Travel Tech Essentialist #136: Probabilities
People who think not in terms of certainties but in terms of probabilities tend to do much better in forecasting and anticipating what is going to happen in the world than people who think in certainties — Philip Tetlock (University of Pennsylvania professor)
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Download OAG’s new report on The Future of Innovative Airline Operations to discover how airlines and airports use manual tweaks, smart tech and AI advancements to optimize flight prep, air management, and baggage handling. You'll learn about Assaia's de-icing data integration, Schiphol's Deep Turnaround, the impact of Delta's adjustment to aircraft pushback angles, JetBlue's weather forecasting cost savings, or Alaska Airlines' fuel-efficient routing, plus a lot more. Download now.
0. The most clicked link in the previous newsletter
The most clicked link in Travel Tech Essentialist #135 was George Mack’s 19 best examples of high agency.
1. Thinking probabilistically
I love slide 20 of Uber’s first deck. Rather than the usual skyrocketing growth projections, Travis Kalanick decided to show a range of outcomes.
Uber’s $1 billion best-case scenario materialized in 2015, 6 years post-launch. In 2023, Uber generated $37.3 billion, 37 times their best-case scenario. Uber's trajectory shows a hockey stick curve based on actual performance, not just projections. A case of reality being more rare than fiction.
2. Business travel trends 2024
This Globetrender report predicts that a full recovery in business travel spending will be possible by the end of 2024 (compared to pre-pandemic 2019 levels), but the way corporates travel – and manage that travel – is changing. The report highlights seven trends that will define business travel:
AI Personal Assistants will revolutionize self-booked trips
Strategic getaways and nature-based team retreats will soar
Multiple goals amplify the value of business travel
Strict travel rules become less common as focusing on employee experience becomes more important
Corporates get smarter to hit carbon reduction targets
Digitized expenses and the death of expense reports
The global events industry takes off as the desire for connection surges
3. Airline tech and airport tech innovations
OAG’s report, The Future of Innovative Airline Operations, looks at the innovations reshaping operations in the following three areas: ramp terminal operations, flight planning, and baggage management. It includes plenty of metrics, data, impact, and partnership examples. Some insights:
By shaving off 10 minutes from the average turn-time, airplane utilization surges by 8%
By tweaking the angle at which aircraft push away from the gate from 90 degrees to 45 degrees, Delta Airlines saved 1-2 minutes per flight.
A 1% reduction in on-time yearly performance reduces up to 0.6% of an airline’s net promoter score.
The FAA reports that weather conditions account for 75% of flight delays. The airline industry loses $13,000 per flight canceled because of an uncontrollable weather event.
Swiss travel tech startup Assaia uses AI and computer vision for efficient de-icing processes, a frequent cause of delays. Integrating data from different inputs can shorten turnaround times by 12%.
The report examines how airlines and airports partner with AI and ML innovators to optimize flight routing and planning. Two examples:
Alaska Airlines’s partnership with San Francisco-based startup Airspace Intelligence led to mileage and fuel usage reductions for 64% of Alaska’s mainline flights, saving 2.7 minutes per flight and 480,000 gallons of fuel.
JetBlue’s partnership with Tomorrow.io, a leader in AI-driven weather forecasting, has led to monthly savings of $300,000, amounting to an annual reduction in operational costs of $4 million.
The baggage management business is experiencing a surge of innovation spearheaded by startups such as Brock Solutions, Bob.io, AirPortr, BagsID, and Orok.
4. Putting ourselves in our customers’ shoes
Startups don’t fail because they lack a product; they fail because they lack customers — Steve Blank (creator of the customer development method)
Reminder: people don’t buy products. They buy solutions to their problems. Understanding the why is key to understanding how and what to sell. To see two drastically different uses for the same product, watch this video (till the end):
5. Every time you ask users to click, you lose half of them
People are a flighty bunch. Ask them to download an app and 80% will bounce. Ask them to sign up and 90% will hit the back button to avoid putting in their email and password. Ask people who’ve arrived from Google to read an article, to subscribe and get more updates, and 99% will head back to find the next article. — Andrew Chen
Andrew Chen highlights the pitfalls of complex sign-up processes and emphasizes the importance of simplicity in user onboarding. His advice: minimize steps, focus on getting users to the product's core value quickly, and carefully consider when to add or remove friction. The goal is to enhance the user experience without unnecessary barriers, balancing ease of access and maintaining user quality (these elements are inversely proportional). Read + Andrew Chen
6. TravelPerk closes a $104 million Series D-1 at a $1.4 billion valuation
TravelPerk raised $104 million in a Series D funding round led by SoftBank Vision Fund, bringing its total funding to $530 million since launching in 2015. Founder and CEO Avi Meir shared an update on the company's progress in a recent post. Some of the key achievements highlighted:
90% growth in gross profits and 70% in revenue in 2023 by prioritizing profitable unit economics and sustainable growth.
Booked $2 billion in trips in 2023.
Expanded the team to 1,200 employees across the headquarters in Barcelona and global offices (check out TravelPerk’s 144 open positions on the Travel Tech Essentialist Job Board).
Doubling down on their 7-star service as a core value, emphasizing going above and beyond versus “simply” doing their best.
Leveraged AI-driven automation to double the customer care team's productivity without increasing headcount.
7. ‘Slow Travel’ gains speed with luxury train rides
Luxury train travel is living a renaissance, with operators investing heavily in designer interiors, gourmet dining, and unique experiences. As I’ve highlighted in previous newsletters, luxury consumers are moving away from material goods and shifting towards one-of-a-kind experiences, and luxury brands are following them. Luxury conglomerate LVMH bought Belmond in 2018, and since then, it’s been embedding LVMH’s numerous luxury brands to rail experiences (and hotels), such as Dior-branded spas onboard and bubbly-inspired train trips themed around “Veuve Clicquot’s joie de vivre.” Belmond’s Venice-Simplon Orient Express launched one of the world’s most expensive train journeys this year. Its Grand Suites start at about $77,000 per person and include 24-hour butler service, marble en-suite bathrooms, private dining, and “free-flowing champagne.” If this is not enough for you, there’s also an “Around the World by Luxury Train” itinerary with fares starting at $113,600. Read + Penta/Barron’s
8. What a difference four years makes
The graph shows the change in value for several publicly traded travel companies since January 1, 2020 (pre-Covid impact). MakeMyTrip and Booking Holdings have more than doubled in price, while Trivago has lost 81% of its market value. I also added luxury conglomerate LVMH for a broader perspective and Euro Stoxx and NASDAQ to provide a comparative view of the overall market.
9. Less is more in team dynamics
The Ringelmann Effect describes the inverse relationship between the number of people in a group and its productivity. Vibhor Chandel published an interesting twitter thread (here it is unrolled for better readability) to explain why it happens and how to cure it.
In 1913, French professor Max Ringelmann conducted two experiments tugging a rope individually and as a group. The results showed that when individuals pulled the rope together, they used less energy than when they pulled alone.
The Ringleman effect applies across teams, from corporate to sports to academics. Studies on the effect suggest that a team of 7 (plus or minus 2) is most productive. Jeff Bezos’ Pizza rule is a direct response to the Ringelmann Effect:
We try to create teams that are no larger than can be fed by two pizzas. We call that the two-pizza team rule. The smaller the team, the better the collaboration. — Jeff Bezos
Vibhor Chandel offers two key reasons for decreased productivity in larger teams: lack of coordination (confusion over roles and responsibilities can lead to uneven work distribution) and lack of motivation (feeling undervalued leads to reduced effort.
To counter the Ringelmann Effect, strategies like forming small, agile teams, dividing tasks (Chunking), creating deadlines (Urgency), ensuring transparency, and recognizing every member's value (Awareness) can prove to be effective. These approaches encourage accountability, motivation, and a sense of belonging.
10. Netflix and Expedia
Netflix announced Expedia Group will be its first global advertising partner to activate a multi-market campaign. Expedia looks to strengthen its global presence while Netflix showcases its multi-country advertising possibilities to brands. This month, the campaign begins in Japan, with additional markets including the US, Canada, Mexico, UK, France, Germany, Australia, and Brazil. Jon Gieselman, president of Expedia Group, said that this partnership allows them to target relevant audiences with impressive reach. In November 2022, Netflix launched a new ad-supported tier to provide a cheaper option for customers to enjoy the same Netflix platform as traditional subscribers, but with ads shown in the videos. Read + AdWeek
Travel Tech Essentialist Job Board
Explore the 1250 open positions on Travel Tech Essentialist’s curated Job Board and stay ahead of the curve by subscribing to job alerts. Some of the jobs on the board:
TravelPerk, Personal Assistant to CEO (Barcelona)
Expedia, Senior Strategic Initiatives Manager, Trips (Austin, Seattle), $155,000 - $217,000
Airalo, Paid Social Specialist (Remote)
Wakanow, Director of Marketing (Dubai, UAE)
Fora, Growth Strategy Associate (New York), $100,000 - 120,000
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Mauricio Prieto
Nice one