The travel press have been playing up ITA Software's recent announcement with Air Canada as a sign that the GNEs have been unsuccessful in their quest to replace the GDS. Again I must reiterate a theme from my prior blog entries: this shift in distribution is not about us verses them (GNE verses GDS) but about the ever increasing likelihood that a single GDS will lack total travel content. Why is ITA focusing on airline automation? The answer is very simple. The majority of airlines still run their reservation platform as a partition of a GDS and thus some of the same inflexibility that exists in the GDS mainframe infrastructure also exists in the airline reservation systems. The underlying message here is that airlines want control over their distribution platform and there is no better way to seize control than to implement an entirely new airline reservation platform that is independent of the GDS. I've known for some time that this has been a main focus of ITA and thus the announcement was not surprising. Airlines want to control the level of fare inventory through different channels. It is this underlying desire which will likely increase the level of fragmentation in the market. Despite all the flurry of GDS announcements regarding their new airline contracts, no single GDS has signed all the major carriers. In addition, as details of the distribution deals surface it is likely that some of the travel agents may opt-out of the deal limiting their ability to gather complete content. The major TMCs (American Express, CWT, BCD) have already built (Amex TravelBahn, CWT Symphonie) or are in the process of building (BCD Project Renaissance) their own internal systems to aggregate content. At the end of the day the need for a GNE (with a focus on 2nd tier TMCs) will be more important as a tool to aggregate content across GDS as it will be for direct connection inventory. Both G2 Swtichworks and Farelogix recognize this and each has promoted this capability. By the end of this year, some of the smoke will clear giving us a clearer picture of who has what inventory and at what price. Who pays for this access is still unknown as TMCs will struggle on whether to pass on this cost their corporate customers. The bottom line is that fragmentation is here to stay. This will not only impact the corporate market, but the leisure market as well.
Friday, June 09, 2006
Last week I was again interviewed by Kyle Peterson of Reuters. The article entitled : "Internet Travel Agencies Losing Some Luster" talked about the drop in stock price of the leading OTAs (Expedia, Orbitz and Travelocity). My comments were primarily directed at the underlying technology and UI of these large players and the fact that there has been little innovation in the way consumers interact with OTAs in the last four years. With the emergence of Travel 2.0, the OTAs are starting to look like old school players. Their ability to embrace and integrate other sources of planning content is at the heart of my comments that OTAs "need to think of more creative ways for people to take advantage of all these new sources of information". Most OTAs seem content to simply continue to push a model of a single stop shop. Finding a way to benefit from new Travel 2.0 trends such as vertical search, mash-ups, user generated travel blogs, picture tagging and collaborative planning tools is an essential evolutionary step for the OTAs.
Monday, June 05, 2006
JetBlue pioneered Direct satellite TV services and now seems poised to offer Internet and new phone services on board with the successful winning bid on Air-Ground wireless license announced on Saturday. For some time I and others have been talking about U-Commerce (ubiquitous connectivity). The idea of the always connected consumer is quickly becoming the reality and it is nice to see JetBlue lead this innovation. Of course wireless Internet is nothing new as Boeing's Connexion has been deployed on long haul international routes for some time. Every segment of the travel industry needs to start planning today for the U-Commerce wave developing applications and strategies that assist the leisure and business traveler while they are in transit.
Friday, June 02, 2006
I am very lucky to have part of my family (my cousin) Marc A. Smith who is a research sociologist with Microsoft. Now rather than going off on the implications of Microsoft employing a sociologist, I instead wanted to share with you part of our conversation we had last week. Marc has been very accurate with predictions over the last 15 years. While he was getting his PhD. from UCLA he worked as a contractor with Microsoft developing a virtual world using avatars. The project was dropped by Microsoft, but we see evidence of this approach with environments such as Second Life. Also while completing his studies at UCLA, Marc created a product called Netscan, which analyzes the social trends of news groups. These are just a few things Marc has predicted, so when he provides me guidance, I listen carefully. During our conversation last week, Marc commented about how virtual tourism will play a major factor in travel planning for the future. Whether it's Google Earth, Windows Live Local, Amazon's A9 Maps or geo-coded pictures from Flicker, Marc believes that in the near term (3-5 years), Web surfers will be able to get a ground level view of a destination and take a virtual walking or driving tour. I am not saying that this immersive experience will replace travel, but by virtually experiencing a destination through ground level photos and videos, the planning of travel will permanently change.