Tuesday, September 20, 2011

The Beat Live - Court of Chancery

Wikipedia says that a court of chancery has jurisdiction over the estate of lunatics. Let’s hope Jay wasn’t making a backhanded statement about either party by choosing this particular forum for the airline/GDS debate. As I see it, there are a number of real issues at the heart of this battle. Content, Technology, Merchandising, Business Model, Connectivity. I frame it as a battle, because it reminds me somewhat of the parent child battles that emerge when a child gets its independence and leaves home. The child continues the behaviors taught from the earliest age, both the good and the bad, but the parent tends to it in a whole new light, even fighting what they modeled for years. One example is having a cocktail before dinner and a glass of wine with dinner, then being upset when your kids start drinking in college. Another is being a workaholic and never being there for your kids and then getting upset when they don’t come to visit you. On the good side, it may be attending church or staying fit and eating right. In this battle, the GDSs for whom I am advocating are the children that earned their independence from the parents, the airlines, represented by my esteemed colleague Mark. When a child leaves home and goes to college, it costs the parents quite a bit for tuition, books and room and board, not to mention what it cost to raise them. In this case, the GDS “children” each left home somewhere in their late teens. Their companies went public and/or were purchased by private equity, and in each case, I believe that the airline parents pocketed a substantial amount of money from the transactions. And in the case of Amadeus, who is still partially owned by several of its founders, the airline owners continue to benefit from that ownership. With the massive losses of the last few decades in the airline arena, I can’t help but wonder whether the airline parent companies should have sold the airlines and kept the GDS. Back to the issue at hand. Let’s start with the business model and the alleged “sharing” of a portion of each booking fee with our travel agency customers. Those in the room may remember that when the first “bag man” appeared on the scene, literally with a bag of money. It was the early 1980s and the business cards for the automation staff at that time read American, United, Delta, TWA and Eastern Airlines. The money was not “revenue sharing” on a segment basis, but an incentive to switch systems. Soon the incentives were used to retain business and to offset the cost of equipment. And once commissions were first cut, then eliminated, the incentive was also called “financial assistance”. The issues are of course intertwined. Prior to the elimination of the CRS rules in 2003, full content was not an issue, as all airlines that had a stake in a GDS had to participate at equal levels between all GDSs. But selling different content through different channels has always been the practice of the airlines – case in point running ads in the newspaper on Sundays that were not available through agencies on Mondays. My position is that the onus is on the GDS to offer a compelling business proposition to the airlines, such as aggregating variable cost demand at a higher average yield. If the GDS cannot do this, then the airlines both can and will sell their products through other channels. As far as merchandising and legacy systems, the evidence will show that each of the GDS companies can and do offer merchandising of ancillary products for airlines and have made substantial progress in transitioning from legacy systems where it makes business sense to do so, just as the airlines have done in their internal reservations systems and web platforms. The one issue that actually makes the most sense in this battle is that of connectivity. In the late 1980s, a group of hoteliers formed a consortia known as THISCO, later renamed to Pegasus. Those hotels decided that rather than trying to keep up with connectivity to a growing number of GDS companies, they would instead connect once to Pegasus and let them connect to the GDSs (and later the other internet powered channels that emerged. If American and others desire to connect via Farelogix or other alternative platforms so that they can get out of the connectivity business, this is of course there prerogative, but where the GDS as an industry begin to get concerned is where there is incremental cost for development and additional complexity for our agency customers that may indeed erode the profitability of this valuable channel for the airlines, who as a matter of fact have been our core customers for over 30 years. INDUSTRY IMPACT We live in a free market economy. Producers are free to distribute their products using intermediaries or directly or a combination of the two The channels have to provide compelling reasons to the producers to garner their business Variable cost channels have a high appeal The companies that thrive ensure that they drive as much business as possible through the highest yield channel Those that shift business to the lowest margin channel will not be as profitable and may indeed fail The issues is really one of points of sale Value of a collective network of over 50,000 agencies globally selling travel at minimum 5 days a week, 40 hours a week – aggregating high value demand

Saturday, September 17, 2011

A Book Recommendation - It's Not About You, Bob Burg and John David Mann

There has only been one book in my life (other than the Bible) where I've bought more than one copy.  That was The Go-Giver, by Bob Burg and John David Mann.  The concepts are simple but profound.

Well, I'm thinking that another book is about to share that distinction.  Bob and John have finished their next book and my only challenge is whether I pre-order the book in hardcopy so I can pass it on (as I know I will want to do) or download it on Kindle so I can get it immediately!

Set once again in the fictional Pindar’s town (with some inside references readers of THE GO-GIVER will enjoy bumping into!), this book expands on the first book’s Third Law, “The Law of Influence,” showing what happens when an unexpectedly cagey mentor by the name of Aunt Elle takes the ambitious young Ben under her wing and shifts his focus in a way he never expected.

The book is filled with quotes you’ll use the rest of your life! And if you currently lead a team, my guess is you’ll most likely suggest that everyone on your team read it.

Today is the official pre-release date for my friends, Bob Burg and John David Mann’s brand new parable, IT’S NOT ABOUT YOU.

Written in the style of their huge international bestseller, THE GO-GIVER, the story is woven around captivating new characters who will both touch your heart and show you how to be the leader and influencer you’ve always known you can be.

If you like, you can go to and download Chapters One and Two. If you like what you read (and I believe you will) you can click right through and purchase online, or wait and pick it up at your favorite local booksellers.

You’re going to love this book.

Learn, prosper, and most of all, enjoy!

Wednesday, September 14, 2011

International travelers spent a record $13.3 billion on travel to the US in July

TI News: An information service from Office of Travel & Tourism Industries (OTTI)

Wednesday, September 14, 2011

News Media Contact:
Kevin Griffis, (202) 482-4883,

Statement from Acting U.S. Commerce Secretary Rebecca Blank on International Travel to the United States in July 2011

WASHINGTON - The U.S. Department of Commerce announced today that international visitors spent a record-setting $13.3 billion on travel to, and tourism-related activities within, the United States during the month of July - $1.8 billion or 15 percent more than was spent in July 2010. International visitors have spent an estimated $86.9 billion on U.S. travel and tourism-related goods and services year to date (January through July), an increase of 13 percent when compared to the same period in 2010. Americans have spent nearly $63.7 billion abroad year to date (up 8%) - resulting in a $23.2 billion trade surplus for travel and tourism through the first half of 2011.

“Today's numbers underline the vital role travel and tourism plays in strengthening the U.S. economy, helping to create jobs in communities across the United States,” Blank said. “The industry is also an important part of America's exports success story. Travel and tourism accounts for 26 percent of exports in services and 7 percent of all U.S. exports, and helps to achieve President Obama’s National Export Initiative goal of doubling exports by 2015.”

Monday, September 12, 2011

AA/Sabre - Will anyone win on this? (besides the attorneys)

In case you missed the story last week, here is a little tit for tat on the latest in the AA/Sabre argument from this snippet of an article from Travel Weekly in the UK

A spokesman for American said: “We believe evidence will show that, among other illegal behaviour, Sabre has used its market power to inflict harm on American by hindering the sale of tickets on American flights. The sole purpose was to preserve its monopoly position by deterring American and others from continuing to pursue cheaper, more flexible means of distribution.”

Sabre has filed a counter antitrust claim against American, arguing that: “American is unlawfully forcing travel agencies, travel management companies and corporations to take its Direct Connect product in order to access the airline’s full fare information.

“American Airlines is attempting to eliminate the GDSs . . . by refusing to provide complete fare information to GDSs and by forcing travel agents to use its direct connect product instead of GDSs.”


Not sure where you weigh in on this? 

It's easy to find arguments for and against the requirement that airlines display and sell all fares and ancillary services through the GDSs.

However, where but The Beat Live 2011 can you witness completely unauthorized representatives of both perspectives hashing it out in a Court of Chancery? Largely obsolete in the real world, the Court of Chancery sits without a jury and empowers its presiding chancellor to determine all issues of fact, pronounce injunctions and issue writs. Advocating for the GDS perspective on Sept. 20 in Las Vegas will be Solutionz' Chicke Fitzgerald. Her opponent? Former Air Canada exec Marc Rosenberg of Marsalyn Creative. Presiding as chancellor will be Tom Wilkinson of KesselRun Corporate Travel Solutions.

Don't miss The Beat Live, Sept. 19-21 in Vegas.
Register to attend here:

Thursday, September 08, 2011

GAME ON: Google Buys Zagat: It's All About Local

You can tell an awful lot about a company based on its acquisition strategy.  I'm seeing someone that basically wants to own providing information to us about both travel and local.  Content is King may just be their new tagline.

Google Buys Zagat: It's All About Local | Digital - Advertising Age

With Deal, Internet Giant Is Starting to Look a Little More Like a Media Company
By: Kunur Patel Published: September 08, 2011
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Google has acquired Zagat, a high-end restaurant and shopping reviews publisher, to bolster its local business content.

"Moving forward, Zagat will be a cornerstone of our local offering," wrote Marissa Mayer, Google VP-local, maps and location services, in a blog post announcing the deal.

Until now, the search giant has populated its Google Places pages with aggregated content from outside sources, which until recently included Yelp reviews. However, Yelp, a user-generated reviews site for local businesses, found Google Places to be in direct competition to its business. With Zagat publishing arguably some of the most respected restaurant reviews and ratings, Google now has its own store of highly respected local content. The restaurant and shopping reviews publisher has been in the business more than 30 years and covers 13 categories in more than 100 cities.

For the rest of the article, click HERE

Wednesday, September 07, 2011

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