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Competition is Our Lifeblood – So Why is the U.S. Guardian of Competition So Stupid?

November 15, 2013



For those of us who toil in the new economy – the one where innovation and creativity becomes the driver for growth – we sometimes marvel at the old economy.

So yesterday we had what I can only describe as something incredible. Perhaps I am just not getting how government works or I just am too old to understand how people can do such illogical things.

I am speaking about the US Department of Justice and its bizarre approach to competition. For context allow me to ramble on a bit about the how this came about.

The American Airlines and US Airways merger was never in doubt – just there had to be some jumping up and down by the regulators to complain that perhaps the competition in the US airline market was being eliminated. Here is a great opinion piece from ATW’s editor.

The problem with the merger and any complaint against it was that an objection was the legal equivalent of closing the door long after the horse had bolted. UA+CO, WN+FL, DL+NW all preceded it to create behemoths who will now be in the position to make super profits. In fairness to the DoJ – they were overruled in several of these cases by the DoT who had ultimate jurisdiction. So some resistance was put up by the DoJ in each of the previous mergers but none serious.

Earlier this year the DoT and the DoJ signed off on a massive slot swap between Delta and US Airways between LGA and DCA. This preceded the merger negotiations between AA and US. The end result was a dominant position in NYC (LGA and JFK) by Delta and DCA with US. With the merger between AA and US – the result was a real consolidation of power. only 4 airlines matter really in the USA. These are: The new AA, UA, DL and Southwest. the next tier of airlines is WAY behind – Alaska, JetBlue, Frontier. None of these airline can claim to be truly Low Fare airlines while several claim to be Low Cost.

It’s important to remember that the darling of low fares – Southwest – really isn’t. Another myth. Southwest has some of the highest yielding fares in the marketplace.

And this is a very important and clear distinction. Low Fare airline means that the customer pays less. A Low Cost Carrier is one who has costs below that of the industry norm. The Low Fare airline doesn;t have to be Low Cost and sadly vice versa. Charles Dickens’ Micawber’s famous, and oft-quoted, recipe for happiness: “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” applies to airlines as well as individuals. Actually not as much because clearly airlines seemed to be quite happy for years to go about losing money and carrying passengers.

The trouble is that the DoJ doesn’t seem to know the difference between Low Fare and Low Cost.

So they are determined to continue to allow the airlines to make super money profits at the expense of the poor consumer. To wit – they want to reserve the slots that US and AA have given up for smaller airlines. This is really a bad idea given the structure they have enabled in the market which now favours bulk over consumer benefit.

So here is a chance for the DoJ to do the right thing.



Open the slots to ANYONE who will guarantee that they will (for 5 years) commit to providing service at the airports affected at a rate equal to 10% below the AVERAGE of the past 5 years fares (cents per mile) from that airport. This will effectively cap the prices of the new entrants into these markets and at the same time force the big incumbents to match that price.

This would open up the market for competition and lowering the prices paid probably across the whole industry as it would ripple out to external markets.

Lawmakers would love it because it would make sure that they had fares that were low enough for them to get to and from Washington.

Will it happen? NEVER!

And why not you ask? Because the DoJ team is looking for its next job since they have done such a piss poor effort of ensuring fairness in the marketplace.



Social Media is it the sustaining or introduction of your brand? A reflection on Social Media and our lives.

November 14, 2013



Normally I am not one to focus on branding. But I am fascinated by brands in today’s ADHD world. I constantly ask myself whether brands are relevant in a world of on-demand always on information resources.

Personally I find a sense of irritation at the way in which the big access points of my life keep trying to mold me to their ways. The AGFA world (Apple Google Facebook Amazon) each is telling me – many non- too subtly – that I have to do things their way. And no-one seems to bat an eyelid at that. So I was very interested to see this recent piece by eMarketer on the manner in which Social media weaves its way through our lives, not that we didn’t know already.

But for me the most telling piece was the end paragraph. I would like to quote verbatim…

“Once they become loyal customers of a particular brand, it would seem natural that consumers who engage with brands on social networks would significantly prefer to use this channel to keep in touch with them. But this is not the case. Fifty-five percent of social network users reported they typically keep in touch by visiting brands’ websites—the top method of staying connected to a brand. A slightly lower share— 52%— said they commonly visit social network pages as a way of staying in touch with their favorite brands. “

And perhaps this is a reflection of the mixed way we all approach Social Media. Older folks like me still like Social Media as a way of keeping in touch with people in whom we share past experiences. Millenials are in many cases eschewing Facebook because they have better things to do with their lives in creating the experiences that will in turn define their lives. And that is part of Life’s rich tapestry.
Our brands are not just marketeers’ inventions but today in many cases we have created our own brands. We should just take care not to mess it up.

APIs APIS The APIs Have it…

November 13, 2013



Or my APIs have seen the coming of the Lord!

APIs – Application Programming Interface have been around for a very long time. These days it seems you cannot walk or speak about Travel without the techies starting to talk about this API or that API.

The world now requires a different skill set. The ability to reuse and repurpose code and the explosive growth of Apps has fueled the change. But Travel remains something of an enigma. The category is usually marked by 2 seperate characteristics in Technology:

1. It is very possessive of its data and its “Intellectual Property” I would hazard that only Telecoms is more paranoid and restrictive.

2. it has the clunkiest back end systems with way too much out of tech technology. Legacy applications abound everywhere. Some technology that is so old it has been retired by their creators (many of whom are actually retired or even dead).

I can recall even as recent as a few years ago that a senior representative of a GDS was extolling the fact that to connect to their API required a monthly subscription of $1000 and a minimum one year contract before access was to be permitted to their very safe and secure system. And he thought that was a BARGAIN.

Happily today there are many APIs now freely available but the plethora of them is not helping. Most APIs are arcane in their flows and while they use common technology models and even some use standards the implementation of an API is anything but trivial. For many startups who look online and see the availability of many APIs it looks very easy.  Don’t be fooled its VERY HARD.

There are a large number of pitfalls to watch out for. Let me give some of these as an indication.

Open Travel Alliance. The good standard for APIs in the Travel Industry (I will come onto Air in a moment). They dont have a formal test harness to validate the messages and as a result many business partners have developed extensions and resulting implementations are unique to those business partners alone. The amount of reuse for the next pair of business partner (with one of the original players) becomes hard. The individual players – typically supply owners or large agregators make the smaller suppliers and aggregators suffer by having to frequently implement unique versions of the APIs.

Work flow does matter. Remember at the back of many of these APIs are steam powered mainframe systems or mainframe work-alke systems still using arcane and cryptic interactions and logic. Many airline and hotel based systems still use embedded terminal commands to achieve completeness of the dialogue. Most mainframe based solutions still use session based controls and though these are fooled into looking like they are session less – this is done through the opening of the transaction and then the closing at the end, all of which adds time to the XML pair. Result performance suffers.

Air.. oh boy where do we start. The arcane world of the GDS system doesn’t really like the way that the LCC carriers use merchandising. At present the GDS mainframe based systems are trying to fix their legacy by fooling the solution to allow a merchandising based capability. Mostly this is accomplished through a bold on ancillary server either in-house (still a work in progress) or through a recognized provider such as OpenJaw Technologies or Farelogix. NDC should fix this but today there is a big debate going on in the DDX work groups about how to address different airlines merchandising and differentiation capabilities. One of the critical problems is (yes again) workflow. Do you merchandise before the PNR is built or after. A set of tricky questions indeed.

Thus for those trying to aggregate solutions for a shopping system this can be really hard.

So as I would like to say BEWARE.

APIs APIS everywhere and not a drop to make work… easily. (With apologies to Samuel Taylor Coleridge for butchering the Ryhme of the Ancient Coder).

Here is a good link to a story you should read.



VaultPAD invests in Air Black Box

November 13, 2013


VaultPAD is making a low key investment in Air Black Box Company and will be incubating the business from their office in Manchester. Best of luck to the team there. Paul, Anita, Symeon and others providing support in Seattle, Singapore and Pune.

Mobile Web – Frustration or Paradise?

February 17, 2013


Way back in the 1990s the world’s first true global roaming phone was the Motorola Timeport. I recall one of my colleagues at the time was SO frustrated with the experience that he went home one day and got a hammer and nail and drove a stake through the heart of the errant device.

Have things improved lately?

Well according to most surveys despite the wonderful projections of how we are all going to be mobile in just a few years – there is a very strong undercurrent of dissatisfaction with Mobile based applications and the Mobile web in general.

The Mobile Experience is almost universally a compromise – and frequently not a good one at that. A 2011 Survey by Modapt, Inc. and Morrissey & Company suggested users are frustrated with Mobile Web experience. In this survey the majority of respondents were Smart Phone users. This would tend to indicate that the users were early adopters and savvy technology users. Yet their responses were not that happy.

  • While 95% of respondents reported using advanced smartphones, more than 86% found their mobile browsing experience to be either ‘okay’ or ‘frustrating’.
  • The Big 3 of user frustration are: slow downloads 40%, Difficult to navigate 40%, and Hard to find/read information 20%
  • Nearly one-half (48%) of smartphone users never make purchases via mobile

In a similar study published in August 2012 that confirmed the early results.  Keynote Competitive Research studied mobile behaviour from a much broader sample of US users. The study showed that 60% of tablet users expect to wait less than three seconds to get to a website, while 48% of PC Web users want download speeds faster than two seconds. Smartphone users also have high expectations, with 64% wanting a website to load within 4 four seconds and 82% of respondents wanting the website to load within five seconds. Even more startling is that 16% of users will not return to a site if it takes longer than six seconds to load, with 6% of users opting instead for competitor websites.

While Apps have created small specific applications – the explosive growth of the App market has created a number of cascading problems. Already we have the usual types of problems. Phantom downloads, poor search and even worse badly written Apps. As the barrier to entry is so low – almost everyone has been encouraged to enter the mobile web. This has created a cottage industry of plain awful App writers. Poor security (both with data and just in general) has created an opportunity for a new breed of hackers to steal your data. With Apple’s Passbook now a fixture in the iOS world – there are clear indications that the back door entry into your personal data from badly designed Apps (as well as Apple’s low barrier to certification processes) are going to result in security breaches. We just haven’t seen them – yet. From the Modapt study, Not surprisingly, fully one-half (50%) of smartphone users say they feel less secure about paying for something via mobile browser than desktop browser.

Another big issue is the nature of both Wifi and Cellular data based performance from the network. Wifi 802.11ac performance is now acceptable for most data applications but frequently the problem is not in the local network but in the backbone. The expectation of free wifi that most users have is now tempered with smart acces points having dual speeds. Crippled and OK. Crippled are free, OK is if you pay a premium.But we are to blame as well. Count the number of Wifi enabled devices you have. And then try and turn them on at the same time in a hotel or airport. Even a few years ago I was in a leading e-commerce player in a major market and was appalled to learn that their backbone to the web was not even a 56K circuit, yet they had hundreds of users in their environment. Cellular data performance is just plain awful for data. I have used extensively iOS, Android and Blackberry data devices using Cellular connections around the world. Frankly they all suck.

And then there is the cost. Several times in my speaking engagements I have asked the audience to honestly admit (of those who data roam) if they have ever left their data circuits on and received a large bill. go on admit it – you have too! (Oh yes and I do it frequently. Mostly because I am lazy or just forgetful.)

Consumer expectations and network performance are clearly in a state of dissonance.

Actually i am pessimistic about the network speed issue. 4G LTE the standard of choice for mobile data via cellular is not that much of a performance bump from 3G. Sadly APP and Mobile Web providers have chosen to take advantage of the speed to bulk up their offerings instead of allowing lighter applications to prevail and for the users to get real speed.

Nothing can be more frustrating for a user that to show up while data roaming and seeing a little notice that says. Download our App and get better access faster. In your head you calculate that the downloading the App will cost about $25 and so you wait in line… now even madder than you were before you saw that little sign. And its not just the consumers who are frustrated. Kayak recently abandoned its relationship with one of the current darlings of the Mobile Web. GetyourGuide. Further I have spoken to many players who have spent large amounts of money developing web applications only to be very frustrated with the results. Typical complaints are:

  • Poor adoption
  • Low usage
  • High costs

Google – with so much vested in mobile (not necessarily in mobile e-commerce (MCommerce) have some good advice for you. They even have a website to help you Go Mobile.

Mobile providers – networks and application systems need to up their game. There is just too much crap out there and that has to change.


Virtualization Comes to Mobile & Not A Moment Too Soon

February 16, 2013


Many of us are starting to doubt the hype around mobile in Travel Technology. There can be no doubt that it is critically important. However as to the level of that importance and the extent to which we should ascribe real world activity should be placed under the microscope. At the recent Future Day in Miami hosted by Farelogix to show case Distribution trends in Travel one of the presenters was Norm Rose. I have pulled one of his slides to illustrate the point. (You can see the whole presentation here on Slideshare.)Screen Shot 2013-02-16 at 12.01.55 PM

I believe that mobile is not everything. It is a part of the ecosystem but not the entire ecosystem itself. Where I do agree is in the first part of his statement but not his conclusion – namely that within 5 years the concept of mobile as a separate entity will disappear. The line is already blurred. So why do I disagree with Norm on this topic? In my view the reason is that the infrastructure to support mobile is not living up to the hype. There are many barriers to entry not least of which is cost. But don’t take my word for it. I cite the study by Localytics from 2012 which showed that only 6% of total App use was via Cellular.

But is there hope for the change and that Mobile will become as valuable (albeit a little less than what Norm is saying)? There are a few missing components and one critical one I think is about to get solved.

Virtualization has become a major buzzword in IT as the ability to adopt different entities makes management of IT resources more tolerable. The explosion of BYOD and the advance of Apple to the top of the PC tree makes Virtualization an essential part of the IT arsenal. But for mobile – there is a different set of challenges. Not least of which is the size of the screens involved. Time to learn a new term Hypervisor.

For the brief value – let me describe Hypervisor technology as a way to add virtual personalities to your mobile smartphone. Check out this article. For a person like myself who travels extensively – I suffer as I have to keep track of different and real personas for the different markets that I enter. I carry usually 3 telephones. 2 Smartphones and 1 dual SIM device. Swapping SIMs is a way of life when I am in a market. Looking at my desk today I see within eyeshot – 11 different SIMs. Virtualization can and should help to reduce this clutter and allow me to adopt different personas for work (in my case different segments) and at the same time enable me to optimize the cost of the communications device.

This will not come easy and there will be a degree of resistance particularly from the Mobile Network people. It is estimated that some time this year the number of cell phones will exceed the number of people on the planet (2011 numbers have this at 87%). Looking at the top 65 markets we can see that the heaviest concentration is Saudi Arabia where the percentage of Mobile phone users to total population is a whopping 170%. That number of subscribers could be reduced with Virtualization, so the networks are not going to be too keen to give up any revenue.

Just a little food for thought as you plan your Mobile Strategy. Just let’s say you should be a little more cautious rather than being a simple iSheep!




Some you win – some you lose – Part 2

January 2, 2013




In the some you lose column is the sad story of Lodgenet. the dream of piping media into the hotel room was a long time held belief that this was a great way to reach an upscale and valuable audience at a time when they were most susceptible to influence.

Well it took a LONG time. It was expensive and also prone to technology change.

The sales cycle was part of the problem. But the company failed miserably in my view to address the issue of the internet. So here we are nearly 20 years after the birth of the consumer web and they are still plugging away at a conventional media base.

The writing on the wall should be clear, Internet pipes are valuable but portal real estate is not that great.

On Monday the company filed for Chapter 11. It is up to its eyeballs in debt. It has little future and in my view is a dead duck. Why?

It has failed to recognize that consumers now want to consumer media in their own mode and via own tools, services and especially own devices. During the waning days of 2012 – I met with a large hotelier who operates and dominates a market segment. They have Lodgenet in some of their properties but it has little value and in some instances does not make the hotel any money.

Interestingly Colony Capital who is plunging $60 million into the company has a history of bailing out lodging based companies. Let’s wish all the best for them.

The company lost the plot on what it’s business is/was. It is to provide access to entertainment content. In that they have failed to keep pace with the market and the consumer. For that they have been well and truly spanked by the marketplace. The lesson to startups here is to remember and focus on what your core business is. And don’t EVER lose sight of that.




Some you win – some you lose – Part 1.

January 2, 2013


Two stories today point to the perils of businesses that sound good at the time but either fail to maintain their value or just lose the plot altogether. Two companies today point to a bit of both.

Firstly the success. ZipCar has been acquired for $500 million (yes that’s half a Billion) by Avis. Its a good fit for both businesses. It brings credibility to ZipCar. (Especially the poor CRV I saw being transported yesterday that had broken down 😉 But there is a clear message here for others in the “Sharing Economy”. As I wrote in TNooz today:

I think this purchase sends a clear message to those who believe that its OK to comply or not with current legislation.

One of the reasons ZipCar and Hertz on Demand both work in the “Sharing” economy is that there is a clear sense of liability and a clear value. Both of which are handled by the companies concerned. AirBnB and the accommodation players in “Sharing” are now only just waking up to the liability and legality issues. There has been frantic efforts to adjust the rules to isolate the problems they face. (If you are an AirBnB “host” you might want to read the new T&Cs VERY carefully. Ditto the new ones from Wimdu. About now those investors who have pumped loads of cash into it are probably hi5ing themselves. BUT they should be eying the door. However in my opinion this is all window dressing.

ZipCar addressed its car sharing liability early through membership and its legal status. It also lobbied hard to ensure that it could get the laws changed to allow the service. Hertz on-demand service is also a straight rental contract provided by a licensed provider. Both of them legal and both legitimate to the consumer and local and national legislation.

The path to success took ZipCar a long time. There were other competitors who tried to muscle in but in the end they are the survivors. This is a good exit for the company and the founders/investors. Please read part 2 for the downside of not keeping current. Lodgenet.


Dark Sides in 2013 – I will be watching

December 31, 2012


One new trend I want to start thinking about in 2013 is the “walk away” and “immune” consumer. We have always had these people. These are the guys who in the fruit market walk through – touch the fruit (and bruise it) and then walk out without buying anything. They are the people who when the leaflet people try to thrust a piece of advertising let it fall on the floor and don’t even acknowledge the bill pusher.

In cyberspace we dont even have to view it. We can put in software into our devices that actually remove the opportunity to even view an offer of any sort.

And this is the problem and potential for worsening the experience for the rest of us. We already know how much the Privacy abuses by the AGFA empires affects us. Facebook’s come uppance was the image of the “Hooded One” being splashed around the web – he is clearly not amused but its fair play. On a more serious note was the spat of the publication of the gun owners in NY State and the NRA’s retaliation by publishing the addresses of the journalists and publishers of the newspaper.

Are we to be subjected to shock treatment in 2013 and beyond? I think this is highly likely.

And I will be watching to find ways to make that not interfere with the rest of our experience in Online Travel. Already we are recommending to our startups and friends 2 things:

1. Have a full and proper privacy policy.

2. Put in the necessary controls to keep your customers and users safe.


More 2013 Analysis

December 29, 2012


Hop on over to the WIT website for one of my more introspective views of the world around us and how things are going to change in 2013.

You can find some of my other predictions here at the WIT website.

Happy New Year


Timothy and the VaultPAD team