I’ve seen the future of air travel — at least the kind of future the airline industry wants — and I don’t like it.
I had a chance to see the car rental of the future yesterday, and it’s a smart set of wheels.
The preview, which was part of the unveiling of Hertz’ upgraded location at San Diego International Airport, was meant to show off the first of several new facilities designed to bring you a “completely new” car rental experience.
The changes are impressive. Hertz is streamlining the rental process to prevent long wait times for rental vehicles with “virtual” kiosks that videoconference you with a representative in an Oklahoma City call center. It released a new app that send you shuttle wait times and is installing recharging stations and printing facilities for business travelers.
How did unbundling and a la carte pricing get started in travel?
It’s easy to view this as the big bad airline taking advantage of the travelers.
This is an extension of revenue management. I should define revenue management for you: Travel companies have high fixed asset costs. You’re trying to use those assets as much as possible. For example, a hotel room is a time-perishable product. If it doesn’t get rented this evening, it will never be able to get rented again. So any revenue is better than none. That’s revenue management, and that that originated with American Airlines 30 years ago.
In a word: wait. But not too long.
I’ve been getting this question a lot, and I usually refrain from making predictions. No one really knows how prices will fare.
But look at this. These are oil prices during the last three months.
This is the Dow Jones US Airline Index. Remember, stock prices reflect the anticipated future performance of a company.
Here’s the Dow Jones US Hotels Index.
So what does all of this mean? Well, Wall Street is betting that airlines and hotels won’t be as profitable in the near-term (or, perhaps more unprofitable, in the case of airlines). Combine that with lower energy costs, and it’s hard to argue that rates and fares will go up. In fact, the best deals may be just ahead.
If I were a bettin’ man, I’d wait until early 2009 to book my vacation. But don’t hold off for too long. It looks as if oil prices and the major indexes are looking for a bottom.4 Comments