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Why Video-Conference Will Not Impact Air Travel

There has been an increase in shares vouching for video conferences to replace air travel post-Corona.

Conference Call Bingo – click to enlarge

Face to Face

There is a lot in a personal conference that is not available in a video call, especially on multi-personal level. Who stands with whom, looks at each other, stands apart, shuffles papers, scribbles notes, shows interest, looks away (and why). Aside the sole focus on the call or conference when you’re onsite and out of your “common environment”. You paid to get there, you focus on the conference and not on your daily chores and tasks.

Call Quality, Disruptions

Then there is the (video) call-quality. Especially on video-calls and webinars these days, even using the best provider to organize it online, the video often enough fails, speech becomes unintelligible, not just users, even the speakers get disconnected. Disrupting the thought, the statement, the information. Surely at the most inconvenient of times!

Lesson Learned 2002

What it does keep reminding me is that for 2002, in the wake of 9/11, we had the very same discussion. And I brought in a video-conferencing-specialist to speak at ITB Travel Technology Congress. And while the big players added video conference rooms to their portfolio, they turned to dust-bins quickly. I know, c’mon, that was 20 years ago. And we simply don’t tend to learn from history. There’s all the young smart-asses leaving university. They have no experience with extensive travel, their live has been virtual, they are still to learn the lessons.

Perceived Importance

The last issue is emotional, psychological. Which we found out post-9/11 already. There is the factor of “importance” when you are send to travel to meet your client. And I do not speak about the true importance to show your flag at your client. But the perceived importance for the traveler.

A face-to-face is valued a lot higher than any video-call. Have I met the person in real-life? What was my impression? Those are valid reasons to justify your trip to your boss. But especially for middle and lower management, the effect is fare more on a motivational level. To be “allowed” to travel raises your perceived standing. In the company much more important that with your client. The meeting could be sufficiently covered with a video conference, especially when done properly – not via Skype, Viber, etc. But to be “allowed” the expense to travel to the client raises your internal standing, your (imagined) “importance”.

Whereas for the manager of the traveler, that very motivational impact might very well justify the travel expense. So don’t disqualify it. But be aware of it.

Video-Call Will Replace Travel?

Naaaw. No it won’t. I have video calls with my family when traveling, my mom living 600 km away, friends around the world. And especially during the lock-down I keep with my network attending webinars, video and voice-only conference and one-on-one calls. And can’t wait to see all my counterparts in person either on conferences, on business trips and visits. Video-calls replace phone calls. But they don’t have what it takes to replace the real face-to-face.

Food for Thought
Comments Welcome!

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It’ll Hit Us in the Back

Another post in the Cognitive Dissonance series.

Aviation banks say new deals on pause until ‘market bottoms out’ (ISHKA)
The market will be flooded with surplus of 150-seat up aircraft. (ISHKA webinar)

Aside those headlines, two ideas shortly (too short?) addressed in the ISHKA-webinar triggered my thinking:

Is P2F (passenger-to-freight-conversion) a strategy for aircraft owners? And is part-out, cannibalizing aircraft for spare parts, an option?

P2F – Passenger to Freighter Aircraft Conversion

Bill Cumberlidge addressed P2F shortly in the ISHKA webinar. As the need for quick transport increases, the belly-freight in passenger aircraft has gone missing. That increases the demand for classic freighter aircraft. But keep in mind that this is a temporary peak only.

But given passenger airlines taking up that surplus transporting goods in their passenger aircraft, the question now is not if we need more freighter aircraft, but the aircraft owners sitting on “dead capital”, seeking their own bailout – by considering to convert them to freighters seems a good idea. Or does it not?

The main issue there seems not to be the demand for conversions exceeding the available resources, companies with the experience in such conversions.
Then you cannot simply convert all the grounded aircraft to freighters, without flooding the market. Offer and demand will simply result in surplus freight capacity, ruining the prices both for freighter aircraft as well as for airfreight cost. So the idea will quickly backfire. What I heard first from truck drivers, seems now to become an issue in the airfreight industry. Passenger airlines, offering cheap passenger aircraft for ad hoc transport ruining the prices.

While there is a current peak, promising a use of lots of large freight aircraft (A380, B747, B777, B767, A330, A300, etc., etc.) that demand bubble will last maximum one year.

Seabased shipping will still do the majority of transport. And while shipping cost will likely peak, ship-operators (I avoid the word shipping company) will possibly recover their eroding revenues in the crisis. If they don’t make their own mistakes.

But how many containers does a single container giant today transport? And how many of those can you put onboard an A380 or B747? There were a lot of hurray and self-praise of airlines that one aircraft transported 500,000 masks to somewhere. Whereas the population there is a multiple of that number. Airfreight is expensive and a drop on a hot stone.

And the rush now to the common idea everyone follows will backfire and hit us in the back soon.

Parts-Out – Cannibalizing Aircraft

Another, very standard “fallback idea” is the “End-of-Life”-strategy to cannibalize the surplus aircraft for spare parts. Given the immense surplus of 150-240-seat aircraft, this bubble is instantly doomed. In several expert discussions I heard 50%, even up to 70% of the fleets to be grounded. Recovery of likely 80% within two years. Let’s say we decommission 20%. Which ones? Where? Who starts?

Bill voiced a valid concern too. What if airlines neglect the engine maintenance, but use the engines of the grounded aircraft? Sure, once traffic picks up you can lease new engines. Which might be even cheaper than servicing the neglected engines. But. If all airlines follow that strategy, I predict a shortage in new engines to hit us in the back. And we will have hundreds of aircraft engines to be written off.

Cognitive Dissonance: Who Pays the Bill

All those ideas try to secure the profits, moving the losses to others. Whereas we so much promote that we are all in this together, in reality it is very much egoism at play. Back to the good old Saint-Florian’s Principle: Oh holy dear Saint Florian, don’t burn my house, take the neighbor’s one!

A good example is basically the question about aircraft. Airbus and Boeing reduce their production. Because airlines do not take the aircraft as planned. Realistically, there won’t be much demand of their aircraft in the next two years (or more). But could they sustain two years without revenue? Beyond some spare parts.
Then the airlines return aircraft to the leasing companies or cancel orders, even at the expense of financial penalties. Such piling up the dead capital with them. i.e. Brussels Airlines, representing the mighty Lufthansa Group, cancelling their wet lease deals with CityJet. Leaving them out in the cold. Lufthansa style.
And then there are the investors. Who will loose big money as a result of a surplus of aircraft they had focused on. Without realistic concepts how to make money or turn their dead capital to assets again.

That self-centered thinking will hit us in the back soon.

Supply Chain Management: We are ALL in this Together

My first boss taught me an important lesson in supply chain management ethics. It is not always about the cheapest offer. There is always someone cheaper. But part of good supply chain management (and beyond) is the reliability of partnerships. Especially when times are challenging.

#weareallinthistogether. Exactly that catchphrase so many now use for #whitewashing. Again. It’ll hit us in the back.

Food for Thought
Comments welcome!

P.S.: Things can be handled differently. If you Think Outside the Box. And beyond. We’re looking for airline investor(s) who understand “doing different” being the core to the Unique selling proposition. We have some sound, profit- and USP-, sustainability and social responsibility focused business out for funding. Contact me to learn more.

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The Dying of Social Media

“For those who agree or disagree, it is the exchange of ideas that broadens all of our knowledge” [Richard Eastman]

Look to Book

… or the question of leeching.

Social networks become more and more inactive, “leechers” that consume but not share their own opinion even with a “like”. In “online booking”, we called that a “look to book ratio”. In Germany, we call it the “caller in the forest” (echos, but no replies). In modern times it’s called the “social media bubble”. Which statistics say consist of 100:1 or worse “data corpses”.

But this is about success eating its children. The larger your network, the more information jumps up on the timeline. With little to no “filtering”, much of those “news” showing on the timeline becomes “irrelevant”. The more often you post, the more the social networks show your news on your followers timeline. Whereas I would like to be attracted every time someone posts who does not post that often. But then we come to Post Expiration and Information Flooding:

Post Expiration

How long are posts visible in social networks — Source: Sprocketwebsites (click on image)

In my last years qualification on “online marketing”, there were some interesting statistics about post visibility, that I found quite interesting.

What is not covered here are the increasingly used online chat tools like WhatsApp, Skype, etc. – posts there are lasting minutes.

You may remember my articles sharing my experience with LinkedIn articles and also media campaigns. As a result, already four years ago, I discontinued writing “articles” on LinkedIn, but with ongoing visits to my blog archive articles, LinkedIn articles (different from the normal posts) have a life span of about three days – older articles are not having relevant visitor numbers ever after.

Now companies, SEO-experts etc. tell you to post constantly to show constantly on those “channels”. But that turns, no it backfires into

Information Flooding (1)

For which there are two reasons. And both reasons are in reality counterproductive.

In the beginning, Facebook promoted to post “everything”. Other companies built on that and developed i.e. restaurant reviews and posting of food, selfies from the weirdest places on Earth, etc. – now people post all relevant and irrelevant stuff and clog the timelines. Where it was nice in the beginning to get input from friends, now the flood of irrelevant information makes the tools largely unusable. A business friend recently asked me why I did not respond to his latest posts. Well, I was busy with real life and did not even see those posts, they were long gone when I logged in again. Don’t get me wrong, I did the same mistake. Posted irrelevant things, missing out on relevant news.

Now I will intentionally limit my Facebook to less but higher quality posts. So this week I deleted my all the old content (since 2008) of my Facebook profile. I decided to keep my profile but only for an occasional look, the most important “updates” and use of the messenger to reach out to my friends. But it took me three days to remove all that data, even using Chrome Apps that allow bulk cleaning – with some bugs to slow you down anyway. Now I can “restart” with focus on quality, not quantity.

Back in 2016, I removed my “articles” from LinkedIn, after I found them to be seen just a few days with little interaction, whereas this blog, with the same little interaction except from the same people, has several thousand readers meanwhile and a constant flow of readers on the “old” articles as well. Except for a few readers they do not interact, not even with the easy “like” button I’ve added to all posts some years ago. It keeps motivating to hear on conferences that people obviously follow my blog, referring to my articles.

Information Flooding (2)

I also last year discontinued to actively use Skype and drop WeChat. Same reason. In business and with friends I now mostly use Viber, WhatsApp (another Facebook-company). Many years ago, I decided to stick my newsletters to ten. As I can’t keep following the flood of information, it distracts from doing business and make money to sustain my family.

A friend on a conference talked about the “first screen” on the mobile phones. While they become bigger, you also need to decide, which apps make it to your first screen. My new smart phone has space for 30 app icons. I may be unusual by having my apps grouped and using folders, even on first screen, but yes, I have my few important ones.

Social Networking – Lessons Learned

In the expensive Social Media lectures I attended last spring, on which I shared my lessons learned, I mainly learned that if you are a good marketeer, the same rules apply on- and offline. It also confirmed, I can spend all the time someone wants to pay me for, to analyse the online performance with KPIs that are the same useless as the QSI (Quality Service Indicator) as they are set and defined by the analyst with an intentional or (rarely) unintentional outcome in mind: “you are going to get very quickly to ‘factors’ and ‘coefficients’. And that they are variables, subject to interpretation and weighting, they are “relative values” (from The Bias of Route Viability Analysis, Dec. 17).

We all know of headlines that celebrities (and companies) bought and buy “followers”. Implying that all those leechers make an impact to your business. While it may take longer to grow your real “Stammkunden” (patrons, regular customers), only the ones that “buy” or stimulate a purchase by recommendation are valuable to your business. In the end it you got to pay your bills!

Marketing is about reputation management, it’s about indirect sales, but in the end, marketing is a part of sales and sales support. Brand is marketing, but in the end it is to stimulate memory and reputation and bring the brand to mind in the purchasing process. Neither marketing, nor brand, nor sales or public relations are an end to themselves. They are to stimulate business and keep the coin rolling.

So where do “Social Networks” fit in here? Same issue. Commercially, it does not help to have leechers. You need either buyers, or ambassadors. That must be first and foremost on your activities. Privately, you neither want leechers, you want people that share information with you, to discuss, agree or disagree, help you to evolve.
So I split my activities to two layers. Connecting with friends. While I appreciate a lot of Facebook “friends”, interaction is limited to very few. I will keep posting occasionally there, but just personal and limited to friends and only the “important” news, not to “flood” my friend’s timelines! I use LinkedIn for business and have some other responses there, confirming the value of the network. Xing is a German social network, but I keep finding them focused on job opportunities. So don’t expect me to do much there.

Instagram? Twitter? YouTube? Tik Tok? Yes I could do more there. If you convince me to drop LinkedIn for better impact to my information exchange with friends…?

And if you want my opionion, feel free to reach out to me or to share. I’ll keep watching my Facebook timeline for updates and on occasion also look at Instagram. You can reach me directly using Viber or WhatsApp (if you have my number).

And again, it boils down to my early mentor Richard Eastman‘s favorite quote:

“For those who agree or disagree, it is the exchange of ideas that broadens all of our knowledge”

It is all about interaction, about exchange. Without a “feeback loop”, writing blogs or posting on Social Media becomes boring – in turn, more shares turn to leechers – and the slow dying of Social Media continues. And if you like this post, click onto the little like button… If you did not, let me know what I could do better or where I’m far off in your opinion. Preferably not by e-Mail or direct message, but use the comments function this blog has.

Food for Thought
Comments welcome!

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Goodbye Karl Fisch – Hello Karl Fisch?

It is with serious regret that I just learned (a little delayed) about the retirement of Karl Fisch, author of the first ever YouTube video that went viral having a lasting impact on my life. It became the first ever thing I blogged, when I moved over the first articles I wrote elsewhere to the FoodForThought-blog: Shift Happens Narrated. The post contains a short summary of what led to the story, it is the most-read post on my blog ever and keeps being read 5-10 times every months.

Three years ago, Karl wrote an article on his blog I recommend reading; The Shifty Years.

I hope you understand the respect when I quote another famous author for the farewell. May life treat you and yours kindly!

So long and thanks for all the Fisch (Original wallpaper by redditor RWalsky) — So long Karl – and thanks for all the Fisch!

So Long Karl … Thanks for all the Fisch … And I hope it’s not the last I’ve seen of you! Shift Happens.

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Aircraft-on-Ground, Disruption Management …

… and the Ongoing Demise of Small and Mid-Sized Airlines

P.S.: While I wrote this article, Germania, an airline that I know from the beginning of my career, who’s team I booked at American Airlines to Seattle to pick up their first 737s, an airline I have had a personal attachment to, went into insolvency grounding all aircraft after many years of financial losses. The demise of Air Berlin 2017 brought easyJet on their home-apron in Berlin in force, no longer some competition, but clear one-on-one. Such the chance to establish lucrative routes in Berlin evaporated. Instead of benefiting from the demise of their largest local competitor, Germania had to sit aside, watching the threat growing.

Germania did, what they had to do, they focused on niches. Niches that were too small, to fragile to give them safety. Routes they developed well always threatened to be taken over by their competitors operating with lower cost. Erbil, under threat of war, Beirut, …? They announced a base in Pristina (Kosovo). They ordered A320neo, in an attempt to stay somewhat competitive to their competitors like easyJet also introducing the modernized aircraft. Else they operated tourism charter flights – which are in great demand in summer, but one after another airline in that market files for bankruptcy at the end of the season. And Germania published financial troubles as early as August 1st, 2018. So they could not do what needed to be done: Generate enough money in summer to succeed across the harsh winter.

You cannot succeed if you play it small, if your cost is not competitive to your competitors. Not the small virtual airline competitors, the other “day flies” lasting one summer season, two at best, but the big ones. The easyJets, Ryanairs, Wizzes, etc. It’s not fuel cost development that kills you. It’s bad management. It’s a strategy without USPs or with very weak ones – there’s reason, the other airlines don’t bother the routes Germania did.
And as I outlined in an article I published on LinkedIn, this was no sudden issue, they lost money for years!

As it is being said, the unexpected increase on EU261-expenses, the “EU passenger rights” also had it’s impact on the financial situation. If you sell a ticket for € 100 and you must compensate € 300, it does impact your revenue. So back to the topic – flight disruptions.

Having worked last year on the business plan for KOLIBRI.aero as well as on projects related to Airport and Airline Operations Control Centers, flight disruptions have reappeared as an ongoing topic of increasing concern. And my experience doing a study a few years ago at delair together with Zürich Airport (ZRH) about the impact of the deicing forecasting and management tool on Swiss (airline) operations at Zürich became a strong source for my advise to airport operations managers.

When working with ZRH “Ice Man” Urs Haldimann on the study, I also got some feedback from Swiss. While managing the deicing in winter is not that much a problem, neither airports, nor passengers understand the rippling effect to the schedule. And often enough, not the airline’s own managers. That in the evening in warm Mallorca, the flight may be late, because of a deicing delay in the morning. So while higher force is accepted for the flight cancelled in Zürich, very often, the airline is required to pay EU Passenger “compensation” multiple the price for the ticket. So a major delay can be far more costly than just related to the immediate flight.

The harsh winter 2013/14 in North America (as likely this recent one) became known in the deicing industry as the Polar Vortex. The accumulating delays forced JetBlue into a “two day network reset”. Crews and airplanes were anywhere but where according to schedule and crew planning they were suppose to be. It took the better part of two days to relocate aircraft and crews back to the planned position, also to make sure the crews received their legally due rest, to then start the new day with a fresh start. As needed as that decision was, imagine the impact to passengers on flights that are booked usually 80-90%.

Disruptions can also be thanks to airport closures for other reasons, delays can be caused by as trivial as a broken baggage belt, a common thunderstorm or a ground handling crew doing a coffee break in the wrong time window – all things I experienced in my professional life. Flight crew duty times and technical delays are more common. Did you know that the Top 10 of “punctual” airlines have 15-20% of their flights delayed? That means 1 out of 5 flights is late. To “celebrate” such achievement is beyond me, I honestly feel embarrassed that our industry cannot do better! Don’t come with the typical “explanations” covering for the incompetence to do better. Needless to mention that this is about “departure delay”, whereas passengers truly don’t care about those as long as the flight arrives on time, right? I was recently on a flight that left “on time”. Doors were close, the aircraft was sitting at the gate, waiting for it’s slot in the deicing and departure.

More recently, Primera Air, Azur Air or Small Planet Airlines closed down. Cobalt Air followed shortly after I published the blog post. At least for two of those airlines the cause was said by their respective CEOs to have been “unexpected” cost for delays and disruptions. Though not reconfirmed, rumors have it such were also the cause for the financial troubles Germania faced in Mid-January 2019, filing insolvency early February (see P.S. above). “Refund portals” organizing refunds for delayed passengers result in higher number of refunds. Small fleets with no spare aircraft causes the ripple-effect to sometimes swap over into the next day(s).

Lesson learned from my research about Zürich delays: It very often is cheaper for the airline to cancel the flight to make sure the further aircraft “rotation” (planned flights for the remaining day/week) are not impacted. Especially if i.e. winter operations allow for “higher force” reasoning of the cancellation. While the airline can show goodwill and help the stranded passengers, in such situation they are not legally forced to add the legal, excessive passenger compensation for delays. It also in fact reduces the overall passenger upset. And Zürich can predict the delays!
What I expected quite a while ago is the information of upcoming delay situation to the inbound planned airlines. The example I keep using: Once Zürich (or any other airport) learns about arrival-, turnaround- or departure-delays would inform KLM before their flight leaves, that it would likely develop delays in Zürich and may have an excessive delay departure, maybe KLM would cancel the flight?
The concern: But if those airlines cancel their flights, then the flights will leave early, so KLM could operate on-time…?
Ain’t that shortsighted? Oh holy dear Saint Florian – don’t burn my house, take the neighbor’s one…
So what would be needed would be a bonus/malus system. If an airline “volunteers” for the sake of the overall operation, to cancel a flight in such a situation, maybe it’s relatively empty, could be merged with the following flight – the airline gets a priority the next time, so the full flight gets an on-time departure. An airline deciding not to join that system will never get prioritized and take what they get – including the delays.

Another ongoing discussion is the promotion of the big players for “SaaS”, Software-as-a-Service, more commonly known as “Cloud Computing”. What in my experience lacks of one vital thing, the fallback for a “line down”. There have been three cases that I (just me) know of last year, where line-down caused major flight delays. Because there is no fall-back in place.

Delta takes weather seriously, with a team of 20+ in-house meteorologists (Photo by Darren Murph / The Points Guy) . Taken from Daniel Stechers LinkedIn article.

That problem is multiplied by data silos. As Daniel, VP at IBS points out, there are too many screens an operations manager in the typical airline Operations Control Center (OCC) or also in the AirPort Operations Center (APOC) have on their desk, using old-style Gantt-charts, weather maps and other “sophisticated tools” that show them what happens out there. Very little tools that analyse the data automatically, giving you decision support on a disruption. Or warning you of potential disruptions giving you decision support how to avoid them.

While we do need to replace those multiple screens with dashboards, highlighting what to look at, I disagree to some extend with Daniel’s implications, as I believe we will need to be able to expand from the problem, onto the relevant Gantt charts, graphs, tables and maps. Worse in my eyes is the underlying reason for those screens, as they are clearly attributed to data silos. And if the left tool does not know what the right does, if the airport, the ground handler, the airline have different “realities”, no wonder we have friction that results in ineffective operation causing “issues” and delays. As I mentioned in my article about APOC, OCC, NMOC five years ago. And if I ask about interfaces and am told “XML” or “ASCII”, we talk about triggered “push” or “pull”, but not about a live interface. Another data silo.

Coming back, to close this FoodForThought-article, let’s come back to Germania and other airlines which we have lost recently. If you have no assets (aircraft leased or sold/leased-back which is the same), if you outsourced everything (to which I include “cloud”), if you don’t have “spares” for covering up disruptions, you make a very good business case on the old joke: “How do I become a millionaire in aviation? I start with a billion.” Or the other one: “Saving, no matter the cost”. It’s called a “virtual airline”. And I predict we see increasingly those virtual airlines to fail, as they lack size, assets and revenue (RASK) to compete with their competitors.

Food for Thought
Feedback welcome

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It’s Your Job …

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

Added to Quotes

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CheckIn.com turned into side business

Almost three years since our launch, we could not make CheckIn.com a full scale business.

We knew that targeting airports would not justify the development and were confirmed – airline use is more than 10 times of what airports use our tool. Unfortunately, the majority use is access to our free data. Approaching the existing users, they have no money for such information, though they confirm the value in their day-to-day life. Even a SVP Network Development of a large airline, praising me for the unique value of our tool, knowing from the analysis we keep maintaining for him, that many airports use false “facts” for their catchment areas, confirms he compares with our data as an indicator to the quality of the airport data.

But nevertheless he expects the airports to deliver the (biased) information. “In the end, it’s a look in the Crystal Ball”. Expressing the fact that he does not understand the value of good data, even for the look into that Crystal Ball. Garbage in – garbage out.

Unfortunately, only the network departments of the smaller airlines frequently access our airports, but we suffered some painful losses on the larger airlines of which two have started to use our data. The large airline having recently expressed some interest and receiving some “combined” analyses, now having turned down the discounted flat offer we made. Such we decided to unregister the company and run it as a personal side business only. Yulia takes care of that, I will focus on other projects and only help on demand.

If you need know how in airlines, airports, specifically corporate strategy, marketing and distribution, disruption management you might want to talk to me…

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Long-Haul Low-Cost? Supersonic? Quo Vadis?

While we work here on a business plan for a new airline, we did discuss and disqualified many of the existing airline models. Is that negative? Or realistic?

These days some news hit me in short succession, that make me rethink the assessment my friend Ndrec and I made when discussing possible, viable business models for a new airline.

I did the picture above a mere year ago. Meanwhile Niki is gone too, as is Virgin America. Mighty Norwegian being said to be likely acquired by IAG shortly. We have “new” players like Blue Air. But the question for any new business case must be:

What is Your (E-)USP?

Now Ray Webster, former CEO of easyJet opened the Routes Europe Conference with a keynote:

“I don’t see long-haul low-cost as a viable model. Operating a small aircraft across the Atlantic is not efficient, and low-cost carriers aren’t going to fill a 787 or an A380”

Ray Webster, former CEO easyJet

Even students traveling on longer flights do want more services the longer the flight gets.

In contradiction to that assessment, Eurowings now opens up New York-services, taken over from the late Air Berlin operating from Düsseldorf. We all looked at Norwegian, though their “success story” also seemingly was bought on the cost of revenue, the airline now is said to be acquired rather shortly by British Airways/Iberia holding IAG (also owning Aer Lingus).

Whereas I simply do not understand the “brand strategy” of either Lufthansa or IAG…

IAG: Aer Lingus, British Airways, Iberia, Level, Vueling … Now Norwegian adding to the mix of “it’s not me”?
Lufthansa Group: Air Dolomiti, Austrian, Brussels, Eurowings, LGW, CityLine, Swiss, Sun Express. Also “it’s not me”?

The work on a business plan for a new airline was triggered last year initially by some investors, going down the same “me-too”-dead end using old, inefficient Boeing 737-aircraft. Cheap to get, but their fuel consumptions renders them virtually useless.

BlueSwanDaily believes in the future of Supersonic… Are you kidding me? Yes, I believe supersonic will come, but expensive niche for the rich and wealthy. No real change to the Concorde business model.

I myself worked out a “green” concept a few years ago, but we’re neither getting there… The project got grounded in the wake of Lehmann Brother’s and a world financial crisis and the original interested investors gone never took up speed again. [Update: The Korean Wingship seems a ready-to-go WIG, though using conventional fuel, no green hydrogen or battery powered e-engines]

So we looked at models that differ from the existing ones. Where are unservered or underserved markets and why are they not served well? One issue sure is the airline analysis tools misleading their users to “established routes” and airports.

So we started with the original intent of a small scale operation. And recognized why so many such projects are doomed. There is a pilot shortage hovering on the horizon, Ryanair running pilot acquisition as far as South America and Asia. Most airlines do not value their workers but drain them.

And having discussed the very same issue again yesterday with friends who must relocate in the automotive industry as a direct consequence of overpaid managers, back again, using old images:

Maybe. Just maybe. I believe Ndrec and I came up with a sound business idea, which requires far higher investment than we originally envisioned. Coming with a round and sound business plan paying off that major investment in 10 years safe. Because we do have a unique selling proposition (USP). Because we do have an emotional USP. Because we thought it through and instead of failing at the first obstacle, we save cost from day one and make this a company to work for?

And working on that, we learned a big deal about the faults of the airlines we see in the market. And it boils down to the normal questions: What’s your (emotional) USP? What makes you different, why should the intended consumer decide to use your product. We see too much “me too” in the market. Buy your market share in the B737/A320 shark pond?

30+ years ago, my training officer told me that joke:

A man starts a business selling screws.
His friends questions him: “You buy
the screws for 1 €, you sell them for 95c?
How do you want to make money?”
“Oh, the quantity does it!”

My training officer told me to look after yours. Not only in the company, also your supply chain. Make sure you have long-term suppliers selling you the quality you need for a good reputation.

Later I learned the same lesson from space shuttle Challenger, management ignoring their own experts warning them of the temperature being below safety specifications. Shuttle Columbia dying of a piece of foam worth a few cent perforating the heat shield. Of Concorde crashing from a “minor” piece of scrap metal.

I’ve paid very high (in hard Euro) for another lesson. Starting with a sound idea (regional airlines’ franchise concept to share cost and operate a larger scale of operations), it turned out later that the stakeholders did not look for a franchise, but a means to start their own small operation and “share” the cost with the other small players. Clearly understanding the small operations to face obstacles they cannot overcome on their own. Could not. Cannot. Will not. A costly mistake I made. But lesson learned!

Then at delair I learned about airline disruptions and how our industry uses historic processes to “manage” somehow. How airlines use manpower instead of intelligence to cope i.e. with a winter storm.

With Ndrec, I found a seasoned manager understanding the need to either do it right – or don’t do it. And we got surprised how much money we save if we do it right! Not short term, there we need more to invest. But then very shortly, within less than 10 years. Now we reached the point of the reality check: Will we find solvent institutional investors helping us to pull this off? Cross your fingers.

For all those other airlines out there… Do your homework. First and foremost: What’s your USP? What’s the business case?

Food for Thought
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Quo Vadis Airline & Travel Distribution

Michael Strauss of Pass Consulting, developer of an “aggregator” system for travel distribution systems addressed his thoughts on why the NDC (IATA for “New” Distribution Capability) is already “old” (it’s XML, not contemporary JSON for one) and why we still need the GDS.

I find all those developments Michael addresses to be “baby steps”. And is it 18 months already again since I questioned the very same thing? Quo Vadis OBE?

Carefully tiptoeing around, while I still wait for the first airlines to make the bold step, leave the tangle box, cut the spider webs, dust off the past and make bold moves embracing the possibilities “digital” offers us. The likes of a C.R. and R.B. Smith back when they gave birth to what eventually became CRS,, GDS, PSS. Or Louis Arnitz (and myself) making Internet-Amadeus-booking reality, when all the GDSs told us, this is impossible and tried to protect the holistic, old way. Good, GetThere launched about the same time, but when we started, all it’s infancy could was to take a Sabre-entry and return the GDS-output. But yes, that gave us the idea.

1.44 MB = 0.00144 Gigabyte or 0.00000144 Terrabyte. Those thoughts tell me how old I became…

Now we are “surprised” that Cytric bypasses the GDS-side of Amadeus, linking directly to Altea (Lufthansa direct link). I just happen to wonder if Louis Arnitz also fondly remembers that “white paper” he wrote about “Mozart” (what later became Cytric). Few people remember the evolution from “Woodside Travel Trust” (today Radius) “Hotel Disk” (3.5″ ‘floppy’) to eHotel or that eHotel has been a spin-off of what became Cytric… It just tells me, how the GDSs keep the thumb on the thinking of our self-proclaimed experts. A battle they can’t win if they don’t embrace (carefully) those changes you so nicely summarize. Working on an airline’s business plan, I just emphasized that I see the future of travel distribution with Facebook, LinkedIn, Google, Amazon. Individual like a book. Common as a book.

20 years ago (!) my friend Richard Eastman emphasized disintermediation at ITB Travel Technology congress. And that it is about packaging what the traveler wants.

Voice recognition like “Alexa, book our vacation”. GDSs? Aggregators? Airline seat? Car Rental? Hotel transfer? Restaurant? Or …

“Jürgen, this is Alexa, I believe you wanted to go to that “new movie”, they show it tonight at the cinema here in your vacation area, shall I book you two or four tickets?”
“Jürgen, this is Siri, there is a Pink Floyd revival concert in xyz, I could book you and Yulia two flight and concert tickets in four hours as well as the babysitter for the girls?”

Things I would have overseen…

Richard emphasized, the consumer does not want to bother about all those detail. They want an offer. And consume. GDS? Aggreggators? NDC? …?
Hey Richard, that was 20 years ago we discussed and envisioned those things. Ain’t it faszinating, how our industry keeps stalling…?

Food for Thought!
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The Bias of Route Viability Analyses

The last months we worked with two regional airport operators on a route viability analysis both airports see as a exceptionally promising: Saarbrücken (SCN) to Reggio Calabria (REG).

Their problem is that it is rather difficult to get the hard-facts on it. Based on our work with ~~CheckIn.com~~ Airportinfo, they thought we might be the right people to look into this.

At first, talking to airline network planners, I was referred to the analysis tool providers. Though interesting, I got the “results” from four of those tools, three “disqualifying” the route, the third one (more correctly) failing with the information of insufficient data. The problem is, that the route in question has never been served before. There are some “comparable” routes, we found the two tools returning results used, from airports in the vicinity of Saarbrücken to Catania (CTA) on Sicily or to Lamezia Terme (SUF) in Calabria.
Then we were referred to the ACI “standard” QSI (Quality Service Indicator), specifying how a route potential is being calculated. There is a very nice introduction to QSI on the website of the North American chapter of ACI Airports Council International. But if you read that introduction, you are going to get very quickly to “factors” and “coefficients”. And that they are variables, subject to interpretation and weighting, they are “relative values”. And while I found my usually very open sources at IATA, OAG and FlightGlobal distinctly tight-lipped, when I called and asked about QSI, they quickly confirmed that their tool follows those principles and how much and why their tool is better than their competitors.

One airline network planning director clearly told me those tools they use, but they are useful only on existing (or to some extend historically existing) routes. As he had provided me his initial impression on that route, I questioned his initial response and he confirmed that they use those tools with an “almost religious” faith. So if they look into a new route, knowing their tools to have a bias towards existing routes, if their tool returns “not viable”, it builds a major obstacle to get them to look into such route.

So we also had a look ourselves into the “route data”, getting statistical data from those other routes from Eurostat (avia_par), the airports, two of the tool providers, as well as three airlines. As discussed in The Numbers Game, we once more were confronted with conflicting data. Public data on Eurostat shows different numbers for outgoing HHN-SUF compared to incoming SUF-HHN. All numbers “close by”, but in most cases, the numbers did not correspond to the other sources! So what “quality” do we talk, if we in a single industry cannot agree to a fixed value?

Okay, so we decided we take the average of the different values we received. Then we compared to the various catchment areas from our ~~CheckIn.com~~ Airportinfo analyses, both the pure isochrone-populations as well as our competitive analysis. Where we found once more that the drive-time zones themselves resulted in major offsets, rendering any attempt to interpret the results as useless. On the competitive reach, we found some “trends”, though it showed clearly that the more routes an airport has, the more choice such is given to the traveler, the lower the average choice of a traveler for a specific route. But even with those constraints, looking at the catchment area confirmed potential interest in the route.

More interesting, I found that aside of Eurowings with about 75-80% load factor on their flights, all other airlines operated with load factors of around 80-85% and up to 90% on an annual basis. Such, it seems that overall, there is very high demand for travel between the regions. But the tools disqualify flights. Hmm.

Working on a viability study, other approaches are to look at the regional demand. Where we got confirmed, what we knew before. There are no reasonable statistics on a regional level. Yes, you get all the statistics on a small scale from Saarbrücken to Italy. Or from Reggio Calabria to Germany. Okay on Luxemburg. But is Italy Northern Italy with higher purchasing power, commerce and industry? Or Calabria? Is Germany Munich, Berlin, Hamburg, Düsseldorf, Stuttgart, Frankfurt – or Saarland or Saarbrücken? You. Got. To. Be. Kidding. Me.

So yes, we can see how much of the industry is where (percentages), how many “Italians” live in the Saarbrücken region, but without there local research (they have done), we could not know that their “Italians” are mostly from not just Calabria (state) but Reggio Calabria (city)… Whereas we talk about many “2nd generation”, having German passports, not showing up in those “statistics”.

So yes, we did the numbers crunching, but those numbers are to be taking with a big grain of salt. Discussing this with my friend, that afore-mentioned airline network planning director, I could “see” his smile. “You check some basics, to get a feeling and have some numbers to confront the Powers-That-Be (PTBs) in those regions with. Then you travel there and confront them and learn that all you learned is useless and why. Then you talk to the PTBs and learn if and why they believe it makes sense, you question them from your experience and then you decide if it makes sense to take the risk and fly – or not.” And he referred to my 2012 post on the Crystal Ball and told me that he liked my conclusion in it: “I take a big long stick and grope in the dark. It requires expertise, experience and good guesswork to do something with all that information you get. Good luck is part of the business.”

Hmmm… It confirms what I recently told the Minister President of Thuringia, discussing on Facebook about population emigration they suffer. Emphasizing the need to better support the airport to attract incoming business and the necessity for scheduled flights, I told him, it is not the airport acquiring airlines, it is the region. As soon as an airline network planner researches Erfurt and finds all the negative buzz about that small airport there, if they hear the PTBs having promoted bus service from Frankfurt when they had a flight connecting them to Munich, when they learn that the state officials and commercial (state-paid) delegations traveled from Berlin or Frankfurt instead, they understand that the people in the region do not support flight services. They’ll look at the story behind the closure of Altenburg. Then they likely look for locations where the PTBs support flights. Politicians, local industry, tour operators, the people and the media. Discounts on landing fees are a minor factor on the cost and risk of an airline operation. (Except for Ryanair?). They are an indicator, if the region is willing to support the flights.
I am afraid, that Minister President did not understand that, he instantly fell back into the “airport bashing”, questioning, why in the past the airport’s subsidized flight services did not succeed. No, he did not heed my words. In fact, he was prejudiced and simply did not listen but took his “instinctive” fall-back position on “airport”.

Working with small regional airports over the past years, I know many airports heeding such words, their PTBs in strong and unquestioning support of “their” (regional) airport. Who publicly want their airport and want it to succeed. Who fight for it and take a stand in discussions for their airport. And yes, Connect or Routes Europe are places where you can meet and talk to them. Though there I also heard just recently (again) that many airlines are showing interest in the big airports only and the small have trouble getting a time slot to make their case. Where Connect° had the advantage on the small airports.

Coming back to the issue of this post. My airline friend and I discussed for several hours (thank you!). And rather at the end, he emphasized, why he invests only little time in “analyses”. Because all those analyses will promote the big buddies. They will confirm business potential on the large airports with data silos full of supporting statistics. But they will disqualify any of the small airports solely based on the fact that there are no “supportive statistics”. Following our discussion, he wrote me a very short message: “Jürgen, the game is rigged. Your catchment area stuff is the first thing I saw to give me a somewhat unbiased view on smaller airports in years. Those [other] analysis tools are sold to sell us statistics. Stupid network planners and the ones trying to play it safe and by the books, requesting the QSI. It’s why mostly the small airlines, who can’t afford those tools start new routes.” And why he emphasized to me that he and anyone in his team wouldn’t bother about any route viability studies based on the statistical history of the airport, except for an indicator. “If you play it safe, you just follow the crowd.”

Food for Thought
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Tag: Habits

Face to Face

Call Quality, Disruptions

Lesson Learned 2002

Perceived Importance

Video-Call Will Replace Travel?

P2F – Passenger to Freighter Aircraft Conversion

Parts-Out – Cannibalizing Aircraft

Cognitive Dissonance: Who Pays the Bill

Supply Chain Management: We are ALL in this Together

Look to Book

Post Expiration

Information Flooding (1)

Information Flooding (2)

Social Networking – Lessons Learned

… and the Ongoing Demise of Small and Mid-Sized Airlines