June 17, 2009
June 23, 2009
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Datalex Users Conference

Last week I was in Dublin Ireland to participate in the Datalex Users Conference. Datalex is a long time client of Travel Tech Consulting. The conference has a small number of attendees (50-60) consisting of Datalex customers and prospects, but the quality of the attendees and depth of the sessions was very impressive. I had the pleasure of siting next to Jim Young who opened the conference with some provocative observations about industry trends. Jim, most recently of Frontier Airlines can truly be called an industry pioneer. At Frontier he was instrumental in implementing fare families, at IHG he was the executive that pulled inventory from Expedia and then renegotiated a new agreement which included a mix of content and advertising benefits and while at Continental he pioneered the direct distribution model during the turbulent 2005 period. Also in attendance was Mark Rosenberg who recently left Air Canada, where he redefined the distribution landscape with the idea of a fare family and pushed the GDS to accommodate this new model.
Day 1 was all about ancillary revenue. Jay Sorensen, President of IdeaWorks presented the results from a new Ancillary Revenue Guide that he just published. The discussion was lively with different airline executives from American, Continental and Frontier debating the various approaches to ancillary revenue. As an observer, I had to comment that all these ancillary revenue strategies often result in a single customer reaction, paying for services formally free (baggage, meals and in the case of Ryan Air on board toilets!). There is no question in my mind that this current focus on ancillary revenue represents a permanent change in the way all airlines market their product. Fare families (also known as branded fares) breaks the long held practice of yield management by associating services with different fare categories regardless of seat class availability. This will likely impact all sectors from distribution (how GDS and intermediaries display these fare groupings) to corporate travelers (will corporate travel negotiations now center around services as much as discounts?) and even meta-search as the Kayak and Fly.coms of the world struggle with showing airfare comparisons when branded fares associate price with service characteristics.
On Day 2 I gave a talk on mobile. By the response of the audience I realized that the airline executives still do not get the impact of mobile. The main response was about how difficult it would be to sell a mobile project to airline senior management. This was an odd discussion from my vantage point as the prior day’s focus on ancillary revenue ties directly in to the opportunity with mobile. It looks like the major carriers will have to catch up on the mobile revolution and risk the possibility that a new intermediary will emerge on the mobile platform adding additional distribution costs and separating the end traveler from the supplier once again.