Bid for Business Class: Airline upgrades now up for auction

By Daisy Carrington, for CNN

September 4, 2013 -- Updated 0335 GMT (1135 HKT)

(CNN) -- Flying economy getting you down?

The good news is that getting bumped up to Business Class just got more affordable. Last month, Iberia became the latest carrier to roll out an online auction scheme that allows customers to bid for seating upgrades.

"Everyone knows that if no one is sitting in seat 2a when the plane takes off from London to New York, it's a loss for the airline. But everyone in economy wants that seat," explains Ken Harris, the founder and CEO of Plusgrade, the software company that developed the system. "The idea was to help correct that, and do it intelligently."

The setup works differently for each airline, depending on their specifications. Some carriers offer upgrades to First Class as well.

Who is allowed to participate in the bidding process also varies. Often, the selection process is determined by the route and the number of leftover premium seats. On occasion, a customer's frequent flyer status might also come into play.

 

Furthermore, bidding is blind; customers enter how much they're willing to pay, and if that number exceeds other bids (and the airlines keep that information top secret), they win. The cost of an upgrade is extremely variable, depending on the airline, season and route.

Carriers are shy to reveal how much is necessary in securing a winning bid, though it's fair to say the price is less than a full-fare, Business Class ticket.

 

The concept has gained traction with the airline community. A dozen carriers have already introduced upgrade auctions to their websites with the help of Plusgrade and he expects to double that number before the year is out.

Still, one can't help but wonder if the airlines risk eating into their premium revenues.

Jamie Baker, an airline analyst at JP Morgan, says it's a possibility.

 

"If airlines make it too easy to pay for an upgrade, it might dilute what the traveler would initially be willing to pay for that ticket," he notes. "As a result, airlines tend to control the capacity of award seats. There's a certain amount of experimentation in the process that is required."

Harris, however, seems confident the bidding system will not impact premium-seating sales.

"There's no guarantee that simply because you've requested an upgrade, you'll receive it," he says.

"If you want to sit in Business Class and your budget allows you to do so, you should buy that seat. It's the only guarantee you won't be sitting in the back of the plane on your next trip across the ocean."

 

Austrian Airlines has one of the more democratic approaches to the process. Everyone, regardless of frequent flyer status, can bid on an upgrade, assuming any are available on the flight in question.

The airline isn't worried about hurting their profits, because they view the full-fare seats and auction upgrades as two different products, even though passengers who win an upgrade receive the exact same benefits as someone who paid up front, including access to premium lounges and extra baggage allowances.

 

"This product is for a completely different type of group," explains Stephanie Kunath, Austrian's director of revenue management and business development.

"It's not for the business traveler who really wants to fly Business Class and needs a 100% guarantee that he can. It's for the passenger that just wants to treat himself for a little extra, and can live with the uncertainty."

While bidding for seats might not hurt an airline's bottom line, the advent of these auctions will likely eat away at the number of free upgrades awarded passengers.

"It probably will erode the complimentary upgrade process to a certain degree, and airlines do run the risk of offending their elite traveler, who has become accustomed to complimentary upgrades," says Baker.

Harris, however, argues that free bump-ups are the stuff of fantasy.

"Free upgrades are really only given by necessity in operational situations or given to frequent flyers," he says. "The idea that you can simply smile at a ticket agent and get gifted a free upgrade is a romantic notion. It simply doesn't happen."

Solving Traffic Problems - Algorithms that mimic micro organisms

How bacteria could solve China's rush-hour blues
20120814 BBC
Contributor: Christopher Mims

(Copyright: Thinkstock)Software that imitates the collective behaviour of bacteria could help create intelligent traffic lights that manage teeming masses of city traffic.
As the largest city in southern China, with a population of around 13 million, Guangzhou has traffic so bad it's legendary. One way to alleviate it would be to increase the intelligence of traffic lights – converting them from dumb beasts that beat out the same rhythm all day long into dynamic managers of vehicle flow.



And now two Chinese researchers have proved, at least theoretically, that insights borrowed from the lowly bacterium E. coli could markedly increase the throughput of a real-world traffic light in Guangzhou. No one knows what effect this could have if it were applied to an entire city, but it's fitting that a solution from a class of algorithms that seek to mimic the collective behaviour of organisms should be applied to the teeming masses of Guangzhou's trucks and automobiles.



Traffic lights around the world, from Guangzhou to Geneva, are managed by computerised systems housed in a metal cabinet at the side of the road, which regulate the cycle of changes from red to green to red either through fixed time periods, or through sensors in the road that can detect when a car is stationary. Both options work well when traffic is low, less so during rush hour, as any driver will tell you.



The solution Qin Liu and Jianmin Xu have proposed for improving flow during high traffic periods is what's known as a Bacterial Foraging Optimisation (BFO) algorithm. The algorithm varies when and for how long a given light is red or green. So, for example, the algorithm has an almost traffic cop-like sense for which road at an intersection has a higher volume of traffic, and when to strategically deprioritise traffic that may be waiting on a less-used road. Simulations of a Guangzhou intersection showed that BFO-regulated lights reduce the average delay of vehicles by over 28% compared with those regulated by a fixed time cycle.



Behaviour code



It's part of a surprisingly rich history of applying algorithms inspired by nature to traffic light timing – researchers have applied everything from genetic algorithms to models of ant behaviour to the problem. And it's not just traffic lights – BFO can be used on just about any engineering problem, from tuning the behaviour of simple automated control systems, such as those used to regulate the level of water in water towers, to determining the lightest and strongest configuration of structural elements in a building.



BFO was invented in 2002 by Ohio State professor of electrical and computer engineering Kevin Passino. As is the case with many discoveries, Passino wasn't searching for a better mousetrap when he stumbled into one. Instead, he was merely trying to create a faithful simulation of the food-seeking behaviour of E. coli.



Like many bacteria, E. coli swims more or less randomly, but it will spend more time swimming in the direction of food and less time swimming away from it. This incredibly simple behaviour allows the bacterium to move up a chemical gradient, from areas of lower concentration to areas of higher concentration. Once Passino expressed this behaviour in code, he had his eureka moment.



"I realised that it could solve engineering problems, because what it was doing was performing an optimisation," says Passino. Many engineering problems like design, quality control and maintenance of buildings and devices can be expressed as "optimisation problems", in which a single number, known as a performance index, quantifies how good any particular solution is. A good algorithm will find the best possible combination of all the parameters in a system to make it perform as well as possible according to this one measurement of quality.



Follow the swarm



Individually, E. coli aren't very smart. Yet according to Passino, making them more intelligent about their environment doesn't improve the performance of his algorithm. In part, that's because BFO finds the optimal solution to any problem by letting multiple virtual E. coli loose, one after another. After a hundred or so have run the simulation, generally at least one has found a pretty good solution.



Running the algorithm over and over again turns it into a classic case of parallel processing, which is exactly the trick our (relatively slow, at the neuronal level) brains employ to outwit computers on most tasks. It's also the very definition of "swarm intelligence", in which groups of animals operating according to simple rules can solve very tough problems.



Other biomimetic algorithms exist, some of which simulate ants, bees or swarms of insects. Further afield, there are algorithms that simulate genes and natural selection, and even primitive nervous systems. They're all part of a much broader class of solutions that seek the best possible solution to any particular optimisation problem.



Knowing that these solutions can operate on real-world problems doesn't mean they've been incorporated, yet. At this stage, the research by Qin Liu and Jianmin Xu has yet to go beyond the modelling stage. But it's reasonable to expect that as the components of cities become ever more interconnected, centralised traffic systems will incorporate whichever combination of optimisation algorithms – out of the thousands available – will be best at reducing urban China's infamous traffic.

Plan to increase capacity for RER Line A in Paris, France

Current design cannot handle surging ridership

M109 that will serve RER A in 2014

New colors makes the train looks futuristic

Current M184 serving RER A in Auber station

Source: RATP.FR
Increasing transport capacity of the RER line A is a major issue and replacement of existing trains, which carry fewer passengers, the new material MI09 is an essential step in improving transport conditions. The MI09 offer many additional seats (2600 passengers with 948 passengers seats, against 1 684 passengers with 432 seats for MI84). Currently, three types of rolling stock co-exist on the line: the MS61 recently renovated, the MI84, and the two level MI2N. As of December 5, 2011 until 2014, a first tranche of 60 MI09 trainsets will gradually replace the equipment MI84. Four MI09 trainsets (that is to say two trains) run on the line by the end of this year, then two additional trains will be put into service each month.

In case RER A doesn't ring a bell to you.... It is the line that connects to Paris Disneyland, the Val de Europe outlet Malls, Arc du Triumph, and La Defence

PM launches Malaysia's first bus rapid transit project

By RAZAK AHMAD - The Star .com .my

SUBANG JAYA: The Government's efforts to further improve public transportation received another boost with the launch of the country's first bus rapid transit (BRT) project by Prime Minister Datuk Seri Najib Razak Saturday.

The BRT comprises of buses traveling either on a network of dedicated bus lanes or on purpose-built elevated lanes, complementing the My Rapid Transit (MRT)currently under construction in the Klang Valley.

Speaking at the inauguration of the project, Najib said the government and related authorities would continue to find viable solutions to address the Klang Valley's traffic congestion.

“The usage of public transport is still low at 17 percent and our target is to push it up to 40 percent by 2020. This will help us achieve the target and we hope that with this project, the urban transport landscape in this country will be something we can be proud of,” said Najib.

The first BRT service, expected to start in the second quarter of 2013, will allow the 500,000 residents in Bandar Sunway and Subang to connect more easily to existing light-rail transit (LRT) systems which currently does not serve their neighbourhoods.

The BRT-Sunway line, covering over 6km via 7stations, will connect Bandar Sunway and Subang commuters with the Kelana Jaya LRT Extension Line at USJ6 and with the KTMB Setia Jaya station near the Federal highway.

The BRT initiative is part of the Government Transformation Programme (GTP) Urban Public Transport National Key Result Area (NKRA), which aims to encourage higher public transport ridership. The project is being built under a Public-Private Partnership (PPP) between the Government owned Syarikat Prasarana Negara Berhad and Sunway Berhad. Prasarana chairman Tan Sri Ismail said the total cost of the project was still being worked out and that the public would be invited to provide feedback on the proposed alignment of the BRT route once it was ready.

Land Public Transport Commission Tan Sri Syed Hamid Albar said the Sunway line was the first of 12 BRT lines proposed for the Klang Valley.

Air Asia X withdraws from India and Europe

View: This is big news! Barely a year after launching flights into Paris, the darling of Asian low cost carriers - AirAsia has decided to suspend services in its long haul segment. Reasons of higher taxes (airport and regulatory) and fuel cost while deteriorating economic conditions in Europe were reasons given by the CEO.

In the end, I suspect this is due to the MAS-AirAsia partnership, which AirAsia had to step back in order to allow MAS a surviving chance to return to profitability.

Here are my reasons: for the instance of Europe. Although the economic conditions in Europe are depressing consumer demand, but we should not forget the growing affluence of Asian travellers seeking holiday destinations in Europe. There is definitely a demand in this segment. If Air Asia has to back off due to reasons provided by Mr Osman-Rani, then wouldn't the situation be even worse for MAS??

India, which like China is a potential huge market for air travel, Air Asia shouldn't let go their routes. Giving up will be surrendering lucrative business to other carriers.

=====================================================
here's the news:

FOR IMMEDIATE RELEASE

AIRASIA X RE-ALIGNS NETWORK TO FOCUS ON CORE MARKETS
Developments in Global Economy, Soaring Taxes and Higher Jet Fuel Prices leads long haul low-cost carrier to increase focus on core markets

KUALA LUMPUR, 12 January 2012- AirAsia X, the long haul, low fare affiliate of AirAsia, today announced a realignment of its network with a focus on its core markets.
The move will see AirAsia X withdrawing services to India (Mumbai and Delhi) and Europe (Paris, London) from its Kuala Lumpur hub as follows:
· Mumbai- Four weekly services will be suspended with the last flight on 31 January, 2012
· New Delhi- Daily services will be suspended with the last flight on 22 March, 2012. Flights in March will be reduced to four weekly services.
· London- Six weekly services will be suspended with the last flight on 31 March, 2012
· Paris- Four weekly services will be suspended with the last flight on 30 March, 2012

AirAsia X will offer guests who hold bookings after these dates an alternative travel option at no additional cost to mitigate the inconvenience caused as a result of these route withdrawals.
All affected guests will receive an e-mail stating options that are available to them, including a full refund, a reroute to another AirAsia X destination (e.g, in Australia and North Asia), or a move to an alternative carrier where available.

These changes will improve operating cost efficiencies and consolidate its network to focus on markets where it can build a leadership position in 2012.

Azran Osman-Rani, CEO of AirAsia X said “AirAsia X remains focused on maintaining its global leadership position in the low cost, long-haul segment. We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan, and Korea where we have built up stable, profitable routes within an infrastructure that supports low cost services. We intend to open up new routes within these markets, as well as add frequencies on existing routes. Announcements of our future expansion plans will be made soon.”
“The continued high jet fuel prices and the weakening demand for air travel from Europe, brought about by the current economic situation together with exorbitant government taxes, have placed cost pressures on operating long-haul low cost flights between Asia and Europe, compromising our ability to offer the low fares AirAsia X is known for.”

He adds, “The implementation of the Emissions Trading Scheme and the escalating Air Passenger Duty taxes in UK, which will rise yet again in April 2012 has forced our decision to withdraw our services to Europe.”
“As for Delhi and Mumbai, the continued visa restrictions for travel between India and Malaysia, and the increase in airport and handling charges have resulted in a structure not conducive to the low cost model.”
Azran concluded that, “The airline is hopeful in reinstating services to India once these structural issues can be resolved.”
Note:
Further details on AirAsia X’s withdrawal of Europe and India destinations:
Europe (London and Paris)
AirAsia X started flights to London in March 2009. At that time, oil prices were less than US$40/barrel, and have since tripled. With the Arab Spring unrest of 2011 spilling over to the unrests in Syria and Iranian oil embargo this year, oil prices are expected to remain high and crippling the economics of long-haul flights, where fuel represents over 50% of operating cost.

Moreover, the European situation is also compounded by a very weak economy and depressed consumer demand, which has resulted in a reduction in the number of passengers from Europe on the flights over the past several months. Flights to Europe have also been burdened by exorbitant government taxes such as the UK Air Passenger Duty which will be increased to £92 per departing economy passenger and £184 per departing Premium passenger from 1 April 2012. From 1 January 2012, the European Governments have also imposed an additional carbon tax under their Emissions Trading Scheme, which further adds to an already high cost.

The confluence of macro-factors, including high fuel prices, depressed European economy and exorbitant taxes have made it economically impossible to sustain these flights, despite AirAsia X recording load factors of over 80% for its London and Paris flights in 2011. Attempts to increase fares to reflect the higher operating cost recently have shown the price elasticity of travel, with demand falling down adversely.

India (Mumbai and New Delhi)
AirAsia X launched flights to Mumbai and Delhi in 2010. Structural issues in the Indian aviation market have made it difficult to operate economically viable flights. The airport and handling costs in New Delhi and Mumbai are already more expensive than even airports in Australia, and the authorities have just approved a massive 280% increase in airport fees effective April 2012.
The Indian routes have also been under-pressure when the Malaysian Government removed Visa-on-Arrival facilities in August 2010, soon after the routes were launched. This places Malaysia at a significant disadvantage versus Thailand and Singapore who offer Indian tourists convenient Visa-on-Arrival facilities.


About AirAsia and AirAsia X
AirAsia, the leading and largest low-cost carrier in Asia, services the most extensive network with over 165 routes covering destinations in Asia, Australia and Europe. Within 10 years of operations, AirAsia has carried over 130 million guests and grown its fleet from just two aircraft to 107. The airline today is proud to be a truly Asean (Association of Southeast Asian Nations) airline with established operations based in Malaysia, Indonesia and Thailand, servicing a network stretching across all Asean countries, China, India, Bangladesh, Sri Lanka and Australia. This is further complemented by AirAsia X, its low-fare long-haul affiliate carrier that currently flies to destinations in China, India, Europe, Australia, Taiwan, Iran, Korea, Japan, and New Zealand. AirAsia is the regional carrier with the largest destination network and highest flight frequencies. AirAsia was named the 2011 World’s Best Low Cost Airline in the annual World Airline Survey by Skytrax for three consecutive years.
For MEDIA enquiries, please contact:
MALAYSIA
Sherliza Zaharudin
My Mobile No : +6019 282 5887 My Email : sherlizazaharudin@airasia.com
My Office No : +603 8660 4614
Stacy
My Mobile No : +6017 673 7603 My Email : wongkaiwenstacy@airasia.com
My Office No : +603 8660 4650

Logistics seen growing 10%

Source THESTAR Saturday January 7, 2012

KUALA LUMPUR: The Malaysian logistics industry is expected to grow by 10.3% to RM129.93 billion in 2012 against an estimated RM117.8bil last year, on strong government support for logistics-related development and growth fuelled by foreign investments.

Malaysia's strategic location and focus on improving supply chain efficiency were also key growth drivers, said Frost & Sullivan vice-president, transportation & logistics practice, Asia-Pacific and country head for Malaysia, Gopal R.

“Growth of the country's external trade signifies growth of the transportation and logistics industry especially for import and export forwarding, air freight and ocean freight-related businesses,” said Gopal, adding that external trade for Malaysia was expected to increase 5.9% year-on-year to RM1.32 trillion in 2012.

Foreign direct investments surged to RM21.3bil in the first half of 2011 compared with RM12.1bil in the corresponding period in 2010, reflecting the growing confidence in the wake of Government initiatives to stimulate economic growth.

“The introduction of several initiatives such as the Government Transformation Programme and the Economic Transformation Programme provided a conducive business environment for the logistics market,” he said.

Malaysia's major trading partners are Asian countries which are expected to experience stable economic growth.

“However, the share of trade with Japan and Thailand is expected to shrink due to supply chain disruptions and production slowdown following disasters in the respective countries,” Gopal said.

The country's key trading commodities are electrical and electronic products, chemicals, palm oil, machinery, appliances and parts.

The Malaysian logistics industry is forecast to grow at a compounded annual growth rate (CAGR) of 11.6% to reach RM203.71bil in 2016. In terms of volumes, Gopal forecast Malaysia's total cargo volumes to increase 10.1% to 545.13mil tonnes in 2012 compared with 495.29 million tonnes in 2011.

“Sea-freight is the most favoured mode of transport for cargoes in Malaysia, (comprising) more than 90% of total freight traffic in 2011,” he said. Gopal said total cargo volume by sea was expected to grow 10.1% to 538 million tonnes in 2012.

Cargo volume by rail is expected to increase to 6.2 million tonnes in 2012 compared with 5.9 million tonnes in 2011. Gopal predicted cargo volume by air to grow 3.9% to 925,000 tonnes this year buoyed by steady growth in the economy and external trade.

MAS taking longer than expected to unveil turnaround plan

View: Read the last paragraph... It is foolish and naive to think that having Air Asia X give up the routes to London and Paris that MAS will be able to reduce costs. Before asking the partnership to make sacrifices, please get your own fundamentals/matters in order.

By B.K. SIDHU bksidhu@thestar.com.my

PETALING JAYA: Investors and analysts are basically growing tired, having waited for nearly three months now for the new team at Malaysia Airlines (MAS) to announce some definitive execution plans to turn the ailing airline around.
In a report, Maybank Investment Bank said: “The first impression we get is that the new management is busy learning the ropes and dealing with internal matters first before unveiling their grand plan.''
The house expects MAS to report a net loss of RM242mil for the third quarter. It said the fourth quarter, which is traditionally a good period for airlines, would be equally challenging for the national carrier. “It has been more than three months since the announcement of the MAS-AirAsia tie-up. Unfortunately, not much progress has been made in terms of operational matters.''

The research house said: “We have lowered our earnings forecast to adjust for higher fuel prices, lower yields and lower capacity deployment. We are optimistic on the tie-up as it brings forth exciting opportunities with synergy potential in the billions, but execution plans are iffy and very slow.''
“Against this backdrop, we have lowered our earnings forecast and downgraded MAS to a “hold” (from “buy”) with a target price of RM1.55 per share (from RM2.70) pegged to 5.6 times 2012-adjusted enterprise value/earnings before interest, taxes, depreciation and amortisation on par with global peers,'' it said.

Malaysian Airlines aircraft parked on a tarmac at Kuala Lumpur International Airport in Sepang outside Kuala Lumpur.(File picture) - EPA

It estimates that the third-quarter core net loss to be RM242mil after adjusting for FRS139 derivative mark-to-market, which is non-cash. The target is largely based on a 45% year-on-year rise in fuel price.
“We forecast the third quarter and the early part of 2012 to be loss-making after imputing for a higher jet fuel price of US$120 per barrel (from US$110 per barrel) and softer yield environment. MAS' cost structure is not nimble enough to deal with the current market environment. It should be in better shape in 2H12 when it removes most of its old aircraft from the fleet, ” according to the report.

It added that both airlines can save huge sums (RM200mil-RM300mil per year each) by eliminating irrational competition and reducing wastages. There is also potential yield enhancement stemming from better market supply demand relationship.
MAS has many routes in its network that are thin and have no potential to make profits (irregular non-daily flights, using big aircraft for small routes). Most of these routes were legacy in nature and served a different purpose in the yesteryears. Since the core focus was to revert back to profitability, MAS must be decisive and cull these routes immediately, the report said.

The report suggested that there were many areas where MAS and AirAsia could work to save cost.
“We believe both airlines should be smart and combine powers against the common enemy. For example, AirAsia X should stop its flights to Europe (London, Paris) and let MAS fight the battle alone against the Middle Eastern airlines (Emirates, Etihad, Qatar, Gulf) on these routes. Similarly, MAS should also get out from routes where there is no business travel or low yielding routes,'' it said.