Archive for June 2010

A different approach to TMC negotiations?

I think one of the most disappointing outcomes from contract negotiation is that between corporations and TMCs. You can practically guarantee that one side or the other, or in time both, are not enamoured with the end results. The corporation wants total priority and service delivery at the lowest unit price whilst the TMC spends its time trying to figure out how to comply whilst clawing back profitability elsewhere in the deal or through caveats.

Another disappointment is that many of these negotiations are so combative. It is almost like trying to play a game of poker where the TMC has to play with his cards face up and the corporation with theirs to their chest. How can you get a good result when the beginning is riddled with various levels of speculation and possibly deceit? There really must be a better way.

I would really like to see such methodology turned 180 degrees. The RFP should be changed to an IFB (information for bidders). This IFB would say ‘look, this is what we think we really want’ and ‘here is a list of the important things in priority. Can you think of anything you could add to improve our service and savings? Here are the problems we currently have and how can you help resolve them’. The corporation would then receive an inflow of pertinent and creative ideas rather than getting a load of bland ‘comply/not comply’ answers to a bunch of sometimes irrelevant questions.

Having narrowed the field down to those TMC that have shown the right level of flair and innovation one could then move on to what they are hoping to achieve from winning the contract in both money terms and ongoing partnership. This would be much better than dragging in a TMC that has been cut to the bone and is frankly going to favour the client that brings more revenue and longevity.

Having now discovered what both parties want it is time to sit down together and thrash out how both can be achieved with as little compromise as possible. I can think of lots of ways to doing this in a way that protects commits and rewards.

Otherwise I guess people can continue what they are doing now. Issuing an RFP the size of a small book to TMCs who will be initially judged on how they answer a bunch of questions that really do not address the real issues. After all, the large TMCs can answer the questions any way they think you want to hear them and are probably already handing numerous Fortune 500 companies who asked the same.

So there we have it. Naïve? Workable? Or both?
Your guess is as good as mine!

Global Travel Programmes – Delivering?

It has been quite a few years now since the advent of globalisation, or should I say attempted globalisation, became the trend. TMCs amalgamated, acquired and re-launched just so they could offer a solution that crossed all geographical boundaries.
Maybe now is the time to asses whether the global travel programme strategy delivered what it should have and if all the stakeholders got what they wanted or perhaps, in some cases, feared. It is a huge subject which won’t be fully covered by my few paragraphs but I really do think it worth some scrutiny and debate as many companies are still considering taking this route.

Was it worth telling so many overseas offices to leave their existing suppliers and TMCs for the much expected global good of the company? Did those companies really gain global benefits and what price did it cost in terms of disruption, relationships and country budgets? Frankly, was it worth the hassle and, if so, can that worth be truly quantified to everyone’s satisfaction. Is there a case for scrapping the concept or is the dream of global control, buying power and service worth continuing with? Here are my initial observations both for and against.

I would argue that from a straightforward procurement perspective the case for globalisation is very weak. This is simply because, like many corporations almost all airline suppliers do not operate the same way and are almost quaintly traditional in their thinking. If you squeeze airlines they will admit that each country has their own cost centre and even head offices have to ‘sell’ a global deal to them. In almost all cases individual global locations can veto deals on the basis that it will create low fare precedents for insufficient regional benefits. Why should my country give a silly deal that will hurt my pricing strategy and bottom line even if it does benefit offices in another continent? This will only be solved by cross subsidisation or immoveable directives.

Interestingly enough TMCs have responded to the challenge much better and have found differing internal ways to solve the problem. They too have a different range of challenges particularly in the areas of common fees, fares, services and product ranges. Different markets have varying capabilities of GDS, M.I, market sophistication and standards and to expect the same services to be available in London as in Laos is simply unlikely and possibly unwelcome.

From a corporate perspective I think there is the same age-old issue between buying a commodity and a diverse service. This one really has to get cracked and I can count those that have succeeded on one hand, with a finger or two to spare. Everyone needs to agree the expected benefits, communicate them and benchmark results. Easier said than done as corporate head offices spending most time looking at what should be the compelling concept rather than the nitty gritty deliverability and cost both financial and practical.

In summary, if it is all about negotiating power I have severe doubts. If it is about measurement of what everyone is doing then O.K. but it may not be popular. If it is about provision of global support at times of crisis like war or volcanic ash then it is worth its weight in gold. Finally, if it is positioning for a future time when suppliers buy into the programme and global subsidiaries do what they are told (for whatever reason) then go for it now.

p.s. I define a global programme as one which covers a corporation in all their operating countries. This is entirely different to a Strategic programme which only covers two/three of an organisation’s main or driver markets. If you look at most companies you will find 80% plus of their travel comes from these two or three areas. I wonder sometimes why some find a need to spend time on the hugely fragmented 20%.

Strategic deals work well, especially between UISA/Europe and I have seen sizeable gains made by savvy organisations. Most airlines can cope with giving deals where there are good new business prospects at both ends of a route.

Peril on Planes 2

I thought it topical to publish this today as it is my birthday as it was on the day this event happened. What a present it was!

What with all the plane journeys I have undertaken over the years I think I have been relatively fortunate in that a) I am still here and b) I am still not afraid to fly. One hears that flying is safer than driving a car but see how much that reassures you when you have one engine gone on a two engine aircraft somewhere over mid Atlantic. I can assure you that statistic is of little help as I personally discovered.

I was flying with my boss between Heathrow and Miami on an American Airlines 767. We had been put in seats 3 A and B in a nearly empty first class cabin and I had just tucked in to my favourite caramel topped ‘Ben an Jerry’s’ ice cream and settled down to watch ‘The Mask of Zorro (sad I know) on the in-flight screen. All seemed very well.

My feeling of well-being was shattered when we noticed there were some very scared looking cabin crew shuffling around. Something had clearly spooked them and this impression was confirmed when they delved into a storage container behind my seat and brought out a survival manual and a first aid box. I spontaneously wondered how the contents of the medical box would help if we plunged 35,000 into the ocean. It would take quite a few sticking plasters and gauze to patch us up after that I thought.

No announcements were made so one of us sidled up to a pale cabin attendant, identified us as being in the travel business and offered our assistance. She then explained about the engine malfunction on the starboard side resulting in it having to be shut down and that the remaining port engine could possibly malfunction too “at any time”.

We started to gradually reduce height whilst the captain talked on his radio to the authorities about our situation and requesting an airport to try and land at. I had heard that twin engine transatlantic aircraft are required by law to be no further than two hours flying time from an airport so I assumed we would be heading for Canada or northern USA. The instruction came that we should instead fly to Bermuda which was by no means the closest. I can only assume they sent us there because we would do less damage if we crashed. You se Bermuda airport is bordered on three sides by lagoon and the immediate area is sparsely populated.

The captain finally had to make an announcement. This was greeted by a stunned silence punctuated by the occasional scream. It certainly created a surreal atmosphere on the aircraft. The crew read, and re-read their emergency manuals, a few passengers demanded drinks. Many folk wrote short letters to their loved ones in case they may be discovered ‘afterwards’. To my shame I made them re-start the in-flight entertainment as I wanted to know if Zeta and Antonio lived happily ever after. I could not go to meet my maker without knowing that. Could I?

For some reason I could not stop thinking about that awful joke about the beautiful woman who, on hearing they were going to crash, stood up, took all her clothes off and told the stranger sitting next to her to “make me feel like a real woman for the last time”. “I will” he said, stood up, took off his shirt and said “here, iron this”. I looked at my boss sitting next to me and thought no. It would not be the same!

Anyway, we finally neared Bermuda and, by this time all preparations had been made. The crew had been great and even moved a frail old lady from the back of the aircraft to seat 1A in the hopes of getting her out quick. We offered our help again and this time they gave us a task. I thought it might be to take some ‘heroic’ position like opening the doors but it turned out we were to be used as human barricades! You see they were worried by too many people charging the exit and as we were both “large gentlemen” we were ideally suited for the task. There we were, possibly minutes from death and insulted over our weight. I vowed to go on a diet if we made it.

The captain told us his strategy. Basically we were between a rock and a hard place. If we successfully landed on one engine there would not be enough reverse thrust to stop by the end of the runway. If we tried to start the damaged engine on our final approach and failed it might have an equally catastrophic result.

In the end he went for the latter option and the time had come. We all got into the brace position and those that believed prayed. Incredibly the engine started and the AA pilot did the perfect textbook landing. The fire trucks wound their way back to their sheds looking like a swarm of slightly disappointed red bugs and one of the crew came on a speaker saying “thank you for flying American” I am not sure whether she was being ironic or not. Meanwhile I was asking around to see if anyone knew the ending of the Mask of Zorro.

I often think of that flight but strangely not always in a negative sense. There was a lot of bonding and human spirit shown. I also wonder what happened to those letters that were written and if any got shown. They would have said so many important things that only get revealed at times like that. Finally I learned never to tell my wife I watched the film rather than wrote her a letter!

Stranger than fiction

On the lighter side here are a few facts/urban legends about some of our favourite suppliers which I have picked up over the years. Some are quite old but worth another airing. I cannot vouch that any of them are actually true……but!

RYANAIR are continuing their approach that “all publicity” is good. Residents of Barcelona were promised “free tickets” if they turned up with placards praising the carrier or disparaging Iberia, the national carrier. The 500 vouchers disappeared in 20 minutes and a riot ensued with staff taken to a local police station for protection.

AMSTERDAM recently hosted the Paralympics World Championships. Unfortunately the former 100 metres record holder in the ladies event was unable to take part …………….. British Airways lost her artificial leg at Heathrow.

KOREAN AIR hails itself as one of the most popular airlines in the Far East. Service was not mentioned but their lightweight pure wool overnight blankets, supplied on all long haul flights, were. It seems passengers regard them as being part of the ticket price and remove them at will. In the last 12 month period they have lost over 300,000.

IRISH FERRIES apologies to passengers who “took the hump” following a 45 hour delay to one of its Holyhead to Dublin services. The Captain somehow failed to negotiate the only whale in the Irish Sea, which caused extensive damage to the bow of the ship

VIRGIN has come under criticism following the behaviour of one of its flight attendants on a recent Gatwick to Las Vegas service. During severe turbulence one of the flight crew is reported to have “thrown”, hopefully unused, sick bags to the passengers and then started screaming “We are crashing”. Wholesale panic ensued before the Captain restored order. An investigation is under way but those of a nervous disposition should consider their options.

ALASKA AIRLINES already facing a half million dollar fine for not having emergency lighting in their cabin for a two month period, faced more media criticism when a passenger, travelling with her dog, witnessed the poor creature, in a crate, being thrown head height and headlong into the cargo hold. The airline said they were preparing the dog for turbulence.

RYANAIR have a clause in their terms and conditions that say they reserve the right to charge you for two seats if they consider you overweight. However, they cannot guarantee they will be next to each other.