Marks Aviation

Enforcement, Oil, Bankruptcies and Silverjet

April 14, 2008 – 10:47 am
Airlines are hot conversation topics again, but not for the reasons that any airline executive would want. It seems that the FAA and its myriad offices have once again agreed that technical compliance means just that, and the irony wasn't lost on the media either that the FAA grounded American for non-compliance with a directive that American designed for the FAA. There needs to be balance between FAA oversight and air carriers' own incentives to maintain the highest level of safety. That balance existed in the past and it will exist in the future. The fact that we're in the safest period of airline operations since 1903 has everything to do with the right incentives and level of oversight. Things will get back to normal. But the FAA's changing enforcement threshholds are impacting airline cost structures at a point when they can least afford it. Now it's not enough to fix ...

Posted in Boutique, Budget, Networks, trends | 2 Comments »

Composite Itineraries: White Paper for Download

March 31, 2008 – 9:19 am
Download File: Composite Itineraries White Paper While my interests lie in the boutique sector, my airline experience has been in point-to-point international airlines first and the nascent boutique sector second. You may not know that MAXjet (nee Skylink Airways) was born as a two-cabin model with Premium Economy (45" seat pitch) and Standard Economy (34") cabins. We moved to a single-cabin model to exploit a new opportunity and increase the range capability of the aircraft (allowing markets like London Stansted to Las Vegas). Connectivity among point-to-point carriers was a key challenge that we struggled with before launching. The industry assumption was that all passengers, whether traveling in Business Class comfort or at the back of the (Sky)bus, wanted the convenience of baggage transfers and single-ticketing when booking one-stop/connecting trips. In 2004 I published a white paper with Mike Malik, our Chief Marketing Officer. We discussed the technology and theory behind what we called ...

Posted in Boutique, Budget, Networks, Website, trends | 2 Comments »

Skybus - The Other End of the Spectrum

March 27, 2008 – 11:57 am
Download File: Marks Aviation - 26 March 2008 Skybus While I think about Boutique airlines as low-density specialist operators, the Budget end of the airline world has seen some new models over the past years. In the US, we like our Budget airlines friendly and comfortable, but in Europe the Ryanair phenomenon proves that price really does matter more than touchy-feely details to a big portion of the public. Consider the experiment in ultra-low-cost air travel serving Columbus (Ohio) since May. Skybus Airlines, which is backed by some very big financial names, has taken the ultra-low-cost model to the American heartland with a fleet of 156-seat new Airbus aircraft. The airline's backers include Morgan Stanley, Fidelity, Nationwide, Huntington, and Tiger Partners, among others.  Skybus raised $160 million in financing and ordered 65 new aircraft, although all of their aircraft so far have been leased. What's interesting about Skybus is how different it is ...

Posted in Budget, Website, trends | 1 Comment »

Experiential advertising for airlines?

March 19, 2008 – 2:05 pm
A member of the LinkedIn community asked whether the trend in experiential advertising was here to stay in the travel industry. Given that boutique products have embraced the trend to communicate, I think it is.   Maybe the Steve Jobs School of Advertising is now spilling over into travel.  Apple has long understood that premium pricing in electronics isn’t about whether you have the fastest processor or the most memory.  It’s about the style and experience of using a product and what using that product says about you.  As travel splits into luxury and commodity segments, experiential advertising is brutally effective at building recognition and customer desire for high-end product.  Look at how airlines that depend on high-end passengers (e.g. Eos, Silverjet, British and Singapore) use experiential messaging to avoid detailed facts and figures.  They’re selling comfort and relaxation, and nothing about facts and figures, buy-now pricing or comparative charts communicates calm enjoyment.  ...

Posted in Boutique, Showcase, Website, trends | No Comments »

Dealing with high oil: it’s revenue this time, not cost!

March 13, 2008 – 8:34 pm
Download File: Marks Aviation - 13 March 2008 Oil Another social board had a user who posed a simple question: is there any hope for US airlines whose margins have been trashed by rising oil costs? Is there a neverending stream of capital to fund losses this time around? I thought it was a great question and raises a number of issues related to the boutique model. I like to start with the assumption that airlines must find their own solutions.  We’re heading into uncharted territory, because unlike the trauma last time around in 2001-2002, the structural problems in the airline industry are surfacing at exactly the same time that input costs, driven by oil, are rising and demand is unpredictable.   High oil has a tremendous direct impact on operating cost. Fuel is anywhere from 33% to 50% or more of an airline's cost structure, and it's the biggest cost over which you have little ...

Posted in Boutique, trends | 1 Comment »

Showcasing product online (or why Expedia is in trouble)

March 13, 2008 – 8:06 pm
Download file: Marks Aviation - 13 March 2008 Showcasing I saw a question on one of the social networking boards about today's trends in the travel world. I reflected on what we're seeing today with Internet site re-launches and the changing role of travel intermediaries such as Expedia and Orbitz. Here are some thoughts.   The airline industry is recognizing that Internet storefronts have to adapt to showcase product, not just price, in the booking process.  That’s starting a shift away from the online travel agencies like Expedia and real changes in how we evaluate product when we book travel. Flash back to the mid-1990s when the first travel e-commerce sites launched.  Airlines and hotels looked at Internet distribution as an efficient add-on to travel agency distribution systems that communicated schedules and fares.  The travel agent was responsible for the upsell, explaining product and advocating premium cabins.  Those GDS roots defined how travel companies approached the Internet: as ...

Posted in Boutique, Showcase, Website | 1 Comment »