Plane Conversations

Picture credit: Wealth Informatics

The race to the bottom that everyone has been watching in the airline price wars may have finally ended. All the frills have been extracted, all the expectations have been dashed, and the glamour of the jet-age has all the luster of a drive-in movie.  The bottom has been achieved.

The entire value chain, from airport taxes to hotel rooms and parking fees have happily stepped into the low-cost void, ready and willing to pick up the slack in airline prices.  The taxi from my house to Seattle Tacoma airport costs more than the airfare to San Francisco.  Three days of parking at the airport costs more than the taxi.  Off lot parking is not much better. God forbid that hunger arrives at it’s destination before you do.

Now watch the prices start slowly creeping upward as airlines come back leaner and meaner subsidized by the pensions of their workers in the post-bankruptcy glory of the deregulation act of 1978.   If American business has been accused of shortsightedness, the 25 year plan of the airline industry is pure brilliance – assuming it was a plan.

From USAToday:  

A new American Express Business Insights study finds that spending on first- and business-class airline tickets increased by 9.1% and 5.4%, respectively, in the third quarter. But on the ground, travelers spent more of their dollars — an additional 10.5% — on economy lodging vs. only 2.2% more on luxury hotel accommodations in that time.

There are likely several reasons for the shift in spending patterns.  Travelers are valuing the products on a “true value” basis.  The value of business class treatment and comfort exceeds the value of luxury accommodations.  Interesting.

The spending trend applies to traveling for business or leisure, the study indicates. ”It really speaks to the fact that (consumers are) so concerned about the airline experience that they’re willing to make the trade-off,” says Maryam Wehe, senior vice president of hospitality at Applied Predictive Technologies. 

How much would a business passenger justify to shorten the air travel portion by 50% while also eliminating two overnight stays?  At Social Flights, we can often provide a door-to-door travel experience that is 60% – 80% shorter in total time yet costs the exact same amount in dollar terms.  Guess what – that’s what Social Flights can do for you.  Social flights provides on-demand, direct, and comfortable private jet travel in a ride sharing form so that you get more travel for less money.

Steven Frischling, aka: Fish, is a globe hopping airline emerging media consultant, one of our favorite bloggers, and a trusted advisor.  He has an uncanny ability to identify relevant trends with equal ability for compiling supporting data into useful forms.  In his recent post, Steve compiled a list for the percentage of twitter communications from airlines that contained the word “sorry” (or the equivalent in the language of the airline).

See the original post for details on how he compiled the following list:

So who is the most apologetic airline?  Its not about how many times they say they are sorry, it is the percent of times they say they are sorry.

@British_Airways - 3,766 in 20,757 tweets, 18.14%

@QantasAirways - 2,185 in 14,595 tweets, 14.97%

@AmericanAir - 2,232 in 15,432 tweets, 14.46%

@SingaporeAir - 43 in 385 tweets, 11.16%

@SAS – 238 (in Norwegian 88) in 3,457 tweets, 9.43%

@SouthwestAir – 711 in 8,092 tweets, 8.78%

@Delta – 299 in 4,211 tweets, 7.10%

@AirCanada - 167 in 3,356 tweets, 4.97%

@USAirways – 80 in 2,149 tweets, 3.72%

@United - 66 in 1,897 tweets, 3.47%

@KLM – 826 in 30,563 tweets, 2.7%

@MAS – 69 in 3,740 tweets, 1.84%

@GulfAir – 32 in 1,918 tweets, 1.66%

@AirBaltic - 52 in 3,172 tweets, 1.63%

@RoyalBruneiAir – 17 in 1,348 tweets, 1.26%

Sorry by Surprise

In a recent conversation with Steve, he mentioned that airlines called him up to find out HOW he was able to compile this information.  More important in our minds is, how can the airlines not know how to compile this information?

Apologies are very important because people do respond to a personal touch, so kudos to the airlines that have strong satisfaction outreach programs.  On the other hand, apologies are an opportunity for a company to improve and management should take an opportunity to review “sorry” data.

The “insurance” approach.

Insurance is something that pays out after the failure occured.  For example, AirBnB (a home sharing service) offers an insurance payout if your home is trashed by a renter from their network. Insurance utterly fails to compensate the victim for personal, physical, and emotional losses.  Airlines most often compensate a traveler with a free ticket and nothing else – they should be looking for route cause or they may find their selves on one of Steve’s lists.

Social Flights responds with a very simple solution; our ride sharing service and community air service program.

By eliminating many of the breakdown points of the complex and overloaded hub and spoke system, Social flights can reduce the number of situations where an apology may be required. When a community can literally operate their own airline to their own schedule from their own airport, they eliminate delays due to traffic, parking, long lines, delays, connections, service fees, congestion, overnights, and a host of traveller harassment.

Go ahead and forgive, but don’t forget that there are options…

There is a war brewing within the on-line travel agency space over Google’s recent move with Google Flights and Google Hotels.

Google began positioning its new flight-finding feature at the top of general search results for airline booking information earlier this month. And its new competitors in the $110 billion online travel industry aren’t happy about the search giant crashing the party, according to a recent Wall Street Journal report.

Chasing The Market To The Bottom

Travel is hot for 2012 and beyond.  An increasing number of people say they’ll do more leisure traveling in the coming year, and even more say they’ll fly if they can find good deals in 2012. Good deals are going to be hard to find. The airlines attempted to raise prices 22 times in 2011 (and nine of those attempts were successful).

Business travel spend is expected to have grown 6.9% in 2011 compared to 2010, hitting $250.2 billion.  The forecast for 2012 is 4.3% growth in business travel spend for 2012 (or $260.9 billion).

While revenue growth in the travel sector looks promising the user experience continues to decline. Flying today is like traveling by bus with few frills and even fewer fun times.  Consider some of the recent headlines:

1. Airline Technology Leading to Customer Alienation
2. Airlines Score Lowest In Customer Satisfaction
3. 92% of Executive Unhappy With Business Travel Experiences

I could go on with an endless list but by now the picture should be obvious. Current market dynamics within air travel services is propelling a race to the bottom and Google knows this.  In other words air travel suppliers have boxed themselves into competing on price and thus air travel services have become a commodity. The meaning of the term commodity is used to describe a service for which there is demand, but which is supplied without qualitative differentiation across a market.

Google knows that search has the greatest influence over consumer choices for travel services. 93% of people who seek information on travel services use search. Consumers seek ratings and reviews, news articles, word of mouth and blog post which in the end influences their decisions. When there is little differential in a market then price becomes the initial decision factor followed by “social influences”, i.e. quality of the experience.

As a result, the present online travel bazaar is very competitive and the margins are shrinking . The  tight competition led the market to compete on price rather than experience. Google recognizes this and simply stepped in and made the shopping experience better. Google doesn’t care about the price of air service they care about providing the price to consumers seamlessly.

As fortunes are made by leveraging technology to become ever more efficient, there is yet far greater wealth to be had by unleashing the discovery of new experiences and creation of new opportunities. That is exactly why we created Social Flights.

At Social Flights, we have said many times that nothing economic truly can happen until people get together to build something. Economics is the science of incentives and no incentive is stronger in the human species than family and community.  It does not take much of a chasm of reason to see why Google is so interested in travel and travel related properties.

Travel is the keystone for change; change of ideas, change of relationship, change of intentions, and change of markets.  A banker is not interested in money – they are interested in the rate of change of money; it’s called “interest rate”.  People are not interested in the same old story, they want the story to change – this is what keeps their “interest”

Again, we find Google at the center of the social “Interest Rate” in travel.  Don’t think for a minute that Facebook “timeline” is not also a move to capture how people change and react and adapt to the conditions around them. This almost makes it pointless for people to try to react to these changes because such a reaction is, in fact, registered by the platform driving the reaction.  Is this a problem?

From http://www.tnooz.com/2011/12/12/news/google-quietly-introduces-social-travel-service-schemer/

What makes you want to go to a place to begin with? When you have chosen a place – what makes you want to explore further? The inspiration phase of leisure trip planning research has been by far the hardest for tech-based services to master.

Google has announced (and started sending out Beta invites to) a new service, known as Schemer, which attempts to compete in this gap. Effectively it is local destination ideas based on tips from your (Google+) friends, celebrities (oh yes!) and professional destination content producers (ie. travel writers).

If destination research moves to starting at Google Schemer rather than Google Search, then Google will be able to pitch flights, hotels and other travel services, without having to necessarily work within the confines of their existing web properties.

Everyone else who makes it their business to build P2P platforms such as tour guides and recommendation platforms will be cut out of the loop.  If Google can now branch away from their core search and into the social connectivity business, they can compete with their own customers.  Is this a problem?

What Google does not do, and cannot do, is actually operate a jet aircraft.  They cannot clean a hotel room or manufacture a rental car.  They cannot cook a holiday dinner or wax a snowboard. Real people need to do this.  Why is Google chasing Travel?  Google is chasing people. At the end of the day, people drive Google. Is that a problem?

Ref: http://www.tnooz.com/2011/09/01/news/ultimate-guide-and-analysis-to-tour-guide-marketplaces-on-the-web/

At Social Flights, we have said many times that nothing economic truly can happen until people get together to build something. Economics is the science of incentives and no incentive is stronger in the human species than family and community.  It does not take much of a chasm of reason to see why Google is so interested in travel and travel related properties.

Travel is the keystone for change; change of ideas, change of relationship, change of intentions, and change of markets.  A banker is not interested in money – they are interested in the rate of change of money; it’s called “interest rate”.  People are not interested in the same old story, they want the story to change – this is what keeps their “interest”

Again, we find Google at the center of the social “Interest Rate” in travel.  Don’t think for a minute that Facebook “timeline” is not also a move to capture how people change and react and adapt to the conditions around them. This almost makes it pointless for people to try to react to these changes because such a reaction is, in fact, registered by the platform driving the reaction.  Is this a problem?

From http://www.tnooz.com/2011/12/12/news/google-quietly-introduces-social-travel-service-schemer/

What makes you want to go to a place to begin with? When you have chosen a place – what makes you want to explore further? The inspiration phase of leisure trip planning research has been by far the hardest for tech-based services to master.

Google has announced (and started sending out Beta invites to) a new service, known as Schemer, which attempts to compete in this gap. Effectively it is local destination ideas based on tips from your (Google+) friends, celebrities (oh yes!) and professional destination content producers (ie. travel writers).

If destination research moves to starting at Google Schemer rather than Google Search, then Google will be able to pitch flights, hotels and other travel services, without having to necessarily work within the confines of their existing web properties.

Everyone else who makes it their business to build P2P platforms such as tour guides and recommendation platforms will be cut out of the loop.  If Google can now branch away from their core search and into the social connectivity business, they can compete with their own customers.  Is this a problem?

What Google does not do, and cannot do, is actually operate a jet aircraft.  They cannot clean a hotel room or manufacture a rental car.  They cannot cook a holiday dinner or wax a snowboard. Real people need to do this.  Why is Google chasing Travel?  Google is chasing people. At the end of the day, people drive Google. Is that a problem?

Ref: http://www.tnooz.com/2011/09/01/news/ultimate-guide-and-analysis-to-tour-guide-marketplaces-on-the-web/

Many experts estimate that only 20% of economic impact is measured in financial value – rather, most of it is measured in intangible value.  The work of visionaries in the areas of Intangible Value and the value of social networks are able to articulate value far beyond that which can be counted with money.  Suppose these principles could be applied not only to corporations, but also to communities sharing an asset such as an airport?

In the race to defend valuable assets from the fiscal cutting room floor, communities are increasingly trying to define themselves in terms of shared community assets from schools to parks museums and even airports.

From:  Worcester Telegram & Gazette – telegram.com.

State officials released a study yesterday saying that Worcester Regional Airport is a boon to the local economy, even though the airport has struggled for years and offers charter service through just one carrier.  The study released by the Department of Transportation said the airport supports 418 jobs and has an annual economic benefit to the tune of $51.4 million.

The Intangible Value Drivers include the following questions for corporations, but this also applies to any community sharing a set of assets.  From Mary Adams from her recent book Intangible Capital, she asks:

• How do you get paid (the key revenue categories on your income statement)? (strategic capital)
• What are the processes and knowledge/data that drive this revenue? (structural capital)
• What are the competencies that your people need to support this business model? (human capital)
• What are the key external relationships that make this model work? (relationship capital)

Apply these intangible principles to any community:

In Japan and Europe, high speed rail often competes with air travel for short distance routes.  While it may take 3-4 hours door-to-door to travel 300 miles in an aircraft, the high-speed train can cover the same door-to-door distance in more comfort, the same time, and for less money.  An automobile may need 6 hours to complete the same journey at a similar cost of ownership.

What many peoples fail to realize is the possibility that a community can operate their own airline. This alternative is being pioneered by Social Flights. The regionalization of air service is a new concept that allows communities to own and operate one or more aircraft maintaining control over the schedules and locations where the aircraft flies.

In the United States, a rift continues to grow between available air service and reasonable alternatives to air service. This creates a substantial burden on families; but it also creates a compound burden on the economy upon which those families depend for their livelihood.  If corporate travel is constrained, the economy as a whole is constrained.

From this article in the NY Times:

Consider the new realities of air travel. Competition is decreasing, fares are rising and airlines are adjusting routes (and charging extra fees) in ruthless calculations to extract the greatest possible revenue per mile flown.

Few people take into account the social value of air transportation.  There are very few studies that can measure the impact on a community when they are immobilized due to lack of a service that had previously been available. There is no true economic category to describe such loss except as a tax on travel.

A regressive tax is taxation that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder. Social Flights can restore this value with a regionalized public jet charter system.

Now we can add “Travel” to the list

Sales taxes that apply to essentials are generally considered to be regressive as well because expenses for food, clothing and shelter tend to make up a higher percentage of a lower income consumer’s overall budget. In this case, even though the tax may be uniform (such as 7% sales tax), lower income consumers are more affected by it because they are less able to afford it.

<via American Eagle to park planes, reduce service – Dallas Business Journal>

The small city gets the regressive travel tax

American Eagle announced that they would reduce frequency in a few select markets, they would discontinued seasonal service from D/FW to Augusta, Ga. Eagle would also discontinued service from Chicago to Tri-Cities, Tenn as well as discontinued service between Miami and Savanna, Ga., and Miami and Fort Myers, Florida.  American Eagle would also hasten the cancellation of Los Angeles-Boise, Chicago-Calgary and D/FW-Fayetteville, N.C., service from Feb. 9 to Jan. 31.

So how many people would these reduction in service decisions impact? If we just add up the populations of the smaller metropolitan area in each city pair, we can estimate economic loss of opportunity under the assumption that the larger city would have alternate options. Fair enough?

Augusta, GA: 556,877

Tri Cities, TN:  500,538

Savanna, GA: 347,611

Ft Meyers, Fl: 618,754

Boise, Id: 616,500

Calgary: 1,230,248

Fayetteville, NC:  366,383

The Creeping Costs

The total is at least 4 million who will lose one more degree of economic freedom.  4 million people will pay a regressive tax denominated in time, money, and dignity in some form or another for the benefit of stockholders in American Eagle. 4 million people will lose the economic benefit of travelers from large cities.

On closer inspection, with the exception of Calgary and Boise, all of these cities are well within 1000 miles of each other.  Each of these cities is well within 1000 miles of cities just as large as those that American Eagle is diminishing service.

While a hub and spoke model may break down economically, a regionalization strategy may work quite well.  It has been proven that people are willing to pay a premium for direct service (otherwise the airlines would not be dropping less profitable indirect service).  It is also obvious that people place a premium on their time and hassle as demonstrated by trends in online shopping, communication, and social organization.

These ingredients simple add up to a regionalization air transportation route structure enabled by online social organization tools such as Social Flights where community airlines can form around community priorities.  Social Flights can restore this value with a regionalized public jet charter system.

All of us at Social Flights extend our deepest holiday wishes to all the people who have supported us during this our Launch year.  A lot has happened since February 2011.  We thought we should report to you what has been accomplished and some new developments underway:

Over 13,000 people have joined Social Flights Traveler’s Network receiving unlimited access to the following services:    

• Over 90 Private Charter Operators have joined the Social Flights platform.
• Over 500 aircraft are available in the Social Flights Virtual Fleet.
• Social Flights website can now deliver an instant auto quote under our “Create a Flight” option.
• Social Flights Allows you to embed our quoting feature in your website
• Social Flights Developed a full suite of Community Airline services for small cities that are losing – or never had – airline service.
• Social Flights allows members to create alerts to desired locations or invitations to join a flight formation.
• Social Flights assures privacy with our internal networking features which are never released to the public domain.

Beginning next year:

• Social Flights will expand scheduled public jet charter service through the community airline program to smaller markets and even “stranded” communities.
• Social Flights will expand one-way flight program from 100 per day to over 1000 per day
• Social Flights is building out the affinity travel and social jet charter service to include colleges, Sports, concerts, conventions, events, tourism, and family travel.
• Our Elite Travel Services division will initiate international social jet charter service between the US and China as well as Latin America.

To our Partners:

Our partner network is growing to include hotels, Concierge services, tour operators, marketing firms, Facebook page owners, event managers, and economic development agencies.

Our partner network will continue to grow to serve the traffic that we now steadily deliver hassle-free to your communities.

These are the highlights off the accomplishments this year and some insider information on what to expect next year. 

If you are a traveler please invite your friends and colleagues to share a jet.  If you are a community or event organizer, please keep in mind that we are here to serve you and your community travel needs.  If you are a certified aircraft operator, let us help you increase utilization of your inventory.  If you are a hospitality or experience service provider, please let us help you build travel packages around the freedom of flight.

I often feel “Lost” as I continuously review what is happening in the air transportation industry. So many people are stranded in time and place by the anxieties, harassment, and limitation the air transportation system.  It is only getting worse as airlines push in and pull out of markets with abandon disrupting the dreams and aspirations of millions of people with the stroke of keyboard.

Or, perhaps it is the holiday season now upon us that leads me along the nostalgic trail of family and friends who I miss so dearly. Or, it could be the recession that forces me to look outside my own community to achieve economic security in these difficult times. Meanwhile; social media technology increases my exposure to like minded people, new ideas, and a bewildering array of events and opportunities – many of which I can no longer access efficiently.

The easy thing to do would be to accomodate the situation and limit my goals and aspirations to that which others serve up to me on the platter of their choice.  I could simply give up and be content with my lot in life as determined by others.  I could dedicate my talent, education, and experience to lesser parochial tasks that happen along the jungle trail.

Or, I can seek the vulnerabilities of the forces that control my ability to travel.  I can exploit weaknesses in their business model and I can find others willing to join forces to bypass those externalities altogether.

I have chosen the latter and in the process, I have met some of the smartest, engaging, and interesting people that I could have imagined.  I no longer flash back to the past – I flash forward to the future.  That is the secret ingredient to never being stranded in the choices of others.

2012 will be the tipping point for many people. I believe that communities will begin to organize around the assets that government and corporations can no longer provide.  Communities will make the choices that determine their own future, sanctity, and preservation.  Self-organization will become the fabric of the social landscape.

My job it to show people that there is no reason why they cannot run their own airline; any where and any time they choose.