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Posts tagged ‘airlines’

Did I just enter the Twilight Zone?

October 19, 2014

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Rod Serling the writer and creator of that iconic TV show used to start each of his episodes of the famous TV show with a little monologue. Here is one:

“This highway leads to the shadowy tip of reality: you’re on a through route to the land of the different, the bizarre, the unexplainable…Go as far as you like on this road. Its limits are only those of mind itself. Ladies and Gentlemen, you’re entering the wondrous dimension of imagination. Next stop….The Twilight Zone.”

In San Diego this week at the IATA World Passenger Symposium. I really felt that I had entered this bizarre place. After directly witnessing (and feeling) the GDS companies ire, obfuscation and direct attacks on NDC for years and the Open Axis Group before that, it seemed as if I had stumbled on the campfire round which everyone was singing Kumbaya. The very companies that were warning of the dire consequences of NDC, paying high (and low powered) consultants, lobbyists and others to kill NDC even before it was born now embrace it with open arms.

Well not quite – picking through the well rehearsed lines and statements was a large bit of fudge. But frankly I don’t care how they got here. THEY ARE HERE. Yes ladies and gentlemen the bizarre and the unexplained has happened. The GDSs now believe that NDC is the best thing since sliced bread.

However, not so fast. We do not appear to be going into the land of the “different” quite yet. And this is my big concern. NDC is becoming shrouded in legacy processes and structures. This is where we could see the effort go off the rails. In my view the initiative is at a quite precarious state. There is a significant danger of the industry not taking advantage of the opportunity that has been afforded to it with the adoption of NDC (the communication standard not the panacea).

NDC is not new. XML is not new. Dynamic pricing is not new. Ancillaries are not new. But that does not mean that NDC cannot  bring change and positive benefit to all levels and potentially ALL stakeholders in the Travel eco-system. The problem has to be now that adoption will require rethinking processes and long held assumptions about Airline Product Distribution.

The marketplace is dividing into three distinct groups.

# The early adopters and market movers. They are clearly out front and trying to distance themselves from the laggards.
# The great middle group who are confused.
# The sheep – those who must wait till its all safe and there is a clear model to follow

The first group is clear. There are airlines and IATA who are doing hard at work and have clear direction to adopt NDC not just in their indirect distribution but also they see there is value in the direct distribution area as well.. Companies like Farelogix, OpenJaw and Datalex who are IT providers are clearly in. And now it would appear that the GDSs are here too.

The second group is confused and the vast majority of players. Most Travel Agencies have no idea what it means because their primary source of knowledge has been the GDSs. Now that the GDSs have moved towards adoption – they need to spread the gospel to the Agency Community.This group is going to be thirsty for knowledge and will expect a high degree of coaching to get to the next level – adoption – of NDC.

The third group is waiting and waiting in finding a model that they can understand and adopt so they will wait until this process is well under way. The concern I have is that by waiting and hoping that it will go away – they will have a significant challenge to incorporating the new processes of NDC into their organization.

For those of us in technology, what we are sensing is that the users both internal airline and travel agency must step up their game. The agent community over the past decade did not go through the same extensive re-purposing of  their roles and corresponding training that the airline staffers did. Can they? Will they? Every Agency now needs to have a technology person on staff or available to bring different content into the displays. The GDSs have clearly stated they cannot provide ALL content ALL ways ALL the time?

Where to from here?

The complete switch over by the GDSs as laid out during IATA’s WPS sessions must be turned into action. The GDSs must bring their customers into the 21st century. This includes extensive new products for the agency community and corresponding training and education.

So to end as Rod Serling would do allow me to end ……

On the road to sustained acquiescence and stupor, the GDSs didn’t quite make it. Something happened that changed their lives and those of all around them. The signposts were ignored about the end of the road. And there they found themselves and a different road. A detour through the Twilight Zone.

Rod Serling

How to Sell An Airline Seat (Technically)

October 11, 2014

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Ah – let us consider the humble airline seat.

Many start-ups question me on the complexity of Travel based applications. For many there is a quizzical tone in their voices as they struggle to understand why Travel is so hard, so complex and has so many variations. Let’s look at one of the most fundamental of systems that Travel has to interact with: the airline reservation system or more correctly PSS.

If you must go and look this up in Wikipedia – you will find unfortunately a fair amount of incorrect and misleading information. Sadly there is a lot of horse output spoken about the PSS systems. But sorting through the effluent – here are some salient things to know from a Technical perspective.

  • PSS system are based on one way asynchronous “fire and forget” type messaging. A core concept is that the transaction is assumed to be successful unless you get a rejection message.
  • Most availability functions are now cached at some level.
  • The construction of an available price is comprised of a Fare, Rules and appropriate availability.
  • Each state is out of date as soon as served up.
  • Only GDSs have guaranteed results. For which the airlines pay a hefty fee.
  • All XML type messages are never the full answer. They are ALWAYS a subset.
  • A human can always find an alternative result (and in most cases at a lower price).
  • Do not forget the add-ons for example seats and bags
  • Consider data privacy
  • Consider financial fulfilment
  • Optimization is the best you can ever hope for.

The current standard for message interaction for transactions is the Open Travel Alliance (circa 2011 b) is probably the most representative of what is in the market. One can find various flavours of this floating around the web. However this is being replaced with the NDC standard. Current ratified version is IATA’s NDC 1.0 You can download the Schema here. This is about to have a baby,  (which may be a sister or child – we haven’t quite figured that out yet.)

In looking at how this can be interpreted – there are a number further cautions I will provide.

  • There is no universal source of airline supply. Both technically and commercially there is no ubiquity of service delivery.
  • Make sure you have your own customer and transaction file system. Do not rely on the host to provide that service
  • Be prepared for managing a constantly evolving set of services. Be prepared for constant change.
  • Make sure you have considered the operational aspects. IE what to do if something goes wrong. Who will fix it? Don’t assume the airlines will help you out here.
  • Selling on the web requires some form of commercial license. This means that selling airline tickets (if that is what you want) requires approval and there are many local and international rules that govern this.
  • Whatever time-frame you think of – Add 6 months.

And where to go if it goes pear shaped?

This is where it gets ugly. Sadly there are few very good places to go for advice. I can offer some of this directly. And will answer the first question. But after that finding a reliable partner who truly understands the vast complexity of airline system interaction will require a lot of patience. There is no master class on this.

I wish you the best of luck on your quest. This is not for the feint of heart.

Cheers

Timothy

The End of Competition – a Takeaway from CAPA Airlines in Transition Event

April 13, 2014

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if you are a startup airline – you face many challenges. The sheer enormity of the regulatory, commercial, legal, operations and technical challenges. Does a startup really have a chance to get established? Judging from the sessions over 2 days in Ireland at the CAPA Spring AIT – Airlines in Transition Conference, the answer has to be negative. 

What we see today is the homogenization of the marketplace.  Last year’s event saw the emergence of the financial metric ROCI – return on Capital Invested. This year, that was no longer new but assumed. For new entrant carriers there is a significant change from the growth of LCCs in the last 1990s and 2000s which has given way to profitable but “too big to fail” large airline groups. IAG’s Willie Walsh and the regulators both were speaking about market efficiency and preventing irrational competition into the marketplace. How great it was that the marketplace was now a rational and safe place for the market forces to work effectively. However I believe that this is not a good trend.

Why?

Good question – the chief reason is that the legacy carriers achieved 3 major changes over the past 10 years.

  1. Mergers and acquisitions have radically changed the landscape of the airline marketplace.
  2. FSC Airlines persuaded the regulators to allow them to engage in legal closed relationships that normally would not have been permitted under conventional anti-Trust legislation.
  3. The LCCs showed FSC/Legacy carriers how to make money through unbundling and merchandising

These changes have dramatically altered the landscape and airline competition has been replaced by a closed marketplace to all but the biggest carriers. The significant reduction in competition in both LCC and FSC sectors is hurting the consumer. Slower growth rates, higher prices are obviously linked.

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The regulators who spoke at the conference and the larger carriers such as IAG were patting themselves on the back at how well the marketplace works. However there was little attention paid to the two critical areas of consumer competition and the economic impact of the reduction in competition. There should be strong concern that the airlines are being protected by the regulators and that protection should be removed.

In my view – the continuing anti-trust support for the various Joint Ventures such as A++, DL/AF and BA+AA does not pass the test of consumer value. It should be ended. However the opportunity for new carriers to enter the marketplace has barriers never before seen. A removal of the regulatory protection  and the banning of the Joint Ventures will significantly increase competition across the Atlantic. Further loosening of the ownership rules (but not control) should permit the European and US carriers to compete against the Gulf and Asian airlines more fairly and directly benefit the consumer.

The end of competition is evidenced by the sheer size and reach of the European conglomerates. That IAG is highly profitable yet AF/KL and LH Group are struggling is an example not of a fair marketplace but a dissonance of outmoded and inflexible regulation and poor labour management. 

This is a great industry. It has the ability to benefit the consumer significantly. The regulatory framework does need to be reformed. That reformation should be consumer focused not supply side focused.

Food for thought.

 

The Coming Pilot Crisis – Impact To Be Felt World Wide

November 20, 2012

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For many people – the guy upfront is assumed to be competent and trustworthy. Those millions who fly on the major airlines just assume he is a well paid and comfortable chap grey hair and years of experience. You buy a ticket from the big airline because it makes you feel safe. Stable, solid….

The truth is unfortunately not quite so clear and getting murky.

As the recent Colgan Airlines operating a Continental Express flight crash showed there are issues with contract flying. All the people on that flight bought a ticket thinking it was operated as a CO flight number (and their partners/codeshare airlines). The fall out has been huge.

First lets deal with the pressures on the demand for pilots.

The FAA has now changed the rules for flying which slows the intake of new pilots and sets higher standards for rest periods which means that an airline’s cost for pilots has to go up with different work rules and more pilots required. Pilot Fatigue is a real problem. (To download a report by the European Cockpit Association click the link – it makes somber reading). Over 4 years ago the FAA enacted a rule that raised the bar for pilots forced retirement in the USA from 60 to 65. Check out Chris Cooke a senior pilot at a USA based airline and his article in Executive Travel Magazine published by American Express. There is a huge bulge of senior captains who are going to retire in the coming year – starting next month!

While the US Airline industry has actually been reducing its requirements for pilots – it cannot accommodate the now large demand for qualified mainline fleet aircraft. A general trend is a slimmed down air force which has been a big source of pilots. The now bigger source of pilots is coming from the commuter carriers who graduate from the smaller RJ – Regional Jets to mainline fleets. BUT the US airlines have been shedding the smaller 50 seater aircraft. with more than 2000 of them leaving the fleets in less than 4 years. As each aircraft needs about 4-5 crews that is a significant number of pilots. Probably this could be accommodated if the US market existed in a vacuum. It doesn’t. While the US actual capacity has been falling for 4 years (source Airbus) the rest of the world has continued to grow indeed the centre of Aviation is passing from North America and Europe to the areas in the GCC, Asia Pacific and Latin America.

Even the use of contract personnel is not constrained to foreign airlines. A reminder that Codeshare airlines might have contract pilots and not be what you think it might be is palpable. I list for example a Delta flight i recently booked. Operated by Air France it said… actually the MAN-CDG flight was operated by FlyBE. Not quite what I expected when I bought the ticket.

The Impact?

Amongst other things is a large number of contract pilots. Other issues rise such as the lack of job security which all contribute to a change in the profile of a pilot. Its not that nice cushy job that it once was. Indeed the UK’s pilots are raiding the profile of the issue of both Ryanair and Easyjet’s use of contract pilots. Use of Contract personnel is not new but it is an increasing issue. Perhaps one of the most noticeable was the Etihad/Airbus accident in Toulouse in 2007.

There are many different places where the impact can be felt. The increased use of contract staff has been raised by Unions (fearful of their jobs) but also safety experts as it increases the requirements for oversight on the regulatory compliance teams. Something that doesn’t quite make the national budgets because its not sexy.

So just have a thought about the guy upfront next time you fly. Is he who you think he is?

Words to the wise. Be safe out there.

 

Cheers

image courtesy of ABC