Avoid addiction to Margin killing Google Search.

As travel search-demand restarts, the bid costs for all major Google search terms are already rocketing, as travel companies compete to build back their bid histories and dominate the top of search results.

 Now I must confess to some history of Google bashing having launched a customer referral scheme 12 years ago called “Google Bypass”. Not surprising an expected lawsuit quickly followed and we had to revert to the less controversial “Share and Earn” band.

 However, my key issue with Google remains.

 Although Google is clearly “Not Evil”, its perfect information and bidding algorithms, have facilitated the travel industry in competing away virtually all its booking margins, with Google estimated to be taking 90% of all commissions earned.

 Finding alternative routes to customers and maximising database, use has never been more important. Here are my 5 tips for reducing reliance on Google.

 1.  Friend get Friends schemes.

Often the best advocates for a holiday, are customers who have already booked it since they have been through the research process and have selected your company’s product based on quality and price.

However, how many companies then use these potential advocates to bring other couples or families on the same trip or incentivise them upon return to recommend the trip to other people? Few in my experience.

 It is important to get the basic’s rights

·      Linked bookings. Lead customers do not want to take responsibility for paying for other people’s holidays and therefore don’t want to add passengers to a booking as most systems allow, but want to create a new booking linked to the original.

·      Incentives. People do not like making money from friends. The incentive, therefore, needs to be either shared or paid to the friend. For example, one of CannyApp partners is offering “£75 Holiday money” loaded on the card, as a booking incentive to the secondary bookers, so that they can take the friends who recommended the holiday out for a meal on holiday.

·      Make claiming simple. Complex schemes don’t work so make it easy to claim an incentive.

 “Friend gets Friend” schemes normally result in a direct secondary booking avoiding commission, but sensible operators will also consider rewarding the originating travel agent.

 2. Long tail Satellite TV advertising.  

The exponential growth in the number of satellite TV channels has led to many channels not having the minimum number of viewers to even charge for showing an advert. Campaigns across these “Long Tail” channels therefore can often deliver 40-50% of free adverts, reducing the average cost per view and lead generated.

 But why would you want to advertise on channels with few viewers? Well, it’s the same principle as “long tail” google advertising. Even though volumes are low, if channels are cheap and are seen by the key housewife market they can work.

 For example, children’s or old films channels often deliver the best cost per lead, as the adverts can be more interesting than the programs for housewives who have them on as background noise or to keep kids happy. The move to home working has also increased response levels from Music channels, often played as background noise, with interesting travel adverts grabbing attention.

 Historically, high TV production costs prevented smaller companies from exploiting direct response TV, but productions costs have dropped dramatically, with adverts using stock video footage costing as little as £2,500, allowing introductory campaigns from £10k, although a campaign covering several months will cost £30k plus.

 Even small travel businesses often spend £60k per month on Google advertising and satellite TV delivers a large Halo “as seen on TV” boost to brand confidence-boosting google CTR’s.

 3. Nested Email Services producing personalised emails.

Too many travel companies pump out weekly “Deal” emails, which quickly get dismissed as irrelevant by customers.

Sophisticated email systems focus on just getting a customer to visit the company’s website so that the customer’s search behaviour can then be used to produce increasingly focused personalised emails.

 If a customer searches for a Tenerife holiday departing in May from Gatwick, then the next email will offer only Tenerife or similar destinations, until their next click to the site gives more information about the board basis or hotel they are looking for.  Nested “if they” email databases are not rocket science.

 A company’s database of previous bookers is one of its most valuable assets, but many travel companies abuse it with boring and non-relevant content. Personalised emails are 10 times more effective.

 4. Use the “Travel Data Lake” to add value.

Only 1 in 100 customers visit a site book, giving you full contact details, and entering your customer database.

 However, 68% of customers complete a search indicating their broadly holiday requirements. Research shows that in 78% of cases, the customer sticks within +/- 3 days of the holiday date originally searched and 92% don’t change departure airport.

 Why not cookie these customers to allow, the advertising of travel ancillaries such as Foreign Exchange, insurance, or airport parking during the key 28 days before they depart using retargeting adverts via Google or Facebook.

 The customer may not buy a holiday from your company this year, but if you sell them a holiday ancillary, you’re adding them to your marketing database for next year holidays and cutting Google costs.

 Cookie use is becoming hard via Apple devices, but can still be exploited via Android platforms so make the most of this opportunity while it lasts.

 5. Ask your customers about their last 5 years of travel?

Travel companies tend to be internally focused and don’t spend enough time trying to understand what other travel products their customers buy during a year or in a longer holiday cycle. Simply ask them, as many customers are happy to tell you!

 This information can be invaluable in understanding future destination booking patterns as customers often return on a cyclical basis to old favourites.

 It is also useful for creating “look-alike” Agent profiles when selling via Highstreet agents or homeworkers.

Create “most likely to sale” profiles, based not just on the sales of your company’s products, but on the sales of competitors you know the customer also books e.g., Kuoni Longhaul sales may indicate a potential Cruise booker.

 Whether you consider my tip 5 tips useful or not, any sensible travel company must avoid being a “Google” junkie and diversify their customer acquisitions strategies. Otherwise, the only winner from the travel rebound will be Google.

The Covid-19 Evolution. Who will be the winners?

The Covid-19 has hit the travel sector, harder than virtually any other UK business, with UK lockdowns being followed by the shutting of international borders, which combined with the imposition of testing and extra paperwork, devastating short term consumer confidence.

However, this week Government announcement removing Covid-19 testing appears to mark the “Beginning of the End” for Covid travel restrictions, with the UK leading the way in learning to live with Covid.

The future of travel looks bright but may require a re-think of how things are done.

For example, Summer 2022 is set to be driven by last-minute bookings 4-5 weeks before departure, as customers who have been hit by a barrage of disruption over the last 2 years remain cautious about booking early.

Low-cost carriers yield models will quickly adapt, even without historical comparators, because putting prices up based on the rate of sale, has never been rocket science. However, driving frequency of rotations on routes will be much more of a gamble, often resulting in flight consolidations and further customer disruption.

Leaving aircraft sat on the tarmac, is likely to continue to be a requirement this summer, as airlines chase yield over volume. Beach destinations with their longer average flight times and earlier booking profiles, will look more attractive compared to city routes, leading to holiday capacity returning faster.

Don’t be surprised to see a big expansion of Easyjet Holidays on the back of increased trade distributions, bought with attractive commission levels. Letting Jet2 Holidays dominate trade distribution has been a historic strategic error, that current Easyjet CEO Johan Lundgren with his tour operating background, will not allow to continue.

Tui’s market share is likely to suffer as their airline does not have the same economies of scale as Jet2 or Easyjet, giving it a higher cost base in the commodity holiday market they are being forced to enter now that Covid-19 has severely disrupted their “differentiated” product.  Tui’s strong brand and reputation for customer service may counter this price disadvantage in the short term, but their debt mountain is one of the biggest in the sector, meaning that long term decline seems inevitable.

High street agents need to evolve rapidly, as Covid-19 has pushed more shoppers online, reducing footfall and making profitable operations very hard, as demonstrated by the Hays Travel £39 loss last year and estimated on-going £2m a month losses. Unprofitable shops need to be shut rapidly, all leases renegotiated, and local counsels pushed to accept that current “business rates” are unsustainable.

How quickly all this will occur, remains open to doubt, but I believe that within the next 2 years, high street shops, acting as hubs for local homeworkers will be the model of choice in the “personal service” travel sector. These hubs will incorporate video conferencing, such as Zoom, as a normal selling process due to its consumer convenience, allowing customers to be walked through online content whilst in the comfort of their own homes and for agents to see consumer reactions, markedly improving conversions.

Personalised travel services don’t have to be delivered face to face anymore and, in a post, Covid-19 world why would staff ever again want to sit waiting in a shop for customers to walk through the door when they can drive their own appointment diary and enjoy the benefits of working from home.

However, if as expected the cost of high street shops is reduced dramatically, because of the lack of demand, having a high street location still makes a lot of sense.

Combining a local homeworking network with a Highstreet shop could offer the best of both worlds. The shop could drive brand awareness and therefore consumer trust, whilst providing a professional administration centre and a point of customer introduction via walk-in traffic. It simply needs to be staffed on a rotational basis and have longer opening hours via homeworkers and video support.

Online Travel Agents (OTA’s) also need to adapt their models,  making “Amending” bookings just as easy a process as booking in the first place. Although OTA’s don’t control their flight supply, the increased flexibility offered by airlines can be passed on electronically and customer portals for self-amendment have never been more important.

OTA’s also need to step into resort with customers, providing relevant added-value services whilst on holiday. These will primarily be delivered via apps but could also be supported by branded Foreign Exchange cards, offering preferential exchange rates and cashback deals on local products.

Covid-19 has undoubtedly reshaped the travel environment and it’s the businesses who recognise this and adjust the quickest who will be the winners.

Will your business be one of them?

Health V National Wealth: Why Lockdown to protect people who won’t protect themselves?

During the first lockdown, I accepted all restrictions on my rights to work, mix and travel as I recognised the need to protect the vulnerable in the absence of a vaccine.

 11 months on from the first vaccines and with over half the country “Triple Vaccinated”, I think it’s time to ask, “Who are we locking down to protect and is the economic cost worth it?”

 I accept the right of the individual, even when faced with sound medical research showing the benefits of vaccines, not to take them. For a few, there are medical reasons why they cannot be Vaccinated, but for many, it’s a choice. However, we live in a democracy and when 85% of the population have been vaccinated, government policy should be based on the needs of the vast majority, which means no further lockdowns and a policy of living with Covid-19.

 More controversially what happens if Hospital wards do become overrun? Should the vaccinated take priority over the unvaccinated? My humanity says “no”, but cold logic says “should there not be some consequences?”

 Living with Covid-19 will need some changes to the “Norms”, for example carrying around Covid-19 passes for entry to certain locations.

 Having returned last week from a Ski Trip in France, where all entry to pubs and restaurants requires the presentation of a “Passe Sanitaire” proving your fully vaccinated status, I must question why the UK Media finds this a breach of our rights. Sorry, but I think it’s my right to demand that people I’m mixing within enclosed spaces are as safe as possible for my personal health.

 Similarly, I think it is reasonable to ask people who are going to sporting events or travelling on holiday to take a low-priced lateral flow test. This provides reassurance and an increased likelihood of a Covid-19 free environment.

 However, I do object to being differentiated against and made to feel guilty by our government just because I want to travel.

 Why should travellers not be able to use “Free” NHS lateral flow or PCR tests whilst travelling overseas, when it’s free to use these services if you want to go to a music or sporting event? As stated, many times, even if these tests are not free, the Government is best positioned to provide low-cost testing at around £12.50 per lateral flow and £22.50 for PRCs which cover costs and generate a small profit for the NHS.

 Given the Omicron infection rate in the UK, I am more likely to catch Covid-19 from visiting a local pub, restaurant, or supermarket than whilst travelling. So, what is the logic of insisting travellers returning to the UK must quarantine for 2 days and take a further PCR test? Where is the scientific evidence that people returning to the UK have a higher infection rate than the domestic population? The simple answer is that there is none, but hitting travellers is an easily visible action when politicians want to be seen to be doing something.

 The Government has announced a £1 Billion package to help hospitality and leisure businesses to survive the coming lockdown which is likely to take effect from Dec 27th, 2021. However, although the assistance to hospitality locations of £6k is clear, it’s very unclear how or what leisure business can claim.

 Although any assistance is welcome, it’s a drop in the ocean and not enough to stop the wholescale shutting of high street travel agents and the failure of many tour operators, particularly those in the Ski sector.

 The only thing that can save the UK travel sector is the rapid spread of Omicron in a triple vaccinated population where the latest research shows it has a mild impact, with the unvaccinated being locked down to protect them. Not locking down the whole population is the right choice for our Economic Wealth as a country and gives the travel industry a chance of a summer holiday season, assuming other holiday destinations take the same approach.

Sorry if this blog offends, sounds selfish and is treats travel as a priority when it’s clearly not for all. However, travel has provided my living for virtually all my working life and if we don’t fight hard the UK outbound travel sector could easily be destroyed by another lengthy Covid-19 lockdown.

What’s worse for travel Omicron or Macron in the short term?

When news of the new Omicron variant emerged, it was obvious it was going to be bad news for the country as a whole and travel in particular.

 The exponential growth rate of Omicron means further restrictions on our liberty will be needed and a lockdown circuit breaker in January, involving the shutdown of the hospitality sector and restrictions on indoor meetings seemingly inevitable.

 However, the rapid spread of Omicron and its relatively mild nature compared to other variants, hopefully, means it’s likely to be a short, sharp crisis, with an emergence the other side by March/April 2022 allowing Summer overseas holidays to proceed as they did for the second half of Summer 21.

 The travel industry has already proved itself to be extremely resilient, however, the wholesale cancelling of winter Ski and winter sun holidays could cause a cash-flow hit that sends many companies to the wall.

 President Macrons, politically motivated move to ban UK citizens from Holidaying in France, will be a killer blow to many UK Travel businesses if it proves anything more than a temporary measure.

 France already has an Omicron wave sweeping across it and statistics indicate it is only a few days behind the UK’s own wave of infections. Therefore, locking its borders to UK Citizens who have been double/tripled jab and passed lateral flow/PCR Covid-19 testing before arriving makes no logical sense. The rate of internal infections caused by French citizens mixing over Christmas in houses, pubs, restaurants, and supermarkets is likely to have 1,000s of times more impactful than the entry of foreign holidaymakers.

 Hitting tourists is therefore simply a high-profile gimmick from a set of politicians desperate to be seen doing something.

 I personally think insisting that all travellers should be double jabbed and have passed a simple lateral flow test before boarding any flight is a logical and reasonable requirement. It also provides those flying with extra reassurance that flying on crowded aircraft is Covid safe, boosting bookings.

 I can even understand why countries with low infection rates demand the more expensive and higher quality laboratory-based PCR tests, as they do not want a high level of infections to enter the country via tourism. However, the moment a variant like Omicron has taken a grip in a country, this is completely pointless, as the domestic-based spreading of people visiting venues without the need for Covid testing will cause a much higher rate of transmission.

 The UK Government’s own requirement for 2-day isolation and a PCR test for release is also completely ineffective and a politically motivated “token gesture”. Is it surprising other countries pose the same illogical conditions on UK tourists, as their citizens face when entering the UK?

 The most illogical and unforgivable piece of UK politics is the continued refusal to allow UK outbound travellers to use NHS facilities to take the PCR or lateral flow tests that the Government is demanding for travel. As stated, many times, travellers should pay a fee for these tests of around £12.50 per lateral flow and £22.50 for PRCs to cover costs and generate a small profit for the NHS. Leaving private companies to rip off travellers with unregulated pricing is simply inexcusable and shows either a complete lack of understanding or care at the dire state the UK outbound travel sector is in.

 The Macron V Boris Brexit fight is clearly the motivation for the UK being the only European country that France has banned tourism from and is, unfortunately, an indication of the unwanted Brexit dividend the UK travel industry is likely to reap.

 The reaction of other key holiday destinations such as Spain, Greece, and Turkey in the coming weeks is crucial, as European Union leaders seek to harmonise Covid-19 entry policies across the bloc. A short term hit to ski holidays is a high price for ski specialists, but uncertainty about the ability to enter key holiday destinations in Summer 2022 will be disastrous, as it would generate a massive wave of cancellations as well as killing new bookings dead.

 I regret to say its politicians like Macon who threaten the future of our industry even more than Omicron itself.

Living with the new travel “Normal”​

Like many people in the Travel sector, I had hoped that the worst of Covid-19 disruption was behind us and that we could look forward to a strong Summer 2022. But then Omicron came along!

 Only time will tell whether European Governments are overreacting by trying to bolt the entry door shut after Omicron has already entered the country. However, as an industry, we need to understand that the new normal for travel is “uncertainty” and work around this unpleasant reality.

 January booking peaks are likely to be thing of the past with customers only willing to book 2-3 months in advance, once they have a better view of how easy travel will be. For example, how many families with children between 12-15 will book a holiday in January to Spain, now it is only accepting double vaccinated UK citizens when it’s unclear when access to a second jab will be available to children in this age group?

 The Spanish tourist authorities will be tearing their hair out, with their own Government, over these double vaccination demands.

 Spain is leading the way in terms of vaccinating children, having double vaccinated 84.5% of its 12–18-year-olds, but it seems to have completely ignored the status of its biggest holidaymakers source markets.

 Germany only approved vaccinations for under 16’s in August 21 and has vaccinated 47.3%. The UK is even further behind, having only started the process in Sept 21 and currently only have 44.4% vaccinated with a single dose and virtually no children having received both the vaccinations Spain is now demanding for entry.

 Spain, therefore, has in effect banned families with children between 12-15 from holidaying in the country this winter and booking a summer holiday in January because of the uncertainty about access to jabs for kids before the summer.

 The fear of testing positive doing the pre-return testing process and being forced to quarantine overseas will also put off a huge number of potential holidaymakers, even before the costs of pre and post-arrival testing are considered. It would appear that the biggest impact of omicron is not making more people seriously ill, but increasing the rate of spread of Covid-19, making catching it abroad more likely, so it is likely to depress holiday demand significantly.

 Again, it’s frustrating to have these testing restrictions imposed with virtually no notice, even though the Governments own advisers admit that it’s virtually impossible in the modern world to keep new variants out of the country and imported omicron cases are insignificant compared to the rate of domestic spread.

 However, this is now the new normal, so how do we adjust?

 Here are my top 5 tips are:

·      Self-service amendments. Bit the bullet and follow Easyjet’s lead in making booking amendment a self-service function complete online. As much effort now needs to be put in slickening up the amendment process that has been put into optimising booking funnels in the past. For example, my own business Rock Insurance has developed a new amendment API that can be integrated into partners customer account areas so that any flight or holiday amendment is automatically captured and used to update the customer’s insurance policy without any need for inconvenient or expensive to handle phone calls.

·      Low deposit and flexible amendment. Customers will only book if deposits and bookings are moveable based on Covid-19 circumstance, at home or in their chosen destination. People will commit but only if bookings are moveable.

·      Scrap fixed above the line advertising. Commitments to above the line advertising mediums such as TV are difficult to scale back or even move once booked. Major companies will have to increase the focus on database marketing to previous bookers and unfortunately expensive but flexible mediums like Google search.

·      Focus on immediate departures. Easier said than done but focus on bookings that bring in cash the fastest, which will be late availability deals to the Canaries etc in winter and early summer season departures for May- July 2022. As ever in a crisis, cash is king!

·      Flexible staffing.  Unpopular, but job sharing and flexible contracts are now a must assuming it’s unlikely that the UK Government will introduce sector-specific assistance now furlough has finished.

 Undoubtedly, Omicron will be the last straw for many travel companies, whose balance sheets have been devasted over the last 18 months, but the survivors will emerge stronger and more flexible.

Travel needs to widen the sustainability debate.

At a recent travel forum discussing how Travel should operate sustainably in a post COP26 world, now that the awareness of the dangers of global warming and the need for climate action has grown exponentially within our client base, too much time was spent on naval gazing.

I don’t mean to be rude or dismissive but flagging newer aircraft or direct flights as “Greener” options and talking about less regular towel changes, is not going to pass as credible climate action.

The fundamental element of travel is a flight that burns fuel, is Co2 emitting and will be seen as polluting and contributing to Global warming. It’s important we own this truth and although we need to focus on every possible aircraft efficiency, such as using less polluting biofuels, it is unlikely that aircraft flights will ever be a carbon-neutral option in isolation.

It is my belief that travel needs to widen the debate and position the option of reducing personal travel, in context to the other ways individuals and business can reduce their carbon footprints.

The graph above shows that travel represents 12% of an individual’s carbon footprint, but driving an “Internal Combustion Engine” (I.C.E) car powered by polluting fossil fuels, such as petrol or diesel, causes 29% of emissions annually. More than double their annual travel impact.  

A lot of people are put off moving to EV’s, because they are on average 25% more expensive than their ICE equivalents currently and by range anxiety due to an inadequate national charging network. Both issues however are solvable as long as employers are willing to assist.

The Government has introduced massive tax breaks worth 32-42% off the cost of a personal lease depending on an employee’s tax bracket. However, these savings are only available via an employer operated “Salary Sacrifice Schemes” (SSS),  where the employer leases the car and deducts the cost from a staff members salary before Tax.

Employers have an incentive to do this in the form of 15% NI (2022 rate) savings and being able to claim half the 20% VAT back on the lease, creating a net saving of £250 on every £1,000 spent. In turn, part of this saving can be used to take out “Revenue Assurance” against any empty leases caused by staff leaving, which removes virtually all the risk of operating a SSS scheme.

Effectively these schemes make EV’s 20% cheaper to lease than ICE equivalents, even before the 66% reduction in fuel bills from the cheaper electricity power source and 25% lower maintenance costs are considered.

Range anxiety for EV owners who have a home charger is mainly a myth, since 95% of charging is done at home, as the average 200 range of an EV, is more than enough to cope with the daily commute. However, employers need to ensure that office charging is bookable and made available on a priority basis for staff living in flats or housing where home charging is not possible, and staff need to accept infrequent longer journeys need to be made by train.

The move to EV’s is clearly possible with the assistance of employers and will progress rapidly in the UK.

A further 41% of personal emissions come from home space and water heating, but this is a more complex topic to deal with, as the Government has yet to issue an incentive program to encourage people to abandon Gas water heaters. However, the recent 600% increase in Gas prices is likely to do the job for them and many people are already looking at alternatives such as ground source heat pumps and electric boilers.

As an industry, I think we need to widen the emissions debate and show that customers can continue to travel “guilt-free” if they move to reduce 60% of their emissions by moving to an EV and sorting out domestic emissions, which are both far higher elements of their carbon footprints.

Overseas travel is proven to benefit mental health and bread increased cultural understanding and tolerance. We should not lose sight of these virtues and offset these against the emissions damage travel causes, BUT only if we encourage alternative reductions and lead by example as employers.

If you’re a travel business that has not looked at implementing an EV Salary Sacrifice scheme to create a “Green Fleet” of employers who take an EV as a perk of employment rather than a business necessity, then you should.

EV’s are set to become a key recruitment/retention tool and moving 50% of staff to a Green fleet EV will on average move a business 62% closer to becoming Carbon Neutral.

In order for travel to widen the sustainability debate and preach the benefits of continuing to travel, despite its inherent polluting nature, we need to make sure outside of flight itself we have done everything possible to move both our own business and destination partners towards being carbon neutral. Again, an easy solution is to insist on electric coach’s, taxis, or airport ground handling.

The future is Green, but travellers can be educated to alternatives to simply travelling less.

Will OTB suing Ryanair create a “Me too” movement?

I read with a large degree of pleasure the announcement last week, that the UK’s largest Online Travel Agent (OTA), On the Beach (OTB), has decided “enough is enough” and has launched a legal case against Ryanair.

 OTB is suing Ryanair, accusing them of abusing its dominant position in the flight seat market, to try to force customers to book directly via the Ryanair website and not via OTA’s. This is not a new battle, as Ryanair have always declared their opposition to working with OTA’s and the travel trade in general, despite acknowledging that in 2019 at least 2 million of its flights were booked via agents.

 Ryanair has always taken an extreme stance, refusing to provide booking API’s and actively trying to blook screen scrappers. Having failed to achieve this, they have now switched to disrupting OTA customer processes by preventing their customers from using the “My Ryanair” online check-in online tools and sending OTA customers emails suggesting that OTA’s mark-up flight and baggage costs are above those charged by the airline.

 During the Covid-19 crisis, Ryanair took their anti-trade stance even further, putting OTA booking at the back of the queue for refunds. Ryanair knew that the package regulations and the ability of customers to hit OTA’s with credit card recharges would force them to refund, even if they had not been repaid by Ryanair, protecting Ryanair from a direct customer backlash for late repayment and allowing them to hold on to hundreds of millions in refunds that were due.  For OTB alone this represented a £48.7 million cash flow hit. Many other travel companies such as Love Holidays, incurred extensive brand damage because their trust funds simple did not have enough money in them to refund customers if Ryanair did not refund them. Hence, my view is that although OTB is fighting an independent battle against Ryanair, if they are successful it will lead to a “Me too” avalanche of damages claims.

 The CAA when challenged about their lack of action against Ryanair and the damage they have done to the credibility of Trust funds and the ability of ATOL principals to refund clients, freely admit that currently, their “Tool kit” of powers is inadequate.

 But watch this space, as change must come if the CAA has any chance of getting the trade behind its latest ATOL reforms aimed at ensuring customers receive timely refunds. Without airline repayments being brought under the CAA’s control, the whole trust fund model is fatally flawed.

 Although the other main low-cost carriers have embraced travel trade distribution of “Package Holidays, where they earn a higher combined margin by selling flights, hotels, and transfers, they have also sought to restrict flight only booking outside of its consumer direct sites by imposing substantial API booking fees.

 OTB has fought a longstanding battle with EasyJet over their £6 per sector per passenger booking fees. A minimum cost of £24 per booking, is clearly far more than the cost of providing the API booking technology and is pitched to cover the airline’s “potential” lost revenue from ancillary revenues. Although no third party can know the compromise reached by OTB that allows them only to charge its customers half the standard Easyjet API fee, I’m sure the threat of an abuse of power court case was a consideration.

 Low-cost carriers would obviously prefer all flights to be booked via their consumer-direct website, however, I believe that any lost ancillary revenue is more than compensated by the higher load factors OTA drive. Early holiday sales via OTA’s also move low-cost carriers faster up their load factor yield curves, allowing them to charge more for remaining seat only sales.

 Customers buying a package holiday, primarily buy based on the holiday destination and hotel offered, whilst considering the flight as a “bus service” purchased based on a combination of lowest price and best flight times. OTA’s offer the best range of options, simply because unlike low-cost carriers internal holiday companies, they offer all airlines and the ability to mix and match inbound/outbounds between different airlines. In doing so they provide a range and value that customers benefit from and is something the courts are likely to seek to protect.

 Therefore, I think our judicial system will find in favour of OTB and conclude that Ryanair is indeed abusing a dominant market position, even though the UK government via either the CAA or CMA have failed to bring them inline to date.

 Whatever happens, the trade should be applauding OTB for fighting the case and highlighting an issue that has affected hundreds of UK travel companies and continues to do so.

The Ryanair debate. To care or not to “Customer Care”?

Like many UK travellers, I hate Ryanair with a passion after a litany of Covid-19 dirty tricks. Broken cancellation buttons understated brought forward balances and a rip off £95 amendment fee per flight seat, not to mention refunds that never seem to appear in your bank account, don’t sit well with me as a customer.

However, when booking flights to Andorra for a new year ski trip, Ryanair had the best schedule and a £30 per seat lower price. So now I’m faced with a dilemma. Can I risk booking with Ryanair now that Covid-19 disruption is easing?

I’m ashamed to admit that you can guess the outcome, but it does beg the question. What is the real benefit to airlines like Jet2 and Easyjet from doing the right thing by customers?

I personally think the answer depends on what product the airlines intend to sell moving forward.

Business traveller’s spending company money are more discerning and will pay a premium to fly with Easyjet, whilst using their annual Speedy Boarding pass to book their preferred seats, carry extra hand luggage and avoid the worst of the queues.

However, leisure travellers booking a quick city break or a week away in Spain often regard flights as a bus service, booking the cheapest priced option relative to the flight times they want. Brand loyalty rarely survives even a £10 differential, with sites like Skyscanner and Google actively promoting mix and match flying between different airlines.

Ryanair is the ultimate no-frills airline, with a brutal attitude that says the lowest price wins and customers can be stripped of as much money as possible during a pandemic downturn, as they have short memories. Unfortunately, my own experience shows that they are probably right.

It is interesting that Ryanair’s, eastern bloc equivalent, Wizzair are now entering the UK departure market, targeting Easyjet routes, whilst avoiding Ryanair.  They clearly believe Easyjet are a softer target, that can be taken on with the weapon of price. How ironic given this was how Easyjet drove British Airways out of Gatwick.

I would argue that Jet2 have ringfenced themselves from this battle, having driven their in-house holiday operation to 60% of overall volumes and up to 80% on most of their beach routes. Brand value definitely does matter in the holiday sector when the tour operator is responsible for the whole holiday experience. Few customers would ever book a Ryanair holiday!

Jet2 Holidays have also successfully integrated into the wider third-party travel community, being the go-to holiday company for most high street retailers. They also provide seats to many Dynamic Packaging players now have they have removed API fees, unlike Easyjet who still damage relationships with a £12 per flight seat or £24-30 price disadvantage compared to customers buying flight direct.

In summary, doing the right thing and protecting your brand during a pandemic for me makes total sense, but I’m not convinced that in the bus route world of flight only, customers brand loyalty is worth the investment.

I think Easyjet offer a brilliant service and have a mega-brand but need to use this to rapidly grow their holiday division, to complement their strong business travel presence, as competing directly with Wizz air and Ryanair in the brutal flight only market may not be a winning strategy.

We’re all going on a Summer Holiday! But who with?

For the first time since Covid-19 arrived in March 2020, I’m confident about the future of the travel sector and think the worst is behind us, with a strong Summer 2022 ahead. However, Covid-19 has changed many facets of our industry and may reshape how customers book their holidays in the short term.

 Over the last 15 years, travel agents either on the high street or online replaced retail sales of big tour operators with Dynamic Packages created by combining low-cost carriers flight seats, with hotels from bed banks. This combined with the rapid growth of low-cost carrier’s in-house tour operation, such as Jet2 Holidays, dramatically reshaped our industry and lead to the reduction of the 4 big four tour operators of Airtours, First Choice, Thomas Cook and Thomson’s, to just one in the shape of the debt-laden Tui Travel Group.

 This erosion was further exasperated by customers “Self” Dynamically Packaging using Skyscanner, Booking.com and increasingly Googles own travel tools.

 However, Covid-19 has impacted customers and agents’ appetite for Dynamic Packaging.

 Customers have now realised that booking with faceless internet organisations, which are hard to contact by phone, is fine when things operate smoothly, but becomes a nightmare when Covid-19 travel restrictions require refunds to be chased or multiple companies to be contacted to shift holidays to a later date.

 The result will undoubtedly be a move back to “face to face” holiday booking via high street agents, or at least to fully bonded ATOL holidays provided by OTA’s like Jet2 Holidays or On the Beach, both of whom have come out of Covid-19 with enhanced reputations after providing flexible customer service and quick refunds.

 Agents who dynamically packaged Covid-19 impacted holidays, have faced a nightmare of double or triple administration on holidays with no further payment and angry customers demanding refunds that they were unable to make due to slow refunds from third-party airlines. Covid-19 highlighted the risks of dynamic packaging to agents, and many will have decided that the risk is just not worth it.

 Demand for fully bonded ATOL holidays is therefore likely to increase markedly, but at the same time, the CAA has reported that 20% of companies have not applied to renew their ATOL’s and many others (Except Jet2) are reducing the size of their ATOL’s.

 For some companies, this is because their balance sheets have been devastated by Covid-19 and they are struggling even to pass “Going Concern” tests, let alone the increasingly stringent requirements imposed by the CAA. Bluntly, these companies need to fail now and close while volumes are low, to avoid further customer disruption and bad publicity for the sector.

 Large airline “debt mountains” and the continued disruption of international travel has “Spooked” the insurance sector, which has withdrawn virtually all “Airline Failure Insurance” capacity. This insurance is a mandatory requirement to allow “flight costs” to be released from CAA approved trust funds and without this agent’s cannot legally Dynamically package holidays.

 Many agents will revert to a low-risk agency model selling bonded holidays from the major operators of Jet2, Easyjet and Tui or increasingly use DP platforms like On the Beach’s trade arm Classic Collection.  Margins may be impacted, but reduced admin hassle and risk counterbalance this, and the increased volume boost to On the Beach buying power with its suppliers will allow prices to be driven down further.

 I would expect DNATA group to follow suit in chasing trade distribution, using its Travel Republic platform and the reborn Thomas Cook OTA to consider this option once it establishes its own consumer-direct operations.

 An equally big question for the travel sector is how to get families to book early again?

 Although Europe and the USA have moved to open for “Double Jabbed” adults, there remains uncertainty about the testing required to allow unvaccinated children who are often asymptomatic carriers of Covid-19, which may lead families to take a wait and see approach in January.

 So instead of discount messages in January, I think the trade needs to continue to push booking flexibility, low deposits and free Covid-19 testing.

 The low deposit schemes need to be supplier funded as travel agents cash flows will be at all-time lows this winter. Sensible agents will boost cash flows by focusing as much effort on promoting winter sun holidays to the Canaries and newly opening long-haul destinations, as Summer 22, as cash will be king this winter.

 Pent-up demand is driving interest in the marketplace place, but it has come too late for Summer 21 with many customers having already holidayed in the UK or deciding to wait until next Summer. This is evidenced by ultra-low seat prices in October e.g., £22 to Majorca, which will not help airlines trying to re-start programs and get aircraft back in the air.

 However, prospects for Summer 2022 look good, even if the traditional January booking window become a more spread-out booking pattern across Jan-April.  The Dynamic Packaging Revolution may have reached its Zenith and Covid-19 may feel like the “meteor” that signalled the end of the dinosaurs, but it’s more likely that it has just opened the door to the agency market for the big OTA players and sifted who does the Dynamic packaging.

 We may all be going on a Summer Holiday this summer, but whom we book it with is set to change.

Revolut’s entry into Travel is not a “Canny” move.

Revolut entered the travel space as a low-cost FX provider for consumers in 2015 and is now trying to become an OTA, initially offering accommodation only via Revolut “Stays”, with a £70m “war chest” to fund 10% discounts off-market rates. Future plans include offering flights and car hire driven by google PPC advertising to build upon its “in App” cross-referral opportunities.

So, in essence, Revolut is declaring “War” on the travel trade, trying to muscle into the sector as a new B2C player, rather than working with the trade, as my own CannyApp “3% Cashback Mastercard” does.

Good news, as far as CannyApp is concerned, but who has the right strategy?

Obviously, only time will tell, but Revolut is still massively loss-making, having lost a further £126m in 2020, with the key reason being its high customer acquisition costs.

CannyApp has taken the opposite approach to Revolut, guarantying never to sell competitive products to its travel industry partners and paying a 1% referral commission, on the total spend on the card for its lifetime e.g., 3 years on Average.

This allows us to access the travel Industries “Data Lake” and to advertise to holidaymakers in a highly focused way for just the 28 days before they depart for holiday, which is the period in which holidaymakers consider their Holiday FX needs. This is clearly cheaperthan Revolut’s scattergun advertising across 365 days of the year.

By providing partners with templated “Mastercard Approved” emails, CannyApp avoids any GDPR or database sharing issues, allowing the activity to be bolted into partners existing email activities with minimal effort or cost.

The net effect is that CannyApp has a 10 times lower acquisition cost compared to Revolut, which makes scarifying commissions from selling competing travel products a very small price to pay.

Personally, I think Revolut is putting the proverbial “cart” before the horse. Customers only use their Revolut cards when travelling overseas, so it’s likely to be months if not a year before they take their next trip. Are customers going to remember to check Revolut’s travel deals? I’m not convinced, however with a £70m “war chest”, the trade needs to be aware that they may indeed become a new competitor.

The Foreign Exchange market in 2019 was worth £62.5 Billion in the UK, with 60% of this market controlled by the major bank’s debit/credit cards, so there is plenty of markets to share between Revolut and CannyApp. However, I think Revolut may have just shut the door on potential trade partnerships.

CannyApp refers to Foreign Exchange (FX) as the “forgotten” income steam for OTA’s and homeworkers, with virtually none of the major players pre CannyApp having an income stream from FX.

Given that it’s by far the largest travel “ancillary”, at first it seems amazing that OTA’s have not focused on this space, but it’s only been during Covid-19 that the opportunity has truly crystallised.

With high street branches shutting, great swaths of the UK population suddenly had to embrace “App-based Banking”, which has made it much easier for CannyApp adoption amongst its target market of “Females” booking mass-market holidays.

Combine this will a massive explosion in “Contactless” payment, replacing “paper money” and you can see how the market has moved in favour of a “pre-paid” Mastercard, which is accepted globally and can be topped up instantly by just connecting a debit/credit card.

In a travel market where customer volumes are likely to remain below 2019 levels until 2023 due to a lack of flying capacity, it’s imperative that travel companies maximise revenues per customer.

Ignoring the FX opportunity is now simply inexcusable.