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.
Wednesday, February 18, 2009
Thursday, February 12, 2009
Travel 5.0 on Web 2.0 with New Skies 3.0
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.
“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!
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!
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...
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.
Friday, February 6, 2009
You are Free to Move Around Rewards
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.
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.
Monday, February 2, 2009
Morning 'Zoo
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.
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.
Friday, January 30, 2009
Real Airline of Genius ?
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:
"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.
Tuesday, January 27, 2009
Nickels & Dimes Add Up
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.
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.
Friday, January 23, 2009
All in the [Fare] Family
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.
Wednesday, January 21, 2009
The Southwest Effect
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.
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.
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