United Airlines CEO Makes Promises as Apology Tour Hits Good Morning America

Good Morning America

United Airlines CEO gave what he says will be his only TV interview April 12, 2017 to ABC News about the bumping incident that occurred a few days earlier. Pictured is Munoz in October 2015. Good Morning America

Skift Take: From a public relations perspective, United CEO Munoz had to get out there on TV so the public could view his remorse. Written statements wouldn’t suffice. He’s now saying a lot of the right things.

— Dan Peltier

Amid one of the worst public relations disasters in United Airlines’ history, CEO Oscar Munoz said the incident in Chicago represented a system failure and pledged the airline won’t use law enforcement to remove booked, paid and seated passengers from aircraft in the future.

Munoz sat down with ABC News’ Rebecca Jarvis Wednesday in Chicago and part of the interview appeared on Good Morning America. This was Munoz’s first interview since the incident on Sunday (watch the interview below).

Had United employees been more empowered to use their common sense, the incident could have been prevented, Munoz said. “We have not provided our frontline supervisors and managers and individuals with the proper tools, policies and procedures that allow them to use their common sense,” he said. “They all have an incredible amount of common sense and this issue could have been solved by that. That’s on me, I have to fix that and I think that’s something we can do.”

Munoz issued another apology about the incident after initially downplaying it earlier in the week. “My initial words fell short of expressing something that we were truly feeling and that’s something that I’ve learned from. I do look forward to a time as much as I am able to apologize directly to him [Dr. David Dao] for what’s happened.”

Asked what the doctor deserves in the aftermath of the incident, Munoz said, “Certainly an apology and from that point on we’ll have to see.”

The incident, which involved passenger Dao being dragged off a plane by law enforcement when he refused to give up his seat for United employees who needed to get in place to staff another flight, has prompted a “deep and thorough review of a lot of our policies that support this,” Munoz said.

“Specifically, the use of law enforcement aboard an aircraft has to be looked at very carefully,” he said. “They’re clearly there for a purpose of safety and we want to make sure they protect us. But for other reasons, I think that’s a policy we must absolutely look at.”

Later in the interview, Munoz said United would not use law enforcement officers to remove booked and seated passengers, noting that cops should be reserved for safety issues.

When asked why it took Munoz nearly three days after the incident to appear more apologetic, he said his first reaction is to understand the facts and circumstances. “It’s not so much what I thought as what I felt, probably the word ashamed comes to mind,” he said. “That is not who our family at United is. You saw us at a bad moment and this can and will never happen on a United Airlines flight. That’s my premise and that’s my promise.”

Besides reevaluating law enforcement on aircraft, United will also look at its incentive program when flights are overbooked. “There is an incentive program that works pretty well outside of the gate,” said Munoz. “Clearly, when you get into an airplane and you’re boarded and seated your incentive model needs to change and I think that’s one of the policies that we’ll look at. We do empower our frontline folks to a degree.”

Munoz said he hasn’t spoken directly the doctor who was dragged off the plane but said United has attempted to contact him several times and insisted the passenger isn’t at fault and that “no one should be treated like that, period.”

Resigning from his CEO role isn’t something Munoz has considered because of this incident, he said. “I was hired to make United better and we’ve been doing that and that’s what I’ll continue to do,” he said.

United is conducting an internal review of the incident and its policies, and the airline has said it will release the results of its review by April 30.

 

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United Airlines CEO Vows Not To Use Cops Again to Remove Seated Passengers

Good Morning America

United Airlines CEO gave what he says will be his only TV interview April 12, 2017 to ABC News about the bumping incident that occurred a few days earlier. Pictured is Munoz in October 2015. Good Morning America

Skift Take: From a public relations perspective, United CEO Munoz had to get out there on TV so the public could view his remorse. Written statements wouldn’t suffice. He’s now saying a lot of the right things although in the interview he did hesitate when asked if the passenger had any culpability in the incident.

— Dan Peltier

Amid one of the worst public relations disasters in United Airlines’ history, CEO Oscar Munoz said the incident in Chicago represented a system failure and pledged the airline won’t use law enforcement to remove booked, paid and seated passengers from aircraft in the future.

Munoz sat down with ABC News’ Rebecca Jarvis Wednesday in Chicago and part of the interview appeared on Good Morning America. This was Munoz’s first interview since the incident on Sunday (watch the interview below).

Had United employees been more empowered to use their common sense, the incident could have been prevented, Munoz said. “We have not provided our frontline supervisors and managers and individuals with the proper tools, policies and procedures that allow them to use their common sense,” he said. “They all have an incredible amount of common sense and this issue could have been solved by that. That’s on me, I have to fix that and I think that’s something we can do.”

Munoz issued another apology about the incident after initially downplaying it earlier in the week. “My initial words fell short of expressing something that we were truly feeling and that’s something that I’ve learned from. I do look forward to a time as much as I am able to apologize directly to him [Dr. David Dao] for what’s happened.”

Asked what the doctor deserves in the aftermath of the incident, Munoz said, “Certainly an apology and from that point on we’ll have to see.”

The incident, which involved passenger Dao being dragged off a plane by law enforcement when he refused to give up his seat for United employees who needed to get in place to staff another flight, has prompted a “deep and thorough review of a lot of our policies that support this,” Munoz said.

“Specifically, the use of law enforcement aboard an aircraft has to be looked at very carefully,” he said. “They’re clearly there for a purpose of safety and we want to make sure they protect us. But for other reasons, I think that’s a policy we must absolutely look at.”

Later in the interview, Munoz said United would not use law enforcement officers to remove booked and seated passengers, noting that cops should be reserved for safety issues.

When asked why it took Munoz nearly three days after the incident to appear more apologetic, he said his first reaction is to understand the facts and circumstances. “It’s not so much what I thought as what I felt, probably the word ashamed comes to mind,” he said. “That is not who our family at United is. You saw us at a bad moment and this can and will never happen on a United Airlines flight. That’s my premise and that’s my promise.”

Besides reevaluating law enforcement on aircraft, United will also look at its incentive program when flights are overbooked. “There is an incentive program that works pretty well outside of the gate,” said Munoz. “Clearly, when you get into an airplane and you’re boarded and seated your incentive model needs to change and I think that’s one of the policies that we’ll look at. We do empower our frontline folks to a degree.”

Munoz said he hasn’t spoken directly the doctor who was dragged off the plane but said United has attempted to contact him several times and insisted the passenger isn’t at fault and that “no one should be treated like that, period.”

Resigning from his CEO role isn’t something Munoz has considered because of this incident, he said. “I was hired to make United better and we’ve been doing that and that’s what I’ll continue to do,” he said.

United is conducting an internal review of the incident and its policies, and the airline has said it will release the results of its review by April 30.

 

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How the Meetings Industry Is Attempting to Redefine Its Value Proposition

UNAIDS

The 21st International AIDS Conference, Durban, South Africa, 2016. UNAIDS

Skift Take: The Joint Meetings Industry Council’s “Iceberg” project is ambitious in terms of defining the value of the meetings industry more holistically, but there are a lot of challenges to provide the indepth case studies required to quantify that successfully.

— Greg Oates

There are dozens of international associations directly affiliated with the global meetings and conventions industry, but there’s never been a high level of collaboration among them, especially across continents.

The Joint Meetings Industry Council (JMIC) was established in 1978 as a communications platform connecting international meetings industry associations to share industry trends and best practices, although the organization has never been particularly active in North America.

For the last few years, the JMIC has been advocating for the need to define the broader value of the meetings industry, specifically in terms of delivering business outcomes and driving economic outputs for the host communities of conventions and all of the participating companies, organizations, delegates, and sponsors. Those broader values can include new business relationships, new education and professional development opportunities, new collaborative research development, and new destination brand lift for the host city, just to name a few. All of those have a quantifiable economic value.

Typically, rather, the value of conventions and the measure of their success from the meeting planner’s perspective have been defined by the event’s delegate attendance figures, number of exhibitors, total sponsorship dollars, etc. From the destination’s perspective, the traditional metrics of success generally relate to the short-term economic impact derived from attendee spending on hotels, restaurants, convention center space, etc.

In January this year, the JMIC launched The Iceberg project to collect case studies of high-impact meetings and conventions from around the globe that delivered verifiable results for organizers and legitimate benefits for participants. The goal is to finally articulate the meetings industry’s holistic value proposition by showing how meetings and conventions drive long-term business strategy and economic development for all stakeholders.

“The focus of our value proposition as an industry has been shifting from one based on delegate and organizer spending to the value of what these events actually achieve for organizers, participants and host communities,” explains JMIC President Joachim Koenig in The Iceberg’s opening introduction. “As simple as it sounds, this in fact has huge implications, because it places us at the very center of both the global economy and the underlying scientific, professional, academic, business, and social advancements that drive it.”

The JMIC is collaborating with the University of Technology Sydney (UTS) to inform the direction of The Iceberg project. The UTS was chosen because it produced the “Beyond Tourism Benefits” research series for Business Events Sydney starting back in 2010, which is considered the benchmark for insight delving into the legacy economic impacts of meetings.

Skift spoke with Rod Cameron, executive director of the Joint Meetings Industry Council, to learn about the factors motivating The Iceberg launch.

Skift: Do you see a growing awareness among convention bureaus, economic development agencies, and city governments that conventions have a long-term impact on the economic growth of cities?

Rod Cameron: It’s growing, but it’s not universal and there are two problems. The first problem is that we are not particularly effective at getting that information out, not the least of which is because we don’t have enough hard measures to meet the test that government bureaucrats typically want to apply to policy positions, and so we need to do that better.

The second thing is that it’s a constant exercise because the turnover within the governmental and political worlds, particularly at the local and regional levels where most of the investment actually has to be made, is ongoing. That means that you just get one old set of council members, ministers, economic development agencies oriented, and then there’s an election or there’s a cabinet shuffle or there’s some other turnover. So you find yourself dealing with a whole bunch of new people and then you have to start the education process all over again.

So I think we need to, number one, make sure that we advance in the area of getting better and more credible value measurements around economic policy benefit, as opposed to simply spending benefits. And secondly, recognize that this is a job that will never end, and that we’ve just got to keep up the education process, and always reach out to newer and broader audiences.

Skift: What is your take on the challenges of evaluating and measuring the long-term economic and business development impacts of conferences?

Cameron: There are really three levels to it. The first is simply identifying what the benefits are, and UTS has done a tremendous amount of really good work there. Just articulating what exactly it is that a specific business event is intended to do is the first step. Is it to raise awareness of particular issues or practices? Is it to circulate new technologies and get input? Is it to advance academic research in some particular area? So identifying what it is you’re trying to achieve is still something that is yet evolving, and the event organizers are a lot better at this obviously because it’s their event, than we are as suppliers to the industry.

The second thing is: “Right, now you have identified what it is you’re trying to accomplish with this event, so to what extent did you accomplish it?” That’s where the surveys and the measurements and so forth come into play for the individual event.

But there’s a third level as well. It’s the future of where we’re going, but it’s the big one, and that is to monetize those benefits. I know that a lot of the international medical associations — cardiology, AIDS, diabetes — have been looking really intensely at this. Because they can say, by virtue of advancing these practices, by virtue of building awareness which enables preventative work to be done and so forth, “Here’s how much money we can save your medical care system in your region”

Skift: So the goal, then, is to better evaluate the long-term benefits that destinations can leverage when they host events, especially in high-priority sectors.

Cameron: Right. Now all of a sudden, we’re where everybody wanted to be all along, which is to actually attach a financial value to what it is that meetings and exchanges are accomplishing. This last one’s tough but it’s going to happen. For example, as we all know, medical care is going to end up being one of the biggest single components of every government budget everywhere in the world. The more the demographic moves to an older configuration, and the more possibilities that are opened up by different treatment options, the cost is just going to go straight up.

So to be able to demonstrate that meetings and conferences and training sessions can actually help a government manage that cost escalation, that’s going to be a tremendous argument for them.

Skift: Do you have an example of where a medical conference has informed a government’s healthcare strategy?

Cameron: So, for example, at the AIDS Conference in Durban, South Africa last year, we were speaking to the individuals who were involved directly in hosting that event and representing the government. They said that when they looked at the event, the most powerful argument for it, to the government, was the fact that AIDS is, of course, an enormous issue continent-wide in Africa. The governments recognize that the cost associated with treatment, loss productivity, on and on and on, is huge.

So to have an international conference that focuses everybody’s attention to a much greater extent on AIDs, and which brings all the global expertise on AIDS into the country and into specific cities, it focuses government attention and it leads to new funding and the creation of new facilities and so forth, as a direct result of that conference. There was also additional research created that goes toward helping address the problems associated with AIDS in South Africa, and as a result of that, helping government manage the enormous amount of investment that they’re having to put in, or productivity that they’re forgoing because of that disease.

Skift: Moving forward though, is it your contention that the meetings industry in any given city needs to collaborate with their academic institutions at the local level, like Business Events Sydney did with UTS, to create research relevant to a specific community?

Cameron: Absolutely, I think that the more universities that get involved whose specialty it is to do this kind of thing, the better for the entire benefit of everyone involved in the meetings industry. Particularly, university level economists is a group we’ve never really hooked into in my personal opinion. We really need to move in that direction because they’re used to making the kinds of leaps necessary here, and that’s what this is going to be all about. You have to make those assumptions, and defend your assumptions, and then come up with those connectors that can allow you to bridge what is going on in meetings today, and what the result is, and what the value of that result is.

And yes, the politics are different in different communities. The priorities are different. Their concerns with the community are different. When people within convention destinations are figuring out how to communicate their value proposition with governments, they should sit down with their government’s latest economic policy paper and figure out what kinds of events are going on within the industry that are directly supportive of what their governments identify as being their economic priorities.

Skift: How can convention bureaus better communicate to their local governments the value of the work they do to attract conventions that help drive economic growth in their regions?

Cameron: The difficulty here is that every single event has a different set of objectives, so therefore every single event is going to have different kinds of legacies and leave-behinds in the community to measure. We need to make sure that we advance in the area of getting more credible value measurements around the economic policy benefits, as opposed to simply spending benefits, certainly. But to try to generalize it to the point of saying, “This is the quantified impact that a convention leaves behind in a city,” is, I don’t think, ever going to be possible.

The interesting thing is that intuitively, most governments get it. They understand the policy benefits and the political benefits associated with hosting a major event in some area that they see as being their economic future or their community development future. So when you have the conversation with them about these broader benefits that conventions bring, inevitably they pick up on it, and they’re usually okay with the story approach because, at the political level certainly, that’s where they live.

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Delta Took $125 Million Profit Hit From Flight Cancellations, CEO Apologizes

Delta Air Lines

A water cannon salute marked the return of Delta Atlanta to Brussels service in late March. The airline, meanwhile, had to cancel some 4,000 flights in early April after thunderstorms hit the Atlanta area. Delta Air Lines

Skift Take: It’s been a busy week for airline CEO apologies, with Delta CEO Ed Bastian issuing a mea culpa for all of the flight cancellations last week. The airline, meanwhile, is trying to raise domestic fares in the second quarter although its unit revenue did not rise as much as expected.

— Dennis Schaal

Delta Air Lines Inc. said it’s set to regain some pricing power after two years of declines, and the shares rose in early trading.

Passenger revenue for each seat flown a mile is expected to climb 1 percent to 3 percent in the second quarter, the Atlanta-based carrier said in a statement Wednesday. The benchmark measure known as unit revenue, a gauge of an airline’s control over fares, fell short of a company forecast in the first three months of the year.

That sets up the current quarter as a test of Delta’s efforts to raise fares amid fierce competition on some domestic routes, which has hurt pricing across the industry in the last two years. A surge in seating capacity across the Pacific and Atlantic also has dragged down fares, with stepped-up competition on lucrative routes to Europe from discount airlines and some Middle Eastern carriers.

About 4,000 flight cancellations following storms in Atlanta last week will reduce second-quarter pretax profit by $125 million, the company said. Pretax profit is expected to be $1.76 billion in the current quarter, according to the average of analyst estimates compiled by Bloomberg.

“We hold ourselves to a high standard and we apologize to all of our customers who were impacted by last week’s events,” Chief Executive Officer Ed Bastian said in the statement.

The shares rose 2.4 percent to $46.36 before the start of regular trading in New York. Delta is the first major U.S. airline to reports first-quarter results.

Fuel Pressure

Delta’s unit revenue fell 0.5 percent in the first quarter, behind the airline’s initial forecast from January that the measure would climb as much as 2 percent. Delta had expected a quicker recovery in sales of pricey, last-minute tickets favored by business travelers. Investors have punished the shares, sending them down 7.9 percent this year through Tuesday compared with a 2.4 percent slide in Bloomberg index of U.S. airlines.

The first quarter will probably be the worst of the year in terms of pressure on profit margins from higher fuel prices, said Paul Jacobson, Delta’s chief financial officer.

“With an improving revenue profile and further improvement as our cost growth moderates in the second half, we are on track to expand margins for the balance of the year,” he said in the statement.

Helane Becker, an analyst at Cowen & Co., sees a 1 percent increase in Delta’s unit revenue in the current quarter, with the company’s profit margin taking off in the second half of the year. She reiterated her rating of “outperform” on the shares last week, but lowered her price target to $58 from $60.

Earnings excluding certain items were 77 cents a share in the first quarter, the carrier said Wednesday, exceeding the average estimate of 75 cents a share based on the average of estimates compiled by Bloomberg. Sales fell to $9.15 billion, compared with analysts’ prediction of $9.14 billion.

 

©2017 Bloomberg L.P.

This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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United Bumping Incident Draws Comments From Politicians, Including Trump

Audra D. Bridges via Associated Press

This April 9, 2017 image made from a video provided by Audra D. Bridges shows a passenger being removed from a United Airlines flight in Chicago. Audra D. Bridges via Associated Press

Skift Take: The U.S. Department of Transportation should indeed look into airlines’ overbooking practices and passenger rights although it’s unclear whether the United Express flight in question was overbooked. It remains to be seen how the incident will impact airlines and United, in particular, over the long term.

— Dennis Schaal

New Jersey Gov. Chris Christie says he has asked the Trump administration to suspend regulations that allow airlines to overbook flights.

Christie, a Republican, sent a letter to U.S. Transportation Secretary Elaine Chao on Tuesday, citing a passenger who was dragged off a United Express flight in Chicago on Sunday.

Christie called the practice of “bumping” passengers off flights “unconscionable.”

United is a dominant carrier at New Jersey’s Newark Liberty International Airport.

A message left with Chao’s office was not immediately returned.

A spokesman for President Donald Trump says it was “troubling” to watch video that spread across social media of a passenger being dragged off of a United Airlines flight.

But White House press secretary Sean Spicer says it’s unlikely the federal government will launch a separate investigation.

This article was from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Microsoft Bets on Artificial Intelligence to Help It Succeed Again in Travel

Microsoft

Microsoft’s Cortana voice assistant lets users search the web for answers via voice. A new Harman Karman device is expected to bring Cortana into more homes soon. Microsoft

Skift Take: Microsoft thinks that voice-powered internet gives it a shot — via voice assistant Cortana — at upending today’s travel search funnel, which is dominated by Google’s search results. The theory’s plausible, but Microsoft needs to move faster to win.

— Sean O’Neill

With the exception of helping create Expedia, Microsoft has struggled to figure out travel. But it is hoping that artificial intelligence (AI) will be its route finally to leapfrog ahead of Google and Oracle, playing a larger role as middleman.

The example illustrates the company’s current approach to the travel sector. The technology giant appears to be more interested in building “middleware services” that sit between customers and travel companies.

The company has a mixed past record of engaging with consumers on its own. For example, in 2008, it bought an airfare prediction website called Farecast for $115 million and integrated it with its flight search results on its Bing search engine. But that project, along with the MSN Travel mobile app, didn’t gain traction with consumers.

The company’s focus now is on the new AI and cognitive computing layers that it predicts are going to disrupt travel. By 2018 half of all consumers will interact with cognitive computing, thanks in part to the spread of AI-powered platforms like Amazon’s Alexa, Apple’s Siri, and — of course — Microsoft’s Cortana.

Microsoft says 145 million people use Cortana at least once a month. But that definition of “use” is fairly light, and the voice assistant is not yet ingrained in the habits of consumers enough to be a go-to when it comes to, say, travel search.

Stuart Greif, senior executive, Travel/Hospitality, QSR, and Transportation Industry Solutions at Microsoft, has been out on the industry circuit, sharing the company’s predictions about where travel technology is headed. Most recently Greif spoke last week at a conference in San Francisco run by venture capital firm Thayer Ventures, where Skift saw his presentation first-hand.

Greif says, “We’re not looking to build the next great travel platform. Our message to the travel industry is that we want to partner on delivering solutions.”

It has targeted several sectors of the industry, but its chances seem better in some than in others.

Voice-enabled internet changes the travel search game

Mobile apps may be replaced by voice-activated internet, Greif says. “We think the app world is going to go away. People can debate that, but why do you need to go in and out of a dozen different travel apps by touch if you run nearly everything on your device by voice command?”

Greif argues “bots are really the new apps…. Let’s say you often book hotels for business travel You don’t want to have to re-enter your information at every new hotel site or travel agency you use….”

“Our view is, I’m going to have a bot on a system like Skype or Cortana or Alexa or Siri, and Marriott is going to have its own bot, and Marriott is going basically ask me, would you like to check in? And my bot’s going say, ‘Hey is it okay to provide these details?’ My bot is going to say, ‘Yes Cortana, please give the information.”

Greif says the rise of voice-activated search may upend the direct booking wars between suppliers and third-parties.

“When you search for travel queries on a voice-powered platform, who owns that search?” asks Greif. “Is it Google? Is it Siri, Alexa? Is it Cortana? If artificial intelligence can look across the entire spectrum of everything that’s available and choose what to bring it back as relevant, whose is it bringing back? Is it bringing back brand.com? Is it bringing back the OTAs?

Greif conceded he didn’t have answers to the tantalizing questions he raised. And while the company’s Cortana is often seen as superior technologically to voice assistants from Google, Apple, and Amazon, there is a marketing and commercialization effort that needs to go along with the technological work to enable Microsoft to become a vital part of travel distribution.

As of today, Cortana doesn’t known many travel-specific commands.

What’s more, if it chooses to compete in the battle to funnel travelers to booking options, it needs to catch up to rivals by rapidly developing more third-party speakers that support Cortana. It’s prevalence via the Windows platform has not, so far, seemed like enough. Otherwise, Google, Apple, and Amazon may outpace it in having physical platforms distributed worldwide, making the questions Greif poses about who owns search moot.

A year ago Microsoft invited travel companies to build bots on its Skype messaging service, to enable the brands to automate many parts of their customer interactions. But brands like Kayak, Expedia, Hipmunk, and Cheap Flights, have ignored it, focusing instead on Facebook Messenger’s platform.

It’s not hard to wonder if a similar fate awaits Cortana unless Microsoft adjusts its ground game in travel.

What AI means for travel enterprise software

Microsoft translator can translate speech across nine languages in real time in sixty languages, via text input. But it is still some years off from real-time translation happens via speech.

Speech recognition could, in theory, someday replace airline gate agents and hotel front desk clerks, by capturing and processing requests, reducing error rates. As of today, the speech recognition is possible, but not the ability to send commands into travel company systems, Greif says.

Visual recognition could, in theory, replace airline agents who need to match faces with photo identification for, say, allowing a bag to be checked in for a flight. Already Microsoft says its computers are better at matching faces than humans are, on average.

Playing the long game

How long does Greif think it takes for AI to be able to actually have the business logic down that’s required for people to do things like search and book an itinerary that might be complicated?

“I think the search part is the easy part,” he says. “It’s all the back-end integrations and business decision-making that’s gonna take awhile.

As an example, an unnamed “large hotel chain” recently gave Microsoft links to five different frequently asked questions as part of a project to create a demonstration of how an automated, chat-based customer service interface might work.

It only took Microsoft’s developers and machines 10 minutes to read the content and come up with an interface that could provide those answers to a wide away of question phrasings.

But Greif says “bookings are more complicated.” He believes the industry will start putting these solutions into production within about five years’ time.

Despite Microsoft’s ambitions with Cortana, it has less experience in the quirks of travel marketing and distribution of its competitor Google.

It seems more likely to gain market share by providing truly business-to-business enterprise services to hotels for operations. Last year Microsoft began demonstrating its concept of the connected hotel that used next-generation guest experience management system iRiS and next-generation “hotel operating system” that acts as “middleware” for interpreting data in operations and finance.

micorosft connected room

Greif says the key issue for hotels is aligning all the systems in a guest room and the back office so that they are all participating in real-time. Right now the systems aren’t connected to know when water pressure is not working or the TV is not working and so the company can’t get ahead of customer complaints with predictive maintenance.

But the company’s active demonstrations with travel suppliers suggest that it poses a significant competitive threat to today’s largest hospitality tech providers, such as Oracle, and airline providers, such as Amadeus in partnership with Accenture.

microsoft cortana hospitality technology

Artificial intelligence is an authentic game-changer

Whether Microsoft is a victor or not in the AI race, Greif seems persuasive on his larger point that the arrival of high-powered computing in the cloud, more sophisticated computer algorithms, and the popularization of mobile, internet-connected devices is finally ushering in the AI era.

Platforms that can support AI are truly being popularized now, which means that hotels, airports, and airlines are increasingly powered by artificial intelligence. So there is some merit to the buzz.

The platforms are getting better at recognizing spoken queries and at helping to categorize various types of knowledge so as to deliver relevant and intelligent responses within particular areas of focus for a specific task or sets of tasks.

For example, in speech recognition, Microsoft had a historic achievement last year. It achieved parity in speech recognition accuracy with humans. That doesn’t mean its computers hear perfectly, but it hears just as well as humans do.

That said, the hype machine is on overdrive, Greif concedes. He notes that a few years ago every startup pitch described itself as a data analytics company, and “today every startup claims to be in AI.”

In the meantime, Microsoft is claiming it has a new company culture that will enable it to adapt to the new, fast-changing circumstances. Greif says, “It’s a whole new Microsoft. It’s a much more open company now. I get to keep my iPhone, and that’s always nice.”

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British Airways and the Problem of Fees, Frills and Perspective

John Crowley  / Flickr

A British Airways Boeing 747 aircraft. The carrier is facing increased low-cost competition on its long-haul routes. John Crowley / Flickr

Skift Take: Alex Cruz, the Chief Executive of British Airways, is in a tough spot. For years the airline has positioned itself as a premium brand and — whatever the company says — customers don’t like it when you start charging for something you used to get for free. It’s probably too early to say whether the changes to short-haul meal options have been a success and doing it on long-haul flights would be a totally different proposition.

— Patrick Whyte

While British Airways might not be suffering as much bad publicity as some other airlines, a recent comment from its Chief Executive Alex Cruz has been jumped on as another sign that the carrier is going further downmarket.

In an interview with the London-based Sunday Times, Cruz hinted that the carrier might look to start charging for food on long-haul flights in the future.

This follows a decision to scrap free snacks and drinks on short-haul flights last year, a move that was criticized by the press and frequent fliers.

On flights within Europe, BA didn’t really have much of a choice. It is being outgunned by operators such as Ryanair, whose costs are substantially lower. To try and compete BA needed to find bits of its business to trim — or another area from which to make money.

While Cruz and his predecessors have been battling Ryanair and EasyJet for more than a decade they could at least comfort themselves with their continued dominance on long-haul routes. Not anymore.

Thanks to the latest range of fuel-efficient aircraft, Norwegian Air has finally found a way to make low-cost long-haul work, meaning that while it is not necessarily always cheaper than BA and others it has reframed the narrative.

BA’s parent company International Airlines Group has sought to counter this with a new airline called Level, which launches later this year, and will compete with Norwegian in terms of pricing. With only two aircraft though it isn’t going to be enough.

Cruz’s comments were not a firm commitment to change, but they do show the predicament BA and all other full-service carrier’s face: how do you compete on price but still offer a premium service?

Not wanting to lose

The problem for BA is that the status quo is the customers’ reference point and any change to this will provoke a negative reaction even if it leads to cheaper fares for some (although there is no guarantee it will).

Passengers have come to expect a certain level of service from BA and will find it hard to accept anything less.

Behavioural economists have long noted the impact of loss aversion. In a 1983 article Daniel Kahneman and Amos Tversky wrote:

“Many decision problems take of the form of a choice between retaining the status quo and accepting an alternative to it, which is advantageous is some respects and disadvantageous in others. The analysis of value…can be extended to this case by assuming the status quo defines the reference level for all attributes. The advantages of alternative options will then be evaluated as gains and their disadvantages as losses. Because losses loom larger than gains, the decision maker will be biased in favour of retaining the status quo.”

Amitav Chakravarti, Professor of Marketing at the London School of Economics and Political Science, explains how this might work with airlines.

“In essence anything that you take away from the status quo, tends to hurt almost twice as much as anything that you add to it. So you could argue that if BA takes away a packet of peanuts and Ryanair adds the peanuts in the end these should negate each other or should roughly have the same magnitude of customers loving or hating it. But that is usually not true, we usually react much more violently to a 5 percent loss than a 5 percent gain,” he said.

“Just as a rule of thumb if someone loses $5 to make up for it you can’t just hand that person back another $5 you literally need to get that person another $10 to make up for the loss.”

When it decided to drop food on its short-haul services, BA framed it as a desire to increase choice rather than as a cost-cutting exercise.

Should BA go down the route of charging customers for food on long-haul routes, it will be difficult to employ the same tactic because there is already meal choice. Instead BA might look to add an extra fare type.

“Like most companies, we don’t stand still and we are very focused on what customers want. We have no plans currently for a buy-on-board economy product on long-haul, but if that is what interests customers of the future, we will listen,” a BA spokesperson said.

The new reality

In an interview with Skift last year, Cruz said that the likes of EasyJet and Ryanair had helped to re-educate consumers. This is true, but the problem for BA is its position within the market. It uses the slogan “To Fly. To Serve” and is an entirely different proposition. There is also the problem of how a company presents itself to two different types of customers: those on a budget and those willing to pay for business or first-class.

Speaking last week, Kenny Jacobs the Chief Marketing Officer of Ryanair, neatly encapsulated the issue for BA and other legacy carriers.

“If you’ve had it good and then good gets stripped back you kind of think: ‘Whoah, I used to get free stuff on the flights, and I used to go into the lounges for free and I used to get all these points’ and now when you start to take things away from people, people always react that way. We’re adding things on rather than taking things way,” Jacobs said.

“So I think that’s why our customers are saying ‘great I can bring two bags, great I can pick a seat, great I can do things that I wasn’t able to do before and I’m getting better value with Ryanair’.

“Pre-AGB [Always Getting Better, the company’s customer experience improvement programme] Ryanair did a great job of conditioning you into [thinking] this is what a stripped back service looks like. So everything we added on top over the past three years has been a plus, in the minds of our customers. Whereas it’s the opposite at British Airways… you’re taking away something but while still charging the same fare.”

If and when BA decides to start charging customers for food on long-haul flights it will have to get its message right, or risk alienating its entire customer base.There is, however, some good news, for BA according to Chakravarti.

“This is a short-term reaction. In the long term people get used to things and then the status quo might shift to such a situation where you’re used to no meals.”

Ryan Wolkov

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CEO Interview: How American Express GBT Tackles Innovation

John O'Boyle  / American Express Global Business Travel

Doug Anderson was named CEO of American Express Global Business Travel in August. John O’Boyle / American Express Global Business Travel

Skift Take: American Express Global Business Travel is investing in technology to give travelers better digital tools and a more streamlined booking experience.

— Hannah Sampson


Editor’s Note: A year ago, Skift expanded its coverage of corporate travel with more frequent stories and a dedicated newsletter. The Corporate Travel Innovation Report focuses on the future of corporate travel by examining the big fault lines of disruption for travel managers and buyers, the innovations emerging from the sector, and the changing business traveler habits that are upending how corporate travel is packaged, bought, and sold.

In this series of stories and one-on-one interviews, we explore some of the latest trends, technology, and external forces causing corporate travel to evolve. You can read the rest of the articles in this series here.

As longtime CEO of travel management megacompany Carlson Wagonlit Travel, Doug Anderson always kept an eye on rival American Express Global Business Travel.

These days, Anderson is keeping an even closer watch. After about 10 years at CWT, he was named CEO of American Express GBT in August as the firm continued to move forward with growth plans following its 2014 spinoff from American Express in a joint venture between the credit card company and a group led by Certares. That deal came with $900 million in new funding.

Just about a week after he was named to the position, the company announced it was acquiring corporate travel technology firm KDS in a move to boost its online booking capabilities.

The ability to make such investments at GBT is key, Anderson said.

“This industry is moving so rapidly in the direction of technology as the solution to just about everything that we do that the ability to invest in that technology, develop it and lead the market is what makes my job fun,” he said in an interview in late March. “I think it was very good for me to be able to come into an environment where we have the flexibility to either decide to buy, build, or partner for technology solutions that are fundamentally important in our industry while at the same time knowing a little bit about it, which enables me to help our team think through what are the most relevant opportunities that we have and then how do we bring those most relevant opportunities to market.”

Anderson spoke to Skift about the company’s technology plans, disruption in corporate travel, and his priorities moving forward. This conversation has been edited for clarity and length.

Skift: What’s surprised you about the role or about the company since you’ve started?

Anderson: I was somewhat surprised at the strength of our technology plans at GBT. I had, as a competitor, been a keen observer of what Amex GBT had been doing — at least, the part that was visible to the public over the last two and a half years since the joint venture. When I joined the company and got a firsthand view at our technology roadmap, I was very…surprised may be a strong word, but I was energized and was, and continue to be, very enthusiastic about our technology and innovation plan. It’s second to none in this industry.

Skift: That’s an interesting insight because it’s not that often that you get to see on the other side of that curtain. Has it been a real cultural shift to go from being a competitor to an insider, or do you feel like you come in with really good, fresh eyes?

Anderson: The culture of every organization is different. The culture here is one that I would assess at being extremely service focused. I was very impressed from, literally, from day one with the service ethos across Amex GBT. You might expect me to say that, because we’re in the service sector, but the enthusiasm and the commitment, the dedication to providing service to our clients is absolutely superb….

I knew the industry fairly well. But I didn’t know, other than what we see in the competitive field, much about the organization and the way the organization thinks and operates here at GBT. I did understand the joint venture setup and the capitalization of the company and what was in the public domain, but what I think is really unique about this opportunity for me personally is coming in with a fairly good understanding of the industry, a pretty good understanding of the largest competitor that GBT has in the [travel management company] space and then being able to think about the opportunities we have at GBT through the commitment of our shareholders, the investment capital that we have to really build out our innovation pipeline and our product roadmap that I referred to earlier and really invest in growing this business as this digital revolution happens around everything that is travel in both in the consumer and in the corporate space. When you bring those together, and when I think about the service ethos that I referred to, and then the capital available to really invest in separating ourself from the industry, I get really excited about the opportunity we have here and what we’re delivering.

Skift: You’ve been making a bunch of moves in technology, both by acquiring other tech companies and developing your own tools. What’s really the driving force of that tech roadmap? The second part of that question would be how difficult is real innovation when it comes to corporate travel specifically? Just because it’s not just a pure leisure experience. There’s so many other things you have to keep in mind.

Anderson: The goal of our technology roadmap and of our investment in technology is really twofold. One is to enable travelers, the digital traveler — that’s a term I’ll use — to have access to anything and everything the traveler needs while they’re on the road to make them more efficient in their journey. Today’s traveler is at the point of having everything that he or she needs in their hand on a smartphone or a tablet that’s relevant to their trip. Not just the static information about flying and hotel reservation and confirmation, but the information around the dynamic events that are occurring around them at any one time.

From events that are national and manmade disruptors or disasters all the way to my meeting was delayed, I’m going to miss my flight, I need an alternative and everything in between. Travelers have become much more efficient, much more effective, and the journey’s become less I guess I’ll call it stressful for travelers as a result of the digital solutions that are being delivered and are safe. We’re at the forefront of that.

You also asked for what’s some of the difficulty….That aspect is access to content. There are disruptors in the marketplace that are changing the model — the industry typically talks about, for example, Airbnb and Uber, and there are a number of others that have found a new way to distribute travel and travel-related services, and we have and will continue to partner with the kind of new-age distributors in order to make sure that we give our travelers and our clients access to full relevant content.

We have a distribution agreement with Airbnb and we have an agreement with Uber, for example, and others to make sure that we’re where we need to be and want to be in our ability to distribute content that’s relevant for our clients because we want our clients and their travelers to come to us and be able to find the solutions that they’re looking for to completely facilitate their journey.

Skift: I actually want to come back to that, but first I’d love to hear what you think some of the challenges are.

Anderson: The disruptors are called disruptors because they create challenges, they create the need to change and innovate. I think we’re in a good position in that regard. Some of the things that are current events today create challenges; hopefully they’ll be short term, like the travel ban that is now working its way for the second time to the court system. The ban on electronic devices that was announced earlier this week. Events like the horrific incident that occurred in London earlier this week. Those kinds of things create challenges. There are always technical challenges; technology doesn’t always work perfectly. But we strive and drive to make sure that our technology is reliable and that our systems and our applications are up and running all the time, every time. Those are challenges.

But I think the the biggest challenge the industry faces, and we as intermediates face, is around maintaining access to relevant content. There’ve been attempts at new ways of distributing travel — some of which I mentioned earlier, other I haven’t — and that have been evident in the last six or eight years now. I think our industry, and at GBT particularly, has responded well to those challenges. Each day brings a new challenge and along with it comes a new opportunity.

Skift: It would be one thing just to say, ‘Okay, we can partner with Uber and Airbnb, technically, we can do that.’ But then you have these additional levels of: ‘Is it approved policy? Does it comply with duty of care? How do you know where your travelers are?’ I mean, are those complexities that just add to the difficulty in really streamlining that content and building those kind of partnerships?

Anderson: Well, our clients have to determine how their policy is designed, developed, and deployed. To take your example, we have clients who have decided Airbnb works in their travel program and we have clients that have decided that it does not. Our role is to enable those travelers who work for companies that have decided that, for example, Airbnb works for them, enable those travelers to be able to gain access to Airbnb content. For us to make certain that those clients who’ve decided that it does not work for them to manage their programs in that way. That’s no different than any other slate of preferred suppliers or providers or class of traveler who are staying at a hotel that one of our clients may choose.

They’ve developed this program, we help them with implementing and designing our technology to support their programs. There’s nothing new about any of that.

The new aspect is that we develop relationships with suppliers that are new relationships, and those new relationships, sometimes, have unique characteristics.  But it’s not any different than what we’ve been doing for a long time now. It’s just that the platforms are different and there are more new interests, and the pace of new interests entering the market is accelerating.

Skift: Now that you’ve been there for a little while, what do you think are your key areas of focus moving forward from this point?

Anderson: We have a very, what I believe to be, well defined set of priorities going forward. At the top of that list is our product innovation roadmap and plan that I’ve already talked a bit about and you’ve heard us talk a bit about in the media. It is and will continue to be a real differentiator for us in the market.

Hotel is a big opportunity and priority for us, as it is for many of our competitors. Our clients want their travelers for a number of reasons — one, cost savings, two, duty of care — to come back into their managed program for their hotel needs. The level of compliance with hotel booking for most companies is in the 50 to 60% range. Helping our clients pull their travelers back into the channel for hotels, for again, for cost and for duty of care and just taking security purposes into priority.

We have a priority on strategic mergers and acquisitions. You’ve already referred, indirectly, to the one important acquisition we made in the latter part of 2016, and that was KDS. Which gives us our own proprietary online booking capability, which we will do a lot with going forward. Again, sets us apart from our competitors. We support, as was the case previously, a full range of online booking tools based on our client’s preference. We now have our own proprietary capability and we are looking at other either geographic market or capability acquisition opportunities going forward. Nothing to talk about today, but we are actively looking at a pipeline of opportunities.

Then the last one I’d mention is the mid-market….Our traditional business is medium and large corporate, multi-regional, global. We’re going to be focusing more on the mid-market. We have a healthy thriving mid-market business in the U.S. We’re looking to grow that business significantly over the next three to five years. Some of the technology that we’re developing and have acquired recently will help us in the mid-market. We’ve actually, recently, relaunched our mid-market offering in the U.S….We’re pursuing those opportunities with enthusiasm.

Skift: We talked about the disruptors, Uber and Airbnb, but what are some other important trends that you’ve been tracking broadly in corporate travel?

Anderson: Well, the macro trends would be the challenge to maintain access to relevant content, which I’ve already touched upon. Another big trend is mobile, mobile everything, all-the-time traveler connectivity, which I’ve also referred to. Mobile is moving at a pace that I believe — and forecasters like Forrester and Phocuswright believe — a very high percentage of online transactions will be platformed on a mobile device in the very near future, so moving mobile forward here at GBT is a priority that I haven’t talked about previously. We’re enriching our mobile offering. We’re working on developing mobile booking capability, which we would expect to launch in the not too distant future. Enabling travelers to be as efficient and effective as they possibly can while they’re on their journey. I think those are three big trends — access to content, and the others that I just mentioned — that take up a segment of our time to think about and, again, they’re opportunities that if we leverage, and we intend to leverage the opportunities wisely, that will create competitive advantage for us.

Skift:  We hear the word consumerization a lot, or at least the sentiment of consumer behavior that they perfect in their leisure life then influencing how they travel and book travel for business. I think the overarching sentiment is prioritizing or making the satisfaction of the traveler more important in their corporate travels like it is in their leisure travels. Is that a consideration that you’re keeping in mind when you’re planning your future moves? Or is that an approach that is important to you?

Anderson: It’s critically important. Our approach is to ensure that traveler centricity is at the heart of everything we do. Now, that doesn’t mean we’ve forgotten about our corporate clients, but travelers are actually a joint interest and focus for our travel manager, procurement officer clients as well. Our joint goal along with our clients is to make sure that their travelers are very effective and very efficient. Traveler centricity is right at the middle of everything we’re thinking about as we move forward and develop and innovate.
When you talked about consumerization, I think the clear channel here that’s really come to the surface in the last four or five years is the booking experience, which you referred to. Consumers find it relatively easy to book through many of the online travel sites, leisure travel sites, and when they compare that experience to the corporate booking tools, they don’t understand why the experience isn’t as efficient and as smooth and as easy to accomplish. One of those difficulties, that you actually referred to earlier, is around some of the requirements that are built in to the corporate booking tools that aren’t required for the leisure experience.

Things like policy compliance and corporate rates and backend integration into reporting and analytics technology etc., etc. One of the drivers behind our development of mobile and our acquisition of KDS was to start to make the online experience on the front end more like the consumer online experience.

For those that have looked at what has been developed with the KDS online booking tool, the efficiency and the number of steps that are required to assess the various alternatives for a trip and then make a decision is much more streamlined than the average corporate online booking experience. What we’re striving for is to get as close to that consumer experience, not because….We’re not trying to deliver a consumer application, but we’re trying to give our travelers a consumer-type experience because they when they find that in their personal lives, they’re looking for that in their corporate lives.

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Flight Centre Invests $7 Million for Stake in Leading Argentinian Booking Site

Avantrip.com

Avantrip.com is part of Bibam, an Argentina-based travel group that Flight Centre has invested in. Avantrip.com

Skift Take: Can a legacy brand like Flight Centre really transform itself and get more digital and global? The company is making the investments and acquisitions in people and technology to do so. Will the strategy be successful? It will take a few years to find out.

— Dennis Schaal

Flight Centre, the Australia-based travel agency group that is trying to get more digital and global, invested $7 million to take a 24.1 percent stake in Bibam, an Argentinian travel technology company.

Flight Centre said Bibam operates the Biblos brand and owns e-commerce player Antrip.com. Based in Buenos Aires and employing 440 people, Bibam does about $240 million in gross bookings and is the second largest travel agency group in the country, Flight Centre said.

Flight Centre see the investment as helping it make gains in corporate travel and technology, in which Bibam has a presence, and views Argentina in particular and Latin America generally as expansion opportunities.

“We have had a long relationship with Biblos through its involvement in the FCM corporate travel network and have identified further growth opportunities in Argentina and throughout the Latin America region in corporate travel and in other sectors, particularly online,” said Dean Smith, Flight Centre Travel Group’s president in the Americas, in a statement. “We have been impressed with the company’s proprietary technology platform and the level of talent in the organization.”

With the investment, Smith gets a seat on the Bibam board.

Flight Centre has more than 30 brands, including Liberty Travel and GoGo Vacations, under its umbrella. In 2016, it acquired Boston-headquartered StudentUniverse and BYOjet.com, an Australia flight-booking site that’s expanded to Singapore, New Zealand and the UK.

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Airlines Add to United’s Social Media Woes Following Its Latest Controversy

Royal Jordanian Airlines

The Jordanian national carrier had fun on social media with United’s current woes. Royal Jordanian Airlines

Skift Take: If history is our guide, another airline will do something worse soon. But for now, United is taking a beating on social media, even by its peers.

— Grant Martin

Everybody apparently has something to say about a recent debacle in which a passenger was forcibly ejected on a United flight and now, some airlines are trying to turn it into a marketing opportunity.

Middle East carriers, stung by recent anti-competitive movements among the U.S. legacy carriers and a recent electronics ban (possibly motivated by things other than security) have perhaps been most harsh. Royal Jordanian, which is known for its snarky social media feeds, posted a photo on Monday saying that “We would like to remind you that drags on our flights are strictly prohibited by passengers and crew,” showing a cigarette but clearly referencing the United incident.

Emirates, another carrier long embattled by legacy carriers, went so far as to post a video quoting United’s CEO and lambasting the airline. It also used the opportunity to brag about winning top billing in TripAdvisor’s new global airline rankings.

On this side of the Atlantic, criticism was a bit more guarded. Doug Haller, a reporter for azcentral, reported Southwest flight attendants joking with customers over the affair:


Meanwhile, graphics of a new Southwest slogan surfaced saying ” We beat the competition. Not you” surfaced though the airline claims no part in that campaign.

So far, United’s competing legacy carriers seem to be some of the only participants staying on the sidelines; American’s Twitter account is staying focused solely on promotional material while Delta’s top tweet is a misdirected support message to a nonexistent user. It’s showing more restraint than it did two weeks ago when it rested to United’s #leggingsgate challenges by reminding followers that they were free to wear leggings on flights.

Among the other lessons from this week’s debacle, one thing that’s clear is that airlines still haven’t perfected the social media game.

 

Ryan Wolkov

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