The Professor's 2012 Predictions. By Timothy O Neil-Dunne ~ T2Impact.com Monday, 26th December 2011
It's that most wonderful time of the year, the Professor has dusted off his crystal ball and peered into it -
This year, I am seeing a lot of change and disruption. 2011 was a bad year for the integrity of the travel world, and 2012 will be no better. So here are some of my key predictions; in fact this is my top 10. I am not going to rank them - they are all equally likely to happen. The impact will vary on where in the food chain you live.
So here goes:
1. More Regulation - yes re-regulation by stealth and through the front door will occur. Much of this will be consumer focused. Much of it will also be revenue focused. States are struggling with their financial obligations and so taxes will increase.
2. Less Competition- this might seem strange but I see much less competition in key areas that matter. Less competition among airlines for example in the USA where the number of airlines has shrunk to the point where competition is almost non-existent. Prices are going to rise for travel. The golden age of competitive pricing for airlines and cheap airfares are over. One bright spot is that the long haul traffic in the Gulf State airlines will continue to create value for long haul traffic - in the back of the bus. Low cost carriers will continue to eat away at legacy airlines’ market share. Some of these legacy players are going to suffer badly that in turn leads to short term improvement but long term reduction. Travelport’s Agility program is another example of companies trying to extract more money out of … ultimately the consumer. The lack of true competition in distribution enables them to do that.
3. More fragmentation of the user experience. Think of the current Hipmunk type change as version 1.0 of lipstick on the front end of the pig. In 2012 we will see a lot more innovation coming in the UX. However many of the players will be pretenders to the throne. Many players will be attacking the user interface without understanding the complexity of product requirements and the sophistication of the users. Developers will continue to mistake UI for UX.
4. Availability state will become a top problem to be dealt with - specifically quality and speed of results. Finally the current generation of cache results will be exposed for the poor quality they provide. However this will not deter practically every travel vendor from demanding a source of cache availability. At the same time the suppliers will be demanding more and more discrete transactions; i.e., tell me who you are and what you want, and only then will I tell you what you can have. This battle is going to heat up in 2012.
5. Google Flight Search will be a mixed bag. It will launch internationally but won’t be very good and certain significant airlines will not participate. Google’s inability to display discounted fares internationally will condemn them to be just like Expedia’s UK product – only partial in its delivery. The boycotting by several airlines such as Lufthansa will be marked by slow adoption of the Google Flight Search product by consumers. Google itself will start to feel the heat from regulators and users alike. No more will it be the “do no evil Mr nice guy”.
6. More dynamic based pricing. This is a longer-term trend. The move away from fixed and predictable pricing will be an early trend. Tools that have made the pricing more transparent will be harder to use and the gaming of the systems by users, meta search and supply/sellers alike will make the task of knowing pricing harder and harder for the user. This is a double-edged sword. The lack of reference based consistent pricing results in Consumers searching (unnecessarily) harder than they do today costing more in real search assets and costs. If there was true dynamic pricing – then the search would be different. Today the searching of approx. 6 guaranteed but different pricing causes confusion. IE we might as well move away from fixed pricing. Unbundling will continue. (See #1 above).
7. We will see a wave of apps ported back onto PCs as search on tablets and smartphones becomes the biggest obstacle to app adoption. Already many sellers and providers of travel information are seeing low returns on their mobile efforts. Much of this can be laid at the door of the poor tools for search in the mobile environment. As such to get better search – SEO and SEM – all round many app providers will port back their apps into the Browser and PC/Mac worlds. Google must be rubbing its hands in glee at the thought.
8. Tablets get better and broader adoption but applications that are truly useful for basic travel – like search – don’t match the devices. Yes more and more of us will be using tablets. Windows 8 will have a big impact as it will be the first really unified fully functional service platform. Android is showing that it’s a pain to work with and unstable. Google will need to balance the need for openness with the requirement and expectation of stability. So many apps, so little time(!) will become an over-arching problem for app developers. The lack of quality of many apps out there will start to show how slipshod and lazy developers have been. However we will still see squillions of poor quality apps coming into the market, and more unhappy companies who commissioned such efforts and but are not realizing any returns.
9. Big Data will have a big impact with more people attacking core problems of infrastructure than ever before. Those who oppose them will be under tremendous pressure. Specifically the structure and economic models of Gatekeepers such as GDSs will start to show their difficulties. Think of a world of smart ITA wannabes who actually attack successfully tough data problems. Be afraid – very afraid if you have a large IT infrastructure.
10. The patent wars will hit travel. I wish I didn’t have to make this prediction, but I believe the current state of the Phone Patent Wars are but a precursor to the wars that are going to affect travel. Already we see Patent Trolls beginning to send snotgrams (aka legal letters) to the world of travel. Yes – this one is likely to have a chilling affect on the development of travel as a whole. Ignorance is not bliss and what you don’t know will hurt you.
And now some rather obvious non-predictions:
1. 2012 is not the year of mobile in travel (that happened a few years back in case you missed it)
2. Social fatigue will set in. People will get bored with messing around with Social apps. Too many, too wasteful.
3. The GDSs won’t die in 2012. However they will see even more share erosion. Amadeus will get really strong and Travelport will get weaker. Sabre will stay relatively quiet
4. Several high profile startups will run out of cash and will fade away or become zombies. There will significant culling in certain sectors such as trip management.
5. Apple’s first efforts will hit travel
6. Google will not be top of everybody’s fave list
7. Google and Facebook won’t merge
8. Facebook will IPO and it WILL be awesome
9. There will be a lot of startups coming into travel. More investors will eye travel and conclude it’s too expensive, too complex and full of a lot of Looney Tunes.
10. And there will be even more conferences than last year.
With that –may I wish you and yours a very Happy Holidays from the Professor and all of us (well OK it’s just me, the dog and the cat) deep in the heart of our secret lair somewhere in Washington State.
Feel free to comment. And catch you all in 2012. I will try and be better about posting. I suggest you follow me on Twitter where despite my dislike of the service - I am a reluctant participant.
And just one note of thanks to the literally thousands of you have have read, mused, commented, cursed, prasied and otherwise consumed the Professor's Wisdom in 2011.
And thanks to Sodahead for the image.
Thanks for reading - private comments please to firstname.lastname@example.org
Timothy O Neil-Dunne, T2s Managing Partner, serves as the lead for the Airline, Aviation and Airport Practice.
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