Open Source Experiment in Travel Industry a Modest Success

I was reading about open source Mozilla's challenges now that Google has entered the browser market with Google Chrome, and that reminded me that it was time to get an update about the travel industry's own open-source experiment.

As you may recall, four months ago travel distributor Farelogix kicked off Project Hawkeye, an open source point-of-sale application and made it available for free downloads.

Farelogix stepped up to the plate and gave away the desktop application's code and documentation in the hope that developers would build applications to it that the travel industry can share.

So far, 450 entities have registered for the Hawkeye source code and downloaded it, says Farelogix CEO Jim Davidson.

It's not entirely a selfless effort on Farelogix's part, of course, because it would hope to gain some customers and revenue by supporting the application, if companies approach it for an assist.

But, this is not a requirement: Companies can download the code for free, run with it, and innovate the hell out of it, just as so many developers did with Mozilla.

Project Hawkeye, with its open-source effort, is a big deal in the travel industry, which has been stifled by proprietary technology and what might be called partisan politics in the geekosphere.

Because companies or individuals can take the Hawkeye code without any further obligations to Farelogix, it is hard to gauge what they are doing with it, if anything.

But, this is what Farelogix knows so far, according to Davidson.

• Farelogix is engaged with three travel management companies which are developing their own highly customized versions of the application, tweaked to their own workflows.

• Some 10 companies have pinged Farelogix back with questions or issues with the code.

• All of the GDSs, which hold onto their own code as if it were the key to Iranian nuclear technology production, have downloaded Hawkeye, as have some airlines.

• Farelogix is aware that "a couple of other technology companies" are developing the code in some way, but the details are unknown. Davidson surmises that the fruits of their efforts may be public in some form in six months to a year.

• Meanwhile, Farelogix, which has developed a few new versions of the code since it was released March 26, is readying another major release of the application in September or October.

So, is Project Hawkeye a success or a failure?

Too soon to tell, really.

Davidson says Farelogix would have considered Hawkeye a success even if Hawkeye had hit 100 downloads -- let alone, 450.

So, the travel industry will have to wait to see if Farelogix's release of an open source desktop application will light the industry's innovation fires.

Hawkeye, a business application, assuredly will not become another Mozilla.

But, maybe Hawkeye will lead to further efforts to tear down the travel industry's "walled garden" -- and that would be a good thing.

United's Fee Passalong Could Tilt Playing Field Back Toward Airline-Direct Channel

United Airlines' decision to test the waters and have some travel agencies foot the fees for credit-card transactions when selling United flights could conceivably tilt the airline-online travel agency marketshare-skirmish back toward the airlines.

As Tom Botts noted in the Hudson Crossing Travel Industry Insight Blog: "If adopted even more broadly and applied to the Online Travel Agencies, they would be forced to reinstate some sort of booking fee in order to cover the costs of paying credit card merchant fees. This would return a pricing advantage to the airline.com websites that has recently been removed by all of the major players in an attempt (which we have heard has been successful) to drive growth."

In fact, PhoCusWright financial analyst Jake Fuller, in his recent report, Does the Model Work Without Fees?, cited "indications of a mid-teens increase in air-transaction volume since waiving fees [in March and April] suggests a rise in [OTA] share to 37% and that OTAs would be able to offset at least some of the lost fees through volume."

Fuller pegged the OTAs' share of online-flight bookings at 32 percent in 2008, down from a peak share of 44 percent in 2002.

So if a bunch of major carriers follow United's lead on credit-card fee avoidance and the OTAs are forced to reinstate some form of consumer-booking fee to shoulder the new burden, then the increased volumes that the OTAs have seen in the last few months may evaporate as some consumers return to airline websites for flight-booking.

And, as Nadine Godwin notes in her Travel Weekly piece, United's initiative could drive more travel agent bookings to United.com, as well.

Godwin writes: "Alternatively [instead of agents absorbing the fees and booking United flights using their own merchant acounts], it could push agencies to book at the carrier's website rather than the GDSs, leaving United to pay credit card merchant fees but bypass GDS fees."

Travel organizations quickly are taking sides on the issue.

ASTA (American Society of Travel) has taken a dim view of the United plan and reportedly stated that it would be asking the Justice Dept. to monitor possible airline collusion on the issue since carriers have openly aired their feelings on the question of reducing credit-card fees for some time.

And Robert Joselyn, a prominent travel industry consultant, reportedly is urging travel agents to book carriers other than United as a form of protest to convince the airline to rescind its new credit-card policy.

After greatly reducing their GDS fees several years ago, many airlines identified credit-card fees as the next battleground in the drive to reduce distribution costs -- but United's is the first potentially game-changing attempt.

In a July 2007 Travel Weekly article, Al Lenza, then Northwest's vice president of distribution and e-commerce, said credit card fees were soaring and it was critical for Northwest to trim its "dependence on credit cards."

Lenza was the point man in Northwest's ill-fated drive in 2004 to have agents pay a "shared GDS fee" in an attempt to reduce Northwest's distribution costs. After vehement protest by travel agencies and the GDSs, Northwest withdrew the plan.

Lenza left Northwest in 2008 when it merged with Delta, and The Beat reported in February that he began working at United on distribution strategy.

In Block-ade-Buster Move, Orbitz Launches 'Open Cuba' Campaign

Orbitz is offering a $100 coupon toward a four-night vacation package to Cuba and the online travel agency's Away.com brand is featuring a Cuba Travel Guide, with tips about exploring Old Havana and the Afro-Cuban heritage in Santiago de Cuba.

Imagine that.

It's all part of a petition campaign and website that Orbitz is officially launching tomorrow that calls on Congress and the Obama administration to end the 50-year-old Cuba travel ban. The petition reads:

"We call on you to reverse our failed policy of isolation and end the 50-year ban on travel to Cuba in the United States. We believe that every American should have the freedom to travel to any country in the world, including Cuba, because the interaction between peoples from different countries is the single most powerful way to advance the causes of peace and prosperity."

In light of the Obama administration's steps to loosen travel to Cuba by Cuban families, I heartily endorse the effort.

Americans should have the right to travel anywhere, and I give credit to Orbitz for taking the bold step to take a leadership position in the travel industry on this issue.

Orbitz and market-research firm Ipsos released a poll in tandem with the campaign launch that shows that 67 percent of respondents would back a plan to allow travel agents to book Cuba travel and 63 percent supported allowing online travel agencies to do so, as well.

I believe this was a bold move by Orbitz because the OTA risks a boycott and a backlash.

And, it's also curious that the Interactive Travel Services Association, the trade group that represents major OTAs and global distribution systems (GDSs) like Sabre, Galileo, Worldspan and Amadeus, didn't lead or at least join in the effort.

Perhaps there is some dissension in ITSA about the move.

As much as I applaud Orbitz's Open Cuba campaign, I have to say that offering the $100 coupon for Cuba travel cheapens the effort.

Signers of the petition get emailed a promotion code, which is good toward a four-night Cuba air-hotel vacation package if you register on Orbitz.com and once the federal government approves travel to Cuba for the general public.

Orbitz officials plan on presenting the petition to U.S. officials in Washington, D.C., later this year, but the coupon offering opens Orbitz to charges that the petition signers may have been swayed by the discount.

At any rate, I hope other major travel companies and nontravel companies join the campaign.

It is not only a travel issue, but a human rights issue.

There is growing momentum toward lifting the Cuba travel ban and travel companies, including some airlines, are getting excited. AirTran Airways and Allegiant Air already are dusting off plans.

In the Orbitz-Ipsos poll, 72 percent of respondents said they believe restarting U.S.-to-Cuba travel would benefit the daily lives of the Cuban people.

Clearly, the boycott hasn't worked and only has served to cause greater suffering for the Cuban people.

Let's take this opportunity to push travel to Cuba and to put pressure on Raoul Castro to open up the society.

Travel Metasearch, OTAs Sweating the User Interface, Stupid

When it comes to the new availability of optional services data for the airlines' fee frenzy, the travel metasearch engines and online travel agencies (OTAs) are sweating the user interface (UI).

How do you cram the options into search choices and displays when checked-bag fees may be suited for apples-to-apples comparisons among airlines, but in-flight entertainment choices or paid seats may not?

The challenges for Kayak, FareCompare, Mobissimo, Farecast, TripAdvisor, CheapFlights and the OTAs is how to present a clean UI to consumers that would entice them to pick their optional-services preferences before they execute their search so travelers can take advantage of the new data without the metasearch engines and OTAs totally messing up the UI.

There also still is a technology debate, I'm told, concerning whether the new ATPCO standards are robust enough for airlines bent on those incremental revenue streams that optional services will generate.

Although 13 global airlines, ITA Software and Amadeus made some travel news by testing optional services' feeds with ATPCO, some carriers undoubtedly will build their own nonstandardized solutions, as did United Airlines, Midwest Airlines and Frontier Airlines with the Sabre GDS before ATPCO had completed its standards-crafting.

The GDS UI issue can be easier and more complex than the problem for the metasearch engines and the OTAs. On the one hand, putting optional services on green-screens and in the hands of travel professionals might be easier from a display perspective. On the other hand, the GDSs need to jump through hoops to make all this work with their legacy technology.

Meanwhile, there was an interesting debate yesterday in the comments section about my post, "Airline Optional Services: TripAdvisor, Kayak, Farecast, FareCompare, OTAs to Get the Data."

Hudson Crossing and Valyn Perini of Open Travel Alliance fame cast doubt on whether many consumers will choose to shop for flights based on optional services choices.

A very legitimate point.

But, the more I think about it, the more I think that the issue is a chicken or the egg kind of question.

I think if the metasearch engines and OTAs succeed in creating clean, compelling UIs out of this admittedly morass of optional services choices, then a significant segment of travelers will take advantage of the choices.

That's because it is in consumers' interests to know what they will be paying for in advance, especially if the airlines are offering any new services that actually add value.

On that point, I like the comments yesterday in my blog by Sam Shank, the CEO of Dealbase.com.

Shank wrote: "I've long felt that if a la carte products are positioned as upgrades (vs. add-on fees), and strategically-placed within the purchase decision process, they'll represent a key new source of airline revenue. Metasearch, with their focus on innovation and rapid iteration, is the logical partner for airlines to roll this out to consumers."

He added: "As an air traveler, I'm looking forward to spending more money to have a better flight experience. But, if the only products offered are things I used to get for free, my wallet will remain shut."

Mine, too.

Airline Optional Services: TripAdvisor, Kayak, Farecast, FareCompare, OTAs to Get the Data

Before the end of 2009, metasearch engines powered by ITA Software, and online travel agencies (OTAs) and airline websites pumped up by Amadeus and Travelport, likely will get the optional services data necessary to transform the flight-shopping process.

As I reported in Travel Weekly today, more than a dozen airlines, ITA Software and Amadeus are testing airline-fed data through ATPCO for services like checked bags, Internet access, premium seats, lounge access, onboard gin and tonics, and even portable oxygen. Travelport GDS, too, says it will get the feeds by the end of the year.

This bit of travel news is huge.

Here's why:

ITA Software is part of the metasearch guts behind Farecast, TripAdvisor, Kayak and FareCompare, and it also powers Hotwire and a host of airline websites, including Continental's and United's. These metasearch sites use ITA to get fare, schedule and availability data so they won't have to scrape airline websites and get into new legal scrapes.

And, Amadeus powers some of Kayak's and Expedia's global sites, as well as ebookers, Opodo and LastMinute.com. Travelport GDS, including Worldspan and Apollo, provides booking engines for Orbitz, CheapTickets, Priceline and many others.

With standards for optional services in place and ATPCO finished writing the code and transmitting the data to ITA Software and the GDSs by the end of the year, the way travel agents and consumers search for flights will be transformed.

A bit of the complexity in flight shopping will get simplified.

So, if enough airlines go ahead and agree to file their optional services information and the metasearch sites and OTAs take advantage of this data bonanza, consumers would be able to shop for flights by preferences.

Travelers would be able to search for flights, for instance, that offer pay-as-you-go exit-row seats, lounge access and Internet service and compare these to flights that offer similar services.

Metasearch engines that don't offer these apples-to-apples comparisons in their search-results grids, could use the data to enhance transparency in their fee-translators, such as TripAdvisor's Fees Estimator.

And, the OTAs could come up with similar solutions, although access to the same standardized data from the airlines doesn't mean that all the displays will be identical.

Access to the data is just an enabler. There is plenty of room for innovation, and at least one prominent metasearch site is working on its unique solution as of this writing.

OK, shopping for flights still will be complex and a pain in the butt, but access to the optional-services data at least will be a major step forward in navigating the fog of helter-skelter service offerings.

Next on the docket, the airlines and ATPCO will be working on filing data on branded fares, or fare families, but that is stage 2 in the process, and probably won't get implemented until 2010.

Delta Joins American in Pay-To-Play Distribution Drumbeat

Delta Air Lines CEO Richard Anderson, waxing poetic about the future of travel distribution, today echoed earlier comments by American Airlines CEO Gerard Arpey that global distribution systems (GDSs) and travel agencies would one day pay for flight inventory instead of airlines paying distributors and intermediaries.

A Travel Weekly story by Michael Fabey quotes Anderson as telling analysts during Delta's first-quarter financial results conference call: "Over time, the industry will evolve. People will pay us for our content."

As I wrote in the Dennis Schaal Blog several days ago, Arpey of American Airlines articulated a similar plan, one that might be dubbed, "The American Dream."

Well, revolutionizing the distribution formula "over time," as Anderson put it and Arpey apparently also believes, can take quite awhile.

Anderson's comments came the same day as Travelport GDS announced that it reached a content agreement with Air France KLM that runs through March 2013.

And, in November Sabre announced that it had extended its current agreement with United Airlines through 2013.

Unless Delta and American want GDSs and travel agencies to preference United's flights instead of Delta and American itineraries, something else is going on here.

Major airlines undoubtedly will push hard for lower distribution costs when the next round of negotiations over content agreements gets under way in a couple of years.

And, they probably will succeed in lowering their costs even more than they did in the previous round.

But, making the GDSs and travel agents pay for the right to distribute -- this isn't on the agenda in the real world.

However, airlines' posturing as a precursor to negotiations always is on the agenda and certainly can't hurt the carriers' negotiating stances.

With these comments in the last few days, Delta and American are laying the groundwork.

Expect additional airline CEOs to chime-in likewise.

The American Dream: AA to Try to Turn Distribution Costs Into Distribution Revenue

In AMR Corp.'s first quarter earnings call yesterday, CEO Gerard Arpey spoke of his "long-term vision" to make travel agencies and global distribution systems (GDSs) pay for the privilege of distributing American Airlines' flights rather than the reverse.

And, even short of that goal, the move could be, well, priceless.

Arpey was quoted as saying: "Tom [CFO Thomas Horton] can jump in here, but I think the same approach that we’ve taken here in the U.S. certainly lends itself to the international distribution of our tickets where we’re still paying much higher levels of commission and booking fees, etc., and I think a lot that hinges on the use of technology and the competitive environment because a lot of those commissions or overrides or booking fees are paid in order to stimulate traffic and if we can, as an industry, do a better job keeping the supply of seats in line with the demand, I think that will help us on those fronts."

Warming to the topic, Arpey spoke of his dream: "So I think there are significant opportunities around the world to make the kind of progress that we’ve made here in the U.S. and not to be too dramatic but I can see a day, and maybe I’m dreaming here, where those folks who are the intermediary between us and our customer, have to pay for access to our product rather than us paying them to distribute our product. So that would be my long-term vision."

Any airline, GDS or travel agency executive in the U.S. recalls the distribution dramatics of 2005 and 2006, when the airlines threatened surcharges and radically cut the distribution fees they paid to GDSs and the incentives that Sabre, Galileo, Worldspan and Amadeus passed on to travel agencies.

Well, Arpey is signalling two things:

1) American Airlines, and others no doubt, are set and already are trying to export to the international arena the slash- and-burn distribution tactics that they successfully employed in the U.S. several years ago.

2) In the U.S., the next round of GDS-airlines booking-fee negotiations in a couple of years may make the prior face-off look like amateur night.

Airlines, of course, have every right to trim their distribution costs to reasonable levels. Before GDS deregulation, the GDSs used their clout and virtual monopoly power to tack on excessive fees to airlines that had little bearing to actual costs.

But now, as Arpey's comments show, the airlines are poised to try to force intermediaries to distribute flights to airline customers for free -- or, taking it to dream-like proportions -- to make online travel agencies, traditional agencies and GDSs pay for access to flights, which, of course, the airlines control.

Between Sabre, with its still-sizable distribution grip, terminating its relationship with Farelogix, and airlines poised to wield their hold over flight inventory to pummel intermediaries, it almost -- but not quite -- makes one wax nostalgiac about the days when these sectors were regulated.

The disruption that the travel industry faced in 2005 and 2006 would be considered a tremor compared with the earthquake that would occur if the airlines succeed in forcing through payless distribution in the next round of contract talks.

These days, the brouhaha may not sell a lot of newspapers, but it would drive a lot of traffic to travel news websites.

Meanwhile, another interesting point about American's first quarter results, is that although AMR's revenue declined 15 percent to $4.8 billion, those checked bag fees and other ancillary services indeed are paying off.

American's revenue from change fees, on-board meals and checked bag fees jumped 6.9 percent to $558 million in the quarter.

In the American (Airlines) Dream, those feels increasingly will be in the picture.