SideStep - "He Gone"

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

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*

*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

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

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%

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

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

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

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?

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

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 !

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!

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.

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...

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 !!

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

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"

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

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 !!

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 -

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

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 !!

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 !!

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 !!

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 !

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)

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

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

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

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

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?

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

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

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

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

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!

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

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

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…

Give 'em what they want

Guy Kawasaki, tech evangelist, entrepeneur, venture capitalist, and pretty funny speaker, gave a keynote Thursday evening. The main topic provided guidance on how to innovate; but Guy ended with his "Top 10" complaints about travel booking sites. His gripes ranged from the obvious to the creative. For example:

• Prepopulate the 'return' date with a date equal to or later than the 'departure' date;
• Allow an e-mail address to function as user-name;
• Allow user to have boarding pass faxed to his/her location during on-line checkin.

We can think of many online sites that already address many of Guy's complaints, but obviously Guy is not using those - - or maybe he could use some tutoring. While Guy apologized for ending his talk with a big complaint session, he shouldn't have. Rather, the audience should thank him for one final, important lesson.

Suppliers need to talk to their customers! Find out why consumers like (or dislike!) their online experience at various online sites. Get it right and you're golden. Get it wrong, and best case the customer will call the contact center or shift to an indirect channel; worst case they'll try a competitor.

To that end, one of the most interesting groups we saw at ResExpo (although we also saw them at the FFP Conference in Vancouver in Feb.) was a company called VisionCritical. Most companies just scatter-shot surveys to customers and hope for the best. However, VisionCritical has software that allows you to form a dedicated panel of your customers, send out a surveys to them, and then interact with them as often as you want. The key here is that you can follow-up with your customers online and really drill down on their thoughts and preferences - imagine what you can do with that:

• "This set of customers expressed frustration with our website, what exactly did they not like?"
• "This set of customers are our business customers, what would enhance their experience?"
• "These customers fly a lot, but never use on-line check-in, why?"

For airlines this is ideal. First, they already have good information about their customers (and their booking habits) through frequent flier information to form a solid panel. Second, they readily have a cheap reward system for customers to participate (miles). And of course - they really really need help in figuring out what their customers want.

"Travel 6.0" ?

*** UDPATED - Scroll Down for Updates***

Henry Harteveldt of Forrester Research kicked off the first Keynote address this morning at ResExpo / Travelcom. We love Henry since we find that he actually goes on record with predictions regarding where the distribution industry is going without hedging, and most of his conclusions are based on actual data his company has collected.

So his big thing this year was that the next wave of travel ("Travel 6.0" as he has coined it – Travel 5.0 centered around search, Meta-Searches, and web-based communities) will focus on the digital media for the next 18-24 months. The goal is to "Humanize the digital experience" which includes "Interactions where human benefits are more visible than the technology".

We're not 100% sure what that means yet, but it screams of management consulting speak so look for it in future .PPT's you view soon soon.

Some random facts of note that he threw out:

- 4% of travelers have engaged in a Customer Service realtime chat session.

We think this is a great solution because it solves several problems at once. We consistently hear that people "just feel better" talking to a real person – this solution gives that feeling in a low cost manner. (Over 60% of people that used Starwood's chat support completed a booking). In addition, one service representative can engage several people at the same time providing some cost savings. It seems that any travel supplier would love this system rather than having that traveler pick up the phone for the call center. However, this is probably much easier for hotels, and will be a long time coming before we see it in major airlines.


- The average business traveler has 6.4 digital devices while traveling.

We guess having 6.4 devices makes it easier to leave your 2.5 kids…

My Goodness – MORE than 6 devices?? We personally travel with a laptop, I-pod and cell phone. Oh, our laptop has a DVD – so maybe that's 4? A separate PDA if your cell phone isn't up to the task? A digital alarm clock? Digital razor? Shoe phone? USB Toaster? We're struggling with the 6+ and not sure we buy this one.

*** UPDATE*** Henry Clarifies Via Email*****

I would like to correct one comment.

Travelers don't travel with 6.4 consumer electronic devices, they own 6.4 CE devices. These are travel-relevant devices, which include both stationary items like desktop computers or HDTV sets, as well as portable devices such as laptops and MP3 players.

What makes the fixed-positon devices relevant? They affect how travel firms market thier brands or products, and how travelers see, view, or interact with your messages (or, in the case of devices such as DVRs or MP3 players, have the ability to shield themselves from unwanted marketing
messages).

I hope this helps clear up any potential misunderstanding, and apologize for any inconvenience.

Thanks again - Henry

First - we appreciate the feedback and love the fact that Henry actually read this. Second, the apology should come from us. We looked at the slides again and FMV reported the facts wrong in our haste to get a post in as quick as possible. It does indeed say "OWN" the devices. Serves us right for second guessing Henry. Third - we now shift the other way and say how is it only 6?? FMV has 5 HDTV's between the two of us !!

We still love the concept of the USB Toaster though - "For toast on the go !!"

- 14% of travelers have changed a reservation online.

We're not 100% sure if this is for hotel, car, air or all three.

That's pretty significant if this statistic is for just air – especially given the amount of agent's time this takes up. Agents have to pull up the original reservation, search for the new schedule, wade through all of the rules manually, calculate the new price, add any applicable fees, charges and taxes. It's completely prone to error and takes a ton of call center time (we're hearing up to 20 minutes on average for airlines). It's easy to see that getting the right online experience can be really huge for an airline.


OK – we're off to the craps tables to see if our run of luck can continue. Last night saw a string of three great rollers go on a tear of hitting their points – and we're hoping a run of hardways shows up because one of us can't stop making that bet !!

VEGAS BABY !!

Greetings from Vegas where they are holding the 2007 TravelCom / ResExpo conference!!

This year, they combined the traditional TravelCom and ResExpo conferences into one, but from all accounts, it looks like this conference is noticeably smaller than previous years. In addition, while the past conferences seemed to have a good amount of upper level CIO-type management, it doesn’t seem to be the case this year.

Could it be that there’s just too many tradeshows in this business??

BUT – there is one huge benefit to this conference – we love Vegas! However, you can’t go an hour without someone saying “what happens in Vegas...” That gets old pretty quick. Wednesday was pretty slow, but it was the first day so we’ll see how things pan out. More to come.

Cheer, Cheer, for New Baggage Fees

We check baggage, yes we do! We check baggage, how ‘bout you? Actually, we rarely check bags, but when we do it costs nothing. For now.

You can always tell what’s on the horizon in the airline fee world by taking a peek at what ATPCO is developing. ATPCO developed “fuel surcharge” functionality and all airlines tacked it on. They’re working on fees to simplify ticketing fees (e.g. call center service charge). But hear us now and believe us later – the next step will be a proliferation of baggage fees as ATPCO rolls out filing products that will make collection much easier for carriers.

Many carriers (e.g. BA) have tinkered with excess and additional bag charges. However, Spirit Airlines dialed it up a notch in the U.S., accepting no checked bag unless you pay a fee for that service. The interesting thing is that we haven’t read much negative press about the Spirit policy. People think it’s cute when an upstart leisure carrier does this. And we cringe, because you can bet $25 that in any conversation about the topic you will hear some variation of the phrase “Ha ha ha. What’s next, a pay toilet?” Bank on it.

However, will passengers still laugh it off when the majors implement fees from bag #1?

As a rep from a major international carrier asked at CASMA, should a traveler on a quick business turn, carrying only a briefcase, pay the same fare as a family checking many bags for an extended vacation? Arguably, the family gets more value. Charge them for that service!

This will be an interesting game to watch. Will the fees be positioned as a charge to the family, or a discount to the road warrior? Who will lead, who will match? We don’t envy the players - especially if we have to wait in security lines longer as families fumble with their array of 3 oz. bottles.

More from CASMA: The Hunt for a Killer in Travel

Michael Bennett from Cheapflights.com gave a nice talk on Wednesday, encouraging airlines to consider new marketing methods as online sales (and advertising spending) grow. Mr. Bennett challenged the crowd to identify leading brands in the online space: Search? Google. Auctions? Ebay. Jobs? Monster. Books? Amazon. Each category killer an easy slam-dunk for the sleepy CASMA faithful.

What about the travel vertical? Can any brand dominate? FMV considers the question…

An Online Travel Agent?
Expedia may be the closest to domination, but the gnome’s not a believer, and neither are we – in ANY of the OTA’s. Count the reasons. Supplier-direct sites continue to improve their functionality without fees. The meta’s are gaining a voice and also cross-shop suppliers. What happens if the airlines start to experiment with holding back content? The OTA future value-added service proposition isn’t clear. We leave the rest to you.

OTA’s do offer a consistent storefront to shop and buy a complete travel experience. Is that really a strong enough advantage? We doubt it because many buyers don’t care. After all, not all air trips need a hotel room, or vice versa. More importantly, you can bet that sites with strong air and hotel brands are working hard to offer more robust purchase options for broader travel categories. In fact, go ahead and get it tattooed on your bicep: JetBlue, American, and Midwest Express airlines all said as much in the other morning session!

So a supplier site then?
Could a previously pure-play supplier sell enough travel to become a virtual Allegis, only an Allegis that’s tougher than Chuck Norris? Maybe an airline that’s a really savvy marketer sans the airline snobbery (e.g. Ryanair), but even then, the consumer base is simply too segmented. Try to picture a Willie Loman type booking three-hundred Motel 6 stays each year at SPG.com. You can’t, and neither can we.

So you’re saying it won’t happen?
FMV doesn’t see the travel killer looming on the horizon, but never say never. Well, maybe you could say never if Walmart, American Express, Kayak and Aeroplan weren’t around – but don’t get it tattooed on your bicep. Unless you’re Chuck Norris.