American Airlines announced today the release of a widget for Facebook in an effort to "understand how consumers interact with one another"." The tool allows Facebook users to share trips within their network and comment about their experiences. American has always been a leader online going all the way back to the late 1990s when they introduced an early attempt at personalization with BroadVision (later replaced by ATG) on AA.com. I doubt the agenda is really to understand customers as AA has extensive research on customer behavior both at AA.com and through more traditional survey methods. It is more likely the widget's purpose is to understand how AA can work within a social network to help influence future bookings. AA is also working with Microsoft on delivering ads in Facebook. As with any social network effort, sometimes the results are not what the vendor expects. For example, here is the first comment on the TravelBag Facebook page: "The design sucks. It should allow the end user to control what shows on his/her profile page. Get rid of the goofy suitcase. It eats up about an inch of screen space and adds absolutely nothing to the user experience [just add "American Airlines" into the box title]." And this comment "Disappointed as a loyal AAdvantage member that this can't pull in my existing reservations from AA.com." These comments point to the challenges of creating widgets for social networking and the need to integrate the widget with the existing reservation process. That being said, I applaud AA's effort to find a place within the expanding role of social networking.
Wednesday, March 26, 2008
,Today Delta matched earlier moves by United and USAirways to charge $25 for a second checked bag. This is both a reaction to increased operating expenses due to escalating fuel costs as well as the clear desire to unbundle airfare pricing. It is interesting to note that this fee " will not apply to first-class or business-class customers or members of Delta's frequent-flier program who log at least 25,000 qualifying miles of travel per year." "Those travelers will still be able to check up to three bags without extra fees". This week JetBlue also announced a fee for seats with more legroom, a practice used by United for many years. Apart from the obvious economic motivation for these actions, unbundling airline pricing is as much about customer segmentation as product differentiation. For years the airlines have resisted the notion of the airline seat as a commodity. Despite this effort, most travelers only differentiate the airline's product based on their personal loyalty value (e.g. frequent flyer programs and in particular the ability to upgrade) or poor service experience. I have to confess I have fallen into this trap as well as every time I fly AA I seem to have a problem, though countless stories of a similar nature can be found with any airline. The more interesting effort at play here is the customer segmentation strategy. Yes airlines tend to be lemmings and add fees or change services based on a market leader implementing a change, but trying to better target higher value customers is a noble goal for any business. The irony of the airline industry is that thought the carriers pioneered loyalty programs, they have great difficulty in implementing customer segmentation at the point of purchase. This is both due to the number of players in the value chain (e.g. travel agency (or TMC) GDS, payment providers) and the legacy technology used to distribute their inventory. As long as the customer information is wrapped together with the transaction stored in a old 60's style mainframe, airlines will have continued challenges in their attempt for differentiation their products and ultimately offering dynamic pricing reflecting the customer's true value. The market leader in unbundling airfare costs has been Air Canada and thus their motivation to re-engineer their airline CRS system with ITA software.
Monday, March 24, 2008
WiMax's first commercial rollout may very well be at U.S. airports. The goal is to provide a faster upload of manifests, flight plans and onboard entertainment for incoming aircraft. For those not familiar with the term, WiMAX (Worldwide Interoperability for Microwave Access) is a wireless industry coalition whose members organized to advance IEEE 802.16 standards for broadband wireless access (
Friday, March 07, 2008
I had a great conversation this morning with Jerome Thil the CEO of the French meta-travel search company Sprice. In Europe and other parts of the world purchasing static vacation packages has been the norm long before the advent of the Web. That buyer behavior has changed a bit with the concept of dynamic packaging, but roughly 80% of travel-related searches by European consumers still focuses on static packages. The Sprice meta-search capability is currently only available on the Spice French site:
For those not up on their French the "Sejours" button starts the travel search for packages. The package meta-search capability took 4 years to develop and uses an interesting technology approach to capture the unstructured and non standardized content from package seller Websites. Rather than using intelligent agents to screen scrape the site, Sprice built an extraction application as an extension to the open source Mozilla Firefox browser. As a Sprice developer uses this modified browser to identify fields on a given site, the extension records the session and thus captures the structure of the site. When the user enters a search query, behind the scenes, the Sprice technology sends these knowledgeable browsers to the sites tracked and extracts the information. Please note that this is a fairly simplistic way to describe the technology as cleansing and parsing the data is a major step in providing consistent comparisons across sites and thus the 4 year development cycle to bring this to market.
Comparative shopping is at the heart of the Web. Rather than focusing on air or hotel shopping as many competitors are already doing (e.g. Kayak, Mobissimo, Farecast), Sprice is focused on the package segment providing important functionality to markets that still predominantly purchase pre-packed tours. User generated content and mobile applications are on the near Horizon for Sprice, particular as the company has a long standing relationship providing the travel channel for the large European Telco, Orange.
Yesterday's announcement concerning the availability of the iPhone SDK (Software Development Kit) is significant for potential travel application developers. The iPhone has shifted the focus from cell phones to mobile Internet devices with the first full function mobile Web browser. Applications written for the iPhone can be downloaded directly from the Internet bypassing the traditional walled garden of the wireless providers. The announcement specifically emphasized application development for the business market to compete with RIM's Blackberry, the leading corporate smartphone. Venture capitalist firm Kleiner Perkins Caufield & Byers announced it was creating the $100 million iFund to help new developers for the Apple handheld platform. As a result there is a lot money on the table to encourage developers to create corporate oriented apps. Are you listening travel software vendors? That's the good news.
The bad news goes to the heart of what Apple is about: proprietary software. Though the iPhone design is truly revolutionary, the corporate strategy of a proprietary operating platform environment may constrain development. There is fear among developers that Apple will limit the ability for third-party developers to distribute apps, in the same way they did with the iPod gaming market In addition the ability to write the application once and have it shared across devices is impossible with this proprietary approach. For example many of the current mobile applications are written in Java which can run any device that has a Java Virtual machine (JVM). This week Apple also announced that they will not support a Flash Virtual machine on the iPhone limiting the use of Macromedia's Flash, a very popular way developers have added animation and desktop functionality to Web apps. In addition, the Telcos are not happy with Apple as the iPhone has eliminated the revenue associated with the control over application distribution that has been a driver for the walled garden approach. A slew of new iPhone like devices is already hitting the market with many more on the near horizon. Apple has again been pivotal in the development of new platforms as it was in the creation of the personal computer, but may fall victim to the same low marketshare fate if open applications environments such as Google's Android platform take hold allowing a more practical path for cross platform mobile application development. I don't believe we'll see the iPhone's share of the mobile market diminish as it did in the early days of the PC, but limiting third party application development is never a good thing in the age of open source computing.
Wednesday, March 05, 2008
A news release late last month announced a new relationship between Farelogix and ITA Software. First a bit of disclosure, Farelogix has been a Travel Tech Consulting Inc. (TTCI) client and I have known the founder of ITA Software since 1997 when I participated in a presentation at Sun Microsystems (another TTCI client) where Jeremy Wertheimer first presented the ITA faring solution as part of a visit by a major TMC. Many in the corporate travel world may falsely believe that the concept of a GNE (GDS New Entrant a term coined by a former UA executive back in 2005) is old news and is no longer relevant based on the 5 year agreements signed last year between the major airlines and GDS. How are the GNEs continuing to survive and why have the three original GNEs embraced each other? It is important to note that G2Swithworks the other major GNE who received lots of press in 2005 already has a relationship with ITA Software as well as sharing a funding relationship with Texas Pacific Group who now also owns Sabre). In 2006, ITA shifted their focus away from GDS bypass to building a next generation CRS (Central Reservation System) for their "beachhead client" Air Canada. Farelogix has successfully continued to sign direct connection agreements with major airlines and was selected to provide the plumbing for BCD Travel's Renaissance Project. There are four major trends that continue to provide opportunity for these so-called GNEs
- Unbundling of Air Pricing- The move by the airlines to provide a menu approach to pricing that charges different fares for different levels of services (e.g. a different price if you don't check bags or change your ticket) is being implemented or considered by all the major airlines. Whether the traditional mainframe-based platform of the GDS can accommodate this new pricing strategy is still an open question.
- Leverage to Negotiate lower GDS Fees - Another key issue keeping the GNE activity alive is whether GDS fees can be further reduced beyond current agreements. The fixed costs in operating a GDS may limit how low their fees can go in the next round of negotiations. Even though we are about 3-4 years away from the renegotiation, airlines continue to support alternative distribution as a way to provide leverage for future negotiations.
- Flexibility to Control Distribution - In 2006, Farelogix released its Distribution Manager software which enables " TMCs to effectively control the sourcing for each supplier's inventory through preferred booking sources, while maintaining contractual commitments to the various Global Distribution Systems (GDS) and direct supplier relationships." This control over distribution may be used by the TMC or corporation to gain further leverage in airline negotiations
- Shifting the Aggregation point to the TMC - The reality of travel distribution is that content continues to remain fragmented. For example, corporate buyers continue to push hotel reservations through the GDS (either through self-booking or call center activity) but a good portion of hotels are still booked via the telephone. In Europe, where travel inventory has always been fragmented, a need to integrate boutique hotels, rail, ferry and other components into a super PNR is still required. BTN highlighted this in a recent article regarding HRG and BCD super PNR efforts.
Please don't misinterpret my comments here as I am NOT voicing the old hackney message that "The GDS are dinosaurs and are history" These companies still are at the heart of travel distribution both online and off. The ongoing viability of GNEs due to the factors above will continue to push the market to provide a more flexible distribution solution that ultimately allows suppliers to better segment their clients and target their best customers with special offers (a basic tenant of CRM). As the ultimate purchases of business travel, the corporate buying community needs to pay attention to this trends to insure that total supply is offered and that the corporation in conjunction with their TMC controls the distribution choices allowing additional leverage in supplier negotiations.
Tuesday, March 04, 2008
Alaska Airlines has introduced an avatar interface called Jenn on its Website. My longtime blog readers will recall me mentioning the historic Knowledge Navigator video that was introduced at MacWorld in 1989 and my belief that an intelligent assistant would truly be a killer app for the travel industry. Even though the Navigator concept eventually led to the disappointing Newton, the concept of having an avatar assistant continued to be tried. Way back in 2000, Eurovacations (a site created by Rail Europe Group and U.S. tour operator Avanti Destinations) introduced an avatar to assist in travel planning. At that time the underlying natural language search technology was not yet developed and thus Eurovacations dropped the avatar after about a year.
Interactive voice applications have been part of the travel reservation process for many years but this Alaska avatar is the first example of combining interactive voice, natural language search and an avatar interface all developed by NextIT Corporation. I caution the reader not to misinterpret my comments here. I am not saying the new Alaska airline interface can replace human interaction. In a way the innovative avatar approach simply mimics help applications that have existed for years. What may make this avatar approach work now other than the new technology behind it? We are in the midst of a generational shift where young adults who spend much of their free time with games such as World of Warcraft are entering the work force. In addition, even though SecondLife has lost lots of its luster it has brought the concept of computer animated avatars into the online consumers' awareness. Jenn is an application to watch.
Monday, March 03, 2008
A new meta-search company, InsideTrip was mentioned today in Tech Crunch.
The model is the now familiar multi-site airline search pioneered by SideStep, Kayak, Farecast and Mobissmo (not to forget the original pioneer, FareChase which only recently was put on the front page of Yahoo! Travel ). The twist is a rating system that evaluates the quality of a given selection based on three specific categories - speed, comfort and ease and 12 so-called "pain points" such as number of stops, security wait time, legroom, aircraft type, connection time, and gate location. Users can indicate which of these pain points are most important and the service will generate a unique TripQuality score for each ticket result. Interesting concept that mirrors the corporate purchasing philosophy of "Total Cost of Ownership" which measures products and services often assigning a numeric score to a qualitative evaluation. A bigger trend is represented here as well which includes personalization techniques adopted by Kayak and Mobissimo as well as semantic search evaluations by start-ups Kango, Nile Guide and Circos. The commonality is a system that filters search results based on user designated criteria. This level of personalization applied to travel search is long overdue and can produce results that are more in sync with the user's needs. That being said, the Achilles heel for these type of personalization techniques is simply a concern that the filtering may eliminate choices that would be acceptable to the user. With gradual maturing of the market for meta-search, competitive efforts promise to continue to provide different tools to filter content to better meet a user's profile. Who owns this preference profile and whether it can be used across sites, is an emerging battle for customer ownership that is underlining the goal to position the company as the first stop in travel search.