Of Burgers…and Buying Travel

How much does yours cost?

Greetings, Cafe Patrons.

Over the past few weeks, much has been made in the global business and economic press regarding a topic normally not infused with passion and rhetoric – currency exchange rates.  Given that one of my friends here in Australia who works for a global investment bank recently proposed a “Parity Party” for when the Aussie dollar matched the US dollar for the first time in nearly 30 years, discussing currencies is seemingly becoming as cool as property prices used to be in terms of discussions amongst friends at dinner parties.

The Economist recently had a special feature on the so-called “currency wars” that some pundits are concerned may break out across the globe.  One of my favourite (and most useful, to layman economists like myself) indices that helps understand the value of world currencies is the “The Big Mac Index” which highlights the relative costs of McDonald’s iconic sandwich across the globe.

So what do currency rates, Big Macs and travel have to do with each other?  Plenty, I might argue.

It may not matter as much if your air, hotel or car deals are localised in a particular market and you’re dealing in local currency.  Your Big Mac costs what your Big Mac costs in your own market, in essence.

However, many GDS / airline contracts, for example, are written in US dollars and with the greenback’s softening lately, this produces an interesting dynamic in the corporate travel space.  Especially with travel management company transaction fees.

TMC transaction fees incorporate a variety of factors to arrive at what a company ends up paying for their services.  And a fair bit of TMC infrastructure and revenue is made possible by the commercial relationships with GDS’s, technology providers and air/car/hotel suppliers.  No reason to begrudge that, as TMC’s are in business to make money after all.

The incessant downward pressure on transaction fees over the past decade has made this dependency on 3rd party commercial relationships vital for TMC’s to continue to provide the services companies are asking for.  However, if you’re a corporate buyer and are out in the market at the moment, or if you’re a TMC seeking a new GDS provider or preferred airline deal – check how much your Big Macs will REALLY cost you.

Many airline-GDS contracts are written in US dollars.  Therefore, with many global currencies performing well against the US dollar at the moment, the ability for GDS’s to negotiate strong local commercial deals is hampered a bit.  OK, maybe a lot, as the US dollar value of the GDS’s airline contracts aren’t worth as much as they used to be when translated into local TMC/agency contracts.

Same with airlines, as if you’re doing your negotiations with an overseas carrier for your local outbound international travel, is the carrier’s home market strong or weak from a currency perspective?  If you’re seeing the fares being offered now to try and attract Brits or Americans to come to Australia, you’ll see that they are trying to distract travellers from the fact that due to the strong Aussie dollar, its no longer cheap to spend money Down Under.  Big Macs are pricey here.

And lastly, if you’re a corporate buyer negotiating a global contract with your TMC, and you want a single price in US dollars, you may find that what used to be cheap transaction fees for markets in Asia Pacific (after converting to USD) aren’t so cheap any more.  Again – a Big Mac is a Big Mac in name only, price on advisement!

So although currency fluctuations may be the provenance of bankers, traders and speculators, the next few months could pose a conundrum for anyone in a commercial role in the travel industry.  Which is: do you know how much you’re currently paying, how much you want to pay, and whether you think you will end up paying what you think you should pay?

Which begs another question: do you want fries with that?

Travel Innovation: A Field of Dreams? Not Quite…

This field will cost me how much??

Good morning, Cafe Patrons.

I may be going a bit “American” today in my references, but perhaps you’ll indulge me a bit so that I might be able to make a salient argument.

An oft-referred to approach in technology, consumer goods, electronics, etc. is the idea of “if you build it, they will come.”  And for fans of American Baseball, you’ll know what movie I’m referring to which originated this now commonly used business buzzphrase.

Over the past few weeks, there have been the annual 3rd/4th quarter flurry of events and conferences within the travel industry – ACTE Berlin, WebInTravel, TheBeat Live, EyeForTravel Distribution Summit – to name a few.  And it seems as though much of the talk from these conferences was focused on what seems to be a growing ennui amongst industry veterans that innovation in travel is stagnant at best and downright disappearing at worst.

The blogosphere and online industry publications are also full of similar rants and exasperated viewpoints; some examples for your “light” reading pleasure: Travel Tech consultant Norm Rose - http://www.tnooz.com/2010/10/19/mobile/the-gap-between-emerging-technologies-and-the-travel-industry/ ; Travel Analytics founder Scott Gillespie - http://gillespie411.wordpress.com/2010/10/14/four-barriers-to-travel-innovation/ ; and a host of GDS, OTA and travel .com leaders sounding off at WIT: http://www.tnooz.com/2010/10/19/tlabs/there-is-no-innovation-in-travel-only-creativity/

Throughout all this debate and dialogue, it’s become apparent to a few, but not to enough of the many, that there is a fundamental issue with respect to driving innovation in travel.  I would go on to argue that this is especially true for corporate travel, which is summed up by a reply to Scott Gillespie’s posting from Michael Boult of hotel technology experts Lanyon: "Innovation is constrained when those whose problems will be solved by new approaches are unwilling to pay to be helped."

Spot on Mike.  All too often in our industry, the expectations of buyers (and I’m including both corporate travel buyers as well as TMC’s and travel agencies here) is that vendors of technological solutions have to completely build out their technology, run it through comprehensive beta and user testing, launch it to some “brave” customers, and then – and only then – might a customer say “OK you can start invoicing me now.”

The problems with this approach are many.  First off is a simple matter of cash flow dynamics.  The expectation is that the technology company has to completely fund the development of their products before earning any revenue from them, putting them deep into a hole which may take years – if ever – to dig out of.

Second is that due to this overwhelming need for the technology to start earning revenue as quickly as possible, the capabilities of many products are either dumbed down to try and attract the broadest customer base possible, or rushed to market relatively incomplete, in the hopes that “if we build it they will come.”  Yes but will they?  And if so, when?  And will you have burned through your capital by then?

The result of this is then that what’s launched to market often doesn’t really meet anyone’s needs, is looked at as being un-innovative, and therefore results in negative impressions about new technologies which stifles innovation and risk taking by the tech companies in the future.

Now I realise I’ve not provided any examples of this, although we all know some from our own experiences and I’d rather not hang out any dirty laundry outside the Cafe.  There are certainly some successes out there too of course, otherwise we’d all still be writing out airline tickets by hand.  And since I’m a guy who likes to look to the future, rather than re-hash the past, I think that’s where this dialogue now needs to go.

On that note, Cafe Patrons – where to from here?  How can we build a mutually beneficial, shared-risk culture in this industry whereby those who will benefit from new innovations are ready to stand shoulder-to-shoulder, technically and commercially, with companies ready to deliver these opportunities to our industry? 

Or – to tie this all back to my “Field of Dreams” analogy – I would argue that the approach cannot continue to be “if you build it, they will come,” but rather “if we build it together we can both be successful.”

Take that, Kevin Costner.

(image courtesy IMDB.com)

Part 2 – Corporate Travel Personalisation...And What To Do (Or Not Do) About It

In case your normal Genie isn’t available, hopefully today’s Cafe will help see your future…!

Greetings, Cafe Patrons. It’s been a fun and interesting couple of weeks since the Cafe “re-opened” with a new look and a new approach, and I think all the travel shots are starting to take effect as the dialogue is moving along fast and furious. Thanks to all the regulars and new Patrons for their participation!

As mentioned last week, based on the predictions contained within a recent Amadeus study on trends in travel over the next 10 years, there may be a significant change in the way travel products are sold and packaged, especially by airlines and perhaps to a lesser extent, hotels. The idea that an entirely new level of personalised choice and flexibility is already taking shape in some instances, as a Cafe Patron rightly commented on the fact that Air New Zealand’s new 4-tier pricing is a live example of this today.

And although I certainly didn’t mean to try and scare anyone with my thoughts last week about getting ready for these changes now rather than waiting for later, I do think that those who sit on their hands may be in a for a rough go of it if they fail to think at least a bit about what the future of corporate travel might look like.
Over the past several months your Barista has consulted with both TMC’s as well as technology companies around future direction and capabilities, and with corporate buyers about how things may evolve for them within their travel programs. As this is travel, there is no shortage of ideas, concepts and technologies all professing to help make things better. Therefore, I’ve summarised what I see are several ways in which travel buyers and suppliers can think through (and in some cases, work together) to tackle head-on the challenges and opportunities the next 10 years in travel could bring:

1. Understand The Present to Better Predict The Future: when it comes to creating a travel program which engages travellers, drives productivity, and pays off through business results, those who fully understand the culture and objectives of their company are more likely to succeed. Similarly, if you don’t know what your company’s strategies are, and don’t apply them to your thinking about how the travel program will compliment those strategies, change will be hard to manage. Is your company shrinking or growing? Are you on an acquisition spree or are you an acquisition target? How long is your company’s horizon in terms of planning – 1 year? 3 years? 10 years? By thinking ahead to understand where your company is going, and in turn what your travellers may be expected to do in terms of travel patterns, expenditure, etc. you’ll have a better chance of anticipating the impact certain trends will have on your travel program.

2. Find Yourself Some Foot Soldiers: Given the various generations that exist across any organisation today, its important that to better gauge how your travellers will react to future program changes and options you get a good cross section of them engaged now. Ask them to be guinea pigs for new technologies, products or suppliers; incentivise them to participate by giving them “preferred access” to programs or ideas that make them feel special; have them first on the list to pilot test the latest and greatest. Then, when you’re ready to take some of your ideas up the food chain to the leadership, you’ve got your “troops” on your side to back up your ideas with their feedback and evidence.

3. Start Managing Upwards Now: to the latter half of point #2, even if you have the best idea in the world, the surest way to get it shot down quickly is to ill-time your engagement with leaders or stakeholders. As in don’t wait until it’s ready to roll to let them in on it! Although it may seem premature, it’s OK to start working some ideas into your current day thinking and presentations to the organisation to start litmus testing their initial reactions and gauge your potential supporters (and detractors, for that matter.) You may even be surprised by getting a green light to move forward sooner or quicker on a future initiative than you may have thought.

4. Engage Your Suppliers – and Disengage from Those That Don’t Engage: this may seem the most obvious, but it’s also the one potentially most important. As the Amadeus report indicates, most if not all suppliers are going to be looking at all sorts of new ways to package, position and sell the value of their products. From experience, I know that most good suppliers will incorporate a future or strategy component to regular business reviews with their partners and clients, so this may be occurring today in some form or another. However, don’t just let them present to you – why not present back to them? Tell them what YOU think your company’s program will look like 2-5-10 years from now, and see how they react. And in turn, if they try to get you overly excited about a new idea because there may not be an alternative for you to consider, challenge the excitement. And if you don’t like what you’re hearing or seeing, be ready to make a move if the supplier’s strategies don’t match with your thinking.

5. Always Be Thinking in Terms of ROI: at the end of the day, travel is an expense and companies like to control expenses. Great ideas in business always need to come down to some sort of bottom line, be it revenue generation, cost reduction, future investment in growth, or a profitable combination of all these factors and then some. No matter how you look at evolving the components of your travel program in the future, the core value of travel management is maximising benefit whilst minimising cost. So even if you think that soon your travellers will be demanding seats on Richard Branson’s Virgin Galactic flights (“our new sales targets are over the moon – literally – so I need to fly there tomorrow!”) if you can’t find a way to justify them financially as a preferred supplier, you’re probably better off keeping things firmly on the ground.

As with all things crystal-ball related, the above list is not all-inclusive nor does it contain all the silver bullets to address the challenges ahead. However, there’s no time like the present to start thinking, experimenting, challenging current norms, and evaluating potential future successes. After all, if you don’t think ahead, do you know who will?

So Cafe Patrons, what do you think – what other angles have I missed in the above list? Let’s hear them all!

Part 1 of 2 - Corporate Travel Gets Personal



Peronalised Cabins?  I'll take this one thanks!
(Image courtesy http://www.elakiri.com/forum/showthread.php?t=611197 - a cool trip through the 8 most luxurious aircraft cabins in the world.)

Greetings, Cafe Patrons.
First of all, I just wanted to thank everyone for reading and commenting on last week's Blogalogue regarding consolidation in global corporate programs. We'll keep that topic alive and well, as just because we have a new topic to tackle this week doesn't mean you can't still weigh in on last week's.

In keeping with the thought-provoking approach in the new look Cafe, I turned my attention this week to a hefty tome just released by Amadeus, in conjunction with Oxford Economics. The report, titled "The Travel Gold Rush 2020" is quite an interesting read, as it attempts to project trends and changes in the travel industry over the coming decade. I always find these reports fascinating to read through, as they invariably fall into a blatant promotion for whatever product/service the sponsoring organisation is fostering, or it's a thoughtful and useful review which just happens to be sponsored by an organisation who has parallel interests. Thankfully this one falls into the latter.

Although more oriented towards leisure and online travel, there was a very interesting theme throughout the report which has potential significant implications for corporate travel. And that is the idea that in the near future, air travel especially will see traditional classes (ie - First, Business, Economy, etc.) be replaced by "virtual classes." According to the report, "The future of the aircraft cabin is set to go through significant changes as customers are able to share their preferences with airlines and the airlines will be expected to meet their individual needs leading to the decline of traditional travel classes." The report later goes on to say that "In reality, what is likely is that traditional airline class structures will break down and there will be a multiplicity of travel classes in the near future."

Although I'm not altogether surprised by this prediction, from a corporate buying perspective it could prove worrisome. On the former, I'm not surprised by it as the individualisation of traveller needs and related product offerings is just a sign of the times. The "I want it now" generation coming up through the ranks demands smart phones with an infinite number of configurations to make it their own, websites and social networks with robust profile tools to allow for maximum individualisation, and an almost daily launch of travel websites devoted to allowing you to "book your travel your way."

On the latter, corporate buyers already faced with ancillary fee charges, travel application download costs, and new pricing schemes like dynamic hotel pricing are now faced with travellers who may (if you believe the Amadeus/Oxford predictions) ask for the airlines to create their own cabin class. How much will THAT privilege cost, I wonder? And will it be in policy?

Regardless of whether you believe this "personal cabin" will be a reality or not, if you are a buyer of corporate travel the message here is that if you're not already thinking about managing the growing personalisation of your company's travellers - you'd better start. And next week I'll have some suggestions on how to do this in Part 2 of this blog.

In the meantime - what do you think? Do you think travellers are headed down a no-going-back road to individual freedom of choice for business travel, or will the company win out as they do today via standardised program design? Not to worry - the Barista still makes all his shots of travel advice to order....

Global Corporate Travel Consolidation: Join In the Blogalogue!

Greetings, Cafe Patrons.

Believe it or not, I’ve just turned 8-months old as Barista of the Friday Morning Cafe. I’m not quite sure how blog years translate into people years, but I hope I’m about ready to start university perhaps?

In any case, I thought that given some increasing traffic (thanks everyone!) and a readiness to tackle some more weighty topics in the coming months, it was time to move the Cafe on from V1.0 and kick things up a bit. Next week I’ll debut a brand new look for the Cafe - an advance thanks to Mrs. Barista for most of the re-decorating – she’s a wizard!

To get things rolling for the new and improved Cafe, this week is part one of what I hope will be a provocative and interesting “blogalogue” (def. – a dialogue conducted within a blog) between the Cafe regulars and soon-to-be-regulars. Without giving too much away, I know that some of you visit the Cafe from travel management companies, some are from GDS or technology companies, some are corporate buyers, and many are corporate or leisure travellers in their own right. Given the one-to-many nature of blogs, it is often hard to get people actually “talking” about some of the topics in a structured way.

In the new Cafe, I propose to change this up a bit. Here’s how: over the coming weeks, I will be reaching out to a few of you who are regulars and some who may not yet be regulars, to see if we can’t get the comments section rolling (that’s the “blogalogue” part) around a particular topic. And if my own web surfing experience is any indication, it will have to be a pretty interesting topic to get people to join in the discussion on line.

So here goes.

As the world’s economy tries to put the recent GFC behind it, I believe that the differences at which recovery is progressing across various global markets is significant. On the one hand you have emerging and/or expanding markets like the BRIC and South East Asian countries that have basically already forgotten about GFC, while the US and European markets remain sluggish and uncertain.

From a corporate travel perspective, this patchy recovery could pose a very interesting dynamic in the coming years as many corporate travel program heavyweights traditionally are centred in the US/Western European markets. This centralised approach to travel management in those organisations have, over the past decade in conjunction with mega-TMC’s, often sought a “one global TMC, one global policy, one global program” approach to consolidation.

Given the last 2.5 years of GFC turmoil, one might then think that continued consolidation would be the norm given the relentless pursuit of cost-cutting many companies have embarked on.

However, given the aforementioned growth of certain “non-traditional” economies, there may be a counter-trend which could find more purchasing power emerging from Asia, South America or Eastern Europe than previously thought. As these markets are now powering much of the growth for many companies, these new “darling regions” could wield much more influence over how they operate. And given that many of the emerging global powerhouse companies are actually based in these rapidly growing markets, we could see an entirely new travel purchasing dynamic emerge.

So – the blogalogue question for Cafe goers is this: will consolidation of corporate travel programs continue apace, or will a new, fragmented yet regional-centric approach start to take shape?

I have a view on this, but in order to get the blogalogue going I’ll allow it to come out in response to the arguments posted by Cafe Patrons in the Comments section – see the link just below this posting. Again, I’ll be offering extra “shots” of advice to those of you I’ll be reaching out to over the coming week to galvanise the discussion – and by all means please feel free to bring newcomers to the Cafe, as again next week we will have a fresh new look ready to welcome them all!

Look forward to chatting with everyone.

May the Force Be With Us...Avoiding "Air Wars" in Asia Pacific

Greetings, Cafe Patrons.

Over the past several weeks, I've been reading with interest the increasingly noisy debate going on primarily in the North American market pitting airlines vs. GDS's vs. corporate buyers vs. TMC's vs. travel technology companies vs....wait a second, I thought wars were usually between two sides??

Perhaps likening this debate to a war is a bit of a stretch, but certainly the passions that are being flamed over distribution of emerging airline and hotel pricing models are quite toasty, to say the least. At the core of these arguments lie the surging revenues airlines are generating through the unbundling of their airfares and charging as ancillary fees all things great and small during the flight. The corporate travel industry in particular is heavily affected by these types of charges as it's pretty well universally accepted that no one has quite figured out how to book, track, manage, report and account for that $9 ham-and-cheese sandwich on board or that $7.50 pillow purchase (and if the company reimburses for the pillow, does it become company property?)

Earlier this year, the debate was taken to a very public, and entirely new level, via a pair of blog postings from US industry veterans Jim Davidson of Farelogix, and Kevin Mitchell of the Business Travel Coalition. These online salvos were then followed up by what I hear was quite the entertaining session at last month's NBTA conference in Houston. If anyone in the Cafe happened to attend that session, the Barista would love to hear more about it! For the rest of our Cafe goers, if you're up for some fairly fiesty reading, follow these links in order:

Farelogix vs. BTC: http://www.tnooz.com/2010/04/08/news/fear-and-loathing-in-the-airline-industry-innovation-on-hold/

BTC retort: http://www.tnooz.com/2010/04/09/news/set-phasers-to-stun-davidson-accused-of-warped-logix-about-airline-industry/

And just this week, a group of fed up industry types (of which Kevin Mitchell's BTC is a backer) have launched what seems to be another attempt to sway public opinion on the subject, albeit with a fairly silly YouTube video of someone's grandmother reading a prepared statement off a cue card. Again, if you're up for an amusing look at this topic, check out www.madashellabouthiddenfees.com

Anyway, while all of this lively banter is going on in the North American market, it begs the question: when will it hit us here in Asia Pacific? If the level of intensity around the debate within our industry overseas is any indication, we'd better pay close attention to ensure "peace" rather than bringing out the lightsabers. That way, we hopefully can learn from this debate for our region and how we can implement steps to pro-actively manage the situation rather than let it digress into a war of words.

What particularly concerns me about this situation for the Asia Pacific region is that content fragmentation is such a way of life here that any attempts to normalise things in the past have, well, not become the norm. Depending on what you classify as a CRS/GDS, there are more than 10 distribution systems in Asia within the travel industry, and that doesn't even count the proliferation of websites and online travel agencies offering content to travellers.

Adding to the mix, and which is reminiscent of what's happened in the North American market, is the rapid entrenchment of low-cost carriers across Asia Pacific offering their own version of direct selling to both consumers and business travellers alike. Oh, and don't forget that those same LCC's are also offering unbundled, pay-for-what-you-use services for a separate fee. So the battle lines may still be fuzzy, but they are certainly being drawn.

Now I'm not going for a "Travel Distribution Nobel Peace Prize" but I do have some suggestions for us as a regional industry to consider to try and avoid a repeat of the vitriol in other markets:

1. "Legal Collusion:" there are laws and very good reasons why airlines, GDS's or TMC's can't sit at the same table to discuss these things, but there's nothing against an airline, a GDS, a TMC and their corporate customers ALL SITTING DOWN TOGETHER to discuss these issues. All the dialogue from the US laments the fact that of all the stakeholders in this business, no one has sat down together to try and work this out. The first step to getting to an agreement is agreeing that no one has agreed on anything. So let's agree to sit down and discuss our disagreements, then work to agree on how to avoid future disagreements. Agreed?

2. Corporate Buyers Define What They Really, Really Want: what are the truly big issues with respect to fees: booking? Reporting? Policy? All of the above? More than the above? If buyers aren't clear about what their challenges are, then it just seems as though they're mad because no one asked them whether they wanted these fees in the first place (see suggestion 1 above!) One group that's not precluded from getting together and collating their grievances about travel-related issues are corporate buyers, so it's time to rally those troops and put together a prioritised list of issues and proposed recommendations from the ones who really bear the brunt of these fees.

3. Remove the Protectionist Attitudes: let's face it, we operate in a fiercely competitive industry, so we certainly can't begrudge anyone trying to make money here, be it airlines, GDS's, technology companies, etc. However, we must come to an understanding that at the end of the day we all have similar interests around efficiency, cost savings, and ease of use for those who want to buy travel services so if it's possible to be altruistic in our industry, this would be a reason to do so.

On that last point, perhaps I'm being naive as the massive growth projected for the Asia Pacific region in the coming decade is certainly ripe for certain entities doing all they can to grab as much advantage as possible over their competitors. That being said, time and again in the travel industry I find that suppliers and technology companies end up going down a certain road for several years, only to hit a wall and have to re-think their strategy. How about we avoid the wall altogether?

In any case, it may just require the Death Star to be blown up by the Rebel Alliance before anyone pays attention to this looming issue out here in Asia Pacific (are we the far far away galaxy perhaps?) Just don't ask me to comment on who I think Darth Vader is in all this...

Image courtesy www.sodahead.com

Same, Same...but Different?

Greetings, Cafe Patrons.

For those of you who have been to Thailand, Cambodia or other parts of SE Asia, you may be familiar with the theme of this week's Cafe. Whether it's a fake Rolex or a hotel room that's not quite as nice as you thought it was on the Internet, you'll hear a common reply from the locals: "yes, it's same same...but different!"

Which is what was running through my mind at last week's Association of Corporate Travel Executives' Asia Pacific Conference in Singapore. And no, it wasn't because someone was trying to sell me a "Louie Veeton" handbag for my wife ("no really honey, it's a real one...same same but different...!")

As I was sat at a roundtable listening to an industry perspective presentation, one of the attendees whispered to his tablemate that "we've heard this all before, has nothing changed in our industry? It's the same thing every year." And that's when it hit me - yes it's "same same" - but quite different than it may seem on the surface.

Take content fragmentation, GDS relevance and online adoption in Asia Pacific, for example. Five years ago when I attended my first ACTE Asia Pacific conference, I was working for a GDS company and was part of a session discussing the demise of traditional distribution due to the "imminent rise of online booking and direct connects in the region." Lots of nodding heads in the audience at that one.

At the conference last week, we heard from several TMC's including HRG and BCD that online booking adoption is growing in Asia Pacific and that supplier content fragmentation continues to be the norm in this region. So there you go - on the surface it sounds like we were saying what was said five years earlier ("same same!")

But listen closer, and you'll start to hear the "but different" part of the old saying. During another industry perspective presentation at ACTE, BCD's Greg O'Neil in particular talked about this subject within a comprehensive white paper called "At The Tipping Point" in which he rightly points out that while online booking has grown significantly in the region (the "same same" part) the BCD white paper also notes that "...a further trend toward the increased use by business travelers of smart phones and other Web—enabled devices should be seen as an interlinked development with online booking." That's the "but different" part.

The great fun of being in this region is that while on the surface sometimes things seem to move quite slowly, the undercurrent is whipping along at a break-neck pace. So while some people may see things as not progressing all that fast, others realise that when you reach the back-end of a period of time in this region you can expect things to suddenly look very, very different.

Many of the GDS pros, TMC leaders and buyers I spoke with last week to various degrees all understand that a big shift is already underway in Asia with respect to travel technology, distribution and traveller behaviour. And that shift is that mobile and hand-held devices are going to drive tremendous growth in self-service in Asia Pacific that will likely put this region well ahead of the rest of the world in this space in the coming months. Note I said months - not years.

Yes, given the plethora of GDS options (TOPAS or TravelSky, anyone?) seemingly endless new online upstarts (excellent IPO, MakeMyTrip) and rapid rise of mobile social media (60% of all tweets globally come from Asia - yowza!) this market may seem to be a madhouse sometimes. But from madness often comes greatness, and it's likely that the corporate travel industry will meet again in Singapore next year and look back on what will likely have been quite a year for travel technology in the region.

And that, my tablemates at ACTE, is very, very different than what you may think it is.

EXTRA SHOT FOR THE DAY

At the risk of taking credit for something I know I had no direct influence on, I still am pleased to know that Virgin Blue is at least thinking the same way I am.

In an earlier Cafe posting I offered up several ideas which DJ could take on board to help them in their attempts to steal corporate market share away from Qantas. This week they've announced that at least one of my points - widebody planes on domestic routes - will become a reality from May 2011 when they introduce A330 aircraft on routes between Perth and the east coast. Flying to Australia's largest state on a large aircraft is just natural, as why wouldn't you want to start stretching out as soon as you possibly can?

And just in case, by some miracle there are Virgin Blue patrons starting to have a peek in the Cafe's windows, I might suggest that they next see about what they're going to do with that useless "Premium Economy" class....

Image courtesy AustralianGamer.com

A Singapore Sling Next Week - Come Join Me!

Greetings, cafe patrons. A shameless plug this week from the Barista, in case any of you are in the neighbourhood. Come join me at the Association of Corporate Travel Executives Asia-Pacific conference, where we will be tackling the big issues of corporate travel today. Mobile? Sorted. Supplier Negotiation Strategies? Easy. Transcontinental flight vs. telepresence? Discuss.

In any case, with several hundred of the Asia Pacific region’s best and brightest corporate travel minds all in the same room (I’ll be outside guarding the door) I’m sure some great discussions will take place and excellent ideas exchanged. And if you are coming by, catch me leading a few discussions as the “talk show host” with some of the leading minds in corporate travel on the panel.

We’ll be covering social media and communication in corporate travel programs, integrating travel alternatives into your travel program (I’m voting for “beam me up Scotty”) and how mobile is changing the travel distribution chain. That last one will be a fun one, given that the whole point of mobile is to break the chains altogether – or is it?

In any case, I do look forward to seeing a few of the cafe patrons at the conference but for those who can’t join the remote Cafe, I’ll be sending updates via LinkedIn and Twitter (@kcknacks) so feel free to join the action!

Mobile Mayhem? Not if You're Switched On

Greetings, Cafe Patrons. It's been a busy few weeks for the Barista, trying to keep on top of all the latest and greatest technology announcements from local and global players leading up to this week's NBTA jamboree in Houston. Many announcements have been related to new partnerships with significant mobile capability aspects (see: Travelport/Rearden; Orbitz/TripIt; TripIt/Google; Concur/Mobiata, etc. etc.) but the reality is that most of these integrations, in my mind, still have a long way to go before being embraced by corporate travel programs.

Oh don't get me wrong, I fully realise that business travellers the world over have been downloading and using services like these for a while now and will continue to proliferate amongst the world's road warriors. But today's Cafe is brewing up a subtle blend...note that I said corporate travel programs. Nothing to do with the aforementioned road warriors.

You see, the main issue that company travel managers are still struggling with is what these mobile vendors will (or won't) do to support (or torpedo) their carefully crafted travel programs. Years of relationship building and negotiations with preferred airline/hotel/car providers are being threatened by the Northern Regional Head of Sales' infatuation with the iPhone App Store and downloading all sorts of content that may have them booking a room at the Sofitel rather than the Sheraton. Room night commitments to Starwood be damned!

And herein lies the rub: travellers are being bombarded by a whole new world of choices when it comes to travel content, recommendations, booking channels, "special" deals, and loyalty perks. Some or all of which may be completely at odds with what the CFO has asked the travel department to do in order to help manage costs while maximising the return on travel investment.

All the while, those same road warriors are battle weary and travel tried from years of cancelled flights, middle seats and phantom hotel bookings. And they are saying "give me what I want as I now have the power to do more and be more effective right in the palm of my hand!"

2010 is truly shaping up to be the year of mobile (and don't just take my word for it - my former colleague and legendary travel blogger Tim Hughes also came around to this concept this year) so any corporate travel managers with their heads in the App World sand are about to get stepped on by the expectations of their travellers. But they still have to watch out for their boss' expectations that costs will continue to be managed and that contract commitments to suppliers will need to be achieved.

So - where to from here? To put it simply, travel managers must be embracing of these new platforms and services but also need to find a way to put some control into the mix. The key will be who can see through all the clutter and glitzy announcements to get to the core of what applications could be leveraged by a corporate buyer.

As example, if you look closer at the Orbitz/TripIt tie up, you'll see a key aspect which gives the travel manager hope: "private company groups" which can be managed by a company administrator. Similarly, applications designed specifically for corporate use like conTgo or Concur Mobile can also inject a significant degree of company management into the mobile space through directing content, messaging directly to travellers, and enabling two-way communication between traveller and company/TMC.

Breathing a bit easier now? Hopefully, as all is not lost if you just keep focused on balancing the need to have travellers be switched on with your company's objectives for strong travel management. But for sure, the mobile mayhem will knock you sideways if you're not careful, as I hear they're working on an App for that...

EXTRA SHOT FOR THE DAY

Talk about a mashup: the look for the newly merged United/Continental airline livery has been released (see page 4 in the hyperlink.) Maybe calling it a "mashup" is actually too kind...."dog's breakfast" perhaps? Poor Continental - they've led the way for the past decade in terms of a US airline that's somewhat tolerable and then their name gets relegated but the logo stays. At least we'll not have to see those awful snow-white United planes for very much longer....

The Most Useless Travel Blog Posting Ever

Good morning, everyone. I know (or at least I hope) your weekly visits to the Cafe are insightful, interesting and useful - but I think today I may just disappoint.

I'm intrigued by the recent moves in personnel and public statements being made by new Virgin Blue boss John Borghetti as he continues to reiterate that Virgin Blue's future is based on a significant growth in corporate business. Just this past week it was announced for example that he's poached a bunch of his former Qantas colleagues to take on senior roles in Brisbane. And given that he was instrumental in building up Qantas' business products over years down in Mascot I certainly am sure he knows what he's doing.

However, as a frequent business traveller, and someone who flew Qantas predominantly for nearly 6 years and recently started flying on Virgin Blue, my curiosity is based on wondering how on Earth Virgin Blue is going to take a slice of Qantas' stranglehold on the Australian business travel pie. Because much of that curiosity stems from the fact that having flown Virgin Blue nearly every week over the past few months I have absolutely no clue how they are going to pull this off.

I certainly do not profess to know what drives the satisfaction of every single business traveller out there. But having logged my fair share of miles all in the name of whatever organisation I happened to be working for at the time, I do think I have a good idea of what business travellers are looking for in an airline.

But I really, truthfully, have no idea what I would tell John and his old and now new cronies there at Virgin Blue how they're going to capture the business travel market. Thus, today's Cafe being the most worthless travel blog post ever.

What I can tell the Virgin Blue team however, are some things about travelling for business on Virgin Blue that I would think that, if changed/edited/deleted altogether would be a great start:

- Terminal experience: OK, so this is a tough one, given that airlines have only so much control and influence over Macquarie Airports (oops, sorry - I mean airport operators) to enhance the airside experience. That being said, the difference between Sydney Domestic Terminal 2 vs. 3 (Virgin vs. Qantas, basically) is significant. I'm not talking about shopping or food- I'm talking about feel. Most savvy business travellers today in an era of mobile/online check-in are breezing into the terminal with only minutes to spare before boarding and don't give a rats about shopping or eating. The light, airy feel of Qantas' Terminal 3 compared to the dark, low-ceilinged rabbit warren of Terminal 2 makes me want to cut those minutes down to one single minute. T2 in Sydney (and don't even get me started on Melbourne) needs a serious overhaul.

- The "fun" factor: I don't have any specific issue with this, as I enjoy a sharp-witted flight crew and genuinely friendly welcome as much as the next person. What I don't like is when those who are tasked with my safety and onboard comfort put that fun above their job. The problem with the flight crew on Virgin from a business perspective is that they don't pay enough attention to why I am travelling. I don't need a joke after a long day and I'm buried in my laptop as soon as the seat belt sign is off, I just need a "hi there, do you need anything?" and then move on. Even if Qantas' flight attendants aren't always the warmest (generalisation of course, there are some very nice ones) they at least have the "attend" part of the job down pat.

- Make a decision on the front of the plane: the current "Premium Economy" is neither Premium nor good economy. Let's face it: flights in Australia aren't all that long, so why have a product that doesn't really give you any significant difference in the on-board experience? Qantas' domestic business class may not necessarily be "worth it" (again, given relatively short flights) but at least the difference in the product is noticeable.

- Narrow planes = narrow opportunity: Virgin needs to get bigger planes on the more popular routes. Like the earlier points around the "light and airy" feeling in the QF terminal vs. the DJ terminal, there is still something infinitely more comfortable being in economy on board a plane with two aisles rather than one. Every flight on Virgin Blue just reminds me of travelling in the USA, aka: Boeing 737/Airbus A319 hell. No matter that the seats are leather, or that there is a seat-back TV in front of me, I would rather be on a wide-body jet any day of the week. Especially to Melbourne, which is such a short flight that having a wide-body plane for a 50-minute journey seems luxurious. Business travellers like luxury, no matter how small it may seem, and having to cram on board single-aisle aircraft when you could go on something bigger just doesn't cut it. And yes - I am saying I prefer a creaky old wide-body 767 to a brand-new 737.

- Free Foxtel: I would have to think that the most clear-cut differentiator is that Virgin offers 24 channels of live-to-air TV on the seat back in front of you rather than stale Channel 9 news updates with the ingratiating Deborah Hutton winking at you from out-dated overhead monitors. I'm sure JB has already thought of this, but if you want corporate loyalty - give us free Foxtel!

Again, as I have said numerous times, I can't imagine how difficult it must be for an airline to offer various pre-flight and on-board experiences and capture market share all in the name of profitability. So if John Borghetti ever did shimmy up to the Friday Morning Cafe and order up some advice from the Barista, I'm not sure I could truly help him out. But as an avid and well-seasoned traveller, I would hope that my useless advice could perhaps find some value somewhere, somehow. Like JB's goal to achieve 20+% share of the corporate market...we dare to dream....

The Premium Conundrum Continuum...

Good morning, cafe patrons. I hate to serve up the same brew two weeks in a row, but I can't help but be flummoxed by this back-and-forth going on in the Antipodean market at the moment with regards to first/business class strategies.

In last week's cafe I talked about the new IATA report showing that premium traffic globally seems to be picking up, and the Asia Pacific region in particular is looking fairly healthy. However, during the last few months all we seemed to hear from Qantas, Air New Zealand, BA and a few other airlines was that the days of premium travel were drawing to a close. Or that at least a future much closer to economy class would be the new norm.

Although I'm pretty sure Qantas execs aren't yet frequenting this humble little cafe for their Friday Morning cuppa, I feel a bit vindicated following some of the comments QF leadership has been saying over the past few days. But I'm also a bit confused, to be honest. Which is easy to do, I get up early to open the cafe so sometimes I'm a bit bleary-eyed with all this airline stuff.

At the Australian Tourism Exchange this week in Adelaide, Qantas CEO Alan Joyce and Executive Manager Rob Gurney both made statements about the importance of premium products as they talked about deploying more A380's in the coming months complete with the new first and business class products. In addition, Stephen Thompson who is Qantas' GM of International Sales also stressed the importance of the premium product and the business travel market within Qantas' overall strategy.

So which direction is this going? I think it's safe to say that the A380's coming on line soon will of course have the new first and business (and premium economy, for that matter) products as part of the service as those cabin configurations have been set for a while.

But then in another article this week from Travel Daily Australia, according to travel agent GDS queries the Sydney-Buenos Aires and Sydney-San Francisco services will not get First Class back on those routes until late September - more than three months later than previously planned.

And I've also not yet heard any mention of putting the B747 back onto the SYD-JFK service, so as of early July it will still be a downgraded A330 on that route. Sure, I've flown that half-empty plane from LAX to JFK but I've also experienced every return flight from JFK-LAX as completely full so I would think that Qantas would prefer customers on QF metal rather than on feeder flights via American Airlines.

As I've always said, you couldn't pay me enough to be an airline revenue manager and certainly I'd be lousy at it anyway. However I'm sure whoever's running that department, along with the head of on-board products for Qantas, must be scratching their heads as much as I am as to what the premium strategy for Qantas really is.

EXTRA SHOT FOR THE DAY

Today's extra shot is taking a shot at cranky taxi drivers. Especially ones in Sydney who seem to not want to take passengers from the airport to the Inner West.

A friend of mine claims 5 straight journeys home with drivers who have given him all sorts of grief about waiting at the airport for hours only to get a "short fare." I've had this before as well, but not nearly as much as this gentleman has. And as he actually probably is going a bit further than I do in terms of how far the crow flies, I certainly can't understand why any cabbie has a gripe about "not far enough."

It's not like they have the right to gripe anyway, as the taxi charter clearly states that a passenger has the right to go to pretty much any destination in the Sydney metro area.

Not to mention that how do we know whether the cabbie's fare TO the airport wasn't a nice big fare so he's just annoyed he couldn't double up the success?

To be fair, I have to say that although this has happened to me in Sydney by far the worst city in the world for cabbie grumbling is New York, thanks to the flat fare from JFK to Manhattan. It's not like I set the price guys, so don't take it out on me!

Ah, if only we all could have London Black Cabs...the world's greatest form of public transportation. Clean, very comfy, with a driver who knows exactly where to go and the best way to get there. Happy to pay a premium for that level of service every time...take note, "Silver" Service!

The Future of Travel is Here...and it's Quite Futuristic

Last week I had the privilege to attend one of the largest corporate travel conferences in Australia, BTTB 2010 in Sydney. An annual confab bringing together buyers and suppliers of corporate travel services, BTTB has always tried to find topics to put on their agenda that are interesting and provocative.

One of this year's more interesting items on the program was called the "Mobile Shoot-Out" where vendors of travel technology including Amadeus, Sabre, Serko and ConTgo did a few nifty tricks with various new products, but one of them stood out as quite an interesting take on where corporate travel is going.

The guys at Serko have come up with an application which allows a corporation to be able to triangulate (using location-based mobile technology) a traveller's location pretty much down to the square foot he or she is standing on, and view that location on a map. The theory is that the corporation's security manager or HR director or whoever is in charge of traveller safety would then be able to evaluate whether or not the traveller may be in a so-called "hot zone" and then send messages to the mobile device of the traveller. This would all be under the premise that in an emergency the company could provide the traveller assistance and/or directions out of the hot zone.

Hello, George Orwell, you say? Perhaps, but I'm not as much concerned about the technology (which is quite cool in and of itself.) It's more about what it will be like for corporate travellers in the future with respect to what they will have to give up in exchange for what their company will provide them.

Are you comfortable with not only providing your mobile number to your company and your Travel Management Company but also now perhaps your technology provider? This would of course be in exchange for the peace of mind that come a terrorist attack or another ash cloud descending on your location, that your mobile will swiftly and surely start buzzing with useful information on how to deal with the situation. A good trade, having someone literally watching over you while you travel in exchange for them knowing exactly where you are standing/sleeping/sitting at all times?

The other aspect of this technology, of course, is although it may allow certain company execs to sleep better at night believing that the company's "duty of care" is now fully in place, how long will it be that these "find me and help me" services will be enough? Will the expectation - whether from the travellers or perhaps even the law in some countries - go even higher to ensure traveller safety? Will it still be enough to know where travellers are and send them messages to help out, or will companies now be expected to have their own SWAT-like search-and-rescue teams on standby to physically swoop in and get the traveller out of harms way?

Sounds a bit far-fetched, but I'm sure the Orwellians out there will say it's only a matter of time. Regardless, it's obvious that the future of traveller location and safety services is literally just around the corner...or is that danger lurking perhaps? Can anyone see around corners yet?

EXTRA SHOT FOR THE DAY

One other interesting "trend" heard at BTTB last week was hoteliers "being forced" to pass along credit card surcharges to companies wishing to pay for their hotel bills with plastic. Will we hear no end to the seemingly endless belief across so many companies today that no one is allowed to make money anymore except themselves?

If you want to accept credit cards, you need to pay for their services. It's secure, it's convenient, and it's what business travellers want to use. I don't carry $200 in cash around with me to pay for my room, and I don't want your hotel chain's direct-connect payment plan, as I am very happy with my current payment plan. That would be a credit card, by the way. You want to surcharge me? Fine, I will go to another hotel that doesn't.

Sounds like hoteliers are taking a page out of the airline book and try to fawn off costs of doing business as "extraneous services charges" or some other spun terminology. If you want to sell your product in a market-type environment (read: GDS) so you can attract the most potential buyers to your door, then you need to allow the market to make money off that. If you don't want to pay credit card companies to manage and process your cash flow for you, then don't take the cards. Simple. Then those hotels that do take cards and don't pass along the costs to me will get my business. Also simple.

What's next - a water surcharge for flushing the toilet? No wait, strike that - I should probably keep my mouth shut...don't want to give anyone any ideas....

Haute Couture, Tiffany Diamonds...American Airlines Seat 23D from DFW-ORD?

Here we go...after years of saying they were going to do it, they are going to do it.

American Airlines is going high fashion.

Perhaps you're wondering if the Travel Barista has had a few too many shots of espresso today, but bear with me.

There is a very clear-cut strategy that high fashion, luxury labels and cache brands use to give their products an air of exclusivity that you can't find in the department store brands. And that strategy is that you can't get them in the department stores.

You want a real Tiffany cut diamond engagement ring in the famous blue box? Only a Tiffany store itself can give it to you. Looking for that Oscar red-carpet look that will allow you to say "it's a Vera Wang?" Better visit one of her stores. Want a complete set of customised steamer trunks like they used to use to travel the world on ocean liners? Head down to your local Louis Vuitton shop. (Ok, perhaps a back alley in Shanghai...)

So what does all this have to do with American Airlines? Simple - they are, in essence, taking their product out of the department store and opening up their own, exclusive, hard to get to, boutique.

Read all about it: http://www.eyefortravel.com/news/airlines/american-airlines-takes-gds-charges-new-distribution-model

Long story short is that American has had enough of giving distribution channels like the GDS's, corporate travel management companies, and online travel agencies (and soon I'm sure good old fashioned shop-front retail travel agencies) a chance to make a bit of profit by selling American Airlines seats. So they're going to only sell direct. Maison d'American Airlines, anyone?

In essence, by only allowing their product to be sold directly via their own channel, takes them out of the shopping marketplace and distribution network that long has served them and other airlines well and will ask the buyers to come find them. It's Fifth Avenue or Bond Street as opposed to Bloomingdale's or Selfridges.

For those travel managers out there who perhaps find the product that American offers is indeed worth the premium it will now take to be able to book, ticket, track, manage and report on flights bought on American, then perhaps this will be a good strategy. After all, making something hard to get can often make it quite irresistible.

But my money's on the fact that most travel maangers are more like power shoppers, who'd rather comb the Saturday newspapers trying to figure out which store is having which sale on the most choices of stuff available rather than having to make a separate trip to a boutique to buy only one type of outfit.

So...could we soon see American Airlines be up there with the Jimmy Choo's or Hermes of the world? Sounds a bit pretentious, doesn't it?

I’m “Fee” To Do What I Want...Any Old Time...

Travellers don’t understand them. Corporate travel managers loathe them. And airlines love them.

What are they? Fees. Lots, and lots, of fees.

US carriers have elevated the auxiliary fee to an art form, finding all sorts of ways to charge the traveller extra for things that used to be standard. Checked bags. Choosing your seat. Nabbing an exit row. Food (bad, good or otherwise.) And my personal favourite- pillows and blankets. Laying your head down for a snooze and paying for the privilege is no longer just the business model of hotels apparently.

But what really is driving me nuts is not so much these numerous fees (which, unfortunately, are obviously here to stay and will be leveraged by more and more Asia Pacific carriers in the near future- more on this in a moment) but the fact that both airlines and the distribution systems which help sell seats for those airlines really don’t seem to be making things easy for those people buying and booking their product.

Case in point: Abacus recently announced the findings of the Abacus Merchandising Survey 2010 after interviewing Asian airline executives about their plans for capturing ancillary revenue through new fees charged to their customers (read the article courtesy of TravelMole here. http://www.travelmole.com/stories/1141434.php?mpnlog=1) Abacus vice president of marketing, Brett Henry, said, “The survey has made it clear that airlines in all segments across Asia, not just LCCs, are making ancillary revenues a key component of their future revenue growth strategies.” Well surprise, surprise.

But what’s troubling for everyone who works in the trenches in booking, tracking and reporting on airline costs for corporations (read: travel management companies and corporate travel buyers) is that there was very little Abacus said about what they plan to do about finding automated solutions for managing these fees. In fact, if you read the article closely – they said absolutely nothing about what they plan to do in terms of offering travel agencies solutions for being able to book, track and manage such fees so that corporations have a clear understanding of how they impact their business travel expenditure.

To be fair to Abacus, I’ve not heard or read anything from the other GDS’ with respect to their plans about ancillary fee management/automation/process improvements in Asia Pacific. For US and European markets, the major GDS’ are spending millions on developing solutions for airlines to help them merchandise, market and sell all these extra “services” with fees attached. But there seems to be very little in the way of how travel management companies are going to muddle through in the interim. Especially in Asia Pacific where this is an issue that is yet to really hit the radar of regional travel buyers and agencies, but I’m sure will be a front-of-mind migraine very, very soon.

So on that level, kudos to Abacus for the wake-up call to the Asia Pacific corporate travel community.

But now the challenge is- will Abacus now back up their research with solutions? And if not them, who else will step up?

And in the meantime – to all the TMC’s and corporate buyers out there – to paraphrase the Rolling Stones: be free, to do you want...for now, because pretty soon there will be no freedom from fees.

EXTRA SHOT FOR THE DAY:

Last week I questioned the seemingly full-on retreat by airlines like Qantas, BA and Air New Zealand with respect to traditional premium on-board products given what seems to be a relatively healthy rebound in demand in Asia Pacific at least. Since then, Qantas is reportedly reducing their SYD-JFK services to remove the daily B747 SYD-LAX-JFK services and replace it with an A330 service, but only 5 days a week.

The reduction is frequency is one thing, but it also means that there will no longer be First or Premium Economy products offered through to JFK from SYD as they only exist on the B747. And that may turn out to be a bad idea, given that many companies who have used the GFC to pull back their air spend and ask travellers move from Business down to Premium Economy (or even Economy.) And now Qantas is eliminating that “step-down” option for corporate travel buyers. So now all you QF Freaky Fliers, if you want to go to the Big Apple, it’s either the A380 then transfer to American Airlines (ugh) or scramble for limited business class seats on an A330. Things that make you go hmmm....

AND NOW FOR A DOUBLE EXTRA SHOT:

The International Air Transport Association (IATA) announced that February 2010 international scheduled air traffic showed a 9.5% year-on-year rise in passenger demand. Even more surprising, given that February isn’t usually a high-traffic month, IATA reported that adjusted for seasonality passenger traffic then translates to an all-time record February load factor of 79.3%.

So, some would think the airlines should be breaking out the bubbly rather than the doom-and-gloom quarterly earnings they’ve actually been preparing the investment community for. Yes, comparing February 2010 to February 2009 is like comparing apples to worms (ie- 2009 was an aberration) nonetheless the adjusted load factor record is somewhat astonishing.

So if you’re like me and have experienced packed airports, crammed planes, and waitlisted flights recently, you’re probably scratching your head like I’m scratching mine wondering: how on Earth can’t these airlines be making money????

I love the travel industry, but you couldn’t pay me enough to be in airline revenue management. When the numbers show that things are bad, but the “physical” indicators like the aforementioned packed planes make one think that times are rather good, would make for quite an unsatisfactory job I’d think. Not that I’d be very good at it anyway....

Ditching Premium Seats Across the Ditch

Air New Zealand this week announced a new strategy built around a simplified pricing structure for Trans-Tasman fares, complete with a simplified on-board product offering.

Translation: Business Class is out, modified (or perhaps "glorified" is a better word) economy seating is in.

The new 4-tiered product and pricing approach is apparently as follows: the lowest price gives you a seat, a coffee or tea and access to entertainment; next highest price gives you the previous plus checked bags; 3rd highest adds a meal and drinks and the most expensive option features lounge access and a confirmed empty seat next to you. How luxurious.

According to Air New Zealand, they are on average only selling 1 Biz Class seat on any given Trans Tasman flight, so the thinking is that perhaps a 3-ish hour flight is not long enough to justify the higher cost of a Business Class product. So they're going to change their cabins to swap out Biz Class seats for Economy seating, but with the above mentioned flexible configurations and on-board amenities to choose from in order to determine the price for the seat. And, they hope, convince those seeking a more up-market product can be achieved with a standard Economy seat - with "perks."

From a creativity standpoint, I think this is admirable and followng on their announcement a few weeks ago of their Skycouch "lie-flat" long-haul Economy product it reinforces to me that the Kiwi carrier continues to push the creative envelope that Qantas seems to not even want to open. That being said - will this idea really fly?

First challenge: making sure corporate travel managers can figure out what level(s) of this new fare structure and related onboard product fits into their travel policy. Obviously if a company's current Trans Tasman policy is business, which of the 4-tiered product is an appropriate replacement? The 3rd-highest priced option with free drinks and a meal, or the most expensive option which provides those features plus lounge access and a blocked adjacent seat? Believe it or not, some companies still have an "International Flight = Business Class" policy which now will have to be re-thought should that company fly Air New Zealand. Or perhaps this may backfire and Air New Zealand customers my decide just to switch rather than deal with re-working their policy. Interesting...any corporate travel managers out there in the Cafe' care to comment?

Next Challenge: Convincing road warriors that this is a "premium" product. Yes, AKL-SYD isn't exactly the Kangaroo Route, but there are indeed plenty of business travellers who think that having to carry their passport (at least for now - soon NZ and Australia will eliminate that hassle of immigration...yeah!) means they're entitled to a Business Class seat. To most of them, the size of the seat is more important than whether the one next to you is empty, and especially if there's no incremental legroom in the new product then I'd predict this approach will fall flat with Business Travellers used to bigger seats.

Last Challenge: avoiding nose removal for facial spite. This move by Air New Zealand, although at the moment seems prudent due to GFC hangovers and a continued challenging operating environment, adds to the trend of carriers pulling out of premium products citing what they see as an irreversible trend in premium traffic. Qantas and BA both recently have stated they are changing aircraft product offerings as they don't see a near-term recovery in corporate premium purchasing. However, this could be short-sighted, as several corporate travel managers and a TMC leaders have commented to me lately that since the start of 2010, carriers that feature premium products prominently (try saying that 5 times quickly) like Singapore, Emirates, Etihad and Virgin Atlantic are enjoying quite full Biz Class cabins and in fact getting seats on top routes require booking a month in advance. Perhaps this is perception rather than reality as the airlines' recent financial reports do seem to be quite glum. But let's not write off premium traffic just yet, as my recent travels have seen full cabins, business people anxious to get out on the road, and a First Class lounge at LAX which had to ask people to remove their bags from seats in order to fit all the people in. No lack of premium demand there...

Here's Johnny!

So perhaps the least surprising announcement in the Australian travel industry came earlier this week when Virgin Blue introduced former Qantas Executive GM John Borghetti as the new boss at Virgin. I think pretty much everyone who’s in the business here knew that as soon as Borghetti’s 12 months of non-compete time were up he’d likely pop up at another carrier, and even more likely at Virgin since Brett Godfrey announced his departure last year.

What will be very, very interesting to watch as Borghetti takes over the reins is whether he can deliver on his ultimate boss’ (Sir Richard Branson) statement that Australia’s number two airline will need to “go after the business market in a big way.” Borghetti was a big driving force behind Qantas’ business products, including the launch of their new business class early in the past decade as well as overhauling the QF flagship lounges – all critical to attracting the high-yielding corporate traveller dollar.

Virgin has done a nice job in recent years of slowly but surely adding on more features to woo business travellers, from upgraded lounges to increased flights amongst top city pairs to special seating to a greatly enhanced Velocity rewards program. These are the “fab four” of what attracts the business traveller: frequency, points, lounges and perks.

If we focused on just the fab four factors, then the good money would likely be on Qantas to continue to enjoy dominance in the business market as although Virgin has indeed greatly improved their products over the past few years, by and large they still are a bit behind Qantas in terms of frequency (although they are very close, especially on SYD-MEL) loyalty (QFF is still the biggest loyalty program in Australia),and lounges (newly refurbished domestic lounges and let’s not even try to compare the Qantas International First Class lounge to anyone else.)

With respect to perks I’ve not been able to experience Virgin Blue’s approach to upgrades, special seating requests, better meals, etc. as I’ve just not flown them enough to have an opinion, so for the sake of this discussion I’ll just call that even.

However, where things get interesting is thanks to the new frugality brought on by the GFC, and that is with fares. DJ has enjoyed strong growth since taking over from Ansett as the antipodean #2 carrier and much of that is due to their aggressive fare discounting in the leisure sector attracting cost-conscious holiday makers. Well guess what – CFO’s and corporate travel managers are the new “holiday makers” in that they too are now seeking out the best deals, the cheapest seats, and any airlines who will give that to them.

I’m afraid that like the original Fab Four, the aforementioned fab four of business travel are about to be broken up and go on solo careers as many companies aren’t concerned about who gives out the most points anymore or who has Cararra marble in their lounge bathrooms (guess which carrier that distinction belongs to?)

So, which approach will Borghetti use to woo Sir Richard’s expected corporate travellers – the QF method of providing “addictive” travel perks like swish lounges and Platinum cards, or will he go after the bottom-line minded travel buyers and CFO’s as after all, they’re the ones really holding the purse strings? Only time will tell (Borghetti apparently starts in May) but I’m sure it will be an interesting matchup to watch.

EXTRA SHOT FOR THE DAY : “AUSTRALIAN GOVERNMENT STIMULATES THE CORPORATE TRAVEL INDUSTRY”

Sorry if the headline is misleading, because I’m sure billions of dollars are not about to be put into the corporate travel industry. But about $500 million or so of government "money" is actually out there for the taking...

Talk is starting to heat up around the impending (apparently within the next 3-4 weeks) announcements by the Australia Federal Government around who wins and who loses across their $500M+ annual expenditure in travel. Airlines, hoteliers, travel agencies and technology providers are all on pins, needles and lobbyists’ hotlines waiting to hear how the Qantas dual stronghold (on air and travel management services) will be reallocated. Note that I said “how” rather than “whether” as I will be extremely surprised and not a little dismayed if nothing changes out of this process.

What’s great about this whole thing is that everyone and their mother thinks they’re going to get a slice of this enormous pie. Even Etihad is wading into the fray, as the Middle-Eastern airline’s CEO James Hogan was recently quoted as saying the six-year old carrier is fully into the bidding process. Given Qantas often complains about Mid-East carriers enjoying government subsidisation that QF hasn’t had for years, it would be slightly ironic if any of them got a slice of the Australian Government’s spend. As a taxpayer, however, I’m more than happy to have the Government fly on more cost-effective suppliers - assuming Etihad or any other carrier will indeed be cost-effective of course....