I share a few thoughts about WestJet's challenge to expand distribution in the US, and add new routes. The story is here.

The Star Alliance comment is true, but the real issues are deeper than what the reporter was able to fit into the story.

Firstly, the real strength of Star Alliance for Air Canada on transborder is the United codeshare, which ensures that US originating passengers flying to Canada see Air Canada flights, since they carry usually carry a United flight number. Same with US Airways (which includes the former America West now, too). This is huge, because it guarantees visibility (albeit under another name) for these services in a market where Air Canada is not well known, ties in to other connecting flights providing additional source passengers, and gives points on the other airline's loyalty program.

Secondly, WestJet's challenge isn't just in securing interline and codeshare partners (to provide valuable inbound connecting passengers, and allow it to feed same on the outbound) but in talking to and working with them. As a low cost carrier model, WestJet has had a mostly closed system in which they operate the airline and distribute their seats. I hear that they have tried to make a change to use technology provided by Travelport, which I have been told has been a real mess (if true, I'm far from surprised. Travelport has been a major disapointment almost since it's inception). Working with other carriers and other distributors means more technology investment and increased pain of "participation" in various platforms used to sell airline tickets, all of which complicates the WestJet model. Plus, they end up having to pay all the various parties for this distribution, much like full service carriers do, reducing their overall yield per ticket sold. This is as opposed to carriers like Ryanair who simply don't use any distribution and keep costs low and control in-house.

A smaller issue is that WestJet doesn't offer a First or Business Class service, which makes it harder for it to offer interline, or connecting, services to Asian or European carriers who do.

The real question, for me, is why WestJet seems hell-bent on going the full-service-type distribution route. They need to expand, sure, but this way of distributing their product adds cost and reduces control, especially in a world of increasing online distribution where the suppliers should hold the cards.

I certainly wouldn't be going that way. But that's just me :)

After a break (there's a pun there for those "in the know") I am back online. I will be posting more regularly again, I promise.

Just after the Holidays I heard from Mel Crothers, the so-called whistleblower on the WestJet spying scandal. You may recall that Mel told Globe and Mail reporters Brent Jang and Patrick Brethour that he "didn't expect a thank you from Robert Milton." Well, Mel tells me that a nice, personal Thank You note is exactly what he got not too long ago.

Nicely done, Robert.

Amazing how abuzz the mainstream media is today with the WestJet apology story. There's lots, lots more out there if you care to look. All the usual suspects are in with their $0.02. Heck, I don't know if I should feel badly or happy for poor Jacques Kavafian. He just can't seem to shake being the go-to Quote Boy for all things aviation, no matter where he goes. Which means, his services are less in demand of late, so this flurry must feel like old times. And that leads to the key message for me in all this coverage:

The business media really, really misses the  bad-old-days of Canadian aviation.

I mean, there was so much material! First there was AC privatization, then there were the years of AC/CP dogfights, charter airline collapses, the CP acquisition - with it's headline-friendly Quebec-vs.-The West overtones - then more charter airline collapses, some start-ups, some shut-downs, the odd bankruptcy, more start-ups, a little spying, more collapses, a few labour crises...

Phew! What a journalistic buffet! Pages and pages of copy, jillions and jillions of pixels. High fives all round the newsroom, the industry is a complete mess. Yippee!

Not to mention all of the personality stuff. Beddoes vs. Milton to be sure, but there have been plenty of other odd ducks along the way. Anyone remember LeBlanc at Intair and Royal? Obadia at Nationair? Deluce at Air Ontario and Canada 3000 (still in the picture with *yet another* start-up to-be. Sigh)? Kinnear at Canada 3000? What is it about aviation that attracts these folks? And of course there's the general sexiness of the business and the romance of travel that adds an allure. Let's face it: for years, the airline biz was the news story gift that kept on giving.

But now? How sad. Biz is relatively stable. AC is stronger than they have been in a long while, Uncle Miltie is about to ride off into the sunset (complete with Reguly's "gosh, I'm sorry I called you a knob all those years, I really think you're a great guy, now you take care" story ($) a while back), WS continues to do it's golly-we're-nice thing, and we haven't had a major failure in, well, months. In fact, there hasn't been much until this little redux of the already-told spying story fell from the sky to fill a whack of column inches. Call it a quick reminder of remember-when. Fuel prices are a pain of course and AC is still doing stuff to tick people off, but broadly things are pretty good.

Man, those reporters must be pissed.

Update: Further evidence of this in today's Globe and Mail, where reporter Brent Jang has a front page non-story about Clive Beddoes. Why non-story? Well, the premise is to discuss Beddoes' future plans, but given that he tried to exit his role as President in 1999 with the disastrous hiring of multi-former-AC-role-boy Steve Smith, the idea that Clive wants to move on is not exactly news. But hey, he was in town and it fills a nice news hole, so my call is that this week's spying-redux flurry has reminded them of that. Maybe airline news is going to be the New Black. Again.

Tags: aircanada, westjet, spying

It turns out that WestJet was in fact spying on Air Canada, has now admitted to it and formally apologized.

To refresh your memory, the claim was that a co-founder of WS an analyst who used to work at AC, Jeffrey Lafond, took advantage of the fact that AC never turned off his access to the AC online staff booking system, and that he used it to check flight loads. This information was used to help WS adjust pricing in response to how AC was doing on a given route. He The co-founder who used this analyst's access to get the information, Mark Hill, left the company, and Beddoes apologized at the time. AC subsequently filed a $220m lawsuit against WS.

This has now been settled. The whole release is here.

The really good news? Rather than WS paying something in retribution to AC, they will be making a $10m donation to children's charities across the country in the name of both carriers. So rather than AC potentially stirring up more negative PR about "pounds of flesh" or whatever, the kids of the country win. And hopefully the YYC cowboys have learned a lesson about playing by the rules.

Nice.

Tags: aircanada, westjet

I've thought a lot about Google taking a serious run at the Travel category over the past few years. Mostly because that's part of what I was paid to do, and also because it makes a lot of sense. So I was interested to see Mathew Ingram's piece in today's Globe and Mail (which seems to have spun out of this blog posting) where he talks at length about the prospect. For the most part, I think he got it right.

For one thing, Google certainly has designs on being a portal, if their recent moves with Finance and Real Estate are any indication. Beyond that, their competitors are already there in Travel, sorta, with Yahoo!FareChase leading the way and msn Travel (in typical Microsoft fashion) representing a half-step towards a fully integrated travel "thing". As well, there is a lot of money at play, both from an ad and a distribution cost perspective, and they have reason to want to maximize it. Finally, if they have been nervous about upsetting the ad-revenue apple cart in the travel category (huge numbers) that nervousness has likely been reduced by things like IAC's purchase of Ask.com. IAC maintains a controlling interest in Expedia, and with this purchase is both a big customer of, and a direct competitor to, Google.

However, I think that there is a big difference between Google ramping up their travel "experience" and them actually fully taking on the OTAs. In terms of them having some multi-site search experience and sending traffic from that to an OTA or a supplier (airline, hotel etc.). that seems like a pretty obvious thing. Suppliers would love it, and the competitive gauntlet has already been thrown down.

But actually selling travel? Yikes. Why would they? Call centres, rules and regs, etc. etc. Easier to just further solidify their role as gate-keeper, and take advantage of the lack of loyalty and brand meaning that these guys have to crank out the ad money.

Also, worth noting that most of this applies less here in Canada. For a bunch of reasons, the OTA and Supplier landscape is different and it is less likely that the existing dominant players here (Expedia.ca, AirCanada.com and WestJet.com) would suffer or benefit much from such a move by Google. Why? Well, the competition is lighter here, they often have exclusive inventory, offer pricing of global inventory in Canadian dollars, work better and have brand meaning that brings a lot of business direct.

Technorati tags: google, yahoo, travel, expedia, travelocity, orbitz, aircanada, westjet

Somebody check the weather, because it could be that Hell has frozen over. Why? Well, I just made my first purchase on Priceline.com - and I am feeling pretty good about it. Now, as the guy who wrote the business plan for Expedia.ca and then was Chief Marketing Officer for Expedia.com, that's pretty scary stuff.

Here's the deal. We are heading to Halifax for Easter with the Grandparents, and as such need flights and a car. Well, for flights we had pretty specific requirements, so we went the traditional route (which in this case meant booking directly at AirCanada.com because it was $600 cheaper than on Expedia or anywhere else, but in fairness that's not always the case. Frequently, the online agencies have better deals, depending in when and where you travel - just not this time). We don't need a hotel, but do need a car. I went to Expedia.ca, Travelocity.ca, Hotwire.com (an "opaque" or you-don't-know-what-you've-bought-until-you-buy-it part of the Expedia family) and finally, to Priceline.com.

With due respect to my friends in the business, when you are picking a rental car up at an airport for a leisure trip, a rental is a rental. Though I do value the service bells and whistles when I am on business, when I travel on my own dime I will gladly trade a little convenience for savings. And for an airport pickup, you know who the choices might be, so what's the big fear?

So, in a nutshell? Priceline beat the pants off of everybody else. By a mile. And they have a neat little tool that guides your bid into likely-to-be-accepted territory. And I ended up getting the car from Hertz.

So, what will happen when I get there? Will it all be awful? Will I regret having done this? Will I hate William Shatner more than I do now?

We shall see. I will provide a full report when I get back.

Technorati tags: priceline, expedia, travelocity, online travel, william shatner

News today the WestJet has entered the Canadian pre-paid air pass fray, in the wake of Air Canada launching a major push for their smorgasbord of passes, which have actually been around for a while now. Lot's of coverage of these moves over the last while, especially since it marks AC's first big advertising push in many years, and the first move into this space for WS.

But hold up for juuuuust a second. Despite all the gushy commentary, it's not like this idea is new. Hardly. It's been around for as long as airline bankruptcy (read: a long time). But in this case, that actually doesn't make it a bad idea.

But first, a brief walk down memory lane. Passes are a tried and true, though usually last-ditch, airline sales tactic. Some might recall how Royal Airlines went nuts selling passes just before they went out of business. Sad fact is, over the years many carriers in trouble have offered deep discounts to buyers who were willing to pay-now / fly-later, in order to add much-needed cash to their coffers. Sadly, in some cases, this effort amounted to little more than a short-term revenue infusion on the road to business failure.

Not to say that's what is happening here. In fact, in this case, this is a really smart move on the part of both AC and WS. Why? Well, it kills multiple birds with one stone. To wit:

1)     They get the revenue now. This is good.

2)     They get "breakage," or segments bought and not used. This is VERY good as it represents pure margin.

3)     The passes can only be accessed and reserved-against online at the airline's own sites. While they can be                 *purchased* from offline agents, the traveller needs to go to the carriers' site to book them, and they are not             available via online agents. This is GREAT for the carriers, who, like most travel sellers, are anxious to pull             business direct and see ring-fencing inventory as key. Given that most online sites don't get access to the                 lowest airline fares already, this just makes that problem worse.

4)     Their costs are much less. Having customers make the bookings online-direct reduces sales commissions and         CRS (reservations system) fees.

5)     They make it harder for travellers to compare alternatives, especially on US routes. If travellers buy passes in         advance for travel to the States, they are less likely to check other carrier alternatives (which most do via                 online agency sites), which may be less expensive or more convenient.

6)     For WestJet, offering a super discount on Eastern Triangle flights (Toronto/Ottawa/Montreal) enables them to         pre-buy market share, without putting a low-ball price out in the open market.

Another interesting thing about WS' move is that they raised the bar by making their passes transferable. So, it seems that a company could buy a bunch and use them for multiple travellers. Or, a family could buy them and dole them out to kids attending university in another city or to Grandparents to come in for a visit. This has definite appeal. It will be interesting to see if AC follows.

All in, this pass war raises the bar in the battle not just between the carriers themselves, but between the carriers and their online distributors.

Game on.

Technorati Tags: air canada, westjet, online travel, travel

Well it bloody well took them long enough. After, what, five-ish years and a rumoured $50 million, Air Canada's little dotcom pipe-dream-in-the-sky is no more. Destina.ca was to be Canada's answer to Orbitz - an airline-owned online travel service for everything in travel, selling not just Air Canada but other carriers as well as hotels, car rentals etc. Theory went, back in the heady days of dotcom mania V1, that they would Rule The World, or at least have real skin in the Canadian online travel game, and then be spun off for untold millions in IPO manna.

Riiiiight.

Well, let's recap, shall we? The site sucked, WestJet wouldn't give them inventory, the marketing was abyssmal, they relied on points-hounds for most of their business, much of their inventory came from competitors, and - oh ya - September 11th took the wind out of AC's sails, just a wee bit (CCAA, anyone? Ringing a bell?).

In some ways it's a shame.Well, for their competitors, anyway. Maintaining some effort on that piece on online silliness meant they diverted some of their under-powered-and-financially-limited-to-begin-with focus from AirCanada.com in order to keep it on life support. Seems like that is finally over.

Technorati tags: air canada, westjet, online travel, travel, orbitz