Today, travel agents,  the human kind,  are either corporate agents or the entrepreneurial types who are scraping as fast as they can to make a buck, euro or quid.

Frankly, in the ever urgent world of needing to make money from the shrinking pie, they have to be increasingly efficient and don’t do things unless it contributes to the bottom line.

Agents are also very dependent on their GDSs, acknowledge the frailty of the system but, in the case of European agents at least, the extent of the content is barely adequate to provide ubiquitous service.

However, the increasing complexity in travel without the corresponding increases in net revenue makes for a hard life – things aren’t as much fun any more and perhaps agents have an inbuilt resistance to change.

At a recent Web In Travel conference in Singapore, Gerry Samuels of Mobile Travel Technologies, told a story of how when he was asked to develop an agent mobile solution, he developed a couple of options but agents chose the familiar green screen lookalike.

And how does the consumer perceive the agent?

To gauge this, I typed “why travel agents suck” into Google and turned up a pretty significant cache of results but put it in quotes and the results drop to nine.

Contrast this with the search term “why travel agents still exist” and you get 1970 results  - good news or false hope?

Part of the problem is they are choosing something familiar and don’t know what will work in future.

They tend to be mired in process and the here and now, not that future state that mobile is representative of.

And, as the Boomers leave the market, older agents are retiring and dying off, imagine the new workforce coming in who won’t know how to work with green screens (or even blue ones for that matter!).

Like many businesses which struggle with the evolution of technology, the travel industry has tried very hard to make mobile a cornerstone of the next generation platforms.

But. are these solutions just pursuing technology for its own sake?

Perhaps a critical question is how are we making it interesting for young people – the internet generation – to work for the industry? Can we entice them in? Or are there just too many older generations trying to migrate their business instead of allowing creation of new business?

Sadly, the position I would argue is that intermediaries didn’t realise the importance of mobile and delegated responsibility (as they have for many years) to the suppliers and now find themselves out of the loop.

Indeed by ignoring mobile agents were bypassed by the suppliers and providers who found they could go direct to the consumer and that an agent in the loop didn’t make a whole lot of sense.

There is no shortage of applications for users of travel in the mobile space, but what about the number of b2b applications for the intermediary community? Very few are operating today.

Mobile in travel has a broader meaning than just fully functioning “agent in a box” services.

Most will agree that the better apps tend to do one thing really well and travel with all its complexity is not easy to do well.

And perhaps that is the crux of this story – agents left high and dry by mobile are a victim of the evolution of travel.

NB: Image via Shutterstock

To explain this, I have created an infographic to demonstrate why air results are displayed in such seemingly different ways. The pyramid is not built to scale, but shows the hierarchical level of issues for air results.

The top two tiers are what can be accommodated via online outlets, including OTAs, airlines and metasearch sites. The next four tiers are all possible results that travel agents and airlines can work on and see.

The bottom one… well that’s just plain bad. So now you know.

[Click for larger image]:

In particular, airline passenger service system (PSS) contracts and GDS contracts, which generally tend to be long term agreements, are two examples where there will be a change of thinking.

Vendors and users, indeed all stakeholders, will need to consider the ramfications of such shifts. So what should customers with large scale IT systems be considering?

The current mainframe-based technology platforms such as PSS and GDS systems are looking a little long in the tooth. That doesn’t make them necessarily bad but it does create challenges.

So let’s start with a positive perspective.

A long term IT contract results in stability for both the vendor who is assured a long term revenue stream and for the customer who is assured support and stability.

There is a lot of discussion, of course, around the longevity of the GDS-based systems. Yet the user community, particularly travel agents who know and use them for screen based interaction, love them, although it is worth noting that the main GDSs are all pushing non-green screen, Windows-style interfaces now.

But for some agents the concept of giving up the beloved green screen has long been regarded as a no-no. That mainframe-based systems are mature and reliable in a very complex world of travel is a very good thing.

However, long term contracts need to have a degree of future-proofing built in. For a core architecture that has changed little since it was first released from IBM’s labs in the 1950s, there are a large number of contracts that will be expiring over the next few years, with suppliers who will presumably be asking their distribution partners what is likely to change, or if it needs to.

What about the PSS side of the house. Each supplier and in particular each airline likes to think they are different. All distribution systems face a difficult challenge: How to develop technology for broad based adoption for what could easily be described as a commodity (ie an airline seat), versus providing differentiated product based on unbundled pricing and different product attributes.

Until now, a PSS contract has generally been a ten-year partnership. So airline technology buyers face a hard challenge of choosing the right system that will indeed last that long.

In the past this did not matter as the air based ecosystem was stable and reliable and, to a large extent, homogenous. Is that still the case?

The answer is “no” on many levels. For example, if the current erosion of GDS-based market share is to continue for the next, say 10 years, then at the end of the current contract the GDSs will have been reduced to serving essentially only 20% of airline distribution channels.

We spend a lot of time advising on systems architecture and helping our clients to make smart decisions on their technology platforms. In the last few years there have been three trends that have driven our thinking for these big decisions:

• The impact of social and collaborative interaction.
• The move for a single primary screen (PC-based) to a multiple screens – full screen TV, Lean forward PC, portable light weight light interaction, tablet and untethered small screen pocket based devices.
• The arrival of big data, cloud-based infrastructure which is dirt cheap and, for once, within the grasp of any programmer.

With the convergence and sheer magnitude of these changes, safe decisions don’t seem to be particularly safe anymore.

And this is exactly the advice we give. Understanding the impact requires unconventional thinking. Fast forward to 2022, when your PSS contract will be expiring, what will you be seeing?

For the first time since the dawn of the PC age, core travel distribution is experiencing a radical change. Unlike the PC era, and the internet era which followed some ten years later, there are now these three incredibly powerful forces at work.

Further we are no longer dealing with the Pax Microsoft that kept us all humming to the same tune – we now have three opposing forces who are fighting for the control of the hearts and minds of the consumers.

The Facebook/Apple/Google wars are spilling into every facet of our day to day existence. Each one of these has an avowed interest in disrupting and changing the way we think, collaborate, search, shop, buy, experience and then tell our travel stories.

And this is not bad, actually far from it – it’s great, providing we can take advantage of these tools and services.

We know all this why will affect us but why now? We are experiencing a generational change whereby the Baby Boomers are leaving the marketplace and will no longer define travel in its many facets shapes and forms.

The newcomers to the market – the Gen Y/Millenials – are the ones who will drive this change.

It is also worth pondering the idea of the gatekeeper again. The anti-Google alliance, Fairsearch, has argued arguing that Google has gone from gateway to gatekeeper. And I believe this is right – but for me the model does not stop there.

Many former gateway providers have decided to do this, Google in travel is just replicating what so many have done before.

What I do believe is that the so-called IT Spring we are now starting to experience will change all of that and sweep away anyone who purports to be or acts like a gatekeeper.

And this is the key question, as a consumer of travel IT products and services, which you have to ask yourself. Is your IT provider truly your business partner or is he out to control you and be a constraining gatekeeper to your business?

As you start your RFP process and review your contracts, think about that.

Furthermore, citing some internal research, an official from the omnipresent social network went on to show how the American general public actually gets a pretty big high from the process of planning travel, and that it lasts longer than the act of travelling itself.

But does this happiness extend to when consumers are searching for flights?

Some cearly do not think so. A recent article in the Detroit Free Press pointed out that airfares were not fair, and that searching for appropriate flights and fares isn’t fun.

So perhaps it’s time to think through the process from the consumer’s perspective. In some respects, air search is still a V1.0 product. After 15+ years of being able to search for air on the internet, it really should be a heck of a lot better than it is.

Myth 1 – Air search is simple and easy

Searching for flights can be a daunting task for internet users. Many providers of internet travel search products often forget that a leisure consumer may only be travelling once or twice a year.

Invariably, it is difficult to find prices and routes, and there is a bewildering array of options. To the traveler, the differences between a low cost carrier and legacy airlines mean nothing.

The intersection of fares, availability, rules, schedules and now ancillary services and unbundled products (not to mention taxes and charges) is also very difficult to understand and compare.

Users can spend hours looking at different possible options and sites. Sorting them all and finding the appropriate flight is painful, and no one really helps the user in this process. Each of the websites offering assistance – and this applies to all – from direct airline sites, OTAs and meta search players offer a bewildering array of options.

There is no definitive single “right” answer that a user can trust. Mapping the possible right answers shows that inside an airline there can be two (sometimes even as many) “right” answers as there are places searched.

Air search is only one part of the need from Internet Users in travel. They want/need to have global information point to point. While they may know a lot about their city of departure there is very little they know about their city arrival, with timing to get to the end destination points.

And the game is complicated as the low cost carriers can land far away from city center or a connection can be from another airport (and some airports are really confusing). Try changing terminals for example in Dallas, or Madrid?

Changing planes in JFK is never a pleasant experience and can take literally hours. And where is all this information? Is it easy and simply explained?

Hardly a happy experience. Which is why inextricably tied to myth #2…

Myth 2 – It doesn’t matter where a user searches (the results are the same)

As a user, I look on metasearch sites, but also direct on airlines sites, and on OTAs. In mainland Europe, such as France and Germany for example, users also need to compare timing and rates between flights and the hi-speed rail eg. France’s TGV and Deutsche Bahn’s ICE.

So, as noted in Myth 1 above, different search sources return different results. There are now four basic types of results:

• Airline results from the internal airline reservation system (eg. HP Shares)
• Cached results created by a caching engine (eg. ITA’s QPX engine)
• GDS based results calculated either by a GDS based cache or by slamming the GDS system multiple times (literally on occasions hundreds) to build a result set that then are discarded
• Scraped results, in other words, results generated by someone else’s system copied and pasted into the serving site’s results.

The results, regardless of search site, are inconsistent and generate little trust for the user. Why are they different?

This leads us to the next myth…

Myth 3 – Air search works

Frankly, it doesn’t. For something that looks like a commodity product, an airline seat is complicated. Here is a smattering of the differences:

The brand.com website, often powered by ITA (such as American Airlines or Alaska Airlines) generates a result, but this is no longer dynamic. Meanwhile, the internal price from the call centre agent is dynamic and can be different.

Why? Because it has a different engine offering the price.

Outside airline-brand.com, we have OTAs that are powered by different cache-based engines, including ITA (powering Orbitz), and Expedia BFS, originally co-developed with Worldspan and now using Sabre-based data.

We have metasearch engines that rely on some general sources such as ITA or some that are scraping the screen results from each website (and let’s not forget there are some combinations of this).

This is ugly. The core problem here is that the airline supply side wants to assess the requestor before providing an answer – but the user wants speed.

The airlines have delegated to the GDSs and others the right to legally price their product. Thus there are many possible right answers and different players calculate the “right answers” differently.

Bottom line, there is no single definitive source for air search results, so nothing works particularly well. So could a user develop trust in this environment? And so who could you trust, this leads us to Myth #4

Myth 4 – Google Search is trustworthy and is a good model for air search

The magic wand theory. Google waves a stick and magically the answer appears, and it’s Google so it must be accurate. Most users appreciate Google Instant for its fast speed, but users don’t think too much about whether those products improve the quality of search results.

As we have seen, Google Flight search is blazingly fast but is it accurate? The first few weeks so far have shown the results to be incomplete. As of yet we are still seeing a similar metaphor to existing search sites – it adds a few bells and whistles but it’s not really doing anything fundamentally different, new or better.

As Google admitted at launch, Flight Search doesn’t include all US domestic airlines, or any international routes, so is not a great model for complete or useful search results in its current guise. Today, Google is also only handing off to the airlines. Will they only do that in the future? Well this leads us to Myth #5.

Myth 5 – The hand-off from search to booking is seamless and never fails

There are two elements to this issue. Form one is the external handoff from the search (metasearch such as Kayak and Skyscanner or a deal site) onto an OTA or an airline site in the workflow.

The second form of handoff is from an internal (ie. within site) search to the booking function. With different logic and different interpretations of the rules depending on the site or between sites, users get different answers.

Furthermore, the state of the answer matters. With a fundamentally dynamic situation regarding state of availability and rates, rules, etc, changes to availability and rate can occur quickly.

The number of instances when a result from a metasearch to the host site fails is quite frequent. There are no statistics that have been published on the subject but having seen several large system results I can assure you the number of failures is significant.

In my own case, I do a lot of searches and see the failures all too frequently. I am sure many others have seen this too. So by now perhaps you are ready for the last myth #6…

Myth 6: Flight search is merely a user interface problem?

Hipmunk, for example, has blazed a new trail by showing a different view of the flight search results. True, it’s very cool, but does it solve the core problems and does it provide more trust?

Passengers have many thousands of possible combinations to contend with, and expressing those could be interpreted as a user interface problem, but it’s far more complex than just the UI.

Data presentation is but one part of the situation, because air search is built on logic, data and compromise, based on rules that are not designed for implementation by a machine.

In fare rules (remember just, one component in the results) there are four major components – fare levels (prices, charges and taxes), rules (usually the 42 “mini” rule categories, some complex, some simple) routings eligible for the fare, and finally a thing called footnotes which are essentially rules one cannot express in simple “codifiable” statements.

So there you have it. Myths and ugly realities. The industry needs to do better to provide reliable and trust worthy results to the consumer. That, my friends, is a great challenge to have.

This caused me to think in particular about how technology is deployed on aircraft. Those of us who travel frequently are more than familiar with the rules about controlling our electronic devices during flight.

But what about the folk up at the front, at the sharp end? What do they use and how do they use it?

Pilots have a lot of information at their disposal – charts and maps, a personal log book and those of the aircraft being flown.

They also have to deal with a vast quantity of manuals. An airline pilot often carries flight manuals weighing around 40 pounds, all contained in a flight bag.

The FAA (US Government Regulatory Authority) and other regulatory bodies around the world have started to realize that paper has to eventually be replaced with electronic devices.

[Official notifications from the FAA here]

These days the concept of an Electronic Flight Bag is well understood by pilots in all forms of aviation – military, commercial and civil non-commercial.

The idea of putting all that paper away and using a small computer is attractive in the confines of a small space such as an aircraft cockpit.

So, enter the humble Apple iPad.

It’s a perfect device for the replacement of paper. And now the FAA is approving its use in airline cockpits, with Alaska Airlines the first to deploy these device.

Now American Airlines and other carriers are rolling out thousands of iPads as replacements for the vast quantities of paper that comprise a pilots flight bag contents.

And its not just civilian pilots. Military applications are becoming quite interesting, too, with the US Marine Corps also getting involved.

Perhaps slightly creepy is that the US military is thinking of using iPads to control its infamous Drones. Given what this hardware is often used for, this a bit scary. But check out the video.

Nevertheless, safety is a big concern for any airline looking to switch paper for pixels. And there is, understandably, rigorous testing before deployment is authorized.

There is also the question of security. With most aircraft now “fly-by-wire” (controlled by electronics and software, rather than cables and levers) there are issues that still concern many within the industry.

These relate to technical malfunctions, malicious breaches of software and controls, costs, etc. Here is a link to a series of papers from American Airlines, Airbus and others – albeit from 2009 – which illustrate some of the issues.

Interestingly, the Boeing 787, Airbus A380 and the next generation of aircraft will have connectivity built in rather than the bolt-on modifications currently being undertaken.

Nevertheless, the replacement of paper and the use of an advanced devices are changing how we manage our everyday lives, with the control of aircraft no different.

And now the humble iPad is being deployed for a large number of different activities – as well as managing the airplanes we travel in every day.

Interestingly, I wonder how those sexy pilots and stewardesses of yesteryear, such as those featured (or parodied?) in new TV show Pan Am (Sorry non-US viewers cant see the show yet) would have thought about this technology.

I’m iPad – Fly me.

The set of regulations, if approved, will have a wide ranging effect across travel technology, meaning if companies should start preparing impact as soon as possible.

The web and self service technology are at the heart of air travel today. But this has created a series of obstacles for those with disabilities.

The American Disabilities Act (ADA) has been the basis for a wide range of rules that govern access for those with disabilities in order to give as much equal access to those who have some form of disability.

The original law was passed in 1990 and was a significant piece of legislation, one might argue, akin to the enactment of broad civil rights legislation such as de-segregation and the emancipation of women.

The law was updated in 2008, with the ADA Amendments Act (ADAAA) tackling issues of access to information and the concept of self service kiosks in transportation.

There are two specific titles which were updated and are relevant: Title II Public Entities (and public transportation) and Title IV Telecommunications. The Department of Transportation (DOT) is proposing air travel websites, as well as automated airport check-in kiosks, be made accessible to people with disabilities.

So it is seeking input on a wide variety of topics:

• What should be the standards for web and kiosk accessibility?
• Which websites and kiosks should be covered?
• How long should companies be given to make the necessary changes?
• What form should the regulation take?
• How long before regulations can be implemented?

Curiously, the regulations are focussing on one particular sector of the industry – aviation.

But why stop with just air. What about hotels and cars. As more self service technology is implemented, perhaps the entire industry should adopt wide-ranging overhauls to their websites. Indeed, standards for accessibility should be common for all services to quicken development and provide uniformity across the industry.

The subject of accessibility for reservation agents was significantly enhanced in the 1980s with the advent of the PC. The combination of a braille based tablet for reading and a keyboard for input opened up the possibility for visually impaired agents to work in airline call centres.

However the move to graphical interfaces from the character-based systems worked against those who were visually impaired. Now the combination of sound and touch as interfaces has massively improved in recent years and the visually impaired better access – enabling both the professional and consumer to work with the world of travel data.

But with the arrival of new forms of access and apps that are opening up mobile devices to so-called Big Data, perhaps it is time that the industry takes advantage of these developments to create better solutions for those with disabilities.

Developing systems that can access the same data and services, so there are no barriers to entry at a user level, is an admirable effort and the DoT should be applauded for this initiative.

A study by Tealeaf and eConsultancy was recently highlighted in eMarketer, using a fabulous expression: preventing customer struggle.

Let’s be honest, the customer experiences such frustrations A LOT. And it is totally unnecessary.

Should we be surprised? Well, according to the study, a whopping 41% of execs admitted to not having processes in place to address customer service issues. OUCH!

So, yes, your customers are struggling to deal with you. As online customer service represents one of the nine epic web battles of instant vs personal service, the lack of any service is a terrible indictment on what should be the greatest channel for customer service known to man.

This does not just apply to online travel products but for all forms and channels for selling travel.

Any self-respecting company today has a website, but so many just fail to leverage it well when it comes to customer service. Now, for fear of tarnishing the entire industry, some do the simple things very well. But they can, why do others fail?

Here are the eight cardinal sins of online customer service. This applies to just about any industry but we are focusing on the travel marketplace.

We are also pointing out examples of Saints and Sinners, purely to illustrate each point. You can judge whether they are real saints or real sinners for yourself.

Sin #1 No online customer service

Not having any customer service channel online is a proper sin. This is so basic as to be downright stupid if you do not have a presence.

Saints: Delta (#DeltaAssist)

Sinners: Southwest used to be a sinner and did not allow email. Thankfully it now does.

Sin #2 No clarity

The confusing and complex array of options that confront a user who tries to find assistance makes customer service online a confusing web of stupid choices and dead ends. There are some who can reduce things to a simple and comprehensible set of options and make it easy for the consumer.

Saints: SeatacPark.com (If you live in Seattle you will know what I mean).

Sinners: Expedia, Travelocity

Sin #3 No response aka denial. Coupled with SLOW response.

No response is unforgivable – today everyone expects to receive a confirmation with useful information via email.

The issue of whether you should or should not reply is not the issue. Everyone should have customer service procedures that acknowledges the user. An email with helpful hints is a good thing.

After setting up the ability to post information and then ignoring it without reply at all, especially when you have a system to reply and then you fail to reply, is bad.

Saints: JetBlue (after getting a bloody nose on the subject)

Sinners: Old style airlines. Keep ‘em in the dark still seems to be the policy for many airlines.

Sin #4 No escalation/no updates.

“Enter your information here”. But we will decide if we will get back to you. No commitment to escalate the response is so common as to be an epidemic of bad behaviour.

For the majority of cases there is no escalation process online – the only way to escalate is to start again and get a live answer via the telephone.

Emails and Tweets are the worst examples of this. Most customer service suits have an automatic escalation process, yet few actually deal with it.

Even worse is when brands appear to have no standard procedure for when they will get back to a customer. In the ADD world of the customer, give him/her an expectation of when you will get back to them. Then if nobody does, auto-escalate it.

Saints: Nobody

Sinners: Just about everyone

Sin # 5 Ignoring the customer

Generally thinking, if you ignore things they will go away… BAD policy. While I have listed Ryanair as a Sinner here, you have to applaud them for being consistent and honest about it.

Saints: Jetblue

Sinners: Ryanair

Sin #6 No coordination of customer service

I spent six months in customer service hell, trying to get a response from a mortgage company to get a house loan fixed.

The appalling nature of the human and machine customer service systems interface is so easily fixed. We have some great tools – many, such as chat, are free.

Yet each of procedure presents different answers and different paths. For most services there is no single place and no ability to coordinate my activities. Solution – have a single contact system. There are so many great solutions out there.

Saints – British Airways Executive Club, but then only in small bursts.

Sinners –  Everyone else.

Sin #7 No metrics

With the web capable of tracking everything, there are several issues here. Many companies do not have a metric for their web activity. Few accurately measure their input. And even fewer even do meaningful things with the data that they have.

I am sure there will be howls of protest over this one, but the vast majority of you know what I mean.

Saints: Not allowed to reveal

Sinners: Too many to name

Sin #8 Failure to update information and provide real time updates particularly in a crisis

With Twitter, there is no longer any excuse for this. If you have no way to broadcast your information via the social web then you deserve to be spanked and slayed in public.

The ash cloud episode of 2010, plus during bad weather such as the the current hurricane season, have seen things improve enormously. Twitter is a fabulous tool for getting information out.

Saints: Led by Delta – everyone in the airline industry now knows how to do this.

Sinners: Hotels in general.

So how do you do? Ask yourself the basic questions raised above.

Then, something we recommend to each and every executive who works for any travel company: attempt to understand customer service within your own company, and in that of your competitors.

Better still, sit with someone who is not familiar with your business and let them try and do this. In my consultancy business we do this as a matter of course on all our clients.

There is no excuse for this. And many brands worry why they have so little brand loyalty. Try the old fashion way. EARN IT!

The media is a classic one (we’re online-only at Tnooz, just in case anyone is wondering when the print version will come out) and while the music industry was turned on its head by MP3 players and file sharing (much of its illegal initially).

The battles described in a recent piece in Infoworld techie journal included items on medical support, customer service, media, and many others.

One area the article focused on was Cheaper Flights vs Hidden Cost. Oh dear.

The point is relevant in that the web eliminated barriers to airline pricing information – and it makes sense to look at the impact of the web from the consumer’s perspective.

But while the article focused on air, the same could actually be said for other products in the travel industry.

In the first phase, previously privileged information that only an airline or a travel agent could provide became publicly available.

This was initially via airline websites and online travel agencies, and more recently via the general metasearch/search players such as Kayak and Skyscanner or niche offerings such as Getflight.

This enabled search and shopping, but caused the demise of the legacy channel (agents who only acted as agents for airlines). The scale of data processing that the web enabled was fantastic and opened the digital world up for many new players.

In the next phase, a degree of quality was introduced – better offers, and more information. The writing was on the wall for homogenous information.

Now, most travel and travel-related experiences are now available online. The long tail arrived.

Today we see that the social element has changed how we obtain ideation and validation in our search for travel. This helps get us better results – we hope.

TripAdvisor is the primary example of how we get to find out what others feel about travel. There is also a strong sense of community and personalization. But, sadly, travel products are not keeping pace.

Furthermore the ability to de-commoditize one’s product and to allow different services to be sold either directly or indirectly has changed how travel is presented.

Dynamic packaging allows us to mix and match services in a way that previously only a travel agent used to be able to do. Suppliers learned that their products needed to fight harder for space on the virtual shelves of the web.

But the key question from the article is clear:

Did the web enable cheaper fares and did the web create airline fees? Yes to the former, no to the latter.

Cheaper fares are now easier to find, but the logic underpinning the article claims that cheaper fares are only possible through unbundling.

That is obviously an over-simplification. Product owners/sellers, particularly in air, want to obfuscate the true market price. That is the pure price argument. But there are two other factors that the article misinterprets:

1. Functionality and unbundling enable a la carte and de-commoditization.

This is decidedly a benefit to the consumer. Buying what we want and need rather than a one size fits everything powers consumer choice.

This has to be a benefit. But not purely in terms of travel. Almost every product category has undergone this process.

2. Personalization down to the consumer of one (aka ME!!!) has benefitted all of us.

True, there have been a lot of abuses and many of these remain but in general “mass personalization” has driven consumer benefits unimaginable prior to the web.

Because the infoworld article was short, it did not draw a conclusion, but it’s worthwhile to consider some.

The logical argument should be that the infrastructure of travel needs to get a whole lot better to support additional functionality and personalization at a lower cost.

Now THAT is an epic battle – and price point is just one element of that.

The world is changing and the infrastructure to support it needs to change. The focus on consumer user experience hides some of the ugly stuff behind the scenes – but that cannot last.

We (collectively) must provide more efficient processes to enable the coming wave of better services and products. Innovation will find a way. But that is not a battle – except in the execution.

If you have expertise in an area, you often want to be associated with others in similar but not competitive fields.

In technology, there is a lot of cross-fertilization that occurs at the board level. While not quite the Japanese Keiretsu model, there are a lot of similar relationships that stem from boards of directors.

So, I was really intrigued by the announcement that Sam Gilliland of Sabre has joined the board of Rackspace.

What has been rather interesting is to question whether or not this is a conflict of direction for Sabre’s CEO. Why?

It is probably worth looking this through the prism of the wider, travel distribution marketplace.

Sabre is one of the three gatekeepers of the closed world of GDS distribution (the other two being Amadeus and Travelport)

It has done a great job over the years in building and then maintaining a secure and restricted marketplace for travel products.

The internet, of course, represents a somewhat different – one could even say anarchic – view of marketplaces. Sabre decided many years ago that owning the physical infrastructure of computing was a commodity and it outsourced its Tulsa data centre (nicknamed the bunker) to HP (formerly EDS).

However, there are a vast number of specialized systems, many on TPF, that still reside in this infrastructure. Sabre also supports a number of the now misnamed Unix type “open systems” in the same location.

From Rackspace’s own website, and the release announcing the appointment of Sam Gilliland to the board:

“Rackspace Hosting is the service leader in cloud computing, and a founder of OpenStack, an open source cloud platform. The San Antonio-based company provides Fanatical Support to its customers, across a portfolio of IT services, including Managed Hosting and Cloud Computing.”

The world is rushing headlong into cloud computing, and away from centrally managed infrastructure.

Cloud computing represents a more efficient use of scarce computing power allowing more standardization at the infrastructure level.

It is also opening up systems so that apps and other user-developed services can be easily adopted at very low cost.

In effect, cloud computing is to industry what democracy was to government.

The adoption of cloud computing is natural for travel – and airlines, in particular, which represent a vast array of users and stakeholders.

Like many markets, it has a relatively small supply footprint and a large consumer footprint combined with a few layers of aggregators. On the web, aggregators are fine. Controlling gatekeepers are not.

So the interesting thing is that here is the CEO of one of the world’s largest gatekeeper companies in travel is joining the board of one of the leading proponents of open cloud based non-gatekeeper infrastructure.

Is Gilliland trying to tell us something?

Now that the process is properly under way, with smartphones outselling older handsets, we are starting to get a better idea as to how the “always-connected” consumer might behave.

Pew Research has some great studies on this, with one.widely reported piece of work on US citizens.

There has also been a similar study outside of the US, for example, by Ofcom (the media and telcoms regulator) in the UK.

In looking at this, I think we are starting to see some key lessons. Mobile usage is changing and evolving. This is not earth-shattering information but the interesting thing is how it permeates everything we do.

So, from the US, a randomly selected nugget of information:

Mobiles can help prevent unwanted personal interactions – 13% of cell owners pretend to be using their phone in order to avoid interacting with the people around them.

In the UK, citing the Ofcom annual study, over half (51%) of adults and two thirds (65%) of teenagers say they have used their smartphone while socialising with others, nearly a quarter (23%) of adults and a third (34%) of teenagers have used them during mealtimes and over a fifth (22%) of adult and nearly half (47%) of teenage smartphone users admitted using or answering their handset in the bathroom or toilet.

For travel, this will have a profound effect on the user community and the companies that service them. In fact, making customer service mobile-friendly is a challenge for all.

For example, many smartphones have soft dial pads, therefore asking a user to enter keypad data from a mobile phone is going to make it increasingly difficult to interact with the system.

You may well lose a certain percentage of people who will abandon the calls even if the system responds to the user. Mayve time to start checking the call abandonment rates in your call centre.

Meanwhile, customers demanding instant gratification will bypass mobile websites and customer service audio services which are too complicated and take too long, with too much interaction.

This means you may never know why your customer base is ignoring you.

Next, the rapid adoption of mobile and the slow decline of traditional media are having a profound effect on the relationship between brands (intermediary or direct) and the customer base.

The frustration level of the consumer with the overly complex processes of customer interaction (I cannot even use the word service in this context) is now hurting your business.

So here is some simple advice to hook on to.

1. Be basic

Answer simply: can I provide a URL or a simple phone number that can answer 80% of a customer’s questions in a single interaction?

2. Is your mobile site TRULY mobilized?

What ever happened to one-click shopping and three clicks to purchase? I have watched far too many mobile demos with 10+ screens, which eventually lost the customer somewhere at screen number three. Assume every screen loses 50% of your user base.

3. Cost to the customer

Remember that each call to you via a mobile is likely to cost the consumer hard money. There are so few plans that are all-you-can-eat voice and data.

4. Skillsets

Are your own people trained on using mobiles from the user end? Take a poll in your call centre: how many of your team have smart phones? Do you?

5. Apps vs Browsers

Get over it – it’s both

6. Attention span

Bascially, assume all customers have ADD.

7. Testing

Experiment. Fail. Experiment. Fail. Repeat until fixed. Then start again

8. Cost to the company

Allocate as much of your budget as possible to mobile. Then be prepared to be shocked when the spending overruns. (Hint: take it out of the PR pot).

One example is how increases in bandwidth on both fixed line and mobile data networks are transforming commerce.

This is big data and big opportunities – but only with non-legacy thinking. And travel needs to understand the reality of the real-time web and how high bandwidth is not business as usual.

Google is making a number of strategic plays, for example – almost a year ago it announced (with Verizon) a restricted, high speed version of the web for premium services.

Now it is moving further into our lives with the acquisition of Motorola’s handset business. Furthermore, Dish Networks in the US bought a number of terrestrial and satellite assets which will bring it also into the game of providers of big data services, allied to consumer brands such as its purchase of Blockbuster.

We can surmise that big data delivery via these high bandwidth networks is going to have a profound impact on travel, perhaps more than many other business sectors.

The reason is that travel depends on a significant amount of data and processing to deliver products and services.

Travel is very complex, something that many newcomers find hard to comprehend. This complexity requires a significant amount of horsepower that is better served via central location services or today by the cloud.

Recent developments in online travel have largely focused on the changes in the consumer interface.

In reality, although people talk about Travel 2.0 and even Travel 3.0, we are still dealing with Travel 1.0, which was and is all about access to (and for) the consumer. The ability to move large amounts of data, and the ability to process data in the cloud, will change the game significantly, not just consumer user experience, but also in the back where the real magic happens.

Here are some predictions for what we might see over the course of the next few years:

1. Greater bandwidth will create new implementations of existing products and service to the consumer, as well as brand new products
2. Search will finally get the real attention it deserves and become real. Metasearch will become “real search”.
3. Trusted sources will emerge for quality data. The current so-called gatekeepers of data will lose their privileged control of data sources, perhaps replaced by new gatekeepers (and Google fully intends being the biggest).
4. Entrepreneurs will develop a whole new market of services that are not dependent on the traditional restrictions, and will be largely cloud based.
5. Suppliers will build better controls on their products ensuring they know where and to whom their products are delivered.
6. Intermediaries will decline in number, but those who remain will be more valued.
7. Big Media and Big Telecom will enter travel (again). Google buying Motorola is an example.
8. Travel will become more implicit and automated for mechanical trip buying (eg. corporate travel). The user will not have to work so hard.
9. Location-based services and augmented reality technologies will blur and become integrated into travel apps.
10. Regulatory control will be tightened in travel as taxing the travel process will become more prevalent.

While many of these predictions are largely not new, the creaking infrastructure at the back of travel cannot keep up with these changes.

Moving travel applications to the cloud, along with the increased use of apps for the front end to the consumer, pushes the current process of concentrated processors of data to the limit, and beyond. The gatekeepers may well find themselves outclassed here.

While it is sexy to think about the front-end piece, the back-end is the hardest part. Much harder.  As an industry we have to rethink our future, including the roles of the existing players.

Success will come to those who understand and build a trusted and reliable set of services for the consumer. This applies to both direct to consumer businesses and those who power services for the consumer.

While big aggregation services will continue to play a role, there is a clear place for the smaller service providers to create better and more meaningful applications for the consumer.

Structured workflows that have existed for more than 15 years are “unnatural acts” that force the user into behaviours that actually do little to provide a better service to the consumer.

These will likely die out and be replaced with more natural search, and better quality of service.

A note of caution is required here. These new capabilities require a radical change in thinking. Legacy processes and methodologies have no place in this future.

Those who own the supply and those who add value to the consumer as intermediaries will now have to work harder – much harder – to keep the interest of the consumer.

The barriers to entry will be lower, but so will be the barriers to exit.

We are all consumers and customers of one or more products and brands and, yes, we make decisions based on some irrational quality of why we like one product over another.

But has the trust been lost?

The common way to riches seems to be, firstly, present yourself as a consumer focused service – then once you think you have that – to misuse that trust.

We can cite cases from Google to Airbnb’s recent faux pas as illustrations of this trend.

It seems to me that there is a series of assumptions that “sellers”, whether they are product owners or intermediaries, have in dealing with the customer:

• The customer is stupid and we need to tell him what he needs because he doesn’t really know. Eric Schmidt of Google is famous for making such an assertion in public.
• The customer doesn’t need to know and what he doesn’t know will not hurt him. Treating a customer like a mushroom is the best policy.
• The customer owes me a living.
• Customers will flock to anything new no matter what it is.
• Customers have short memories and forgive all the time.

Are there real customer lovers who have never strayed from being the customer advocate, that you can rely on?

There are companies out there that adhere to a strong customer focused set of principles – for example, in presenting the truth even when its bad, how they handle bad situations.

So, this is my search – find a true customer-loving business in the travel industry.

I am looking for companies who can demonstrate that they do go that extra mile, which don’t abuse their customers and will not knowingly break that that trust.

Two companies immediately come to mind. One is the UK retail store John Lewis Partnership. The brand’s slogan – Never Knowlingly Undersold – has underpinned a trust that extends throughout their business relationships. Southwest Airlines is the obvious example in travel.

If you can name a company or are one – then I want to know, here in the comments below. Furthermore, WIT In Singapore in October will give an award to the company who best exemplifies in true customer love.

I believe that there needs to be a trend towards a better appreciation for the customer. Consumers are, after all, a heck of a lot smarter than they have been treated in the past.

Now let’s see who can grab the claim of being the best. Big or small, it matters not. Check the rules and then let’s see who is the best.

The recent discussions about different forms of player in the marketplace (eg. the P2P marketplaces) illustrates that perhaps there is a need to establish a set of rules and processes in order to make a migration from the traditional world of physical interactions into a streamlined, efficient marketplace that is safe.

Trust is earned, as one commenter noted. However the law is very grey across the board. Travel is largely a digital economy. It does some things well but it has a lot of catching up to do in key areas.

As new forms of commerce – particularly social commerce – emerge, we all share a responsibility to ensure that all parties to the transaction operate equitably.

Unlike the laissez-faire attitude of the US, where solutions tend to be “suck it and see” or “wait ’til I’m sued”, the European Commission (EC) is taking a very proactive role in creating what it calls the Single Digital Market.

While this may offend free market capitalists, the so-called digital economy is moving too fast to wait for the law to catch up in normal time.

Understanding the concept is not easy, but the European Commission is determined to make this a reality. It is addressing the whole idea of an information based society through a broad range of initiatives.

These range from social responsibility (rights of access and assisting those who are unable to afford the high costs) through to the creation of appropriate competitive law.

They are also clearly signaling that they want to extend the concept beyond traditional borders by ensuring that for example telecom operators based in Europe don’t gouge customers in non EC markets.

[For the consolidated position on the subject go to the EC website]

Probably the leading standard bearer for the establishment of the SDM is the current EU Commissioner for Competition, the feisty Hollander Neelie Kroes who holds this position through 2014.

Interestingly, among her many initiatives is the creation of a common mobile services area. Something that those of us who travel cannot wait for.

These are not the usual this-is-what-we-will-attempt-to-do type of activities – the EC is to be applauded for taking such a broad range initiative.

It is not perfect, but it is one heck of a lot better than the somewhat limp initiatives announced by successive US administrations that somehow never make it to the market.

So, the European Commission has laid out 21 actions as part of its Single Digital market that carry specific agendas and timelines:

• Simplifying pan-European licensing for online works
• Preserving orphan works and out of print works
• Oblige public bodies to give access to public sector information
• Wide stakeholder debate on further measures to stimulate a European online content market
• Simplifying the distribution of creative content
• Protecting intellectual property rights online
• Fix a date for migration to Single European Payment & eInvoicing
• Revision of the eSignature directive
• Updating the eCommerce Directive
• Member States to implement laws to support the digital single market
• Member States to transpose the VAT Directive
• Review the EU data protection rules
• Complementing the Consumer Rights Directive
• Explore the possibilities for Alternative Dispute Resolution
• Consult the stakeholders on collective redress
• Code of EU online rights
• Stakeholder platform for EU online trustmarks
• Harmonisation of numbering regimes
• Spectrum Policy plan
• Investigate the cost of non-Europe in the telecoms market
• Roaming

One particular action item should be considered broadly which is the creation of a European Trustmark.

The commission is encouraging individuals and organizations – both social and commercial – to become involved, a process which began in June this year.

Travel needs to have stakeholders involved in this process. Travel, as a driver of the digital economy, has shown itself to be less than adequate in policing and advancing the agenda of an open and free digital marketplace.

Unless travel can operate and ensure fairness is handled through cooperation, someone else will take that agenda and manipulate it.

There are some specific ways to get involved throughout the 21 actions. As a consumer, understanding your rights and helping to develop a fair and equitable marketplace which in turn can help power the information society is a must.

The current process of 50% off and sharing the residual revenue between establishment and coupon company doesn’t make sense to me.

However, there is some evidence to indicate that I am not entirely correct and that there may be some value to the Coupon Craze model.

eMarketer recently published an article comparing the different coupon sites and their effectiveness. The article looks at a number of the Coupon sites such as Travelzoo, Groupon, LivingSocial, OpenTable and Buywithme.

Reading the conclusions of a study by Brown University, it sounds positive.

But within the study there is inconsistency around the data. One big reason is that the methodology of the testing results from people’s perceptions of their behavior rather than their actual behavior.

Anecdotal evidence of companies going under is hard to prove, while the number of unhappy restaurants is legion.

If we run the back-of-the-envelope maths on the study, there is still not quite enough money to compensate the seller for the direct loss of revenue he may or may not get, as a direct result of the individual coupon. There is also the issue of wastage and how much of the customer’s cash ends up unused.

In the first study, the results would show the seller making a loss. The 38% existing customer using a coupon would not be compensated by the 31% new customers.

In the second study the residual return to the site would only be 20% on average (Brown University). However the amount of additional revenue from the consumer add spend would not cover the incremental cost of the services in my view.

Bottom line here folks is that some conclusions can now be drawn.

Coupon Craze sites do stimulate additional traffic. But there is not nearly enough empirical evidence of performance to draw the necessary conclusions that these sites are long term sustainable as value to a vendor.

I don’t think we can assume that this is sustainable for these sites, otherwise we would have heard plenty of successful and happy sellers’s stories and, as such, the local businesses clamouring for the new found revenue stream.

The reality is that there is a high possibility that the model will reach a point of diminishing marginal returns.

But worst of all, long term loyalty at full price is not going to sustain the vendor. Thus further eroding long term loyalty to a local brand.

This comes at an interesting time for the Dallas-based airline, but it’s also an interesting period for the airline industry. At a time when there is a distribution battle going on for the allegiances of intermediary channels, having an advanced res system is essential.

However, is there a suitable legacy model and process for managing airline reservations? Perhaps the time has come to re-think this.

Southwest’s historic disdain for the global distribution sysstems is legendary, although its attitude has softened with participation in some GDSs.  In that regard, the airline is also now getting an attractive proposition from Travelport to participate in its Universal API.

Officially, the reason for the delayed decision about a new res system is Southwest has too much on its plate, the Dallas Business Journal reports. The airline is running hard and fast to integrate AirTran flights into the core reservations process and this places a significant strain on the Southwest IT team’s scarce resources.

So, it is a prudent move to delay a decision. However, since Southwest has known for some time that it would have to integrate AirTran, one can speculate that this may not be the only reason.  The last time Southwest found itself tasked with airline integrations was when it acquired Salt Lake- based Morris Air in 1993 and the assets of Muse/Transtar airlines in the 19980s.

Given recent glitches in the overall IT infrastructure at Southwest, there may be a number of other issues at stake.

CEO Gary Kelly is on record as stating that a new Passenger Service System would provide Southwest with international capabilities, and the airline had reduced its short list to two players — Amadeus and Sabre.

The selection process has been very laborious. That would be natural for “normal” airlines such as the network carriers. But Southwest has carved a different path and grown to be the largest (by passenger numbers) domestic US airline.

The reservations selection process has dragged on for more than a year. That is light years for a company whose agility and speed is legendary.

In the interim, Southwest will be going for a little more “Luv” from Sabre,  which will be doing modest upgrades to Southwest’s res system, including adding some international quick fixes for Mexico and other nearby international locations.

Sabre declined to comment about this work.

There are many major PSS players. Southwest uses a hybrid and customized system. Some of this stems from the old Braniff system (called COWBOY) which Sabre acquired after the collapse of the Dallas-based airline in the 1980s.

As noted earlier, Southwest is evaluating both Amadeus and Sabre’s PSS offerings.

Amadeus Altea was largely built from scratch over the last decade and is still incorporating major pieces of functionality. Amadeus of late has won a large share of the PSS RFPs in the market — a situation that has prompted some calls for the company to separate its two businesses.

Amadeus has two sub versions of its PSS: one for low cost carriers, which Norwegian Air Shuttle is using, and a specialized Atltea version called the Common IT Platform, which was customized for the Star Alliance. Major Altea users in Europe include British Airways, Air France/KLM, and Lufthansa. In Asia/Pacific, the Altea airlines include  Singapore Airlines, Cathay Pacific and Qantas. Some  are in the process of implementation.

However, in North America, Amadeus’ lone customer, United Airlines, cancelled the contract, leaving  Madrid-based Amadeus looking for a North America customer.

Sabre’s PSS is SabreSonic.It was upgraded in recent years and has won over several former low cost carriers migrating to a hybrid model. Recent wins for Sabre include Canada’s WestJet, Mexico’s Volaris and JetBlue in the USA. Sabre will be losing its largest customer, American Airlines, to HP, once American Airlines’ new system, Jetstream, is ready.

Southwest Airlines confronts a dilemma that most airlines now face. Over the past 15 years, the Web has increased the complexity of airline passenger IT infrastructure. The common wisdom was to have a two-tier solution with the PSS handling most major infrastructure and core functionality, and Web-based systems tasked with being the passenger interface.

This two tier model has now morphed into a bus-like structure with common systems for planning and management, business intelligence data services, customer management/loyalty, check in systems and PSS functions sitting on servers inside the airline’s own environment or within that of their outsourced IT providers. The Web-based Internet booking engine  is usually far more sophisticated than just being a front end to these systems.

Indeed it has become more in vogue to invest in these non-PSS systems rather than in the core monolithic PSS mainframe-based systems of old. There are many current demands on scarce IT resources inside airlines. The need for speed of deployment in a climate of rapid change — mobile and social media — have placed further constraints and demands on the IBM TPF (now zTPF)-based mainframes used to host most airline PSSs.

Southwest realizes that with its growth it will be a gut-wrenching process to move to a new res system despite its relatively simplistic model.

But perhaps the days of the monolithic PSS are over.

With distribution fragmenting and the importance of an actively managed multi-channel distribution strategy essential for all carriers, the possibility of transitioning to a more distributed cloud-based solution will probably cause Southwest to rethink its next foray.

One can clearly infer that there was no easy answer for Southwest or they would have made a decision by now. The demands of consumer-based airfare search, with its accompanying increases in traffic, are placing huge strains on every airlines’ IT infrastructure, and it will never diminish.

Other strains include demands for unbundled and ancillary services (yes, even Southwest has those), mobile and social, and all of these requirements should cause all airlines to rethink the old model of massive-scale solutions.

Instead they should be looking at agile environments and the cloud as ways to move to a more commercially sustainable set of IT solutions.

The days of 5-10 year PSS contracts must surely be threatened.

After all, who can say what the airline IT world will be like commercially in 2 years — let alone five or 10.

Perhaps Southwest is making a good decision at the right time.

So, for my sins, I have acquired an iPad2. After using the device for a few weeks, I started to wonder what share of browsing is now taking place on an iPad? The device now has 2.1% of the browser share in the US, and worldwide more than 1%.

In contrast Microsoft’s browser share is falling, and fast.

My personal browsing shows that I use Internet Explorer 9 less than 5% of the time, where as I keep Firefox as my default and use Chrome for alternative windows, mostly because of the automatic translate feature.

Less than 1% of my time is via mobile browsing on my (various) mobile devices.

So, the browsing experience is changing. But is that because of the browser or because of the use of the applications that we are using?

While I don’t like the assumption that I live in an “always on” world, the fact is that a lot of people are leaving their devices permanently connected to the web. The latest Firefox 5, IE9 and Chrome versions are expressly built on that assumption.

I think there is actually LESS browsing and searching going on. We are now moving to an implicit web, not an explicit web, experience.

For travel this will have a profound impact and is likely to blow apart the current rigid structure of travel distribution.

I believe we are at a fundamental point, the likes of which we have not seen before – in fact, we are about to witness the convergence of several factors.

Here is a partial list:

1. Browser

The consumer is tired of the explicit web and wants to move to the implicit web – the experience is not driven through the browser to the site-based model. The evidence to support this is the number of clicks that are falling before the consumer abandons a particular path of activity.

2. Interaction

The changing habits of the web-led consumer as they mature, and as we move beyond the basic Web 1.0 access to full-on Web 2.0 and even into the semantic world of Web 3.0.

3. SEO

The gaming of SEO has so ticked off the consumer that he is working actively against it. The travel consumer uses a search engine far less than for a regular product evaluation. In most cases it is because the consumer has familiarity with travel. It is one of the most used products on the web.

4. Multiple sources

The fragmentation of the travel process creates so many different places for a user to start his workflow. Note, this differs from…

5. Splinternet

Or, fragmentation of content. Content is now so located in so many different channels and various areas of the web, meaning they have to chase valuable information in so many different sources.

6. Lack of trust

No-one has built a mechanism to evaluate so-called true value of trust on the web, at least not in travel.

7. Cloudy

Cloud computing and its companion of virtualization is making the roles of large gatekeepers irrelevant. This impacts the large scale legacy players such as the online travel agencies and the GDSs

8. Applications

The emergence of the mobile web and its short, sharp app-based interaction.

9. Social media

The importance of social media for both recommendation and, more importantly, validation of consumer choice.

10. Demographics

The exit of the large and conventional Baby Boomer community and the emergence of Millenials/Gen-Y users.

So, what we are seeing is that these factors are challenging the status quo.

I believe that the airlines vs GDSs battle and the entry of Google into travel, for example, are symptomatic of this situation. We are moving to a purer world of supply and demand.

Ultimately the consumer is in control. Yes, we have known this for quite some time, but there was an underpinning theory to that – that those who had traffic could actually speak for the travelling consumer.

I believe that now to be false. Volume doesn’t equate to trust (the flight from Microsoft Internet Explorer is a good example of that) and sometimes there is an exit of users when a travel site’s content ceased to be what they were expecting. For example, Expedia’s Comscore ratings dropped by nearly 25%, for a short period of time, when AA was no longer fully present in the mega OTA’s US site

The consumer’s expectation from Expedia is that it is an omnibus site – the full general store. When it ceases to deliver all content then it loses a part of its core proposition.

This change is coming fast and will no doubt hit us all faster than anyone has appreciated. The fast adoption of mobile web – as we hear from sites such as Skyscanner – is a further reinforcement that the time is ripe for change. Woe betide anyone who tries to prevent that.

Will you be crushed? Just ask Microsoft.

At its Air Transport IT Summit in Brussels last week,  SITA announced a partnership with Orange Business Services to jointly develop a “managed cloud computing infrastructure”.

SITA calls it the ATI Cloud [PDF] (Air Transport Industry Cloud).

Cloud computing, of course, isn’t new. Essentially it is on-demand computing paid for by the drip rather than for the individual component of hardware, software and managed services. It is a shared platform on which computing resources are provided to a wide array of users over a common infrastructure.

The community cloud concept would make sense for SITA and its large airline customer base. SITA has always had a community-based pricing structure. Airlines share many resources. They share airline services and inter-connect at many points.

Many airlines are also focused on being more efficient and outsourcing everything that is not core to their operations.

At the conference, Lufthansa CIO Christoph Klingenberg supported the concept of cloud computing, saying airline IT development of all kinds should be outsourced.

Cynics in the audience may view the SITA initiative as another attempt by IT vendors to boost IT spending and line their pockets after several lean years.

But, the logic for cloud-based computing is inescapable. While the business case is largely about the cost, the cloud is not just about dollars and cents. Cloud computing also simplifies the use of computing assets; it enables rapid deployment and makes IT accountable to the speed of business.

Airlines need flexibility and scalable IT services. Airport IT services, for example, need to accommodate a range of capabilities for  a single flight operation a few times a week and to scale it into a 24/7 hub-type operation. In irregular operations, as occurred during the 2010 winter storms and ash clouds, the nature of operations may change with only hours’ notice.

The goals of the SITA airline cloud are admirable. The widely quoted 100ms (milliseconds) speed should be welcomed by airline executives who remember ALC terminals with sub-2 second response times as standard in the days of hardwired dumb green screen terminals (such as the Westinghouse 1642s).

Plus the ability to set up a new access to your reservations system within minutes rather than days and weeks, for example, would enable flexibility that airlines can only dream about.

However, the airlines and SITA’s managers must not impose the same legacy thinking that has held back innovation in the airline IT space, particularly in distribution.

In Brussels there was a lot of talk comparing airlines (not favourably) to Apple. Lauding Apple’s rise to the top, many speakers used words like “agility” and “focus.”

And this is where things could go awry. Apple imposes strict and commercially harsh terms on its vendors and users. The better model would probably be Amazon’s open cloud-based computing environment.

Unfortunately, SITA already is talking about a certification process. Such a process would  restrict innovation and result in the perpetuation of the lowest common denominator approach.

It would be better for SITA to make the platform open and encourage its use for services not constrained to airlines alone. This is where standards will be important, but they should enable –not restrict — innovation and meet the needs of the business.

Airlines have been slow to adopt cloud computing, but the announcement from SITA and its partner, Orange (aka France Telecom), will legitimize the cloud community approach.

Cloud computing also has long-term implications for airline IT, especially Passenger Service Systems (central airline reservations systems), which typically are hugely expensive and protracted projects.

Klingenberg of Lufthansa matter-of-factly spoke about his new 200 million euro DCS (Departure Control System). Another speaker spoke about his 5-6 year project to deliver a new reservations system.

Cloud computing promotes agility and rapid deployment. Application development is about light, small and fast.

SITA would do well to ensure that its commercial model for cloud computing is structured to promote the agility that has come to characterize the B2C marketplace for apps from Apple, Google and others. This approach enables users to download a new version of the app either on demand or automatically without any computing skills at all.

For the airline business, this will provide many benefits if the processes and management also change. Without this radical change, the benefits of cloud computing will at best be muted, and  at worst lost or wasted altogether.

Cloud computing is about decentralization benefiting any user type as well as complex computer applications.

The promise of a totally flexible platform will also alleviate the needs for centralized services such as GDSs and encourage open distribution models.

With this approach, airlines would be able to reduce their dependency on monolithic systems and their attendant cost models, get closer to their customers and regain control of their product supply systems.

Unveiled at SITA’s Air Transport IT Summit in Brussels today, Horizon PaymentServices is part of the organization’s Horizon Passenger Service System.

For “a low cost” transaction,  the infrastructure can provide a single entry point to the world of payment services with a wide variety of different payment vendors and types enabled. It will have a business rule service so that the single connection can support multiple rule sets for each channel as required.

Horizon PaymentServices, which is available to airlines whether they are Horizon customers or not, in theory will have value for the airlines.

By simplifying the plethora of functions and requirements to have multiple payment gateways,  this multi-currency, multilingual platform will not replace payment service providers, but will simplify the connection process.

For many airlines, this will enable them to save money and eliminate the number of gateways they currently use.

These clearly are early days, but this service holds great promise in enabling airlines to gain back some control over their payment processes.

Will it save them money over the long run? I believe so. However, it will require the airlines to be better managers.

The new platform is no panacea, but it was certain that something needed to be done. For those in the payment gateway business, the new product serves notice that the airline world is opening up.

For the airlines,  a new era of control becomes possible. Let’s hope that the cost structure is commensurate with the service provision and that Horizon PaymentServices doesn’t end up being cost and bureaucracy additive.

Airlines have long been struggling with the entire payments process, and this has been a festering sore in their financial models.

With the vast majority of their transactions paid by credit cards, airlines know that this is a big expense, one that’s right up there with the cost of GDS distribution.

Big payment providers, such as American Express, Visa and Mastercard, and smaller or regional players, including Diners Club-Carte Blanche, JCB and Discover have been joined recently by newer providers like Paypal and Western Union.

The airlines’ own payment facility, UATP, is deployed widely. But this creates an immense complexity for the different channels the airlines utilize for distribution.

In the past, the payment/credit card battle has escalated into all-out wars between airlines and their payment providers. For example, in the early years of the new millenium, there was a big battle between British Airways and American Express over the level of the fee.

BA even filed a lawsuit in 2002, and the litigation eventually was settled three years later. Today, BA offers a branded American Express card.

Credit card fraud is a problem for all businesses, particularly those which operate online, and airlines are no exception. There are a dizzying array of choices, many of which are specific to the channel. And online fraud protection is very tight compared with looser and different payment  systems for the call centre and offline fulfillment processes.

As fraud protections were tightened with such services as 3-D Secure, the percentage of failed, but valid transactions increased. Thus, many airlines are faced with the dilemma of tight antifraud practices with low fraud rates, but high failure rates for valid sales. The alternative is higher percentage of successful approved sales, but increased fraud. This is a dilemma which no airlines like, with rates on both sides of the battle sometimes more than 10%.

SITA says Horizon PaymentServices has embedded “sophisticated fraud screening.”

“These sophisticated settings, combined with advanced reporting systems, give airlines the maximum control in this complex sales environment,” SITA says.

That’s the hope.

So in looking for analogies to try and explain to the general public what the battle is all about, I have happened on TV as the analogy. Allow me to explain.

TV channels are like airlines: They have valuable content that some users — not all — want to have access to. TV channels are supported via a wide range of commercial models, including advertising-based, license based (e.g. in the UK), subscription-based or even government subsidy. Their content can be premium content or general content available to all.

Content in TV programming is very complicated. It takes many hours to develop content and in many cases, such as news programming and live broadcasting, it has a limited shelf life. Sometimes the programming even has one-time use – broadcast it and it’s done.

The consumer is subject to a bewildering array of content types and options. These are driven by opportunity (such as when I can watch) or desire (what I want especially to watch). There are times when content is deliberately locked out from a particular viewing group. Sometimes content, such as programming for sports in a particular market, is embargoed.

Some viewers might get premium content for free while their neighbors get it only when they pay a premium price.

For example, during the Vancouver 2010 Winter Olympic Games, some of the programming that was only available on premium channels in the US was freely available on Canadian stations to Canadians. Also, this same content was available at no charge when these channels were delivered via a cable system inside the USA (e.g. in Seattle and Maine).

The cable companies charge to carry the content on TV channels for their subscribers. When the TV Channels, as content distributors, don’t pay, they won’t get carried, unless of course the cable company wants to do so or is obliged to do so in certain instances for local programming. Cable companies also have to live up to local obligations by providing access to subscribers for free via public access.

Let’s now see if we can draw the analogy between this TV content model and that of airlines.

There are the content owners: in TV, they are the chaps who created and paid for the original content. Some distribute these to the broadcast media or they may even package these for other channels such as cinemas, DVDs or on-demand. There are a lot of options and models.

With airlines, the content owners are the people who own the assets – i.e. the planes. Some are owned and operated, some leased, some borrowed. Some seats are sold individually or in groups.

There are the TV channels: These are the folks who put together programming and create schedules and then push these to the distributers.

In the airline industry, this is the airline brand. The airline might acquire content – products and seats — from different partner or feeder airlines under common branding.

There are satellite and cable companies such as DirecTV and Comcast, which carry the packages of different content providers to the user communities.

With airlines, these are the companies which aggregate content as a service to the user community. These are the GDSs (similar to cable companies) and direct connect distribution through private distribution networks or aggregators such as Farelogix and LUTE Technologies.

Finally there are the users. In TV, these are the corporate (e.g. campus wide) or private individual subscribers. They pay an access fee at varying levels depending on the content they access and consume.

In the airline industry these users are travel intermediaries, such as travel agencies, whether online or offline. Here the analogy diverges because it is rare in any marketplace that you can buy product through a mandated “one size fits everything” model.

So let’s ask some questions.

Should the channels carry all content? Should the cable/satellite providers carry all content?

And, do the content owners have to make all content available all of the time?

What about the search/guide process? Most local newspapers carry a TV guide. Do they list all of the items about the content 100% of the time?

The last time I sat through a blockbuster film, there may have been 500 people getting screen credits. Should we list all of them and the full copyright information every time we mention an item in a guide (which in travel distribution is either search or the GDS)?

And as we all know some of these “creators” — i.e. the “talent” — end up with rights concerning where the content goes and they collect money for the distribution long after they got paid for just showing up and performing. (For those who have never worked in the media, these are called residuals and artists love them).

Now, use your imagination and apply this same logic to airline content.

Ultimately, in broadcasting, for a variety of reasons such as copyright, there is a very strict set of rules that ultimately stem from the content owners and their decision to control the distribution of that content.

Surely the same strict set of applies to the airline world?

Perry Flint, editorial director and associate publisher of Air Transport World, writing in this month’s edition (June 2011), opined in an editorial that the airline industry seems to be held to a different standard. The telling statements are in the final two paragraphs:

We also continue to be perplexed by the fact that government regulators on both sides of the Atlantic seem intent on holding the airline industry to a standard of behavior that they rarely if ever pursue for other private sector activities. It is one thing for Brussels and Washington to require that airlines operate to the highest levels of safety — which carriers willingly accept. But it is another entirely to meddle constantly in their commercial activities and to, for example, demand that every airline’s fares and charges be presented in an identical fashion and (as some argue) displayed together in a common storefront.

We recall that before the advent of smartphones and iPads, one US big box retailer used to remove customers forcibly from its stores if they were observed jotting down pricing information for comparison shopping — and government regulators did nothing. Yet airlines are expected to accept willingly that it is incumbent upon them to make sure their fares and those of their competitors are displayed together and easily comparable for the convenience of shoppers. We’d like to see someone do that with automobiles: Why isn’t Toyota required to combine and price its options packages in the same manner as GM or Honda or BMW? And as for paying for things that used to be “free,” you can check an awful lot of bags for the cost of one copy of MS Word, which used to be “bundled” in the operating software as part of virtually any home PC purchase.

I concur. Are we about to be subject to a whole amount of government regulation to support what now amounts to the less than half of the market that chooses to use GDS-based distribution?

In the U.S.,  less than 50% of all airline seats sold come through GDS-based channels, according to ARC and the U.S. Department of Transportation.

What about those airlines who, by luck or choice, are not participating in GDSs? Will they be forced to participate in all channels, creating a hidden tax that the consumer must pay?

Or do these airlines get off scott free without having to pay a distribution fee even though they are competing head to head in the market with other airlines who do? Do they get a free pass and not have to participate in the GDSs?

Must there be complete uniformity of product, as in a totalitarian regime state where everyone is forced to participate whether they want to or not?

Surely not?

If so, I don’t want to live in a society that prevents choice and options by allowing forced arbitrary participation.

The only place (other than airline safety mandates) where participation should be forced, is in voting. Then we can always say we get the government we voted for rather than the government we deserve due to apathy. We should have a government that ensures we have a framework based on freewill instead of who has the best lawyers.

In a normal capitalist marketplace, suppliers should be free to sell their products honestly and ethically through channels of their choosing.

Most decidedly, consumers need to be able to buy products  in channels of their choosing and in the manner they prefer and not when someone else makes the decisions and enjoins us through a process in which we had no say and for which we will be forced to pay a hidden tax.

Fair enough?

Note: Timothy O’Neil-Dunne is a Tnooz node and acting CTO of LUTE Technologies.

As ever, much of the talk was on the topics of the moment, one of which being the influence and developments of mobile on the sector.

Inevitably, app versus versus mobile browser seems to be a continual debate. In sessions I both moderated and participated in at a number of these events the arguments were equally strong for either side.

Adoption of the appropriate solution is expensive for everyone to solve every problem with their version of an un-common platform that works both browsers and all the various mobile operating system and app environments.

So there is no ubiquity, no easy of use, and no path for adoption. The arrogant developers and controllers of the user experience are arguably forcing a thoroughly unpalatable solution onto the user community. And this is where we find ourselves – a problem for industry at large.

The current model is unsustainable. While there are those touting the fabulous results of their particular app, many of those that remain of the outskirts are losing money hand over fist.

The legion of (in many cases) poor quality developers and charlatans selling mobile app platforms and services is incredible. Also, there is a famine of smart people to manage such developments at all levels of the industry, and in their respective technology providers.

Rather like a love triangle, for some it appears we cannot find a way out of the problem gracefully. So what can we do?

Perhaps, however, there is a third way.

The major need is to reduce the cost of development and deployment – we need to do a better job of providing the small mobile aperture a solution ready for the customers.

There is also a need to eliminate, or at least reduce, the amount of individual one-time apps that are used and then never used again, yet clutter up the limited screen real estate. There is also a distinct need for a common platform that would improve adoption and usage.

If there was one major, or even very few, individual platforms that could create a common walled garden for the travel category this would be a major step forward.

In this so-called common walled garden, the environment is accepted as being different, yet the screen experience can be adjusted to that particular environment and this will enable some common categorization and user navigation elements.

There is a sense that familiarity boosts adoption and usage, so also having common standards will help move this whole thing along.

The walled garden would use the common standards for ensuring that it, at least, stays relevant for users – but this must be open with no commercial-led restraining body having undue influence on it.

No one has tried this yet. The conflicting needs of the technology players and the providers all contribute to the current sad state of affairs:

• The network
• The hand set OS
• The hand set manufacturer
• The payment platform
• The app developer
• The category
• The search

So my proposal is simple: travel as a category, under the auspices of an open body, should develop a common model for travel apps. I tentatively call this T-COMBINE. For Travel Common Mobile Body for Industry-wide Enterprise.

Let’s see if we can actually do something about this problem, before its too late.

By 2020 HP estimates that there will be 25 million apps out there. The thought of managing that number is just mind blowing and simply impossible. We know some bodies have spent hundreds of thousands of dollars and Euros – in some cases with zero adoption and/or usage.

Let’s think of the customer for a change and stop those whose greed is driving the continuation of this plague of too many options.