Poke in the Eye (4 Travel)

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).

Afraid of Travelling

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.

Insurance Against Bad Reporting

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.