Monday, June 27, 2011


The Customer Centric Pledge for the Travel Industry

(repeat after me - Hi, my name is ........ and I have been air traveler centric)

1. We admitted we were powerless over our past behavior in focusing only on WHERE and WHEN the customer was traveling—that by focusing on just the 15% of travelers that fly that our future revenues had been limited for our stakeholders.

2. Came to believe that a Power greater than ourselves could restore us to sanity.

3. Made a decision to turn our customer focus to the whole traveler, that drives as well as flies to their destination, whether on business or for leisure and “life” travel.

4. Made a searching and fearless moral inventory of ourselves as companies and our reliance on both the status quo and the cash cow.  I [we] have vowed to adopt a long term, sustainable business model that is multi-faceted - beyond booking fees and transaction oriented commissions.

5. Admitted to God, to ourselves, and to another human being the exact nature of our self-centered and product-centered viewpoint.  This includes admitting that there are more than 100 cities in the US and the other 88,900 cities have travelers coming to them every day for things other than vacation travel (8% of total trips) and business travel (25% of total trips).

6. Were entirely ready to brainstorm how to get from where we are in our focus to true customer centricity, removing these corporate defects of character.

7. Humbly asked our customers to forgive us our shortcomings and learn more about what they (and their end customers) really do when they travel by car and how we can shift our efforts to make that easier.

8. Made a list of all ways that we have focused instead on our own products and services and our profits, to the exclusion and sometimes to the detriment of our customer (B2C) or the customer of our customer (B2B).

9. Made direct amends to our clients that need a drive market solution, by shifting our focus away from WHERE and WHEN they are traveling to WHO they are traveling with, WHY they are traveling, WHAT they like to do when they are on this particular type of trip and HOW they are traveling.

10. Continue to take a “focus” inventory and when we are wrong promptly correct it.

11. Seek continuous input not only from our customers, but from our front line that support the customer and from the consultants in the industry that get hired to "fix" the problems when it is often too late.

12. Having had a spiritual awakening as the result of these steps, we vow to carry this message to the rest of the air-centric travel and tourism industries, and to practice these principles in all our product, program and technology development affairs.

If you are ready to not be "anonymous" about this and care to learn more about the drive market opportunity, click here to register for a free copy of our short white paper Why is the Drive Market so Important? 

Friday, June 24, 2011

Who is the biggest GDS?

I am now going to shift gears away from online technology and the role that they play in the travel distribution ecosystem to a topic that I have been personally intrigued with since I wrote my first book on Global Distribution in 1999.   That topic is GDS Share.

As background:  Last week, I wrote a blog entitled "Who Has the Power" that made an erroneous statement about Travelport being the biggest in the US.  Rival Sabre quickly corrected me, but would not provide me with statistics to prove their claim.  Notice I say "would not", not "could not".  

Sabre will be happy to know that I have since corrected that article after verifying the information with Travelport, but decided to write a new blog today on the GDS share topic to augment the correction, plus another blog talking about how share has evolved (see the previous blog entry).

When I wrote my last book on the GDS companies in 2002, I got all of the GDS companies to share with me their booking share data by region (based on MIDT - marketing information data tapes) and I forced them to rationalize their differences so that no one would object to what was published.  That was a decade ago and the marketplace (and the owners) are different, and so is the availability of GDS booking share data.

So let me preface my remarks today by saying that in a marketplace where you have a mixture of public and private companies and many new channels that make up the overall travel distribution ecosystem, it is difficult, if not impossible to accurately report booking share.  This is particularly the case when you are looking for a subset of the ecosystem, such as the US GDS-powered agency channel, where the two key players, Travelport and Sabre are both privately held.

When Galileo and Worldspan merged to form Travelport,  the press touted them as becoming the new number one distribution player globally.  This is a position previously held by Amadeus (beginning in 2003) and previously held by Sabre (since the inception of the GDS industry to 2002).  In a December 2006 article in Travel Agent Magazine, the combined Travelport entity was said to have more than 50% share in the US and 40% globally, amongst the GDS companies.   As you will see below, the 40% may have been a stretch globally, so it could also be that the 50% was overstated as well.   

So who is the biggest GDS now?  Well, in the US, thanks to the objection to my blog, we know that the order in the US is #1 Sabre, #2 Travelport's Apollo/Worldspan locations and #3 Amadeus.   What we don't know is how big the spread is and precisely why Sabre took back the #1 US position.  My speculation would include the shift of bookings from Worldspan to Sabre as a part of the Expedia, Priceline expansion of their GDS provider relationships over the last 5 years.

So how about globally?

In its S-1 filings with the SEC and again in its annual report, Amadeus (the only public company in the bunch) published Global Market Share statistics from 2001-2009 and then added in 2010 in their annual report.  Their competitors' names were blinded in their reports, but it doesn't take a rocket scientist to put names next to the share numbers. 

According to the public documents, Amadeus holds the global lead with 37%, followed by Travelport at 30% and Sabre at 28%, with regional player Abacus trailing at 5%.  I would argue that Abacus is an RDS (regional distribution system) player, versus a GDS, but historically they have been included in the global share calculations.

Source:  Amadeus Public Filings

Now, Sabre could argue for combining the market share statistics of Sabre and its joint venture partner Abacus, which would push them into the #2 spot with 33% share.

Amadeus states in its public documents that other than Abacus, other regional distribution companies are excluded from the share information.  So if Sabre adds in Abacus, Amadeus and Travelport would also want to add in their regional partners in Korea, the Middle East, India and Australia/New Zealand and the share numbers might shift slightly.

What is really important for evaluation of the GDS companies is not purely a function of booking share (which is what is reflected here).  It is profitability per booking processed, which won't be available until all 3 GDS companies are public again and posting both their booking activity and their financial results.

Can public offerings be that far off for the US GDS companies?

I would go and dust off my crystal ball to answer that question, but it makes more sense to let the Department of Justice (DOJ) antitrust dust settle first on the GDS investigations.   The outcome of that could have considerable impact on the GDS companies' collective future.

Stay tuned.

Market Share has a new definition

Today's blog is a discussion about the term "market share" when used in the travel distribution ecosystem context.

Let me start by saying that prior to the advent of the Internet in the mid-90s, third party travel distribution was dominated by the Global Distribution Companies (GDS) and booking share was most easily estimated by the use of MIDT (marketing information data tapes).

MIDT consolidates airline ticketing data from all the various GDS sources and is the only truly reliable source to estimate GDS booking share, amongst the group as a whole, but not within the ecosystem.
I must still stress "estimate" in that last statement, as MIDT often excludes regional players such as Travelsky, Infini, Topas, Axess, Sirena etc. and each MIDT provider has subtle differences in how they count segments and when they reflect cancellations.

MIDT is marketed by both Sabre and by Travelport (through their Data Intelligence group, formerly known as Shepherd Systems), among others, including Amadeus and DOB Systems.  Mere mortals like myself cannot afford this product, which is subscription based.  Last that I checked, it was in the range of $20-30k per month for a subscription.

Today, the GDS are now more of a channel for suppliers for distribution of their products - but one of many.

The new post-Internet marketplace is more fragmented and includes sites, online travel agencies (OTAs), search and metasearch players, corporate self-booking systems and of late, others like Farelogix who facilitate supplier direct distribution, including to many of these other channels. 

And surprise, surprise.  There is no single source of aggregating booking data across channels.  And since the US GDS companies are now private, booking share information is elusive at best.

As an aside, my apologies to Sabre for a statement in my blog last week entitled "Who Has the Power" about Travelport being the number one GDS in the US.  Mea culpa Sabre.  I've modified the original blog and now armed with clarification from both Sabre and Travelport, as well as stats from Amadeus' recent IPO, my next blog will focus on which GDS is the biggest.  

Stay tuned.

Wednesday, June 22, 2011

Smarter than a travel agent? OTA Series: Using Orbitz

I promised a shorter blog today.  So we'll get right to the point.

I am an information hound and have an extremely short memory for numbers (aka prices), so my favorite thing by far with Orbitz is their screen utilization.  As I mentioned, they invented the Matrix™ display and while others have copied it, they have perfected it.  Unlike Expedia, where you have to scroll right and back left to see everything, on Orbitz it is all one screen, using all the screen real estate.

In its advanced search options, Orbitz allows you to easily search one day before and one day after.

From there, we diverge pretty significantly.  While Expedia elected to tell us the fares, including taxes and fees (which can be substantial), Orbitz shows the base fare in a larger font and the total fare in a smaller, blue font.    Expedia puts a caveat that the fares are "from" a particular fare, but as we showed yesterday, good luck actually getting that fare.  On Orbitz, what you see is literally what you get (as long as your session doesn't time out and you have to restart the search).

The differences in taxes and fees are actually pretty incredible, with the non-stop tickets on BA, AA and Iberia all having $535 in fees (!) and the one stops are in the $180-200 range.  OK, I could write another whole blog on fees.  And these aren't even the ancillary ones for baggage and seats!  Those are over and above.

But I digress.  The fees aren't unique to Orbitz, they just choose to expose them.  Odd marketing move, as I'm quite sure that it will do nothing but anger customers to be that aware.

On Expedia, Delta was the lowest price at $908 for 2 stops and $1012 for one stop.  On Orbitz, those prices are $1644 and $1576 respectively.  Not sure what gives with that.  They are also significantly higher on American, but with their recent spat, that one is not so surprising.

Orbitz does not showcase constructing your own connections, but instead shows you the paired flights and on the side allows you to break them apart by "choosing" either the departure or the return.  It also does not allow you to sort by arrival time.  It does elapsed time of the flights, but calls it "shortest flights".  Makes sense.  On international, this is paramount since the variation can literally be half a day.  Both Expedia and Orbitz do a good job of showing layover length, which can also be a huge deal on international, particularly on your way home.

Orbitz does offer a guarantee, but it is "price assurance" that another Orbitz customer won't get a better price (or you get an automatic refund in the form of a check).  That is actually a pretty safe bet for them to make and not anywhere near as gutsy as Expedia's comparison to everyone outside their world.

Both companies prefer that you also buy a hotel, since they make much more on a hotel room than an airline ticket.  Both companies do a good job of merchandising that and in fact they do a much better job than most travel agents do on bundling products.  We called four agencies today and none of them tried to secure a hotel room for us while we continued to shop for airfares.

The upside for using Orbitz over an agency?  No booking fees and the Price Assurance™ guarantee are important points, as are their free mobile trip updates and 24/7 Customer Care when enroute.  Again, some agencies have this service as well, but often it comes with a service fee for each ticket.

The upside for using an agency over Orbitz or any other OTA?   Complete, unbiased airline information (at least for now) and the ability to recommend the lowest logical airfare for any given itinerary and preference set.

Orbitz has an impressive voice activated response system, gathering data about the caller, but like many similar systems, they don't hand off the information to the person answering the phone.  Although it seems on the surface that the call center is offshore, their call center has done significant "Americanization" of the accents of their people.  I had a much better experience with the Orbitz call center person and didn't have to tell him the city codes of Tampa or London's Gatwick airport!

So are you smarter than a travel agent after using Orbitz?  You tell me.

If you are still not sure, watch this 8 minute video:

Oh, and Happy Birthday Orbitz.  They are ten years old.

Tuesday, June 21, 2011

Smarter than a travel agent? OTA Series: Using Expedia

In the second of our "Smarter than a travel agent" series, we are going to look at the use of the top Online Travel Agency (OTA), Expedia.

We are going to be consistent with yesterday's blog and use the same itinerary, Tampa to London's Gatwick airport, outbound on the 8th of July and returning on the 10th.  Expedia displays the options in a grid, which was originally branded by Orbitz as the Matrix™ display.

If you will remember yesterday's blog, Bing gave us a fare on Continental for $1010 via Washington DC (just over 11 hours elapsed time).  Expedia tells us that the lowest possible fare is $908 and it includes 1 stop, taking 18 hours.  Continental doesn't even show in the list.  

But just try booking whatever the lowest fare is.  In the 30 minutes since we did the screen capture above, the one stop is now $982.40 when we refreshed the screen.   But when I select the flights, the next screen is this:

You might think this is an isolated event, but in the three different times that we started the process from the beginning, we saw this same message when it was time to select the flights.

The highest fare is for the non-stop, which today is $1376 on BA and $1616 on both Iberia and American.  Amazingly, that flight is all the same airplane, operated by BA.

While we could go on and on about all the various options, the point is that if you don't know anything about close-in alternate airports, or the best airports to connect (particularly if the connection is tight) or about code share and who is really operating a flight, it is easy to get confused about your options.

And whatever you do, don't try to get philosophical about airline pricing.  There is absolutely no rhyme or reason.   If you think you need to understand airfares and how they are formulated, read the perennial favorite "If Airlines Sold Paint".  

Expedia allows you to sort the results by individual airlines (by clicking the airline logo at the top of the grid, or to select an airline in the drop down on the left navigation bar.  You can also sort by length of flight (here 8 hours and 20 minutes for the non-stop and up to nearly 21 hours for a two stop), arrival and departure time and by price.   So far so good.  Seems like I can do most of what an agency can do.

So what can a travel agent do that Expedia can't (*)?  
  • Know and understand your personal preferences (beyond just your preferred airline, hotel and car rental company) by asking the right questions up front before beginning your search.
  • Have full access to all of your airline options and to be able to tell you what the lowest "logical" fare would be.  In most cases, it doesn't make sense to travel 7 hours longer to save less than $100, as you will spend that on food and beverages (and potentially shopping) in the layover airports.
  • Narrow the search to specific connecting airports.
  • Provide personalized service by phone (and perhaps in person) with a specific individual.
And what can Expedia do that a travel agent can't (*)?
  • Be available for booking 7x24x365 without a service fee for purchasing an airline ticket (this could be done by an agency, but it is unlikely that they would be able to afford this service level).
  • Allow you to look at seat maps and select your own seat.  A travel agent will do this for you, but somehow you just feel so much more in control when you can see the graphic yourself (hint hint to the travel agency community..... can you say seat assignment app?)
  • Soon, you may be able actually pay for ancillary service fees (seats and bags) for American and others using Farelogix as their 3rd party distribution front end.  Unless travel agents deploy a front end tool connected to Farelogix or unless the GDS connects to Farelogix (and pigs fly...), they will not have this ability.
(*)  Please note that with the right investment of time and money, any company can match another's service levels and product offerings, but not all elect to make that investment.

But what is important about the differences between an OTA and an agent isn't so much functionality as it is experience.  Granted, Expedia can hire experienced agents to help you on the phone, but my experience today was having to tell the Indian agent what the city code was for both Tampa and London and essentially walk him through the things that I found to be important.  With a brick and mortar travel agent, you are more likely to get a "travel counselor" rather than an order taker using the same tool available to the consumer.

If you are interested in seeing the full video on the comparison of Expedia to what a travel agency can do for you, click on the play button below.  It is just under 9 minutes long.

Tomorrow, we'll take a shorter look at Orbitz.  Since many of the OTAs share the same capabilities, we will only focus on the differences that make Orbitz unique.

Monday, June 20, 2011

Slow Motion Train Wreck

GDS Distribution Fees - A Slow Motion Train Wreck

This morning I was going through my old DRAFT blogs and found this title and graphic from a blog that I started to write in 2006.  Yes, 5 years ago. 

Pre-Order Now
 Actually, I am also updating a book that Kathy Misunas and I wrote in 2001 and published in 2002 and it is amazing how much has not changed at all in a decade.  So in addition to updating the current statistics about the various sectors of the industry, we are just putting the debate in the current context.

So this is now officially the slowest motion train wreck in history.   Perhaps we should update the title and cover of the new book. 

What do you think?

Smarter than a travel agent? - Google and Bing search results

I often get asked by the investment community how one travel site varies from one another and why in the world you would ever need an offline travel agency/TMC.  Today I thought I would just show you.

Forget for a moment the other things that an agency/TMC does for you (policy compliance, ticketing, supplier negotiations, reporting, accounting).

Let's start by looking at Google's new ability to interleave actual flight availability into a basic search, using the data from ITA. In the search bar:  Flights TPA LGW (for those not familiar with airport codes, that is Tampa to London's Gatwick and you can just as easily enter Tampa London in the same search for flights).

It used to be that you would just see the ads (like Cheap flights from Gatwick to Tampa (FL) right below the flight display.

Now the results is actually from the airline schedule (versus availability, since you haven't entered the dates yet).  It shows that British Airways flies every day of the week non-stop at 6:45pm.  The flight takes 8 hours and 20 minutes.  
If I click on British Airways in this link, I have to enter the origin and destination information all over again on the BA site.  And as I walk through the BA site, I end up with a fare of $1,375.50, including taxes) if I use outbound on 7/8 and return on 7/10/2011.

So am I now as smart as a travel agent?  Not yet.  You wouldn't know that this flight is operated by British Airways, but if you are an American Airlines frequent flyer, you can also book it as AA 6209 or even as Iberia 4682. And you still don't know the alternatives on other carriers as a connection.

If you click All Flights from Tampa, you will also see that Delta and Air Tran fly through Atlanta,and Southwest, US Airways and United fly through DC and more than 3 airlines fly through New York.  You might think this means the connection to London, but you would be wrong.

You have to click on the Flights to London on the first screen to get the right information.  You would then see that you can connect through New York on BA, Continental and Virgin or backtrack through Chicago on AA, UA and BA. 

As the consumer, you now feel empowered.  Right?

Except you don't know that the connections may actually be better through Charlotte or Philadelphia on US Airways, or even through Miami on American.  And by the way, you don't know that these carriers may have paid to be on this display and your favorite carrier may not show at all.  Oh where oh where is US Airways?  Or if you are fond of Qatar Airways, that you could connect to them in Charlotte.  Or KLM or Delta via Atlanta, perhaps the most direct connection as the crow flies.

This is where a travel agent adds value, as they are operating with a more complete knowledge base.

So how does Bing fare?  (no pun intended) 

Their Bing Travel metasearch site is also powered by the ITA engine.  Right now they have a one up on Google (don't expect it to last long), in that they already prompt for the date in the primary search results, so you can go right past the basic schedule display to availability (something that Travel Agents do without thinking).

The first flight that they display when you hit "find flights" is a Continental flight through DC for $1010.30.  When I click on that, I magically end up in Orbitz and it asks me to login.  If I had looked in the small print on the first screen (which I didn't), it actually told me a few sites where I could get that same fare.

So this flight will take me 11 hours and 44 minutes, versus 8 hours and 20 minutes for the non-stop, as I have over 2 hours in DC and I have to give up a half day of work on this end, as the cheaper flight leaves at 136pm.  Is my time and half a day of work worth more than $300?

Now, more than 30 minutes later, all that I am sure of is that I don't know everything that I need to make a decision.   Maybe I should call that travel agent after all.  I'm betting it will take less than 30 minutes to get to a set of flights that match my criteria.

You decide.

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