Archive for the ‘Travel Agents’ Category:
The Travel Market Races To The Bottom
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:
- Airline Technology Leading to Customer Alienation
- Airlines Score Lowest In Customer Satisfaction
- 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.
Why Google Is Chasing Travel
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?
Why Google Is Chasing Travel
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?
Is There An Alternative To Commercial Airlines?
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.
Many airlines will continue shrinking overall capacity and trimming domestic routes in 2012, and the Chapter 11 bankruptcy filing of AMR, the parent company of American Airlines, will merely exacerbate the situation. In 2012, American will “ground some planes and resize our network,” the company’s chief executive, Thomas W. Horton, recently told employees.
In addition, John P. Heimlich, the chief economist of the trade group Airlines for America, said, “Capacity reduction is one of the steps the industry is taking to preserve profitability.”
Several articles are now popping up comparing the alternatives that are available. An overnight Amtrak in a cozy sleeper car can cost the same for some routes as the aircraft - unfortunately, Amtrak is not universally connected to very many routes. High speed rail is still on the drawing boards but still many years away with fewer stops and likely connecting major hubs anyway. The other alternative is to simply drive; with the ground travel and delays incurred t hub airports, a commercial flight less than 750 miles can have an door-to-door average speed of around 70 miles per hour.
Michael Boyd, the president of the consulting company Boyd Group International, sums up the phenomenon succinctly. “The cost of flying airplanes across the sky has eclipsed the ability to support it at many communities,” he said in a recent forecast. In 2012, he predicts, airlines will accelerate the mothballing of smaller 50-seat jets, the workhorses for connecting service between many midsize airports, and even some big ones.
Social Flights can provide the knowledge, expertise, personnel, certification, and equipment to maintain and operate an aircraft fleet, as well as the social media backbone that allows people to self-organize around the aircraft asset.
As such, the community can create direct flights bypassing hubs, they can schedule flights for their corporations and shuttle their executives to new business markets for a price that is hugely favorable to any existing alternative; which is often nothing.
Charting The Course For 2012
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.
KLM Social Airlines
Few people get on a commercial airplane to enjoy the fine food, friendly conversation and sensational view – but that may change as KLM continues to innovate in social media. Some may remember that KLM was the first to provide on-demand service from Europe to Miami booked entirely through social media.
This time, KLM is banking on the fact that people who have both an origin city and a destination city in common, would have other things in common as well. KLM observes that people share information with each other so freely on social media- so maybe they’ll share information with each other on “Social Airlines”.
Will something get lost in the translation between the virtual and the reality? Fortunately, Anne van den Berg was kind enough to provide Social Flights with a translation of her Dutch language blog, Editor Anne Daily:
You always have to wait and see who will sit next to you on an airplane. A crying kid or a smelly man, it is not always fun. Soon, this can be in the past. The Dutch airline company KLM will be offering seating suggestions based on someone’s Twitter or Facebook account. The goal, says an executive from KLM, is letting, mainly business, passengers network. I am very curious how this will work.
Well, we are asking the same questions at Social Flights. In fact we are attempting to fill small aircraft on direct flights based on a similar assumption that people of like interests would choose to share an airplane together. While the KLM starts with a full plane and sorts people by interests, Social Flights hopes to go one step further and use such data to “kickstart” scheduled “flash Charter Jet” service. So while KLM sees an important branding advantage, Social Flights sees and entirely new paradigm for air transportation – public Charter Jets.
Anne van den Berg continues with the following analysis:
- What kind of customers are you serving? I wonder, what customer are waiting for this service? Personally, I like having some conversations with my neighbour in an airplane, but, mainly when I return from a trip, I want to sleep. Nó contact. If someone will come and sit next to me with the expectation of discussing the state of the world in a highly intellectual manner, it is very probable he will be deceived.
- And what about privacy? I expect that customers will have to do an opt-in, but do you want to give everybody insight in who you are? If you put your Twitter information out there, sure that is public already, but Facebook? That is mainly meant for family and friends (although some people will stretch that definition).
KLM has since disclosed in this CNN article that mutual acceptance to use the social seating tool will be required. KLM was quick to note that the intention is not to create a dating game and they did not disclose if they would charge an extra fee for the service. Further, they they did mention adding any amenities in support of the friendship event.
This leaves me wondering what the implications of being “unfriended” in virtual space and reality space at the edge of physical space. In any case, Social Flights will be watching KLM developments actively. Thanks Anne for the tip and translation on this story – let’s share a flight sometime.
Value Overcomes Price
Over the years we have seen more and more travel aggregators come into the online marketplace. Now you can go to dozens of different websites to find the lowest possible price for your next trip. As an industry, we have subsequently seen prices going lower as the airlines fight to the bottom to fight for market share. This does not drive down the cost of operation for flying the aircraft, it just lowers the consumer perception of what travel is worth.
(via http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/11/29/prweb8985424.DTL) Superfly, a technology startup at the forefront of travel innovation, today announced its new smart flight search engine. Superfly’s engine is a unique online platform that personalizes flight search by adding an individual’s data — frequent flyer miles, elite statuses, rewards programs and individual preferences — into the decision-making process of choosing a flight. For the first time, travelers can fully take advantage of their frequent flyer miles and rewards programs when booking travel online.
“Today’s mainstream flight search websites completely ignore the impact of consumer data,” said Jonathan Meiri, CEO of Superfly. “This is a defining issue for the future of online travel services. Superfly is a secure tool that not only has access to all the flights in the world, it also combines that information with personal travel preferences in order to help consumers figure out which flight is right for them.”
Google’s recent acquisition of ITA Software has marked the dawn of a new age in online travel. Many industry players are now using the same travel data, essentially turning flight search into a commodity. This will most likely unleash a wave of innovation as incumbents look to differentiate their services.
“Superfly is an incredible tool that will bring great value to travelers, particularly frequent flyers,” said Kenneth Esterow, an advisor of Superfly and former CEO of GTA by Travelport. “It is particularly useful to heavy users and corporate travelers.”
Superfly enables consumers to maximize the value of their miles and make better travel decisions. Rather than focusing solely on presenting the cheapest flight, Superfly helps individual consumers identify the options with the greatest personal value. Travelers can use Superfly’s personal travel insights to better manage their rewards programs and cash-in on the opportunities they present.
When all you focus on when you are looking for a service is price, everyone will lose. Value is a much more sustainable model and can lead to more growth and innovation. All of us here at Social Flights support the efforts of companies like Superfly and look forward to leading the charge with them into an innovative and prosperous age of travel.
The Personal Light Jet
National Public Radio recently aired 2 very interesting segments on the airline industry. The first segment cited companies leaving small cities because of poor air transportation service. The second segment cited an interesting statistic; all of the airlines that existed before the deregulation act of 1978 have gone bankrupt.
But wait, wasn’t airline deregulation supposed to be good for the airlines? Wasn’t it supposed to spawn innovation and drive economies of scale? Wasn’t it supposed to increase choices for the airline passenger?
Well, at least one of these impacts is true; deregulation spawned innovation – although probably not the way it was predicted in 1978. Today, new technologies are appearing everywhere from new forms of social organization to faster and smarter aircraft systems. This article features a very interesting aircraft sector called the personal sport jet. While I do not know enough about their actual business model, it would appear that they are aiming where the airlines and major manufacturers simply cannot reach.
With an operating cost of $400 per hour instead of $1200-$2000 per hour in this class, the excel sportjet can deliver a 2 hour jet flight performance in a “regionalization” market. Social media trends show us that people are connected in shorter distances and far more diverse locations than the hub and spoke system can accomodate.
This aircraft is small, lightweight, and fast. It uses a single jet engine and flies at a lower altitude reducing pressurization forces and associated cost. The Sport Jet II carries 4 people and employs extensive use of composites in addition to simplified pilot qualification requirements.
Clayton Christensen’s book “The Innovator’s Dilemma” cites numerous now classic examples of how industries are threatened by simple upstarts that deliver what the customer wants at a price they can afford without the complexity and “over-performance” burden that mainstream players evolve into.
While the aviation business is very complicated, it is truly a pleasure to witness new products and innovations that come to market under the radar of the big players. We hope that they grow to have an impact on the industry. After all, that is what Social Flights is all about.
Bravo Sport Jet II, Bravo.