What future for the traditional high street travel outlets?

Historically the travel retailer existed because the travel principals, whether airline, tour operator or cruise company needed a point to and through which products could be seen and sold at high street level . The customer of course was less travel savvy a generation ago and there was a reliance to also receive destination information with the travel principal effectively covering the cost of both activities through commission structures.

The current climate sees a reduction in the use of full service airlines. Additionally the leisure product range is under some pressure with the customer base trying to reduce its travel budget. This and a visible migration of travel revenues to Internet based sites, thus bypassing the travel agent equates to tough times for many a high street retailer.

The retail community has already accommodated the general reduction in commissions made over the last 5 years as travel principals have sought to reduce point of sales costs. The corporate travel agents have moved towards a management fee based approach . What does the average high street retailer have to offer for which alternative charges (and a method of survival)can be levied on the customer?

The low cost airline model is arguably more resilient in the current climate. Loss of some traditional passenger volumes being replaced at least in part by alternative market segments 'downgrading' from traditional full service in order to contain travel costs. - Given most if not all revenue generation is direct to the carrier via the Internet , this resilience does little for the retail community.

In a territory which has advanced adoption of the web, inventory and product has been increasingly deliverable direct to the customer for several years. Many traditional travel principals have significantly less reliance upon the high street as a result.

Distribution through a third party with its associated loss of direct access to the customer has always sat rather awkwardly for the travel suppliers. It has been been the thorniest of issues for the low cost carrier. Recent legal action against websites accused of 'screen scraping' only highlights the wish of the no frills carriers to remain independent of third party involvement.

So will the low cost carriers embrace the retail community - well for the genuine locos I think the expression is ''hell will freeze over first!'' .However for the hybrid carriers - those parked between the genuine locos and full service, possibly! Thus throwing the retailer a little lifeline.

Is the high street retailer becoming a bit of a dinosaur ? Relegated to the scrap heap by the Internet with its unlimited wealth of travel information and direct access to air seats, tour products, rail seats and cruises. Well in the case of corporate travel, the retailer still has a value in the chain but for an increasing proportion including the leisure traveller, independence from the retailer is growing.

In the UK, Association of British Travel Agents now has 5500 retail members . A high of 7500+ less than 5 years ago indicates a rationalisation that is already underway


How long has this sector of the industry got ?? What can it provide to add value to the customer booking process and in doing so earn a revenue stream.



How will the retail industry look in 3 years ?

What do you think?

A time to use your talent or waste your talent?

This is not the first economic downturn experienced by the aviation industry.

As with any industry effective control of costs is paramount in terms not only of survival but in anticipating the return to positive growth.

The industry seeks to control and minimise expenditure in order to maintain some level of direction towards profitability. Of course many costs are contractually fixed and thus attention is focused on those variable areas, inevitably including employee costs highlighted particularly by the bean counters.

But are these employee 'costs' or would they be better described as 'talent assetts'. For sure there are areas of employment that directly relate to the health of the business . More passengers can mean more check in agents, more cabin crew, more pilots etc and vice versa. But recent press has highlighted disproportionately large staff reductions relative to declining business volumes. Were these positions so fundamental in the good times?

Does business not have the courage to resolve staff level issues other than in times of business downturn - thus the downturn becomes the excuse rather than the cause for some proportion of staff reduction!

So what is aviation trying to achieve -the survival and improvement of the business as a medium term strategy or just a short term cost cutting exercise - the 2 options are often less than compatible.

Is this industry like many others in the western world exhibiting elements of 'shorttermism''. Listening to a economic issue being developed into media driven crisis. Giving too little thought to the needs in 12 months as green shoots start to re- appear. A quick fix to reduce the responsibility for employing and the associated HR issues that attach.


A reduction in passenger and cargo throughput may require a measured adjustment of workforce. But some see it as an opportunity to contract out functionality with fixed costs being replaced by variable.- why now? If it is such a good business practice, why not do it in times of positive growth?

Who is driving this strategy? HR or the accountants? Are the blind leading the blind?Experience suggests that many making the decisions are least qualified to judge the resultant impact on the business.

Often loosing the skills base and contracting out function to a third party who will have to learn your business whilst being charged with the only interaction with your customer base can be a dangerous place to be . Keeping skills within the workforce, particularly those supporting the customer interaction - airport functionality marketing/sales and telesales functionality inclusive at least maintains the quality of interaction everyone strived so hard to keep high during the good times.


So for those planning such cuts, is the lack of short term cost strain worth the long term talent drain. Cost reduction in terms of employment costs but with the associated increase in third party contract costs will often lead to poorer customer service, allowing your revenue streams to be 'controlled' by a third party whose task after all is to look after their own business first and the principals second.



Caution is advised - the saving of costs for 10 staff for a one year economic glitch will be lost in revenue many times over in the subsequent years once the issue fades and is replaced by more positive economic trends. The loss of talent can be permanent .

So should the current focus be more talent retention and less cost containment?

What do you think?

Finally-- Heathrow runway approval-Objectors take the high ground!

Finally the UK government has ''approved '' the proposal for a third runway for London Heathrow.

BUT opposition groups to the scheme once again have occupied the high ground - The government has failed to get its act together and is forced to play a defensive bat in supporting the approval. This , rather than understanding the concerns voiced by opposing parties and pro actively delivering a campaign answering those questions regarding climate change and local noise increase impact before they even get aired in what inevitably would be a negative way.

Its not as if the opposers' position has been a well guarded secret - campaigns have clearly identified the rationale behind opposing this planned expansion .

As indicated in a previous blog, the government and aviation just cannot seem to provide a positive collective voice on the subject of air transport and climate impact and while this remains it will leave itself open to repetitive whippings from any and all anti-aviation lobbies. With this being just one of several major UK aviation related projects, surely there is enough sense within the industry to pre-plan and answer these environmental issues before the questions are raised . Is it that we are now all too cynical to believe that anything government says has any element of truth in it . Or maybe we are being overly generous regarding their collective intelligence and ability to put together a convincing and constructive argument on the subject

The opposition to the plan by London's Mayor must be causing some bemusement. His concept of a Thames estuary site for a new airport rather than Heathrow development has an element of deja vu , the concept having been proposed and firmly rejected some 25 years ago during a project to identify and secure air transport infrastructure for UK south east. Why did no one tell him ??

Any government walks a narrow line between the positions of supporting improved economic prosperity for its country and the balance of the important issue of climate protection. Climate deterioration however does not recognise territorial boundaries and one country's stand will have negligible impact if the remaining polluters carry on polluting! The government has to protect the economic position of the country here whilst seeking a global approval for emission reduction. At least the UK government is amongst the few already willing to incorporate aviation emissions within the concept of overall emission reductions.

Years of discussion already on the subject and still 10 years before this runway will be available for commercial use .

I would suggest that its not too difficult for aviation and government to find a team knowledgeable enough to drive this pro actively now and re establish the high ground - not just for Heathrow but for the many other projects that continue to receive negative attention.

Who are the real innovators?

Innovators in the air transport industry? Well it depends on your view point

Some make a success out of taking an established range(established by someone else of course with at least a core customer base) of operations, adding some real marketing flair and delivering point of sale direct to the customer. Furthermore, delivering that which was promised and successfully competing against the incumbent.

Lets be honest - they're stealing the customer base of the established carrier ! Really? Well why did the incumbent leave the door open?

Others start with a completely clean sheet of paper. New never before flown routes, theoretical customer volumes, new marketing concept, new inventory distribution, new (or no ) on board service - throw all the original rules out of the window and develop to take on the established carriers in terms of size carryings and profitability.

One thing's clear. The original operator was too arrogant about his market position or missing a trick or two and leaving a gap for the newcomer to establish a competitive ( and many times better) operation. How well did he know his customers and those customers' needs? Looking at the headstones in the airline graveyard, maybe not well at all. And given the contraction of 'legacy'' operations Europe, wide this arrogance or ignorance continues.

Well good for the innovator!-- You need the 'out of the ordinary' to come along and shake up the industry once in a while.



Innovation is not just seen in the Low cost environment. There are plenty of success stories in a number of legacy carriers . Neither is there a protective cover around the low cost model ensuring that it is immune from failure. There have been and will continue to be failures in this area - you need a good combination of innovation, sound finance and business principals and the inevitable stroke of luck or two to carry it off.


But why then are the innovators luckier than the 'head in the sand' brigade? !" Sometimes the staff from the 'old school'' just haven't got what it takes to innovate and from a marketing perspective are too risk averse.



And the same applies to airports . Those who sit and wait for the established airlines to improve frequency or wait for new carriers to turn up with new operations find those services being delivered down the road at the competitor. Birmingham is seeing new operations and some respectability in volumes whilst Manchester has seen a quarter with passenger and cargo monthly volumes decline by up to 10% year on year. So who is innovating and who is resting on its laurels? Manchester is not alone . Those too reliant upon full service operators and traditional markets are witnessing similar volume deterioration.

Those who want to surive should have been innovating for some while now. Those innovating stand a better chance of survival . Who are practicing the ''same old, same old'' and seeing their volumes decline and market share deteriorating?

What do you think ?

Where were your marketeers during the last downturn

The air transport industry has suffered more than many industries over the last 30 years, having been affected at a local level by global issues both economic and political. About 5-7 years between each crisis is about par for the course. If its not an economic downturn , its the fallout form a terrorist event or a country invasion.



Since the last economic downturn, interaction with the customer has improved dramatically with web based applications delivering information and decision making ability to the web savvy customer. The cost of sales for the carrier has declined as a result with benefit to the business bottom line.


Tariffs and inventory can be adjusted almost instantaneously and communicated out to the market and the principals have regained control of their market . But the strategy for delivering success still comes from the mark 1 human brain. It is clear that some carriers are struggling to get to grips with the current situation . Lateral thinking is required . The chances are - some of the industry's marketeers were not even teenagers during the last downturn .



True the distribution of inventory has improved significantly and the ability to interact with the customer has improved beyond recognition. Those carriers who's inventory sales are web orientated should at least have no excuse for crying ''cash flow'' as a crisis. Revenue at least is collected at point of sale before travel,rather than with a delay of up to 6 weeks as in the case of BSP revenue collection and apportionment . So the revenues accrue before many of the costs.


But it is possible that in some carriers there is little experience of handling this type of ''crisis''. The systems are in place but are the brains? So should the response be ''brisk but not hurried''?

Well the statistics for the last quarter are showing 10% passenger reductions to from the UK. Similar for air cargo . Out of the top 20 UK airports only 1 showed a November year on year growth. Some airlines and airports are bleeding revenue heavily. But not all !


Yes the marketing guys around at the last downturn of course made mistakes but hopefully also learned from them and most of the carriers then survived .

Traditional airports occupied in the main by legacy carriers seem to be affected to a greater extent than the adaptors-those airports who have a legacy base but have recognised the better resilience seen in passenger carryings by the major locos. They have adapted their product and resultant pricing to encourage incremental/replacement passenger through-put derived from new loco operations.

And what of the airlines? Observation suggests a wide variation in response to the current economic climate. Some achieving revenue stability through aggressive marketing and some slipping backwards through lack of necessary response to the changing marketplace.

Between Europe and the Middle East, some commercially pro active carriers are still launching new operations with high load factors on early operations. View Turkish Airlines early successes on its new Birmingham operation. Some other carriers have 30 year maturity operations between major hubs with forecast 30% load factors over the next quarter and no realistic strategy to resolve and improve. Be in no doubt all those involved in air transport have the opportunity to respond to improve or at least stabilise revenues . Some carriers however cant because they don't have the skills or vision.

Any chief executive who hears a list of excuses from the marketing guys that nothing can be done instead of plans to exploit opportunities should be seriously concerned that he has the right team in place!

History it appears is repeating itself and selecting the survival of the fittest. The same mistakes are occurring again in some carriers purely because the skills available to to manage the crisis were not used. The resolution of this situation is available to all . Who will have the courage to recognise the need for change and act ?