GLG News by Airline Global Distribution System Experts

Christopher DanePresidentHRG-Executive Travel Associates

Funding of the air traffic control system should be doen on an equitable basis

March 5, 2008

Analysis of:Senator Sees FAA Funding Blocked For Year Over User-Fee Issue | online.wsj.com

- Current Fee structure is illogical. Airlines pay 90% of the cost for two-thirds of the usage. - The Air traffic control system is going to get far worse with the continued growth of corporate aircraft and "very light jet" (VLJ's) -Airlines pay for 90% of the air traffic control system and use only two- thirds of the system. - This proposal  being considered is based on user fees which is far more logical, and equitable.

Christopher DanePresidentHRG-Executive Travel Associates

The airline mergers is not nessarily a "done deal" ...many obstacles remain

February 6, 2008

Analysis of:Airline Merger could bring anything | news.enquirer.com

*    Will the Bush administration or the next administration approve   approve any airlines attempt to merge? *    Unions and communities will fight any merger attempts. *    Other carriers like American and Southwest will likewise lobby against any mergers. *    Premises for mergers is not valid since there are too many profitable network carrier that are smaller than any of the individual carriers that are in play.

Christopher DanePresidentHRG-Executive Travel Associates

There is no such thing as a good airline merger

January 18, 2008

Analysis of:Delta delays Comair sale as it explores merger hopes | www.ft.com

*Service will get worse...I know that is hard to imagine. *Fares will go up. *Communites will loses both Hubs, flights and jobs. *If it happens it will be Delta merging with Northwest and United merging with Continental and no one want US Airways

David JarachManaging PartnerDiciottofebbraio Srl

Both AF-KL and Air One look as second-best partners for Alitalia, LH would have been the best

December 12, 2007

Analysis of:Air France, Air One lead charge for Alitalia; Lufthansa opts out | www.atwonline.com

At the end of the process, only AF-KL and tiny Air One have remained as the alternatives for the Italian Government to go ahead with Alitalia's sale. It is however quite doubtful that any of the two ones are really good partners for the troubled Italian carrier, given their historical strategic fit (AF-KL) and their limited business range (Air One). Lufthansa, that decided to stay out, would have been the real best-in-class choice to turnaround the Italian carrier, provided a full support from politicians and unions that eventually the German carrier was probably not able to get.

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

Is the travel pie still growing? Where are the GDS companies in non-air travel planning?

October 12, 2007

Analysis of:LeisureLogix Takes Back the Road with Its Personalized Road Trip Planning and Booking Tool | www.forbes.com

The GDS industry, which earns its money primarily from the travel agency community (both online and offline) booking airline tickets, has been said to be totally commoditized and destined for decline.  In 2005 (the last year that all reported their earlings publicly), globally the GDSs processed 1.3b bookings and earned $8.7b in Gross Revenues and yielded $774.1m in EBITDA collectively. The interesting statistic behind all of this is that out of the total US Travel market, which in the same year yielded 1.4b trips, of those trips, less than 10% of them were by air.  The balance of travel was by car, motorcycle, RV, train or bus.  Yet, the GDS companies do not have a product that addresses the drive market. For 2007 the Travel Industry Association reports that US spending on travel was $733.9b.  Of that, just 35% was sold electronically (which includes travel agencies and online agents). 

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

What is the real value of mapping and content aggregation players?

October 1, 2007

Analysis of:Nokia to buy Navteq for $8.1b, Take on TomTom | www.bloomberg.com

In July of this year TomTom acquired TeleAtlas for $29.39 per share or $2.7b USD (28x EBITDA).  Today, Nokia paid $78 USD per share or $8.1b for Navteq (35.7x EBITDA). What value can they both now extract?   With mapping services like GoogleMaps, Mapquest, Yahoo!Maps and even AAA's TripTik available via web enabled phones of all brands, what kind of differentiation is possible for Nokia in making this move.  Who is the real competition and what is the size of the pie that they are all after. Like any acquisition, the proof will be in the integration post transaction and the plans to make their tools ubiquitous.   The other challenge is to tap into the 88% of all Americans (and untold international users of Nokia's platforms) that use a car for the $1 trillion in leisure travel spending annually.  Less than $100b of this spending in the US is currently done by traditional online travel sites, such as Orbitz, Expedia and Travelocity. 

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

Is content king, or is it relevant content that matters?

October 1, 2007

Analysis of:BBC Acquires Lonely Planet | www.bbc.co.uk

BBC Worldwide bought Lonely Planet in a deal that insiders value at over $203m.  The question is whether content alone is enough to propel BBC Worldwide into the forefront of the $2.8 trillion global leisure travel market? Founders, Maureen and Tony Wheeler, will keep a 25% stake and presumably have been given a reason to stay around long enough to help BBC Worldwide figure out how to integrate it into their media empire.   Their take from the sale is reportedly  $143m.  This is the BBCs first major foray into the travel industry, but interestingly enough, they see themselves as just being in the content business, which could sell them short on monetizing the investment.  The deal will help the BBC become "one of the world's leading content businesses," BBC Worldwide Chief Executive John Smith said. The broadcaster also aims to grow online brands and to increase its operations in Australia and North America, Smith said.

David JarachManaging PartnerDiciottofebbraio Srl

Increasing complexity for European LCC industry

August 30, 2007

Analysis of:Are European low-cost carriers entering maturity in their revenue and profit generation? | www.ft.com

- profit warnings from European LCCs leaders (Ryanair, Easyjet, Air Berlin) evidence increasing difficulties in shareholders' value generation in the cluster of the airline industry; - on the other hand, smaller players, like Vueling, are expanding their losses; - consolidation looks as reasonable to offset overcapacity, stop a downward pressure over yield and to rejuvinate economies of scale;

David JarachManaging PartnerDiciottofebbraio Srl

Alitalia case as a minor actor in a major European airline industry shakeout

July 23, 2007

Analysis of:Italian Government has to find another solution for Alitalia | www.ft.com

After the collapse of the Alitalia's sale process, with the last one of original 10 bidders having abandoned the game, it's now time for tough choices for the Italian Government. The past months showed that there is really little financial interest on the international market for Alitalia, most definitely as the Italian airline faces strong structural inefficinces due to union powers, mismanagement and an obsolete fleet asset. Although the Italian carrier has still some liquidity into pockets, cash will be burst as on December next. The most likely solution will be a direct negotiation by the Italian Government, which still owns 49.9% of Alitalia, with some players like Air France, Lufthansa, TPG or Air One. As Air France is currently implementing a bid for Spain's Iberia, Lufthansa may surprisingly bid the first one to be contacted, most definitely as the German carrier has proved effective in managing a multi-hubbing strategy with its Frankfurt, Munich and Zurich hubs.

Christopher DanePresidentHRG-Executive Travel Associates

Blackstone's Probably Won't Put Others in Play...

July 6, 2007

Analysis of:Will Blackstone’s Hilton Deal Put Others in Play? | online.wsj.com

* Blackstone/Hilton deal is unique on several levels * Hotel Industry metrics have probably peaked in terms of RevPAR. * New Construction in the piptline is at an all time high * Starwood's management is weak and no apparent strategy. *  Marriott is not about to sell the family business

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