe you'd need to hit the United Express gates in T2 to get the fireworks response.

Overhead Bins: Prepare to be Very Full

2008-02-05T08:45:00.000-06:00

This move has been a long time coming, so it shouldn't come as any surprise to FMV readers that approximately every media outlet in the nation is reporting that United Airlines will begin charging $25 to check a second bag on May 5.

The Chicago Tribune reports that UA expects a $100 million annual benefit from the move (combined cost savings and revenue boost). We would kill to know exactly how McKinsie computed that benefit. Consider that UA lifts about 25 million tickets per year. That would mean at least 16% of passengers would have to pay the fee, assuming no cost savings. However, it's actually got to be much higher than that, considering elites, premium cabins, gov't/military pax, international itineraries, etc. are exempt. Are there really that many hayseeds dragging two bags to the counter? We say no; hence, we conclude there has to be a big cost savings benefit anticipated.

There is also a gaping loophole in the policy, for those that enjoy gamesmanship. There is no charge to gate-check a second bag! Hence, you can go to the counter and check one bag then check the second at the gate. Certainly a nice strategy, and one that also diversifies your lost baggage risk portfolio.

We think the UA spokesperson says it best, "We will keep [the baggage fee] as long as customers want low fares". Oh, SNAP! Take a suck at that, Mr. Consumer. You brought this on yourself, with your demand for low fares without recognition for premium services.

That quote is airline-speak for "don't hate the player, hate the game".

In related news, United traffic fell 5.3% in January on a 3.4% decrease in capacity.

JetBlue: Labor Strife in Marketing Dept.?

2008-01-30T14:46:00.000-06:00

We normally try to stick to the facts, but in this case we'll start a rumor. Something is amiss in the Marketing Department at JetBlue. It simply has to be.

Here is the skinny. As we understand it, the carrier observed that certain customer segments frequently change their travel plans, and may pay a premium for a fare that allows changes or refunds. On Monday, the carrier announced that, for those customers, there would be a new product offering flexibility and convenience that is cleverly named "Refundable Fares".

Hoo boy, that's rich. Refundable Fares? Seriously, someone please tell us they did not pay somebody to brand that? Is there a whiteboard somewhere with TrueRefund, BlueRefund, FlexBlue, and RefundaBLUE scratched out? What kind of a world do we live in, where a straightforward proposition does not need a snappy name?

Anyway, you get 4x TrueBlue points if you buy a Refundable Fare. So at least we know the marketing department is there. They just don't seem to be functioning at peak.

Book Direct. Because You Want To.

2008-01-28T11:32:00.001-06:00

At the end of January, looks like United will become the latest airline to pull their mileage bonus for booking direct. It's pretty clear that carriers are feeling confident in their abilities to draw consumers to direct bookings without such incentives.

What are the key drivers of this change? The short list looks something like this:

The popularity of meta-searchers such as Kayak, Farecast, Sidestep, etc.

Lack of perceived consumer value in the on-line travel agent space.

Carrier surrender in the battle to drive share away from corporate TMC's.

Save Booking Fees over the agencies.

It could also be that carriers are positioning themselves to employ other stick-type penalties (i.e. rather than current carrot-like incentives) for booking away from their sites. That's a great conspiracy theory, but not likely to happen until current GDS deals expire.

The most realistic hypothesis is that consumers are pretty satisfied with the carrier sites. Most offer good shopping tools, a low-fare guarantee, ancillary travel services (e.g. insurance, car/hotel booking, etc.), and other tools like flight alert and on-line check-in. Why bother going anywhere else, especially for a preferred carrier?

This is kind of like any mature relationship. When you first start, you start giving neat trinkets and surprises. But then that starts going away, and the pair get kind of comfortable and content being with each other on the couch eating ice cream and watching "Terminator: The Sara Connor Chronicles" (editor's note: Tonight on FOX!). Just be wary if one of them gets all frustrated that it's not special anymore, sees some other hot young thing out there, and dumps their old standby. Because you can bet that it's going to take more than a handful of devalued miles to win back the mate...or attract a new one.

In-flight e-mAAil

2008-01-24T09:35:00.000-06:00

Yesterday's WSJ reported that AA is going to begin testing inflight wireless on their 767 fleet.

Unlike JetBlue's wireless gimmickery, this service will not be free. Passengers will pAAy $10 for WiFi during short hops or $12.95 for flights over 3 hours. We immediately wonder, do you pAAy $22.95 to keep on surfin' LAX-BOS if you stop in ORD? Hmmm...

We kind of hope so, because this service sounds pretty sweet, and AA can probably print cAAsh with it. Passengers can reportedly use any device (e.g. BlAAckberry, lAAptop, iPhone), and access any web site (e.g. company intranets, Fare Market Value, etc.). Plus it sounds like they got some other sucker to pick up the tab for providing the service (i.e. no CapEx).

Mostly we wonder if passengers will be able to purchase the WiFi service at the time of booking their trip. Somehow we doubt it, at least to start. Though we see a day when Elites may get the service for free, or the service is bundled with a premium fAAre. In the meantime, a kind word, hearty handshake, and Shout Out to the first FMV reader that sends us an e-mAAil from 30,000 feet!

SITA tries Ideating...

2008-01-21T09:02:00.000-06:00

SITA ponies up huge for R&D – sinking $110 million on an R&D budget. However, it looks a big chunk of that budget goes to B-School consultants. Check out this article from Eye 4 Travel (Yeah yeah, we know they are a PR Newswire) describing the research:

SITA's CEO Francesco Violante said: "The pace of change in developing technologies continues unabated from Web 2.0 to Cloud Computing to new mobile applications and virtualisation. The speed of new technology development requires a dedicated focus on how these technologies can be incorporated into SITA's portfolio of solutions for the air transport industry."

The SITA Lab will deploy an Innovation Knowledge Management system to support the generation, capture and evaluation of new ideas. The system will be open to employees, as well as customers and partners, in order to create an Innovation Ecosystem for the air transport industry.

SITA's Chief Technology Officer, Jim Peters, who said: "Emerging technology is now driven more and more by the digital lifestyle of today's consumer rather than by traditional business-focussed IT solutions. SITA needs to be continually watching and learning from what happens in the consumer digital market to understand key trends and to be able to adapt and adopt consumer-driven technologies to create innovative solutions which address air transport industry problems. "

So they are creating: “An “Ecosystem” for “Innovation Knowledge Management” in order to capture the “virtualization” of “Web 2.0” as a result of “Consumer-Driven Technologies”

Heh heh, You can’t make this stuff up!!

Oh wait – maybe you can….(check out video link below...)

Ideating...

We're Giddy for Alaska (and so are they)

2008-01-11T08:29:00.000-06:00

Alaska Airlines has long been touted as one of the pioneers of airlines web sales, largely credited with being one of the first airlines to sell tickets on the web. It looks like some significant milestones were reached a few months ago

"During October, Alaskaair.com generated 50 percent of [Alaska/Horizon] total revenues for the first time. The site also passed the $1 billion annual sales mark in October, earlier than the mark has ever been met in previous years."

"Having finally broken the 50-percent mark, Mark Guerette and his E-Commerce team have their sights set on generating 60 percent of AAG's total revenues. "Unless we completely change our business model, that may be our high-water mark," Guerette said. "Many big companies still prefer to book through their own managed corporate travel arrangements and there will always be a certain percentage of customers who prefer the high-touch service provided by our reservations sales agents."

That's actually a pretty interesting comment and pretty shrewd on the part of Alaska. They recognize their customer mix, and their customers' preferred distribution channels, but have done what they can to maximize their direct distribution.

One thing FMV has to point out - If there is a story about Alaska Airlines and the Internet, it’s federally mandated that two things must be mentioned. We’re serious about this – happens every year:

1) It must be mentioned that Alaska Airlines was the first airline to sell tickets on the Internet to the legendary “Family of Four” from Olympic Peninsula.

2) There has to be a quote telling us how they happy they were when they remember the good ol' days…

- January 9, 2008 - Looking back to the launch of alaskaair.com in December 1995, "I remember all of us high-fiving because we sold 50 tickets in a week over the Web," said Guerette. "Now, we average more than 10,000 per day.

- December 15, 2006, - "We were ecstatic and high-fiving each other when we sold 50 tickets in a week," said Guerette, remembering an early milestone in the Web site's progress.

- December 28th, 2005 - "When Mark Guerette and his information technology crew at Alaska Airlines saw the first online reservations trickle in over their servers 10 years ago today, they were practically giddy with accomplishment."

So hats off to Alaska, and the travel journalism industry, both for maintaining a solid track record of consistency and success. Trust us, we are ecstatic and high fiving each other here at FMV HQ in your honor. We maybe haven't been this giddy since Flavor Flav hooked up with Bridgett Neilson on Surreal Life. Also, we're printing up some T-shirts, "Web Sales We'll Never Remember, Friends We'll Never Forget". Let us know what size you all need.

SideStep - "He Gone"

2007-12-27T12:35:00.000-06:00

OK – we’ll interrupt our holiday festivities and comment on the Kayak / SideStep “Merger”. There are a lot of tidbits coming through so we thought we’d throw in a few cents from the FMV point of view:

First of all – Reports say that Kayak will only hire 20 of the company’s 75 employees, not including its chief executive, Rob Solomon.

Wow, nice timing on that one Kayak – right before the holidays. Merry Christmas SideStep – now you guys can include a resume in your holiday cards you’re sending out!! Try this on your next search site: From: Santa, To: Kayak, and you'll get a big lump of coal in all of your results.

Second , Kayak raked in $196 million in VC money to be able to pull this “Merger”.

FMV puts the word “Merger” in quotes (insert air finger motion here) simply because we always thought that the larger company buying out a smaller company was called a “Takeover” or "Buyout" – but it’s obvious we’re not finance guys…

Third, the financing round was led by prior investor Sequoia Capital – and also included General Catalyst Partners, Accel Partners, Norwest Venture Partners, Trident Capital, Oak Investment Partners and Lehman Brothers Venture Partners, Silicon Valley Bank and Gold Hill Capital.

We guess $196 million is a lot of money so you need a lot of players.. FMV thought about joining in as well, but Kayak called saying they were drawing a hard line at $196 million and therefore they didn’t need our extra $250 to pull off the round…

Fourth, Kayak says there is less than 10% overlap among Kayak and SideStep users. (subscription needed)

This one actually caught us a little off-guard. We're told time and time again “There is NO loyalty in the airline search market, people always check multiple sites”. But now we’re told that tens of millions of searchers have a very strong loyalty to their preferred meta-searcher and don’t cross check? Or maybe because people don't know more than one? Whatever the case - seems like a weird fact.

Finally - Kayak co-founder and CTO Paul English added: “As a native Bostonian, I am also personally gratified to finally see an East Coast technology firm purchasing a West Coast counterpart.”

OH YEAH BABY – IT’S ON !! West Coast Sucks !! It's like the rapper wars again - Biggie and Puff can take down Snoop Dog and 2PAC ANY DAY ! Don't bring your weak stuff in our house Silicon Valley !

Man, where did this quote come from?

Overall – interesting stuff. We always thought that a few of these guys would get taken out, we just didn’t look at them “Merging” with each other. If the 10% overlap part is true - nice play for Kayak on simply shortcutting the process and ramping up their scale.

It’ll also be interesting to see what happens now with FareCast and Mobissimo - will others just look at these companies and think that they can get in the market now on the cheap(er)? Although we think Mobissmo has a long long way to go.

Happy Holidays from FMV & MAXJet

2007-12-24T15:06:00.000-06:00

Hope this holiday season finds all you good readers very well. Unlike passengers of MAXJet, the all-business class airline/gimmick that ceased operations today. At least some stranded passengers will get a complimentary hotel stay from MAXJet.

We wish the very best to you and yours this holiday season, and are looking forward to lots more fun in 2008.

Free In-flight Wireless*

2007-12-10T11:06:00.000-06:00

*Sometimes, Maybe, & Limited. Your mileage may vary. All Rights Reserved.

This is a bit outside our core discussion area, but we feel compelled to comment on JetBlue's new inflight Wi-Fi service, which apparently debuted a little while ago It seems pretty cool to offer this service, and we can understand people getting excited about it, so we're not surprised JetBlue's getting a bunch of media buzz. However, when we read the details we were left underwhelmed:

Works on limited devices only

Works only with Yahoo! mail

Hardware/bandwidth won't allow for attachments to mail or full web access

Probably only available on transcons

No available roll-out plan

The most telling quote from JetBlue, "It's not marketable. It'll have to be more of a surprise and delight for our customers if they get it." Well, with that kind of attitude, they certainly can't charge for it. And they won't. Though they imply that someday if they can get it right they may. Which is why we're keeping an eye on this.

But in the meantime, we're just annoyed that this is portrayed as something really special when it seems to be little more than a parlor trick.

Take Off, Eh

2007-12-05T22:35:00.000-06:00

Wednesday's WSJ reported (subscription required) that Aeroplan is hatching a maniacal plan for global domination. Well, that's a paraphrase. In fact Aeroplan acquired LMG, an operator of retail loyalty programs in Spain, the Netherlands, New Zealand, Canada, and the Mideast, as well as the UK's (apparently) popular Nectar program. Perhaps more interesting to us, was the Aeroplan CEO's comments that the firm remains interested in the US market. Aeroplan believes that an acquisition is the way to go in the States.

Now maybe you've heard, approximately EVERY US carrier has some sort of militant shareholder insisting that said carrier should divest its loyalty program. That includes not only American, but also United and US Airways (Star Alliance cousins to Air Canada) and Northwest (effectively based in Canada). We can imagine that any of those programs would be a tasty morsel for Aeroplan.

In the past we'd ignore this invasion from the north, but not after Rush and Bryan Adams. All signs point to credibility:

- Aeroplan is pursuing some corporate structure changes to facilitate deal-making (i.e. they want to raise money);

- Aeroplan's revenue is up over 20% so far this year over last (i.e. people will give money to them);

- The Canadian dollar is up more than 60% over the last 5 years to parity with the US dollar (i.e. the money will go a long way).

The next several months should have some fun news on this issue. Building a global loyalty brand with some leading carriers seems like a good way to mine a lot of customer data and mint some cash. Let's be honest, a lot of consumers are just fiends for acquiring loyalty points, cheap trinkets, and other shiny objects (Exhibit A: Flyertalk.com). Now imagine if you could use points for anytime rewards to Las Vegas *OR* Toronto. Nice.

In related news, earn two frequent flyer miles for every purchase you make using Google Checkout this month. Woo hoo!

More Spirit

2007-12-05T11:25:00.000-06:00

Here is a legitimate news story about Spirit's MILF promotion, consumers' response, and Spirit's counter-response. We use the applause meter to break it down. According to ABC:

"[Spirit's spokesperson] said that Spirit's senior vice president of pricing is
a British citizen who was unfamiliar with the MILF terminology and that the
airline is not trying to offend customers."

FMV APPLAUSE METER: [Dead Silence]

But Spirit continues:

"The most obscene thing we've noticed, is what other carriers have charged to fly the Caribbean before Spirit's $9 fares."

FMV APPLAUSE METER: [Raucous Clapping, Party Music, and General Spirit of Hilarity]

So they start to insult your intelligence by suggesting that it was an innocent mistake by a naive Brit. Then they slug you with their carefully crafted witty quote. Well played. And at the end of the day, they hit their target audience. Probably at a price point cheaper than a bi-plane pulling a banner at Daytona.

Apparently Fares Fluctuate 400%

2007-12-04T09:16:00.000-06:00

Seems that Yapta is actively trying to promote their pre-buy shopping tools over post-buy change alerts:

"The average airline ticket price fluctuates 400%. All those tricky price changes mean people like to shop around before they purchase airfare. That’s why the latest version of Yapta includes a comparison shopping notepad, right in a sidebar window of your Internet browser. "

Seems like a good call, given trends toward less generous carrier reprice policies. And the Yapta tool in your browser seems kind of neat. However, we question whether a downloaded app model will ever prevail over pure web services such as Kayak. Are consumers comfortable with another monitor on their PC in this era of pop-up blockers and virus threats? We know that even SideStep eventually had to go to the web-site play even though they were really sucessful with the download app.

More importantly, what's up with that 400% stat? What is the source? What does it mean? That average fares start at say $150 and end as high as $750? Fares don't even really change much, do they-availability changes? So many questions for such a petty point. But if consumers take the bait - more power to Yapta.

Spirit Airlines - MILF Sale

2007-12-03T14:35:00.000-06:00

For those that are lucky enough to not be spammed by Spirit Airlines promotions, you're missing out on unbelievable teasers like the title of this post, the actual subject line of an e-mail we received over the weekend.

For those that aren't familiar with the common use of this acronym, type it in Google and spot check the results, or use the Urban Dictionary. You probably don't want to try that exercise at work, it's not for the morally squeamish. Of course, per Spirit, MILF stands for Many Islands Low Fares. Seriously (see graphic).

Can you imagine any legit company ever running that kind of promo? We really don't know whether to be thrilled by the corporate whimsey or dismayed by the seemingly unnecessary PR risk. Anyway, it was edgy enough that we decided to pass it along to you Fare readers to contemplate.

Fare Enough to Buy

2007-11-28T21:20:00.000-06:00

Uggg...

The dreaded “SDC” – Second Day of Conference. Actually – for Phocuswright, it was actually the "Dreaded Third Day" because they had some other lame pre-Phocuswright session that many people also went to.

The highlight for FMV was the FareCast session where Hugh Crean presented some interesting facts and characteristics:

* Farecast has 5 different suggestions for customers when they look at fares, and it turns out that they will recommend that a customer “Buy” their flight 85% of the time...

* Although customers can search Orbitz, Travelocity, Hotwire, Expedia and other Online Travel Agents – FareCast still sends a customer to an airline website 85% of the time. Honestly – we really can’t understand that those other 15% of the people are doing – unless it’s some sort of multi-carrier flight.

* It turns out that FareCast is correct in their prediction approximately 75% of the time, citing an audit that sampled 44,000 quotes.

Question: Is 75% accuracy good? Especially given the fact that you would predict a Buy 85% of the time. Fares going up is the default - therefore FMV things the REAL guage of accuracy is what percentage of the time can you predict that the airfare will go DOWN.

Hugh repeatedly says that Farecast is data-driven, not marketing driven. FMV likes that they are pretty much trying to tackle the most relevant problem of the traveler “when should I buy a ticket?”. However, what would be the difference if you had a site that just said “buy” every time?

Don't be afraid, I'm a friendly gnome

2007-11-27T14:00:00.000-06:00

Michelle Peluso of Travelocity gave a presentation about the site's new interface, without talking about the new interface. Well played.

Instead, she discussed a huge study performed by The Gnome, which indicated that over 42% of Internet consumers who start travel shopping at an OTA book at an OTA, while over 46% of consumers who start shopping with a supplier book with a supplier. The Gnome's conclusion? Internet consumers already know where they are going to book. Sure, they shop around, but it's only to avoid buyers' remorse. Therefore, channel shift is over, and OTAs and Suppliers can peacefully co-exist in a Utopian partnership.

Peace sells, but we're not buying. Consider these facts:

* Al Lenza of Northwest Airlines felt that OTAs and suppliers are not partners, rather the parties simply have a business relationship.

* In the spirit of partnership, Peluso spouted that Travelocity could terminate their business with Kayak (a succesful supplier marketing vehicle), "in about two hours". Nice.

* Further, Peluso felt that The Gnome would not acquire at-risk air inventory since it's "not good for the carriers". Exxon would say the same thing about a carrier fuel hedge.

This felt like a total schmooze play by Travelocity. Sure they're a buddy now, because they're struggling to add value over the supplier sites and meta's. But if they get a chance,they'll pounce on both with the rusty shiv hidden in their hat. Keep an eye on that Gnome.

OTA Booking Fees: Why?

2007-11-26T14:05:00.000-06:00

Intereting realization at Phocuswright that Priceline is no longer charging a fee to consumers for air bookings. Why? To build their brand reputation as a low-price retailer.

They confessed at PCW that, for these bookings, they don't really add service value over a carrier site, and they don't offer the customer care tools of their OTA peers. Bravo! What have we been saying for some time?

Don't look for other OTAs to match, because they've invested too much in pitching their service proposition to throw away that revenue stream. Unless Priceline is able to make up some ground in share of course, which may be unlikely, but actually could happenen. Especially through savvy partnership with meta's.

The important takeaway here for FMV is that this is another chink in the armor of the OTAs. We simply beleive that they are really going to struggle to stay relevant in the long run when: a) meta's are there to provide cross shopping, b) carriers remain commited to driving shift to internal channels, and c) traditional Travel Agent's provide a much clearer service proposition, for a competitive fee...

The Buzz was NOT Palpable

2007-11-26T13:55:00.000-06:00

OK, OK - we are late with Phocuswright posts - but we'll post our thoughts over the next few days...

The "big" (aka "paid") announcement on Day 1.0 @ PCW was the launch of a new travel web site site called Vibe Agent. Sit down, you're not going to believe how awesome this is. It is a site that combines (are you sitting?) hotel reviews, with meta-search, with social networking.

You can't make this stuff up. Maybe it's always been this way, but the travel space is starting to feel like the cliche world of Hollywood. "Let's make a SitCom about the GEICO Cavemen" sounds a lot like "Let's mash-up The Long Tail with Travel 2.0".

Best of luck to Vibe Agent. Seriously. More importantly, why are we writing this blog and not starting "Travel-Wad.com"? Which will get us a yacht quicker? Hmmm....

Hello from Phocuswright !

2007-11-12T23:41:00.000-06:00

Hello from sunny Orlando, where this year’s Phocuswright Executive Conference is being held at the Omni Hotel - which is pretty much in the middle of freaking nowhere, Florida. There are NO restaurants nearby except for a Chili’s, and if you registered late and didn’t get into the Omni – you guaranteed yourself a 17 mile hike to the nearest Marriott or Radisson (read: Dump).

BUT – it is the best travel conference every year, and highlights how badly some of the others really suck. Good lineup for Day 1 so we’ll log some entries a bit later.

Drinks on my company!

2007-11-09T11:34:00.001-06:00

For those living under a rock, Southwest announced some new changes to their fare structure and product this week.

We love the throwback strategy of using alcohol to entice business travellers. But otherwise, it's just more of the carrier moving away from it's no-frills past to embrace some complexity in order to drive more revenue from business customers:

Bonus rewards credits for higher fares?

Preferred boarding and seating for loyal travellers?

Opaque and incomprehensible fare structure?

Hey! Who are you and what have you done to Southwest?

The inevitable has happened.

2007-11-09T11:24:00.000-06:00

US on-line travel sales now exceed off-line travel sales. PhoCusWright has released their seventh annual on-line travel overview. Per this synopsis, PCW reports that online travel sales hit 51% in 2007, and should continue to grow to 60% in 2009.

We always take this stat with a grain of salt, since it's typically computed in dollars rather than transactions. Either may be appropriate for a given argument, but it totally depends on the case you want to make. Regardless, we'll agree with the conclusion: on-line channels will continue to grow despite their setbacks and possible risks to brandloyalty.

We'll be keeping it real at the PCW executive conference next week, so we'll keep you posted on the latest buzz.

No good deed...

2007-10-30T08:08:00.000-06:00

This is a little off the usual Fares material, but it highlights a risk of onboard sales, so here we go:

The Chicago Tribune reports that during October, Delta Airlines is offering passengers pink lemonade for $2, with proceeds going toward breast cancer research. Great call. The problem is, some enterprising onboard staff started offering "Pink Lady Cocktails" (vodka with the lemonade) for only $3 additional. Health professionals in the know alerted Delta that alcohol consumption in fact INCREASES breast cancer risk.

Doh!

Delta tells the Tribune that the clever product bundling will stop. Is that the end of the story? Maybe.

Who out there thinks that Delta has really strict controls on the sale of lemonade and collection of donations? Closer to Fort Knox or the take-a-penny tray at 7-11? In fact, who would wager that if a passenger opted for alcoholic lemonade, the $5 went to exclusively to Delta to cover the vodka (which probably is counted like gold bricks)? That leaves nothing for the charity!

We also know that flight crews HATE collecting this type of money since they have to sign for it and are responsible for any shortfalls. Delicate balancing act for airline exec's to keep in mind as they continue to expand onboard sales - - especially for non-consumables like video player rental...

Actung Baby !!

2007-10-25T20:29:00.000-06:00

Hello from CASMA in the Ritz-Carlton Berlin! We’re at the Fall session of CASMA, which basically means “not in North America”. The theme this year is “Breaking Down Walls” – which kind of makes us cringe a bit. We think it must be tough for an entire city to be associated with a wall that was TAKEN DOWN like 20 years ago. At least some of the Chinese one is still there!

Anyways – your intrepid FMV bloggers are on the scene and here are some notes from day one:

- The buzz-word of the conference is “Ancillary Revenue” and it seems that everyone is trying to figure out extra revenue streams, and trying to copy the Air Canada model- either by creating a family of fares, or charging for extras. We’re talking cars, hotels, baggage, insurance, and others. And YES - someone did crack a "charging for the bathroom joke" - that seems to never get old.

- The best new revenue ideas we heard was the selling of airline gift cards on board, the ability to pay a fee to reserve an empty seat next to you (if available), and taking a portion of currency exchange. For example, some airlines let you pay in US Dollars or Euros – and a bank facilitates that change. Why not use a 3rd party and split the commission fee made on that transaction?

- There was an interesting point that Ryanair may actually be the best airline in world at delivering consistent customer service!! Yes, that sounds totally wrong, until you also remember that they are very clear to the customer that they only do two things: They get you there on time, and they get you there for rock bottom prices. Ryanair consistently has the best on-time metrics of any airline in the world.

- A few airlines like Ryanair and AerLingus are set to get their costs of distribution to turn NEGATIVE. Yes, you read that right – this is set to be a revenue opportunity for some since they already recoup the costs of credit cards and certain channels by charging extra. It was reported that a GDS asked the #2 at Ryanair at a prior conference what it would take to get Ryanair to list in the GDS and the response was “not until the GDS pays us 5 Euro for each ticket”.

- Finally – we think the tide is turning on alternative forms of payment. It looks like Paypal is finally gaining traction in the Airline market (with US Air, Southwest, Northwest, and Midwest) and it looks like other forms of Direct Connect payments are being explored. All this sets the stage for a big war on Credit Card fees – if you think the GDS battles were bad a few years ago – you haven’t seen anything in the upcoming credit card battles !!

Ok – we’re about to go out and check out Check-Point Charlie, and hope there is more to the city than a defunct wall...

We use miles for magazine subscriptions

2007-10-21T19:50:00.000-06:00

Another article in The Wall Street Journal to fuel passengers' frustrations with frequent flyer plans ("Mileage Plans Add to Flier Ire", 10/17/2007). There are some nice factoids in there to illustrate just how pervasive, yet useless, plans have become (e.g., Northwest Airlines has 510 partners for WorldPerks, including 41 new partners this year).

The best gem comes from American Airlines. To support their argument that reward seat availability is NOT declining, a spokesman notes that frequent flyer travellers actually increased from 2005 to 2006, from 7.2% of passengers boarded to 7.5% of passengers boarded.

That sounds impressive, but it's actually misleading. Especially if you take a look at two other facts:

1) If you look in the American Airlines' 2006 Annual Report - it tells you that the number of award redemptions was actually FLAT for the period at 2.6 million [tickets].

2) During the same period, AA's "Passenger Boarded" (segments) volume increased 0.1% (per Airline Business Magazine statistics).

All this tells you is that the Frequent Flier Passenger-Boardeed has increased - but NOT the number of actual tickets. This suggests that frequent flyer availability is tighter, and these fliers are having a tougher time booking direct fligts. But kudos to American for representing the numbers to their favor.

OK - Extra credit for Airline Numbers Nerds follows. AA's PB's in 2006 were reported to be 98.139 million. 7.5% of that means 7.360 million PB's were associated with 2.6 million reward tickets. This yields 2.83 PB's per reward ticket, which is a bit higher than a common industry assumption of 2.5 PB's / Ticket.

FMV has learned long ago that you have to go into the numbers to get the real story - Any time you need a peek behind the WSJ's numbers, you know where to find us.

Popcorn, Candy, and a "Big Front Seat"

2007-10-17T08:03:00.000-06:00

Yesterday's Wall Street Journal Middle Seat column by Scott McCarthy had a tidy summary of carriers' strategies to reduce fares by charging extra for various services. You know, checked baggage fees, fees for more legroom, etc.

There's an analogy in there attributed to the CEO of Spirit Airlines B. Ben Baldanza, who notes that such fees are NOT "Nickel and Diming" as some consumers claim, but rather on par with movie theatres that sell you a ticket and then gouge you at the concession stand.

As Tyler Durden once asked, "How's that working out for you? Being clever?".

Interestingly, Baldanza tells us.

Per the article, Spirit's average one-way fare is $100 yet the carrier collects another $15 per passenger via "Non Nickel and Diming" We must say, 15% seems like a pretty good premium. However, note per our post below that Continental Airlines is collecting at least $125 per one-way (based on $250 per round trip) on comparable leisure sales vs. Spirit's $115.

Whoa, so Continental is doing 8%+ better on revenue than Spirit using good old fashioned airline gimmicks like free warm soda, a strong network, and a loyalty plan.

Baldanza says, "you either need to compete on price or compete on product. You can't do both." However, we wonder if Spirit is really saving enough by checking a few less bags to compete with low fares. How much does it cost Spirit to become a flying minimart selling newspapers, magazines, and aspirin?

Note to Spirit passengers - sneak some Junior Mints onboard in your baggage. It works at the movie theatre, doesn't it?

Eye for Travel - Tuff Second Day

2007-10-16T22:06:00.000-06:00

Uggg. Late post about the 2nd day of the Eye for Travel Conference.

You would have thought that organizers of conferences in Vegas would understand by now that the second day is just pure torture. You’ve already spent two hard nights in Vegas, and truthfully, you're really just trying to figure out which sessions you can skip to get an early flight home. It shows in the attendance as well – we bet the attendance is cut by half from day one.

But we're good troopers and are staying. It's all good since FMV actually feels vindicated in two ways:

First – We feel pretty good about our craps play the last two nights. We rode some hot rollers when they couldn’t lose - and then immediately shifted to the “Don’t Pass” betting line when the tables turned cold. The result: our biggest winning night in Vegas in a long while.

Second – We finally got some data on Meta-Searchers to bust the myth that Scrapers serve to “commoditize” airfares. Chris Degroot of American Airlines stated that the top players that they work with (Sidestep, Kayak, Mobissimo, etc.) all show higher airfare yields than their top OTA’s. In addition, they are pretty happy with the conversion rates of referrals from Meta's that sign up for the AAdvantage program.

In fact – Degroot has the money quote of the conference “Currently, AA is more aligned with the Meta’s than with the OTA’s”.

Wow. Almost makes the 2nd day of the conference worth attending…..

FMV is back in Vegas Baby !!

2007-10-10T17:30:00.000-06:00

We’re at the Eye 4 Travel conference this week. Generally we dread these conferences – but this one is in Vegas so it’s all good. You may not have noticed – but we love Vegas.

Eye 4 Travel is boasting that they have like 800 people, but they are totally cheating because they are combining three pretty unrelated conferences (distribution, revenue management, and CRM) to get these numbers. We think we have to face the fact that E4T is really stretching their limits of being relevant…

There is an interesting dynamic happening here this year. At conferences, there is always a main villain (GNE’s, Metasites, etc), and this year it’s the Online Travel Agents. FMV loves that – we’re totally on that bandwagon!

John Slater of Continental took the first speaking position and simply told the airline point of view when it comes to distribution. Slater has a great way of telling you bad news in such a reasonable way that you find yourself wanting to apologize. You kinda feel like it’s your dad explaining why you are grounded. Anyways, we think he had 4 interesting points.

1) Continental.com accounts for 67% of online revenue while OTA’s account for 33%. This is a pretty good penetration of the large supplier sites and we wonder if this is their plateau.

2) OTA’s average fares are around $250 – we’re talking pretty cheap fares here folks. Slater was pretty blunt that they don’t really need much help in selling these fares to Orlando.

3) International issues are next on the reduction of distribution costs war. While the last round centered on North America – it didn’t address the overseas markets – where costs remain pretty high.

4) Interestingly – Slater mentioned that OTA’s buying their brand name for searches on Google is really starting to chap their hide. They consider this poaching and follows American airlines actually suing Google for the same thing. So much for “Do No Evil” huh?

OK – Off to the Craps tables – man we love Vegas !

Put it on Credit -

2007-09-17T20:06:00.000-06:00

A few months ago – we profiled a new company called Yapta.com, that tracks specific flights, and alerts a user if their flight(s) have dropped in price. The beauty of this service was that you can actually get money back if you’ve already purchased your trip. Some airlines would issue a credit voucher for the entire price drop difference, or charge you a $100 fee if you wanted cash back instead. However, according to a Wall Street Journal article (subscription may be necessary) - it looks like some airlines are switching practices and treating credit the same as cash:

"[I]n mid-July, US Airways quietly changed its policy on vouchers for price changes after you purchase tickets. The carrier now charges a $100 change fee regardless of whether you want cash or a voucher… American, Delta and Continental airlines also charge change fees in these cases; Alaska, JetBlue, Southwest and United airlines all offer vouchers for the full price difference…

Yapta says even as airlines tighten up rules on refunds when they cut prices, its service is still useful in tracking price changes before you buy tickets. Yapta President Tom Romary says 78% of all itineraries tracked by Yapta are pre-purchase -- people get alerts from Yapta when prices change so they can make better buying decisions."

A few points on all of this:

1) This doesn’t seem the optimal result for the airlines. By charging a $100 fee no matter what – they are effectively forcing people to ask for their money back, rather than settle for credit (why would you choose credit over cash??). As a result, they lose some stickiness on getting people to fly their airline again, and they will lose the breakage potential on these credits. Seems like there is a definite advantage for the airlines that they are forgoing here.

2) We note that United is currently an airline that allows the full difference back through a credit voucher. FMV predicts that this will change before the turn of the year. United’s corporate theme song is U2’s “I Will Follow” – and if the major carriers are starting to lean one way – we think they will eventually follow.

3) No matter what they say – we think this really reduces the value proposition for Yapta. 78% of all itineraries are pre-purchase?? Wow. It then becomes a bit mixed with Orbitz’s Deal Detector, SideSteps’ FareTracker and others - and probably underperforms without a related travel product (i.e. actually allowing you to shop for and/or book flights).

4) FMV is waiting for Expedia's Fare Alert and Travelocity's FareWatcher Plus to step it and get a better set of names! (FYI - Fare Market Value can be bought.....)

Chip Shots on the Fare Way

2007-08-30T13:14:00.000-06:00

FMV didn’t get the memo – but it looks like it’s “new gadget” time for Metasearchers:

1) Kayak’s new “Weekend Feature” –

We actually think this is really a clever new idea to display the upcoming weekend trips. In one quick snapshot at the upper left corner – you can already see the cheapest weekends to go to.... say... Vegas and learn about statistics in a realtime environment (Hint: Backup bets are at true odds!). And seriously - anything that gets you to Vegas easier is a great addition.

2) FareCast predicting Hotels –

Farecast now has a “Hotel Rate Key” that lets you know if your hotel rate is a deal or not a deal. We think a natural extension of “past information informing the present”. The only problem MIGHT be that we think special rates are becoming more common on the hotel’s website rather than common public rates. Starwood and Hyatt seem prime examples. However, nice addition non-the-less.

3) SideStep’s “FareTracker”

SideStep launched “FareTracker”, which monitors price changes on fares on particular routes and offers fare alerts as well as some historical prices. However, the alert is not for a specific flight – but rather for the route. Oh Yeah – the alert isn’t for a particular day – it’s +/- 7 days. Oops, one other thing – how generic is the name "FareTracker"? Come ON !! Some marketing creativity would be nice - we're not asking for a lot here.

4) FMV’s Applause-Meter

OK – we feel left out so we need a gadget too – and we’re launching our own Applause-Meter™. We haven’t really worked out the scale – but we know that the Rating for "FareTracker": “Polite Golf Clap.”

Functionality?? Ehh. This is nice and all – but this is going up against the new guy Yapta – which pegs EXACTLY what you’ve said is interesting to you. Faretracker seems to take the opposite approach and kinda, sorta gives you information that MIGHT be useful.

Lots of innovation are coming out of these brands - more to come...

We've Got Spirit, Yes We Do !!

2007-08-23T08:22:00.000-06:00

Not what you would call a "good PR day" for Spirit.

This is going viral around the nets since FMV picked it up at Upgrade: Travel Better and it's now everywhere - The Spirit Airlines CEO Ben Baldanza accidently (we hope) hit “reply to all” to a customer that was requesting the expense of their entire trip (hotel, parking and all) be reimbursed - sending this snappy email back:

Please respond... but we owe him nothing as far as I’m concerned. Let him tell the world how bad we are. He’s never flown us before anyway and will be back when we save him a penny.

Read the whole exchange posted by Alex Rudloff here:

Now, we understand the frustration that airlines go through when customers complain about delays. It's a fact that customers have unrealistic expectations when it comes to flying and taking for granted all that has to happen to make a plane go from Point A to Point B. But this from the CEO?? We thought it couldn't get any odder than their Fibonacci sale.

WOW.

United We Sell !!

2007-08-16T08:01:00.000-06:00

United just posted a new Miles Plus promotion:

Offer: Pay $20 and receive 1,000 bonus miles on your next qualifying United, United Express or Ted roundtrip.

Now, FMV is all for elite status on airlines - so we can see this "bonus" working out if it can help you reach or maintain elite tier status. Sign us up! But wait, there's more. United inserts this kicker of a clause:

"Bonus miles do not count toward elite qualification"

Excuse me? No thanks. Granted, this promotion does accelerate your earnings toward a reward. As a Premier Executive it might take only eight ORD-EWR trips instead of 11 to accrue a 35,000 mile reward. Yet that acceleration costs you $160! We GUESS this is a deal relative to the normal offer to "Buy Miles". United generously offers to sell miles every day, at an even suckier rate than this promotion: 1,000 miles for $64.57, and 5,000 miles for $182.82.

Yet the ONLY instance where we can see this promotion making sense is the case where you know your travel plans for the next several months and you know when you're done you'll be a few thousand miles short of the award ticket you want.

Otherwise, this is a blatant whoring of miles and lends more ammunition to the argument that the most profitable part of United is the Mileage Plus Program. There has even been talk that analysts believe United is preparing to divest the program - much like Aeroplan and Air Canada. If Mileage Plus were sold or taken public, it could be worth about $7.5 billion, compared to the airline itself with a total market value of around $5.5 billion.

Maybe this promotion helps UA demonstrate the consumer market price for miles? It certainly helps demonstrate that "there's one born every minute".

OK OK - This Time We're Serious !!

2007-08-15T19:29:00.000-06:00

OK - It's been two MONTHS since we've posted. We know we've been slacking. We feel bad about abandoning our loyal readers. Trust us - it wasn't you, it was us.

To tell you the truth - we just kinda got into a lazy rut with the onslaught of summer. The combination of travel, work, and vacations just got the better of us.

But we're over it now - and we've rededicated ourselves and from here on out - It's on (like Donkey Kong)!

Bezerker Crazy !

2007-06-13T08:57:00.000-06:00

From all accounts, Kayak and SideStep are growing huge over in Europe – and FMV could guess it was just a matter of time until people starting eyeing the great prize of Asia. Two names that we keep hearing about are Bezurk.com and Qunar. While Qunar has focused more on the Chinese market, Bezurk seems to encompass more of Asia and are ramping up their activities:

1) They signed a marketing alliance with Carlson Hotels Worldwide. The deal will result in real-time rates and availability for all Carlson Hotels properties worldwide to their Asia Pacific-based audience.

2) They announced a marketing partnership with Qatar Airways, who will promote its fares on Bezurk.com’s flights search engine and deals channel. Bezurk will also access and display real-time Qatar Airways fares and availability throughout its network of Bezurk and partner branded websites.

This is definitely the stuff that FMV SHOULD be interested in - but we just can’t do much more than muster a nice golf clap. China and India have been hyped as the next new online travel market for years – but FMV sees this as a red herring / black hole. It SOUNDS great, but there are two huge stumbling blocks to success in this area:

Of immediate concern to meta-searchers is the complete decentralization of local private fares throughout Asia. While SITA does offer an automated fare distribution product, there are too may fares that are simply faxed to travel agents in their local market. We are told that certain fares may in fact be set by a local airline manager. These fares will often be cheaper than the airlines' own web fares and will really hurt the relevancy of Meta’s.

There is also the simple fact that too many Asians just don’t use credit cards over the Internet, and in China receipts are issued on government paper stock. Here's a conversation FMV had with a Chinese travel agent describing how they sell tickets online:

“A person buys a ticket on the website - we then send a bicycle courier over to their flat to collect the cash and give them the ticket.”

Seriously?!! How do you scale that?? Don't get us wrong, we really really hope these guys turn out to be wildly sucessful - but it's not going to be an overnight sensation. It's going to be a long slog, and it's going to require some macro market changes. The hope would be that after the market becomes more accepting, the first movers stand tall. The risk of course is that, "pioneers get the arrows, settlers get the land".

New AA.com (Old Alaska and Air Canada)

2007-06-11T20:04:00.000-06:00

AA.com looks like they re-designed their website with some nifty new features – including a "Price and Schedule Search" functionality shown here. The new display is solid and a distinct improvement.

FMV also thinks it adds flavors from two other airlines.

The first one is the Alaska Airlines search results layout – where you can see different fare levels side by side. Not that big of a deal since it’s a fairly intuitive layout, but nice none-the less. We guess Alaska shouldn't be that upset – "Sincerest form of flattery" and all that….

But the most interesting thing about this system in FMV’s eyes is that American appears to be taking a page out of Air Canada’s playbook of offering different amenities for different classes.

For instance, the example shown, the difference between the “Economy Saver” and the “Economy Flexible” is that you can use 500-mile upgrades with the Flexible fares. In addition, they have introduced a “Instant Upgrade” fare that is supposed to be "a business- or first-class seat sold at the same price as a coach fare. Sometimes those tickets are cheaper than the most expensive coach seat." However, buyers of this fare will also get Priority Boarding, Priority Check-In, Lounge Access for International Flights, and even bonus miles.

In many of the conferences FMV have attended, several airlines have been saying they wanted to mirror Air Canada's ability to tie more benefits to higher fare classes. True, AA's fare names are much more uptight than Air Canada's “Tango” and “Latitude” fares - but it's clear they are making progress along these lines.

Standby Confirmed

2007-06-05T09:29:00.000-06:00

We don't fly on US Airways very much, so this news fell under the radar a bit. We caught it in the WSJ today. Late last month, US announced that they will no longer charge Dividend Miles preferred members for same-day confirmed standby.

First of all, we love confirmed standby. Anytime you can get your business done and get to the airport early is a win -- and to top that off with a guarantee that you'll actually out of the airport early is a huge value to the business traveller.

That said, we think $25 is a very reasonable charge for this guarantee. Your credit card should crawl out of your wallet on it's own to pay this at the kiosk. Unless...you have elite status, you know the earlier flight's not packed, and you know you're an elite that will clear standby and get a decent seat for free anyways.

Hence, the beauty of this policy revision. It's a nice tip of the hat to loyal passengers, for those times when the guaranteed seat really means a lot (i.e. during a time of heavy loads), but US probably isn't giving much away in revenue. These passengers knew it was many times unnecessary.

Back on the Wagon

2007-05-14T08:40:00.000-06:00

Sorry Folks - FMV has been absent for a while. When we first started this blog - lots of people told us "well, don't quit your day job". Unfortunately, our day job slammed us with work last week and it's gotten in the way of posts.

What kind of world do we work in when your day job interferes with proper blogging?!!

Anyways - we're back at it and hope to make up for lost time. Thanks for your patience !

Honey, I Shipped the Bags

2007-05-02T21:20:00.000-06:00

FMV read another story in the Chicago Tribune, regarding the impending reality of baggage fees.

"It's just a matter of time before other airlines start an a la carte luggage system, opined Joe Brancatelli, an airline expert who runs his own business traveler Web site, joesentme.com. "It probably won't be long before free luggage allowances for Coach passengers disappear completely"

However, before we grab the pitchforks and torches and gather the villagers to protest this invasion of our ticket rights, read about these services that may save the day by shipping your bags so you don't have to check them! But at up to $200 per bag, these guys are NOT targeting the mass market. Price-sensitive is not in their customers' vocabulary. Think Al Czervik in Caddyshack. The kind of person who buys one of everything and an extra designer suitcase to pack it in.

But the idea is an interesting one as FMV considers carriers partnering with the baggage shippers to provide more customer options and deflect complaints about baggage fees. We think a large driver of this would be the PR problems of paying for poor service:

"What would be more infuriating than paying to check a bag, then have a carrier mishandle it?"

While we're ok with the "pay for baggage" concept, it also needs to come with a fairly relilable guarantee that your bags will arrive when you do. There is a fairly large oppportunity here for airlines and customers alike - and it's gotta be larger than a 3oz clear container...

Rewarding Sites

2007-04-29T20:59:00.000-06:00

FMV caught up on some reading over the weekend, so we'll share the wealth with you. First, we present a review of the new reward booking sites at Continental.com and Delta.com.

One interesting note, author Ed Perkins found that he could not access all of Delta's new functionality without logging in as a SkyMiles member:

"On Continental, you can search for seats without logging in as a OnePass member. On Delta, however, you can get yes/no answers to flights on specific dates without logging on, but you must enter your frequent-flier number and PIN to use the new flexible-date system."

Why would this be? Perhaps most likely, Delta is trying to keep their IT costs down. Or could it be that Delta wants to gather information about where their most valuable customers would like to travel for free? FMV would be shocked, but certainly applaud that effort.

Overall, Perkin's has a common gripe about almost all Frequent Flier programs:

"Sadly, however, improved search capability doesn't increase the number of available seats; it merely makes it clearer, more quickly, how scarce those seats really are."

This may be true since airines typically offer somewhere around 8% of seats available for award redemption, but cusomers now have more ways to earn miles as ever. However, improving the online capabilities are still crucial for airlines because the call center times needed to address award travel are staggering. FMV has heard averages of 20 minutes - so there are huge cost savings here by automating this functionality. Even if it means a little more transparancy on the dearth of seats.

Kudos to both carriers (and American Airlines) for investing in functionality to help users find reward flights. Especially if customers find some surprising rewards they may not have originally considered.

Coffee or tea? Cash or credit?

2007-04-26T09:32:00.000-06:00

United Airlines reported a disappointing $150M net loss for the 1st Quarter. FMV could type all day and not fully capture how troubling we find this, so instead we'll grab our half-full lens and focus on the "so-called-solution" (or at least part of the solution) as suggested by United, ancillary revenue.

In addition to trying to charge more to business passengers - United suggests they may consider charging passenger fees for baggage handling and seat selection. United is already on pace to make $100M from upselling EconomyPlus seating to non-elite passengers, so they believe it also makes sense to peek under other rocks. The pessimist would note that with $3.3B in 1Q07 passenger revenue, there's no fast track to UA profits through ticky-tack fees. However, consultant Patrick Murphy (Tralliance Coaching & Consulting) estimates that fees and advertising can generate up to 35% incremental revenue! That's real money.

Word from the UATP Conference is that AirTran, Frontier, and US Airlines are among other carriers considering similar strategies. That's no shocker, considering the industry is dedicating a conference to the topic of ancillary revenue this fall. But FMV wonders, can any carrier's top line revenue actually grow if everyone follows the same service fee playbook? We think the answer is yes, but only for those carriers that can effectively market their repositioned products and we believe that doesn't include most of the legacy carriers.

For example, will UA be able to win new business travellers with high restricted business fares AND a seat selection charge? It may work to some degree for lesuire customers, but we can't see it working enough to make a huge difference overall. Business travellers, who already make up a large majority of their revenue, will either be exempt from these fees, or will resent paying them and perhaps pop to another carrier.

The marketing and loyalty efforts are going to have to heat up - and just add it to the fuel charges.

Yapping About Airline Tickets

2007-04-25T08:57:00.000-06:00

Every once in a while, FMV comes across an idea that really makies us consider what it may do to an industry. While reading The Next Net – we may have found such a site. Yapta (still in beta) will actually track your PURCHASED ticket, and let you know if the price went down.

Why do would you care?

There is a little-known rule in the airline industry called the "guaranteed airfare rule." If you buy a ticket directly from an airline and the price of that ticket later drops, you are eligible for a refund [(minus $100)] or a credit voucher [for the full difference].

Think about that. Yes, you would rather buy at the cheapest price possible, but we can’t always time that very well. But this service could be the next best thing – you just get the money back after-the-fact. Granted, it’s in credit rather than cash (we believe that 95% of people would rather accept a credit for the full amount rather than a refund minus $100), but for anyone that travels fairly frequently, that’s still money in the bank.

Implications and reactions? FMV can think of a few:

1) There will be an interesting psychological battle to be played out with FareCast – because these two companies will be on opposite ends of the spectrum. Farecast tries to tell you if you are getting a good deal, and will protect you if you buy their Fare Guard product in case fares rise later. Yapta will track your ticket prices and get that money back for you (for a fee?) if it goes down. Which would a buyer prefer?

2) The obvious skeptics reaction is “airlines will just change their policy and not allow this”. Really? FMV doubts it. We think some carriers will embrace it, use it as great PR, and potentially even attempt their own automation to save call center expenses. Others may be unhappy, cry a bit, but will simply deal with it in the end. To wholly change their policy seems unlikely, though a restriction tweak or two won't surprise (e.g. voucher restrictions).

3) As a side note, FMV wonders what the breakage is for these types of credits. If general retail stores experience a default rate of almost 20% - we bet the numbers are higher for these credits.

4) Others will also say “people will just do this themselves and won’t pay for a service like Yapta to do it for them”. That’s probably true to a large degree. But FMV also can’t figure out why people would pay an additional $5-$6 to buy their air ticket through a online travel agent rather than directly through an airline website...

5) Yapta will be in a unique advertising position because they will know where you are going and the exact dates you will be there! That has amazing potential. Hotels are cars could check out their inventory with specificity and offer better deals and sales. Same for other attractions, events and restaurants.

"We recognize we are throwing a hand grenade into a big industry."

Tom Romary, the CEO, has got that right. First, people will freak out and scoff at this idea. Second, copycats will emerge to provide the same service (think gnome and Galileo-ports). After THAT, it will all come down to execution, marketing, and partnerships.

Regardless of which provider wins the endgame, money back for traveling is a great thing.

Chatting It Up

2007-04-23T07:33:00.000-06:00

Earlier in April, FMV commented on a Henry Harteveldt presentation that stated 4% of travelers have used a “web chat” session for customer support. Although hotels have been using this functionality with great success, we were curious when a major airline would step up and offer this chat support. Not only could this satisfy travellers’ need for *some* human interaction - it also could satisfy the airline’s need for a channel that costs less than a fully functional call center.

Well, it looks like Korean Air has stepped up to the plate – Chat in a limited fashion:

Korean Air will launch cutting edge “Live Chat” technology on its dedicated travel agent website to make it easier than ever for agents to get answers to frequently asked questions… information on Korean Air’s products, special offers, ticketing policies and schedule changes…

So – the chat is limited to Korean Air's agency-only portal. In addition, it looks like it’s purely informational and may not apply to detailed itinerary-related questions. However, it’s still a huge step for any airline and we’re now scoreboard watching to see the first US airline that adopts this support channel. Any bets on Southwest, JetBlue or Alaska??

User Generated Marketing

2007-04-20T10:14:00.000-06:00

The NBA Finals start this weekend. FMV doesn't care too much, though we'll probably keep an eye on a game or two. If you watch, you might see some new Southwest Airlines commercials, schedule to debut during NBA broadcasts, courtesy of the carrier's customers and employees. As you may know, the Southwest recently asked their fans to submit video spot ideas for their "Wanna Get Away" campaign.

This concept recently took off during the Super Bowl with Doritos, and it's only appropriate that Southwest has grabbed the idea for the airline space. Further genious from the carrier that managed to give customer service nightmares a positive spin with their television series, "Airline". Not only do they (presumably) save some payments to their ad wizards, but they more importantly further strenghten the unique bond they enjoy with their customers. Saving money, stimulating business, AND building loyalty. That's a tasty trio.

So while you won't catch FMV staying up 'til midnight to snag Seating Area A, this is just the latest reason we applaud Southwest's marketing team. View the video finalists here if you don't want to watch the Bulls make a post-season run.

AA's "Not Made Here" ERHF

2007-04-18T07:35:00.000-06:00

American Airlines announces an “External Res Handling Fee”:

Effective April 12, 2007, AA Reservations will collect the External Reservation Handling Fee (ERHF) for the service of assigning or changing seat assignments for tickets purchased through non-AA locations. This fee will only apply for those customers who purchase tickets through a ticketing source other than AA or AA.com. It is very similar to the fee we currently charge for itinerary changes. If the customer does not agree to pay this fee, AA Reservations Agents will refer the customer to AA.com, AA IVR (Interactive Voice Response) Systems, or to the original booking source for assistance with seat requests.

Here’s what FMV loves about this announcement:

1) They post this notice on April 10th to be effective April 12th. No foolin’ around there.

2) Not only do they name it awkwardly – THEY CREATE A FLAA (“Four Letter Airline Acronym”) out of it!!

We’re surprised they went with a FLAA instead of the more common “TLA” (“Three Letter Acronym”). You just can’t work with airlines without using these wherever possible. Try this the next time you call AA:

“Will I get charged a ERHF on my ORD / BOS PNR booked thru CWT on a GDS if the ATO messed up my SSR request due to an IRROP and AA.com won’t accept multiple FOP from my POS??”

You simply can’t make this stuff up.

3) They called it an “External Res Handling Fee”?? How weird is that? Why not simply call it a “Seat Assignment Fee” or a “Seat Change Fee”??

This is the crux of the matter - Because they really wanted to highlight the fact you are enduring all of this pain because you went outside of the family!! We also love how they also give you a not-so-subtle reminder that “It is very similar to the fee we currently charge for itinerary changes”

In a way – we can’t help but wonder if agents really brought this on themselves.

Agents (and to a more public degree the GDS’s) keep pointing out that they service the business traveler that yield the higher-revenue tickets. Therefore, the agents’ clientele and service makes all of the higher GDS costs, overrides, “marketing funds” (and other payments the airlines shell out) worth it. FMV distinctly remembers an agency utter the phrase “we service the customer on behalf of the airlines so it’s worth the costs”.

It’s seems to us that American is now saying “Great – thanks for that. Oh, but you can’t have it both ways”. It’s clear the agencies cost more, which MAY be OK if those agencies also take care of their customers. But this model breaks down if the airlines have to pay the agencies more AND also have to shoulder the costs of servicing them. Granted, it does pose tricky customer service issues for the individual flyer – and that’s where we think AA’s real challenge lies.

The traveller is pretty much oblivious to the battle raging between the airline and agency – but still gets caught in the crossfire. AA wants the customer to be mad at the agency - not the AAirline. Call center agents will probably have trouble framing this issue for customers.

And hence the reason why Platinum status members are exempt from the ERHF.

The LCC's are coming!

2007-04-16T13:22:00.000-06:00

FMV loves a sweet low fare as much as anyone, especially this close to tax day. But last week's news that Ryanair and others plan to launch transatlantic service with fares as low as $12? Holy frijoles!

Who would have thought that one could cross the pond for a fraction of their passport fee? Some quick googling by FMV reveals that a $12 fare is in fact an order of magnitude less than the actual fuel cost a carrier must burn per passenger for that mission. What can this mean? Welcome to the wonderful world of revenue vs. fare. Breathe in and savor the subtle nuance.

You can rest assured that carriers will collect much more revenue than the $12 fare. Much of it is unavoidable, courtesy of various governments: taxes, PFC's, etc. Some of it is avoidable - but they do it anyways (like the "Wheelchair Surcharge" they charged ALL customers). However, FMV sees some fuel surcharges and other unavoidable "service fees" on the horizon as well. Think Ticketmaster fees on steroids. They've already confirmed optional value-added services fees - food, drink, duty-free, entertainment - so you can be sure others are in the works (e.g. baggage handling, seat assignment, etc.).

Not to be complete buzzkills, just as Megabus "gives away" $1 bus rides to select passengers, so could Ryanair. But not for everyone on the bus. Imagine the Travelzoo traffic when that Hot Deal is posted! One thing's for sure, new competition will certainly introduce some interesting new sales and marketing strategies. And dare we suggest, with launch markets like Islip and Baltimore, "You are now free to move about the planet?"

Top 15 Reward Markets

2007-04-11T10:28:00.000-06:00

Given how much we fly - FMV loves frequent flyer reward tickets. One great source to learn more about this corner of the biz is IdeaWorks. Last week they published a new study where they've estimated the Top 15 U.S. markets (based on US DOT data) for reward travel. Take a look, it's an interesting read.

FMV likes the observations and conclusions presented, especially the theory that customers are trying to maximize their reward by choosing transcons. However, maybe that hypothesis deserves a bit longer haul?

"Surprisingly, the major vacation destinations of Las Vegas, Phoenix and Orlando are nearly absent from the list. Florida is completely absent, and Las Vegas and Phoenix only make a single appearance."

We're not really sure why this would be surprising. The study JUST said customers are trying to maximize their rewards - Flights to Orlando and Vegas are plentiful and usually not very expensive given all of the LCC competition on these routes. If we're making the choice to burn 25,000 miles, or pay $200 - FMV may just save those miles for something more expensive.

In addition, note that many of the top markets include major hubs and/or international gateways for US carriers. LAX - SFO - ORD and LGA represent 12 of the top 15 city pairs. Perhaps many of these reward tickets are in fact connecting to an international destination not reflected in the US DOT data?

For example, maybe two seats from the ORD - SFO market were simply United Airlines 1K's continuing on to Maui, Sydney, or Shanghai? Or the Dallas - LGA routes were like that American Airlines commerciAAl with the old guy and his latchkey kid going to New York, but then continuing onward to a "business meeting in London"?

We'd need to ask the carriers to know for sure, and not that Newark isn't a great vacation destination, but we think this expansion of the "more bang for your buck" theory has wings.

Innovation Inspiration

2007-04-10T22:53:00.000-06:00

The last bit of conference business at ResExpo / TravelCom was the “Innovator Awards". ITA Software won the "Established Innovator Award" for a company at least five years old. Other finalists included GetThere, Amadeoose FlexPricer, Omniture, and TravelClick.

More interesting was the “New Innovator Award", for a company less than five years old. The winner was FareCast – which is hard to argue against since they’ve been making a huge splash the past year or so, and also won a ton of other "Innovation" awards. An airfare predicition website??!! THAT's pretty cool since they put their money where their mouth is!

(If you get a chance, you should check out the “Travel Start-up Blog” by Mike Fridgen of FareCast).

The thing that really interested us was that, other than DoHop, we had NO idea who these other finalists were – and that’s kinda embarrassing. So consider this a public service announcement:

1) DoHop- A group out of Iceland that has a nice search engine “covering 660 airlines right around the world”. Originally built to search the Low Cost Carriers, they don’t book but they do have a nice interface to filter results.

2) AltiusPAR - They seem to have the complete technology suite for hoteliers - everything from reservation systems, inventory control, and loyalty programs. Although they didn’t win the innovation award, they do win "Best use of B-School buzz words" on their website:

- AltiusPAR combines next generation technology with a dedication to best-of-breed processes to deliver a broad suite of inventory management, central reservations and revenue management solutions for hotel companies…

- The solution and services are customized to match clients' unique business needs while offering flexible financial business models...

- Technology still holds the key to both driving and enabling substantial product differentiation and significantly improving business processes – from real-time access to inventory, transparency across multiple channels, seamless exchange of operational information and access to performance and guest data.

Heh, heh - that's just great stuff.

3) EZ Yield - A software platform that allows hotels to manage all their rates (in different currencies), and inventory restrictions online. It’s hard for FMV to really understand this system since we’re mainly airline geeks, but this seems pretty cool if you can look at all your rates, inventory, and channel supply on a single screen.

4) Open Travel Software / RFP Marketplace. FMV pretty much hates all things related to RFP’s. We hate reading them, writing them, and ESPECIALLY responding to them. So anything that can cut any time out of this process is a good thing. The RFP Marketplace gets the RFP, matches likely providers (with the eye towards the little hotel guys), and then automates the submittal process. Plus they are crazy cheap - $1,000 per year??! Wow.

Congratulations to both winners and all nominees. Now the pressure's on to continue to innovate.

And with that, TravelCom, like our run at the craps table, came to a screeching, jarring, horrible stop. We must have missed the sign out front of the casino where they held a contest to see “who can roll 7 the quickest and lose everyones' money”. FMV came in first and third. We swear we’ll never gamble again. Well, never bet the hardways at least…