Your website may well sing and dance, but what about those on the ground and in the air? How are they improving the customer journey and differentiating their product? Martin Cowen gives his perspective on the challenge for suppliers.
The phrase ‘credit crunch’ is bandied around so freely these days it is in danger of becoming 2008’s equivalent of last year’s big worry – global warming.
But unlike an imminent environmental catastrophe, the credit crunch became real, very quickly. Almost overnight, funny money became less amusing.
Bonus-hungry bankers messed around with financial instruments to make pretend money into something real as far as their incentive plans were concerned, and within six months real people couldn’t get a loan, real businesses found their own credit lines crunched as their costs rocketed.
The interplay between the virtual and the real is often an overlooked aspect of the online travel business.
For virtual – read anything that happens on a screen. For real, read everything that happens once your journey begins. In fact, some pedants might argue that online travel is a contradiction in terms, at least until virtual reality headsets have improved.
So while online travel agencies can pour millions into their booking engines, user interface and virtual tours, there’s little they can do if the flight is late, or if the transfer bus driver has overslept, or if an airport is temporarily shut down.
Luckily, customers are savvy enough to understand where the responsibility lies. Lastminute.com, for example, told Travolution that it “wasn’t aware of any incidents when we’ve been blamed for a flight delay”.
Your hard-won customers might not blame you, but they certainly would like to be told. It might not make much difference to your journey experience to know that your departure has been delayed, but a customer will appreciate the effort.
Opodo recently launched Tarmac Text – a service that texts a customer’s flight details the day before departure. It can’t help out in terms of letting customers know about delays. It might help in terms of what you pack however – the text includes a weather summary for the destination.
For business travellers, time is money, which explains why travel management companies appear to be showing their leisure rivals the way in providing real-time information. The margins on business travel can accommodate the cost of providing this service more easily than leisure. Orbitz for Business and Egencia (formerly Expedia Corporate Travel) have a range of nifty real-time information tools that their leisure-focused sister companies might be interested in.
One of the ways in which the low-cost carriers have changed the travel industry is by making short-haul travel into a commodity. Short segments are price-led, and again, the cost of trying to differentiate one two-hour flight experience from the next is unlikely to yield sufficient returns
For medium and long-haul travel the numbers start to make more sense. First Choice saw the potential to differentiate its package holiday product, and realised that the in-flight experience could be a major differentiator. In 2004 it became the first European airline to place an order for the Boeing Dreamliner, a next-generation commercial aircraft that the aerospace giant has said will redefine air travel.
Boeing, of course, is reacting to the launch of the Airbus A380 from arch-rival Airbus – signifying that, for some, the battle for hearts and minds may be won in the sky.
The latest update from Europe’s largest travel business says that the Dreamliner will enter the fleet for the winter 2010 season. When First Choice made the order, it was expecting delivery a year earlier. Launch dates for something as simple as a website can be a movable feast, so it’s no surprise that getting a new aircraft off the ground is subject to delays.
The Dreamliner has a number of unique selling points that will help TUI Travel’s bottom line. With no let up in the rising price of oil, the fact that the aircraft will use 20% less fuel than current aircraft will go down well with the finance director, as well as its corporate social responsibility team – less fuel equals less carbon.
But the Dreamliner is also able to operate out of regional airports, currently off-limits for a lot of aircraft designed for long-haul flights. Norwich to Buenos Aires anyone? Unlikely, but with regional departures becoming increasingly important to consumers, the ability to boldly go where no direct long-haul flights have gone before should make for an interesting route map.
But the journey itself will also be noticeably different on a Dreamliner. For starters, Boeing is saying that it will help reduce the effects of jet lag. Cabin pressure will be lower, helping reduce tiredness and headaches, while better humidity control will alleviate dehydration. A lot of thought has also been put into how the cabins are lit, with the designers looking to give the impression of a more spacious interior. Quieter engines will also help reduce that annoying in-flight background hum.
When First Choice’s Dreamliners come into service they will operate under the Thomson Airways brand, and will be joined by TUI’s own separately ordered tranche of aircraft. In total, the tour operator will have 23 Dreamliners.
Getting its order in early has provided a number of advantages that presumably outweigh the inconvenience of having to announce a year-long delay. First Choice has had a “consultative role” in the design of the aircraft, and has involved its cabin crew in the process.
British Airways and Monarch will get their Dreamliners some time later, so expect a big marketing push to ram home the fact that Thomson Airways will be the first European airline to bring the aircraft into service. The Dreamliners have a list price of $125 million each, so the marketing budget should be substantial.
Getting to and from the airport can also make or break the travel experience, and it’s another sector where online businesses are exposed to the vagaries of their suppliers. Leisure specialists will partner with a local supplier, but again, the business travel world is different.
Coach and train operator National Express recently launched dot2dot, a luxury shuttle service which operates between Heathrow and central London and Canary Wharf. It’s bookable online, under the potentially misleading URL dot2.com.
It will be interesting to see how this business pans out as travel budgets tighten – it canned its Gatwick service seven months after launch, and its parent company’s financials have already expressed concern that the second quarter wasn’t as good as expected.
Surely the economic slowdown hasn’t gotten so bad that east end boys and west end girls are expected to use public transport to get to and from Heathrow?
Leisure travel’s purpose, by definition, is to get to a destination for leisure purposes, and however good the flight is or the lounge at the airport, it comes to nothing if the hotel hasn’t got your booking. Online travel agencies are aware that they need to get the core components correct.
The journey, while important, is only one piece of the pie and it’s not something an online business has any real control over. Maybe that’s why there aren’t websites with 15 million customer reviews of airport lounges.
The ability to connect to the web in mid-air could be the next ancillary revenue for airlines to tap into.
Aircell, one of the leading providers of the technology in the US, recently claimed to be in talks with every major domestic carrier. It has already announced that Delta will offer its GoGo TM product across its entire domestic fleet by 2009. That’s 330 aircraft.
Boeing probably had similar
ambitions when it launched its own in-flight web business, Connexion by Boeing, in 2000. At launch, it tipped the market to be worth up to $70 billion over the next 10 years. When it pulled the plug on the project in August 2006, it took a one-off hit of $320 million just to close the service down, having spent a reported $1 billion on the project.
The stakes, to say nothing of the investment, are high. So why has Aircell managed to sign Delta, and American Airlines too, when an established aerospace giant gave up the ghost?
As ever, it’s a cost issue. Commentators in the airline and communications sectors have suggested Boeing was ahead of its time and that it had developed a product whose cost base didn’t reflect changes in technology.
Connexion required special equipment to be fitted on to the aircraft in order to connect with satellites, whereas AirCell is able to tap into wireless networks on the ground.
The latter’s deal with Delta will see passengers charged a flat fee of $9.95 on flights of three hours or less, and $12.95 on flights of more than three hours. Connexion by Boeing, which had gone live with a dozen airlines including Lufthansa, was charging $9.95 an hour or $26.95 for an entire flight.
Cost issues aside, it appears the demand is there. But how many times has a potential in-flight internet customer fired up their laptop once the fasten seat belt signs have been switched off, only to think “hold on, do I really need to check my emails again?”
Airports: The necessary evil
Terminal 5 at London’s Heathrow was over-budget and late when it opened this March. The problems in the car parks and with the baggage systems during the start of operations were a million miles away from its promise to ‘replace the queues, the crowds and the stress with space, light and calm’.
Fast forward a couple of months, and British Airways was so proud of its achievements that it launched a further advertising campaign ‘Terminal 5 is working’.
The functional strapline belies an innovative approach. The campaign offered up-to-date operational information about the terminal. Data was collected between 6am and 2pm to allow enough time to get the material to the press for production the following day.
The campaign archive makes for interesting reading – on Wednesday August 13 the average time through security the previous day was 4.7 minutes; the next day the average time through check-in was 8.3 minutes; between August 11 and 14 it took an average of 24 minutes for bags to get from the aircraft to the carousel.
Airports are a necessary evil in most journeys, and the scale of Terminal 5 recognised this. Cynics would argue that at a cost of £4.3 billion, the terminal should help improve the travel experience.
But to take full advantage of the six lounges and spa, it helps if you’re not travelling in economy. Still, at least the views of Windsor Castle and Wembley Stadium, weather permitting, are free for those travelling at the back of the bus.