Although I shared this image on Twitter when I first saw it this morning, I keep thinking about this chart and the many insights it provides not just about how air travel into Australia is organised, but also about how the economy that drives Australia works.
Surprises for me: more seats inbound from New Zealand than North East Asia combined and nearly as many seats inbound from the Middle East as the United States.
New Zealand is a small country. There are nearly 4m inbound seats to Australia – even with a shared economic area, that must signal a higher than expected economic dependency. It can’t all be tourism.
It’s commonly known that there’s a strong economic link between Australia and Asia. The north-east Asia volumes must be growing as China continues to develop and becomes ever more prominent in the region. Living in Australia, it feels that there’s a strong link to the US, but the data suggests that this link might be one way or not as strong as it seems based strictly on in-person interaction (which is ultimately required to do business).
My next question is whether the Asian links are so high because they include the lion’s share of leisure travel, or is there a proportionate distribution of leisure and business travel across all routes?
Check out the infographic on the Adioso blog and check out Adioso’s flight search service while you’re at it.
Last week’s big story was the launch of Color along with an astounding $41m investment which generated much debate in the Twitter-sphere. I’m in the camp of the completely surprised and somewhat skeptical of the high valuation for Color, however, I am also intrigued by the vast potential of the Implicit Social Graph. Using the Color App (as instructed & not alone) failed to intuitively illustrate for me the power of an implicit social network based on location. I suspect this is the case with many as confirmed by the mere 2-star rating in the Apple App Store. Fred Wilson wrote an excellent post about his first encounter with an Implicit Social Graph, Last FM. I’ve been wondering how this concept applies to other sectors, particularly one like travel which is complex, dependent on recommendations, and captures meaningful discretionary spend from consumers.
How can you get the best possible recommendations for those treasured vacations – whether a weekend getaway or a dream holiday? If you happen to be friends with someone who has been nearly everywhere you’d want to go AND travels in the same way you like to (with or without children, backpacker or first class, resort or deep local culture), then all you need to do is ask. The connected world has been helping us create or tap into new networks for various situations when we need or want advice. Sometimes you’ll reach out to strangers on travel forums like Thorn Tree, which works if you’re sufficiently similar to the unknown people who help you out. And in most cases, we finally resort to taking a punt on Trip Advisor, all the while knowing that there are far more unhappy customers reviewing than blissfully satisfied ones. (If only we could apply Matthew Ogbourne’s Ebay reputation analysis to TA’s reviews!). However, the world is a big place and as with Fred Wilson’s example of Last FM, we don’t necessarily know or have an active connection with the people whose tastes are most like ours.
Currently no one knows whether Color will ultimately find success – certainly they have work to do in helping everyday average people see a use for their technology – but they have certainly sparked the discussion. I hope that the concepts and sophisticated use of data which Color is bringing to the fore will unleash a new way of thinking in many applications far beyond photo sharing.
How could you imagine using an Implicit Social Graph?
Entrepreneurs out there, take 20 mins to watch this video. For such a young entrepreneur, Brian Chesky has some sage advice as he talks to GigaOM about how he and the founding team made AirBnB work.
Taking a lesson from the digital world on transparency in setting rates, Carnival Cruise Lines leads their sector in offering flat rate commission on all cruises. As an increasing number of online self service models have demonstrated, the long tail can be well served through self-service models and flat rate pricing eases administration of partners while allowing a proliferation of small businesses capitalising on the simplicity. The travel industry has long relied on opacity in pricing and commissions to keep consumers guessing and to create massive profits for itself. In a bold move, Carnival is showing that they understand the way business is headed and are becoming clear and transparent in their commission relationship with Travel Agents.
In the video that follows (warning, it’s 15 minutes), David Dingle, CEO of Carnival Cruise Lines, explains their rationale in making the commission pricing change. With Agents providing roughly 90% of sales, this is clearly an important channel. Dingle suggests that 25% of these are late bookings made at 5% commission already so we’re talking about 67.5% of Carnival’s sales. According to Dingle, this move will reduce the consumer rebates which agents use to compete with each other during peak sales periods, meaning that pricing will be consistent across agents and competition becomes a question of service and brand loyalty – are any of us actually brand loyal to a travel agent? The benefits for Carnival are meaningful as they regain control over the price at which they sell their cruises, and therefore increase their importance in the supply chain. Clearly there will also be an incentive for Carnival to use the savings from agency payments to attract more consumers – directly through their own promotional activity and indirectly through more attractive pricing that is available to all channels.
So how much of this is today’s spin on the well known practice of cost cutting? Cruise lines are not the first to take control of their destiny as far as pricing and sales are concerned. Earlier this year, American Airlines had a well publicized dispute with two prominent online travel agents (Orbitz and Expedia) and Sabre, a major GDS (global distribution system) that enables travel agents to sell American tickets. The details are covered on MS-NBC here. Airlines have accomplished a much higher proportion of direct sales than cruise lines so far, but despite Dingle deflecting attention to the benefits for agents, direct sales make good business sense and are clearly on the horizon for Carnival.
There are many unanswered questions which will unfold in coming months:
Will there be enough margin for agents to change the way they compete as competition on service carries a cost?
Is this an opportunity to shift the mix of sales channels further online where innovations such as Zendesk are reducing customer service costs by improving efficiency?
Travel planning is complex and therefore should be a high value add activity for an experienced agent. This is not a lower order task which can be comoditised, or is it?
