RE:RE:RE:RE:RE:RE:How to quickly reduce your market cap? - Start an airline Ya that’s a good point. Something to ponder:
I think Expedia/trip advisor and the other travel sites are the wrong comparison though because they are completely different businesses (not that you made that direct comparison, but it has been done in this board before). Those are more of a retail travel agent who have a store front on google’s first page (I know the director of SEO of a Top travel site and discuss the business model frequently). So it goes:
1). Customer google search flight to mexico
2). Expedia first page
3) customer google click on Expedia
4) conversion on Expedia site to hotel/car/flight etc
5) Expedia gets $ kickback from hotel/car/flight company
I would actually compare this business model closer to something like Costco. Now don’t get confused, I’m not saying they are as good as Costco or exactly the same, but the business model is closer to Costco than Expedia:
1) drive customers to become a member somehow (some kind of marketing system or word of mouth)
2) buy stuff from partners to collect loyalty points/get good deals (Costco does cashback)
3) profits or affiliate kickbacks from selling products (Aimia gets cash from sellin points which adds a step)
4) expand offerings using data to appease membership base and increase loyalty
Not an exact match in business model but closer. The fact that there is float and points in Aimia makes it slightly different, but the steps to revenue is similar. Costco you buy your membership with 100 bucks and with Aimia you pay with your loyalty.
It can be confusing since Expedia and Aimia both sell travel and are online, but other than that the business models are completely different. CAA has some features that are the same, but different. I admit it’s really difficult to deconstruct from first principles and place an importance on the news that comes out, but if you lay out the business model on paper, you can see what the new CEO is trying to do, it’s essentially the Costco model. But hey we could be wrong and he is actually trying to start an Expedia or an airline to eventually ditch the points business.
You can see the future revenue picture is starting to be less foggy. But still requires some guess work and unbiased analysis.