Innovation and Patents: Pros and Cons for Procurement

Are patents good or bad for the end consumer?  OK, that’s pretty broad…how about this specific example concerning Virgin Atlantic and Delta Air Lines:

Virgin recently filed this patent infringement case against Delta over Delta’s use of a herringbone-style seating configuration in its BusinessFirst cabin. Virgin Complaint Against Delta

At issue is Virgin’s patent, granted by the U.S. Patent Office two years ago.

The implications for travel buyers are interesting.  Virgin came up with a clever way of arranging its seats in the business class cabin.  The advantages include easier access to the aisle, and more seats in the cabin for Virgin.

Airlines invest significant sums in their seating designs, and clearly hope to gain competitive advantages by doing so.  In this case, Virgin, by virtue of its patent, has the right to exclude other airlines from copying the features covered (claimed) in its patent. Less competition means some combination of more traffic and higher prices for Virgin.

Let’s set aside the issue of whether or not Delta is infringing this patent.  The facts are not clear, and Delta likely believes that either the Virgin patent should be invalidated, and/or there is no infringement. Best guess is this will be  settled in court within two years.

More importantly, what do all you travel buyers and suppliers have to say about the pros and cons of a supplier who has patents covering elements of its offerings?

Should innovation be rewarded with this form of protection, essentially as a way to create more incentive to risk R&D funds?  Or do the implications of paying higher prices for what amounts to a monopoly on a product turn you off? Vote here and let’s see what you all think.

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Air Sourcing Academy a Big Hit

The first-ever one-day workshop on airline sourcing was a big success!  About 70 delegates worked their way through the key success factors for sourcing this important spend category. NBTA‘s post-event survey measured two key factors:

The change in the level of understanding of airline sourcing (definitely improved, above), and the overall satisfaction with the event (quite high, below). Continue reading

Why Ancillary Revenues Don’t Much Matter

Let’s cut to the nub of this issue.  No one will  ever know for sure if ancillary revenues make airlines more profitable.  There are just too many moving parts in an airline’s  revenue stream.  Sure, airlines may report an extra billion dollars in ancillary revenue (AR, from here on) – but what did fares do?

If fares went down, then maybe the extra AR revenue Continue reading

Top Reads from 1st Quarter 2010

Last quarter’s most popular topics covered travel ROI, savings, metrics and reverse auctions:

ROI on Travel and Meetings – Why Bother? – challenges the feasibility of placing ROI metrics on trips; says there is a “good enough” alternative.  It’s called management.

The Real Question Behind Travel ROI – searching for post-trip ROI is a long walk in the hot sun.  Far better to focus on this essential question: “What’s the most effective way to achieve my goal?” Sabre and Cisco showed an interesting approach.

Travel Benchmarking Done Well – the Travel GPA tool focuses on actionable benchmarks – stuff that travel managers really need to pay attention to.

Savings Metrics, Rat Farms and KPIs Gone Bad – takes a critical look at three common definitions of savings, and the unintended consequences of each.

Reverse Auctions for Hotels and Car Rates? – wonders if travel suppliers may offer more reverse auctions for their inventory, and the implications for buyers, TMCs and GDSs.

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Social Scanning, Fuzzy Shopping and More Travel Innovations

**Update: The four finalists are noted below in bold purple text.**

The Phocuswright Travel Innovation Summit showcased 34 firms yesterday. Each has an interesting new angle on some aspect of the travel business. For me, the firms in the social scanning and fuzzy shopping categories were the most intriguing.  See this post for my take on the implications for travel procurement. Continue reading

Top 5 Posts – Last 40 Days

Here are the five most popular posts on this blog from the last 40 days:

  1. Trippy – Tomorrow’s Biz Trip Planning Tool? (Trippy is a mash-up of Google Wave, Google Maps and Lonely Planet content)
  2. Travel 101 (a 4-minute video introduction to the travel category, and four posts covering Travel Data 101)
  3. Travel Procurement’s Fighting Words (started by a slam against using procurement principles in the travel category)
  4. Future Innovations in Airline Distribution – Condensed (a summary of problems and  innovations needed in the airline distribution channel)
  5. Why Travel Disses Procurement (explains the friction found between travel and procurement staffs and what to do about it)

I’m surprised that two of these posts don’t relate directly to travel procurement (“Trippy…” and “Future Innovations…”).  You’re saying it’s OK to cast a wider net in terms of topics.  Cool.  I’ll continue to bring in this type of content from time to time.  What else would you like to see here?

Travel Procurement’s Fighting Words

Anybody out there looking to pick a fight about the role of procurement in the travel category?  I found this post on TheBeat.travel, an active forum for topics related to the business of travel.

Holly Hegeman, who closely tracks the airline industry on her well-respected site Plane Business, made this comment:

Oh and the procurement method of purchasing travel? If your company is still doing it — you need a new CFO.(Her full post is here)

My response is copied below, and yes, I defended procurement’s role and capabilities.  But the more important question is this: Why does procurement get a bad rap when it comes near the travel category?

I’ll gather my thoughts next week.  (Update: See them here) Meanwhile, what are yours? Continue reading