If any or all of you have any questions that you think I might be able to answer then do not hesitate to ask either via the response facility below or direct to me on mike.platt@mpaassociates.co.uk
If I can I will give an educated and useful response. If not then I will tell you so.
Should you not want to share a discussion then simply email me and mark it as confidential.
No snags, no advertising no nothing. I just love travel and still want to contribute something if I can.
Tuesday, January 3, 2012
Friday, December 23, 2011
A CHRISTMAS MESSAGE
To all my readers: Yes I know you are out there because I read the stats!
No, you are not the best at giving me feedback so please have a go in 2012 as I really miss what you have to say and it keeps me writing.
Christmas Wishes: Oh American Airlines will you please grow up and
stop being so self destructive.
Can members of the travel supply chain think of better
and possibly easier ways of making bigger profits than over the
bleeding bodies of their partners and customers.
Finally? Have a great Christmas and New Year and I look forward
To trying to keep you interested and amused next year.
One last ‘story? I flew to New York last weekend and found myself in Club Class and directly facing one of the most attractive woman I have ever seen. We got talking and I asked her what she was doing.
She explained that she was going to speak at a very large womens society the next day about the sexes and planned to debunk a number of fallacies that people had about certain nationalities. “Give me some examples” I asked and she did.
It is not true that French men make the best lovers. It is the Greeks.
The most well endowed men are not African Americans they are native Indian Americans.
Finally the men most likely to talk women into sleeping with them are not Italian they are the Irish.
“Fascinating” I said. “What is your name” she asked.
“Tonto Papadopolous” I replied. “But my friends call me Paddy”
No, you are not the best at giving me feedback so please have a go in 2012 as I really miss what you have to say and it keeps me writing.
Christmas Wishes: Oh American Airlines will you please grow up and
stop being so self destructive.
Can members of the travel supply chain think of better
and possibly easier ways of making bigger profits than over the
bleeding bodies of their partners and customers.
Finally? Have a great Christmas and New Year and I look forward
To trying to keep you interested and amused next year.
One last ‘story? I flew to New York last weekend and found myself in Club Class and directly facing one of the most attractive woman I have ever seen. We got talking and I asked her what she was doing.
She explained that she was going to speak at a very large womens society the next day about the sexes and planned to debunk a number of fallacies that people had about certain nationalities. “Give me some examples” I asked and she did.
It is not true that French men make the best lovers. It is the Greeks.
The most well endowed men are not African Americans they are native Indian Americans.
Finally the men most likely to talk women into sleeping with them are not Italian they are the Irish.
“Fascinating” I said. “What is your name” she asked.
“Tonto Papadopolous” I replied. “But my friends call me Paddy”
Monday, November 21, 2011
A London Airport Solution?
I wonder if we will ever get one. Recent discussions gyrate rather like a manic tango. You know how it goes, striding forward only to come to a dramatic halt, a frenzied shake of the head, and then lunging back again.
Everyone with a brain in their head knows a solution has to be found. In truth many also realise that it is nearly already too late to stop the UK slipping down the major trading nations success chart. One thing for certain is the UK should be ashamed of its current airport infrastructure and the inefficiency, inconvenience and downright embarrassment of it all.
Can you honestly see it happening anywhere else in world? I can’t. Even in the most heavily populated countries they still prioritise and act on making sure their airport infrastructure is prepared for the future. Some simply take the flack and build more runways at existing airports whilst some construct huge islands with fast city links. What do we do? We find solutions, discuss them, semi-commit and then back off for socio, environmental and/or political reasons.
Of course solving our air infrastructure crisis (yes it is one) will upset someone be they people, birds, voles or snails, that’s obvious. And of course it will take time which we are just about run out of but goodness me it has to happen. We all know that don’t we. Or there is the other option and that is give up our place as a major global, political and trading nation. Do we want to give that up and resign ourselves to being a second world nation?
So what are the options available to us? There won’t be any more new ones cropping up so, if we do anything it will be one of the following:
Island in the estuary. Great idea and it has been done before in places like Hong Kong. Remember them? They had this overcrowded airport in the city (sounds familiar?) so they started from scratch far enough away to get the lowest resistance and then built a superb city link by road and rail. It cost them mega money but hey it provided jobs, appeased the majority and ensures they have few problems in future.
Expand one of the existing London airports. I guess it would work…in the short term. But look at the charade that was the last attempt to put that much needed extra runway at Heathrow. What a waste of time and money that was. A ‘no brainer’ that turned out to be nothing of the sort. We can be so darn democratic in this country that we stifle the life out of ourselves.
The third option is the one I favour. Why? Because I think it is the only one that could possibly drag itself through the mire of politics and protest. This solution is to turn the airports of Heathrow, Stanstead and Gatwick into one mega hub. I have been advocating this for years but let me remind you.
The key fact that will never change under the current structure is that the vast majority of people want to fly out of Heathrow. This is because of its proximity to London, its interlining capability and its catchment area. Gatwick and worse Stanstead will never match it, unless they link up to form one big seamless interlinking airport. This would need superfast links from each location and its terminals to the other parts of the hub.
Is such a solution practical and what good would it do? Yes, I think it could work. I am not an engineer but looking at what has been done with superfast rail links and channel tunnel connections to London I think it can. What it will allow is the efficient usage of existing runway space plus a spreading of the Heathrow load across a bigger base. The customer will be able to transfer airports as though they were moving from one terminal to another. With minimal hassle and maximum speed. In effect each of the three airports become a ‘terminal’ of the new ‘Super Airport’.
I put this forward again as a compromise not a solution. The solution is obvious and would involve building an airport in the Thames Estuary. The compromise solves a short/medium term problem but will ultimately require new runways being built. Although we could do nothing I suppose. Or is that really an option?
Think I am nuts? Well tell me why and I will publish it. Same goes if you agree.
Everyone with a brain in their head knows a solution has to be found. In truth many also realise that it is nearly already too late to stop the UK slipping down the major trading nations success chart. One thing for certain is the UK should be ashamed of its current airport infrastructure and the inefficiency, inconvenience and downright embarrassment of it all.
Can you honestly see it happening anywhere else in world? I can’t. Even in the most heavily populated countries they still prioritise and act on making sure their airport infrastructure is prepared for the future. Some simply take the flack and build more runways at existing airports whilst some construct huge islands with fast city links. What do we do? We find solutions, discuss them, semi-commit and then back off for socio, environmental and/or political reasons.
Of course solving our air infrastructure crisis (yes it is one) will upset someone be they people, birds, voles or snails, that’s obvious. And of course it will take time which we are just about run out of but goodness me it has to happen. We all know that don’t we. Or there is the other option and that is give up our place as a major global, political and trading nation. Do we want to give that up and resign ourselves to being a second world nation?
So what are the options available to us? There won’t be any more new ones cropping up so, if we do anything it will be one of the following:
Island in the estuary. Great idea and it has been done before in places like Hong Kong. Remember them? They had this overcrowded airport in the city (sounds familiar?) so they started from scratch far enough away to get the lowest resistance and then built a superb city link by road and rail. It cost them mega money but hey it provided jobs, appeased the majority and ensures they have few problems in future.
Expand one of the existing London airports. I guess it would work…in the short term. But look at the charade that was the last attempt to put that much needed extra runway at Heathrow. What a waste of time and money that was. A ‘no brainer’ that turned out to be nothing of the sort. We can be so darn democratic in this country that we stifle the life out of ourselves.
The third option is the one I favour. Why? Because I think it is the only one that could possibly drag itself through the mire of politics and protest. This solution is to turn the airports of Heathrow, Stanstead and Gatwick into one mega hub. I have been advocating this for years but let me remind you.
The key fact that will never change under the current structure is that the vast majority of people want to fly out of Heathrow. This is because of its proximity to London, its interlining capability and its catchment area. Gatwick and worse Stanstead will never match it, unless they link up to form one big seamless interlinking airport. This would need superfast links from each location and its terminals to the other parts of the hub.
Is such a solution practical and what good would it do? Yes, I think it could work. I am not an engineer but looking at what has been done with superfast rail links and channel tunnel connections to London I think it can. What it will allow is the efficient usage of existing runway space plus a spreading of the Heathrow load across a bigger base. The customer will be able to transfer airports as though they were moving from one terminal to another. With minimal hassle and maximum speed. In effect each of the three airports become a ‘terminal’ of the new ‘Super Airport’.
I put this forward again as a compromise not a solution. The solution is obvious and would involve building an airport in the Thames Estuary. The compromise solves a short/medium term problem but will ultimately require new runways being built. Although we could do nothing I suppose. Or is that really an option?
Think I am nuts? Well tell me why and I will publish it. Same goes if you agree.
Saturday, October 22, 2011
So Will Airlines go Direct Connect or Not?
Of course some will, but not completely and many will not at all for competitive, budgetary or capability reasons. Will all TMCs link direct to those that do? Definitely not. The customer ultimately will decide and they will have a choice… at a price.
Let’s get down to basics shall we? Firstly there is nothing wrong with the GDS model we have at present as far as the whole chain (excluding the supplier) is concerned. For the supplier it is a frustrating cost of sale that they have failed to negotiate down sufficiently and one they are not willing to pay for any more. In simplistic terms they cannot see why they should pay to enable customers and intermediaries to have a ‘one stop shop’ and besides it distances them from their customers.
So airlines like American have decided that it is time for a change in model. A bit like Lufthansa did in Europe. Enabling technology capability is perceived to be there now so they have thrown down the challenge to the GDSs of negotiating or risk market attrition. However what they seem to have failed to grasp is that maybe the rest of the supply chain is either not capable or unwilling to embrace the direct connect model. Some have too much to lose and definitely little to gain by doing so.
The current dynamics and rationales are both fascinating and disturbing and worth analysis. The market is enormous and with many players in various shapes and sizes. It is also bound up in a ‘cats cradle’ of payment incentives, global market variations and cultural ways of doing business. There are still places on the globe who are transacting business two steps back from what the so called driver markets discarded years ago.
The above does not appear to concern the main drivers of change like American and Lufthansa but they need to remember that they aspire to be global entities yet seem to be applying their local majority market strategies on ultimately all of us. I am certain that, in the current environment this will not work but equally convinced they will be able to do it where they have critical mass. So this means that the world will have to handle air transactions on a more complex multi-tier basis.
So I for one accept that it is going to happen in parallel with the current booking methodology. This means that one can either book direct or through someone else at an additional cost. Cost, of course is the operative word. To book ‘direct’ you will either have to go straight through the airline or through a TMC who has a non GDS link. This will cost the TMC in money and resource as they will need to radically change their systems and they will not do it for free. The airlines will have to pay them instead of the GDS although not so much. The corporations will also want their cut or at least compensation for extra TMC cost.
I do not believe for one second that any volume spending corporation will decide to bypass the TMC because of this new model. What airlines choose not to understand is that a booking (and the cost of it) is not the be all and end all of travel management. In my days in travel management the actual booking itself was just the tip of the iceberg of travel management activity. Will corporations accept the fooling around of their programme just because an airline wants to save their own distribution costs?
To me it is logical that not all airlines are going to follow this path. It is also logical that some (i.e. American) will do so but with a much smaller impact than they might hope for and then only in certain market areas. I think others will watch them succeed or fail before rejecting it or taking into account the mistakes they make. It will become just another option which will bypass the GDS, give further power/income to the TMC and pass a potentially higher tab to the end user. I have said it before but what it will do is turn the big TMCs into mini GDS who will want incentivising while having greater control over airline share.
Finally one needs to ask what the smaller and less endowed airlines and TMCs are going to do. Those that do not have the capability or infrastructure to operate two different main booking methodologies. Sure as anything, they are not going to sit still.
Neither is the GDS. I suspect both will do all they can to bypass American and anyone else who tries it and invent alternative value adds.
As for the large TMCs I expect them to eke out every competitive and financial advantage out of the chaos that will ensue. They should be able to both have their cake and eat it by managing the different options in different regions and using their superior technology. Mind you they too are under a degree of pressure as they are less able than most to turn around to a mega supplier partner and say they won’t play. That could get very messy so I am not surprised they are ‘working’ with American.
I will watch with interest and a high degree of scepticism over what American might achieve. I wonder whether they will see the savings made from GDS bypass fading away in TMC and corporate incentives and market share loss. Maybe they will remember that they used to get a higher yield using the other model. Who knows, but it will give everyone in the industry a wake-up call at least!
COMMENT
I still don't think we've even scratched the surface of how bad direct connect will be for airlines, tmcs and customers Martin
Let’s get down to basics shall we? Firstly there is nothing wrong with the GDS model we have at present as far as the whole chain (excluding the supplier) is concerned. For the supplier it is a frustrating cost of sale that they have failed to negotiate down sufficiently and one they are not willing to pay for any more. In simplistic terms they cannot see why they should pay to enable customers and intermediaries to have a ‘one stop shop’ and besides it distances them from their customers.
So airlines like American have decided that it is time for a change in model. A bit like Lufthansa did in Europe. Enabling technology capability is perceived to be there now so they have thrown down the challenge to the GDSs of negotiating or risk market attrition. However what they seem to have failed to grasp is that maybe the rest of the supply chain is either not capable or unwilling to embrace the direct connect model. Some have too much to lose and definitely little to gain by doing so.
The current dynamics and rationales are both fascinating and disturbing and worth analysis. The market is enormous and with many players in various shapes and sizes. It is also bound up in a ‘cats cradle’ of payment incentives, global market variations and cultural ways of doing business. There are still places on the globe who are transacting business two steps back from what the so called driver markets discarded years ago.
The above does not appear to concern the main drivers of change like American and Lufthansa but they need to remember that they aspire to be global entities yet seem to be applying their local majority market strategies on ultimately all of us. I am certain that, in the current environment this will not work but equally convinced they will be able to do it where they have critical mass. So this means that the world will have to handle air transactions on a more complex multi-tier basis.
So I for one accept that it is going to happen in parallel with the current booking methodology. This means that one can either book direct or through someone else at an additional cost. Cost, of course is the operative word. To book ‘direct’ you will either have to go straight through the airline or through a TMC who has a non GDS link. This will cost the TMC in money and resource as they will need to radically change their systems and they will not do it for free. The airlines will have to pay them instead of the GDS although not so much. The corporations will also want their cut or at least compensation for extra TMC cost.
I do not believe for one second that any volume spending corporation will decide to bypass the TMC because of this new model. What airlines choose not to understand is that a booking (and the cost of it) is not the be all and end all of travel management. In my days in travel management the actual booking itself was just the tip of the iceberg of travel management activity. Will corporations accept the fooling around of their programme just because an airline wants to save their own distribution costs?
To me it is logical that not all airlines are going to follow this path. It is also logical that some (i.e. American) will do so but with a much smaller impact than they might hope for and then only in certain market areas. I think others will watch them succeed or fail before rejecting it or taking into account the mistakes they make. It will become just another option which will bypass the GDS, give further power/income to the TMC and pass a potentially higher tab to the end user. I have said it before but what it will do is turn the big TMCs into mini GDS who will want incentivising while having greater control over airline share.
Finally one needs to ask what the smaller and less endowed airlines and TMCs are going to do. Those that do not have the capability or infrastructure to operate two different main booking methodologies. Sure as anything, they are not going to sit still.
Neither is the GDS. I suspect both will do all they can to bypass American and anyone else who tries it and invent alternative value adds.
As for the large TMCs I expect them to eke out every competitive and financial advantage out of the chaos that will ensue. They should be able to both have their cake and eat it by managing the different options in different regions and using their superior technology. Mind you they too are under a degree of pressure as they are less able than most to turn around to a mega supplier partner and say they won’t play. That could get very messy so I am not surprised they are ‘working’ with American.
I will watch with interest and a high degree of scepticism over what American might achieve. I wonder whether they will see the savings made from GDS bypass fading away in TMC and corporate incentives and market share loss. Maybe they will remember that they used to get a higher yield using the other model. Who knows, but it will give everyone in the industry a wake-up call at least!
COMMENT
I still don't think we've even scratched the surface of how bad direct connect will be for airlines, tmcs and customers Martin
Monday, October 10, 2011
Good Evening Count – Do Come In!
Without insinuating they are all a load of blood suckers I believe that inviting the press to listen to you is akin to inviting Count Dracula around for a nightcap. You want the experience to be worthwhile and enjoyable but there is a chance you will have a pain in your neck and the need for a transfusion afterwards.
Never could this more true than in the corporate travel business as recent events at an ACTE conference testify. They willingly invited journalists in to their sessions, tried to slap down an ‘off the record’ mandate and then were mortified when the press did their job. You cannot hold a very public and very large conference and then say everything (bar what we tell you) is a secret.
Reading about this furore got me thinking about my career as a senior in a travel management company and the experiences I had with the press. They were many and varied and I think they highlighted some of the things that are right and wrong in this particular industry. As a result, here are a few thoughts to ponder on.
Who in the travel industry needs the press? We all do yet we go about fulfilling this need in strange ways. You can take it as a given that unless you deal with them right you can get into trouble. Deal with them properly and you will get all that you desire. Bullshit, dictate or threaten them and you get what you richly deserve. Ignore them and you can start wondering why nobody knows about you.
On the other side the press needs you or they have nothing to write about. Simplistic I know but this is something often forgotten. So if you want to be a player in this industry you have to help them and not throw obstacles, smokescreens and dictates in their way. You also need to tell them something useful, not just the samey releases and platitudes that make you yawn let alone them!
I have never known an industry so selectively secret than our own. Many corporations won’t tell you what TMC they use let alone anything about their travel profile or philosophy. Suppliers only want to talk in sanitised clichés about new products and services but become very reticent when it comes to evidence and case studies. Hardly surprising as very often such products are in their early stages or even a hurried reaction to a competitor’s announcement. Hence the so called ‘smoke and mirrors’ syndrome we have encountered over recent years, Just ask yourself how many of those super duper announcements five years past have ultimately turned into anything worth having.
My own experiences with the press were many and varied and I must admit some of them gave our PR departments kittens. But I can honestly say they were both useful and rewarding to me and the companies I worked for. Why? Because I told them’ like it is’ but in a way that gave us credibility and, hopefully, respect. There is nobody better to have on you side than a journalist who believes in you and nobody worse than one who feels patronised and used.
What advice would I give? The following might help:
Never give a journalist a story and expect him not to use it. It is not in his nature.
Never give them something unsubstantiated and boring and expect publication.
Treat them as the valuable marketing tool they are not as a company stooge.
Stop being so darn secretive. If you got it then flaunt it.
Never treat them or their readers as idiots (American Airlines take note).
If you invite them around do not let them bite your neck! I suggest you try providing high quality ‘blood bags’ of information that are digestible and tasty!
Never could this more true than in the corporate travel business as recent events at an ACTE conference testify. They willingly invited journalists in to their sessions, tried to slap down an ‘off the record’ mandate and then were mortified when the press did their job. You cannot hold a very public and very large conference and then say everything (bar what we tell you) is a secret.
Reading about this furore got me thinking about my career as a senior in a travel management company and the experiences I had with the press. They were many and varied and I think they highlighted some of the things that are right and wrong in this particular industry. As a result, here are a few thoughts to ponder on.
Who in the travel industry needs the press? We all do yet we go about fulfilling this need in strange ways. You can take it as a given that unless you deal with them right you can get into trouble. Deal with them properly and you will get all that you desire. Bullshit, dictate or threaten them and you get what you richly deserve. Ignore them and you can start wondering why nobody knows about you.
On the other side the press needs you or they have nothing to write about. Simplistic I know but this is something often forgotten. So if you want to be a player in this industry you have to help them and not throw obstacles, smokescreens and dictates in their way. You also need to tell them something useful, not just the samey releases and platitudes that make you yawn let alone them!
I have never known an industry so selectively secret than our own. Many corporations won’t tell you what TMC they use let alone anything about their travel profile or philosophy. Suppliers only want to talk in sanitised clichés about new products and services but become very reticent when it comes to evidence and case studies. Hardly surprising as very often such products are in their early stages or even a hurried reaction to a competitor’s announcement. Hence the so called ‘smoke and mirrors’ syndrome we have encountered over recent years, Just ask yourself how many of those super duper announcements five years past have ultimately turned into anything worth having.
My own experiences with the press were many and varied and I must admit some of them gave our PR departments kittens. But I can honestly say they were both useful and rewarding to me and the companies I worked for. Why? Because I told them’ like it is’ but in a way that gave us credibility and, hopefully, respect. There is nobody better to have on you side than a journalist who believes in you and nobody worse than one who feels patronised and used.
What advice would I give? The following might help:
Never give a journalist a story and expect him not to use it. It is not in his nature.
Never give them something unsubstantiated and boring and expect publication.
Treat them as the valuable marketing tool they are not as a company stooge.
Stop being so darn secretive. If you got it then flaunt it.
Never treat them or their readers as idiots (American Airlines take note).
If you invite them around do not let them bite your neck! I suggest you try providing high quality ‘blood bags’ of information that are digestible and tasty!
Monday, September 12, 2011
The Beat Live? Boy What a Blast
I have just been reading the agenda and speaker list and boy what a blast I would have if I were there! No folks, this is not an advertorial for this event, more a recognition that at last somebody in the travel world is getting together some smart guys to air critical issues. I hope they do not let us and themselves down by blowing the opportunity to sidetrack posturing and ‘company speak’ to thrash out some alternative arguments.
My time for speaking at such events has diminished either by the lack of an own company to provide travel logistics or concerns about just how forthright I have become since shedding company policy shackles. Either way it reduces wear and tear on my heart and liver but sometimes, rather like my scruffy old jeans, I miss them like this one.
I then started asking myself why I am so het up about not attending yet another industry conference. What would be the one question I would ask if I was there? What would I press speakers about? Why do I think it is so darn important? How much would I lose at the Blackjack table?! Before moving on I thought I would scribble down a few thoughts on the topic I would bring up if I had made it to Las Vegas. You never know, somebody might use part of my thinking within their own contribution.
I would ask airlines to explain the practicalities of how they make their strategic commercial/distribution decisions. Within that who the decision makers are? Who within their organisational management do they interface with (i.e. sales, marketing etc)? Do they factor in the impact and needs of their corporate customers and, if so how and through what channels? Do they consult the corporate customer and who/how?
I would want to know about their policies and priorities. Are their decision makers fully market aware? Do they think they need to be? Does their organisation feel any duty of care to the industry they work in or do they simply focus on their own needs and expect the supply chain to adjust with their changes?
I still find it extraordinary that after all this time even people of my years do not really truly know who makes the key decisions in the air supplier sector. Experience has made me pretty certain it is nobody less than twice removed from customer interface. In fact I am pretty certain that most sales divisions are low enough in the company pecking order not to have much input. If they are being honest they are mainly left to pick up the strategic pieces.
It does not need a brain surgeon to get to the point I am trying to make which is that I believe this market is supplier and not customer driven. This was (perhaps) OK in the past when the industry was heavily regulated but surely not now. Not only do they want to have their cake and eat it but they want somebody to wash up after them…for nothing!
The point of the question is to explore if there is any better way of receiving and giving true consultation between corporations, their TMCs and their supplier partners. I know it is a competitive world out there but surely there is a better modus operandi than the current system of making decisions without true understanding. You only have to look at some of the arguments coming out from AA regarding distribution to see that they either do not understand their customers wishes or choose to ignore them.
Anyway, to those that are going to ‘The Beat Live’ have a blast from me and get some answers!
My time for speaking at such events has diminished either by the lack of an own company to provide travel logistics or concerns about just how forthright I have become since shedding company policy shackles. Either way it reduces wear and tear on my heart and liver but sometimes, rather like my scruffy old jeans, I miss them like this one.
I then started asking myself why I am so het up about not attending yet another industry conference. What would be the one question I would ask if I was there? What would I press speakers about? Why do I think it is so darn important? How much would I lose at the Blackjack table?! Before moving on I thought I would scribble down a few thoughts on the topic I would bring up if I had made it to Las Vegas. You never know, somebody might use part of my thinking within their own contribution.
I would ask airlines to explain the practicalities of how they make their strategic commercial/distribution decisions. Within that who the decision makers are? Who within their organisational management do they interface with (i.e. sales, marketing etc)? Do they factor in the impact and needs of their corporate customers and, if so how and through what channels? Do they consult the corporate customer and who/how?
I would want to know about their policies and priorities. Are their decision makers fully market aware? Do they think they need to be? Does their organisation feel any duty of care to the industry they work in or do they simply focus on their own needs and expect the supply chain to adjust with their changes?
I still find it extraordinary that after all this time even people of my years do not really truly know who makes the key decisions in the air supplier sector. Experience has made me pretty certain it is nobody less than twice removed from customer interface. In fact I am pretty certain that most sales divisions are low enough in the company pecking order not to have much input. If they are being honest they are mainly left to pick up the strategic pieces.
It does not need a brain surgeon to get to the point I am trying to make which is that I believe this market is supplier and not customer driven. This was (perhaps) OK in the past when the industry was heavily regulated but surely not now. Not only do they want to have their cake and eat it but they want somebody to wash up after them…for nothing!
The point of the question is to explore if there is any better way of receiving and giving true consultation between corporations, their TMCs and their supplier partners. I know it is a competitive world out there but surely there is a better modus operandi than the current system of making decisions without true understanding. You only have to look at some of the arguments coming out from AA regarding distribution to see that they either do not understand their customers wishes or choose to ignore them.
Anyway, to those that are going to ‘The Beat Live’ have a blast from me and get some answers!
Friday, September 2, 2011
A Distribution Prediction
Perhaps if you want to understand some of the practicalities of the airlines planned change over to direct connect you could look at the current hotel booking model and how it does (or does not) work. To me the hotel model is where the airline industry is heading. Let me explain.
Money and strategy matters aside the consolidated ‘one stop shop’ offering provided by the Global Distribution Systems (GDSs) is perfect for customers and intermediaries alike. You do not have to go to numerous different ‘shops’ to buy your airline product. Shops that have different languages, booking methods, rules and reporting. It is all there for you in one common language package with little diversity or complication.
Now hotels are totally different and far more difficult to package. Each location can be independent, owned by a chain, part of a consortium and sometimes a mixture. Each speak a slightly different version of the same language and they very rarely sell their inventory through a GDS because they are too expensive. Instead they do their own thing via many different outlets at many different tariffs. Frankly it is all a bit of a mess if you want a properly managed travel programme, particularly as they use differing technology.
So what is happening with hotels now and how does it compare with the current GDS system? In the main TMCs must have some kind of ‘connection’ (either direct or via third party) with key hotel establishments and chains. Some TMCs have created their own databases to hold inventory and information that then gets linked up to the GDS air booking screen. It ends up all looking like one source but contains numerous connection types that range from online links to manual entry.
The TMC has to create room allocation acquisition and management systems that doubtless include room close-out periods and price variations by customer and intermediary. These need constant adjustment and repopulation to remain current.
Ultimately they end up with their own mini GDS for hotels with numerous information flows coming from a similar number of independent sources.
OK, back to airlines. They are necessarily a selfish bunch. They don’t want to pay for the current excellent consolidated air booking system any more. They just want to sell their seats in a way that gives them more power/control and less cost. They try and dress it up differently by saying it is what the customer wants which of course is laughable if it wasn’t so serious. I wish they would just come out and say the truth which is that they intend to eradicate this cost or pass it elsewhere.
Where might this end up? Some might call it industry evolution but I would call it going backwards. Instead of efficiency and commonality in air travel it will revert back to the hotel model of individual airlines operating at different speeds with different communication methods. They will deal through TMCs who also vary in skill and flexibility. There will be dual pricing and availability depending on which model you book through and which source you use. That is progress?
I am sure the GDS have explored all avenues to find a solution to being considered bad value for money by their airline customers. I have always thought that if they presented and justified their cost more intelligently, reduced prices strategically whilst building in new markets (such as hotels) they might do a lot better for all our sakes Either that or negotiate their wares with corporations/TMCs in a new and different way? After all people will pay if they see a value and surely it is better than the chaotic alternative illustrated by the hotel market?
The smart TMCs have seen this direct connect war coming. In fact you would have had to be blind not to. They have been building what they call ‘super platforms’ and the like in anticipation of it. I predict it is only a matter of time before the mega TMCs connect their ‘pipe’ to the main suppliers in the air and hotel world. In fact it is happening now. What happens then? Are the TMCs going to distribute inventory at no charge? I doubt it. They will most likely become the new GDS of the future but with broader product reach and more control on who the customer uses and at what price.
Perhaps the GDS and airlines need to get there heads together in more harmony or they may end up creating something that compares with Frankenstein’s monster. Built with various industry parts but likely to murder them!
Anonymous Comment:
Brilliant commentary. Mike has REALLY hit upon something important here.
Love the line about airlines wanting more control and less cost, "They try and dress it up differently by saying it is what the customer wants which of course is laughable if it wasn’t so serious. I wish they would just come out and say the truth which is that they intend to eradicate this cost or pass it elsewhere."
Again, brilliant analysis
Anonymous Comment
As ever Mike hits the nail on the head whilst other so called industry experts have a tendancy to hit their thumb with an oversize hammer. What is being described as more than likely to happen within the industry is in fact already work in progress; and perhaps further down the line than many (on all sides of the equation) would care to admit.
Money and strategy matters aside the consolidated ‘one stop shop’ offering provided by the Global Distribution Systems (GDSs) is perfect for customers and intermediaries alike. You do not have to go to numerous different ‘shops’ to buy your airline product. Shops that have different languages, booking methods, rules and reporting. It is all there for you in one common language package with little diversity or complication.
Now hotels are totally different and far more difficult to package. Each location can be independent, owned by a chain, part of a consortium and sometimes a mixture. Each speak a slightly different version of the same language and they very rarely sell their inventory through a GDS because they are too expensive. Instead they do their own thing via many different outlets at many different tariffs. Frankly it is all a bit of a mess if you want a properly managed travel programme, particularly as they use differing technology.
So what is happening with hotels now and how does it compare with the current GDS system? In the main TMCs must have some kind of ‘connection’ (either direct or via third party) with key hotel establishments and chains. Some TMCs have created their own databases to hold inventory and information that then gets linked up to the GDS air booking screen. It ends up all looking like one source but contains numerous connection types that range from online links to manual entry.
The TMC has to create room allocation acquisition and management systems that doubtless include room close-out periods and price variations by customer and intermediary. These need constant adjustment and repopulation to remain current.
Ultimately they end up with their own mini GDS for hotels with numerous information flows coming from a similar number of independent sources.
OK, back to airlines. They are necessarily a selfish bunch. They don’t want to pay for the current excellent consolidated air booking system any more. They just want to sell their seats in a way that gives them more power/control and less cost. They try and dress it up differently by saying it is what the customer wants which of course is laughable if it wasn’t so serious. I wish they would just come out and say the truth which is that they intend to eradicate this cost or pass it elsewhere.
Where might this end up? Some might call it industry evolution but I would call it going backwards. Instead of efficiency and commonality in air travel it will revert back to the hotel model of individual airlines operating at different speeds with different communication methods. They will deal through TMCs who also vary in skill and flexibility. There will be dual pricing and availability depending on which model you book through and which source you use. That is progress?
I am sure the GDS have explored all avenues to find a solution to being considered bad value for money by their airline customers. I have always thought that if they presented and justified their cost more intelligently, reduced prices strategically whilst building in new markets (such as hotels) they might do a lot better for all our sakes Either that or negotiate their wares with corporations/TMCs in a new and different way? After all people will pay if they see a value and surely it is better than the chaotic alternative illustrated by the hotel market?
The smart TMCs have seen this direct connect war coming. In fact you would have had to be blind not to. They have been building what they call ‘super platforms’ and the like in anticipation of it. I predict it is only a matter of time before the mega TMCs connect their ‘pipe’ to the main suppliers in the air and hotel world. In fact it is happening now. What happens then? Are the TMCs going to distribute inventory at no charge? I doubt it. They will most likely become the new GDS of the future but with broader product reach and more control on who the customer uses and at what price.
Perhaps the GDS and airlines need to get there heads together in more harmony or they may end up creating something that compares with Frankenstein’s monster. Built with various industry parts but likely to murder them!
Anonymous Comment:
Brilliant commentary. Mike has REALLY hit upon something important here.
Love the line about airlines wanting more control and less cost, "They try and dress it up differently by saying it is what the customer wants which of course is laughable if it wasn’t so serious. I wish they would just come out and say the truth which is that they intend to eradicate this cost or pass it elsewhere."
Again, brilliant analysis
Anonymous Comment
As ever Mike hits the nail on the head whilst other so called industry experts have a tendancy to hit their thumb with an oversize hammer. What is being described as more than likely to happen within the industry is in fact already work in progress; and perhaps further down the line than many (on all sides of the equation) would care to admit.