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October 2014 Newsletter

Editorial

Moving into the regions

Whilst its is true that Europe’s major airports are getting busier and busier, it is also undeniable that regional airports across Europe are not only growing in passenger numbers but also in their attraction to travellers who appreciate their convenience and simplicity. Getting to London Heathrow or Paris CDG Airports for example is not only stressful if you are having to drive on congested roads at peak times, but its also expensive when you start to factor in aspects such as car parking. Also, the total travel time is a measure often used these days by travel bookers if not travellers themselves and the total travel time is increased significantly when you travel to or from major hub airports. Getting from your car which is parked in an expensively priced car park to your car check in desk or returning from arrivals back to your expensively priced car park is time consuming to say the least and can add on thirty minutes to a journey easily. What’s worse, the time spent waiting for your baggage seems also to be getting longer and longer these days with the waiting time at the baggage carousel at London Heathrow being calculated at 29 minutes 29 seconds!  It comes to the point whereby the actual  time in the air is possibly less than the time it takes you to get off the plane, collect your bags and get to you car! It’s certainly less than the time spent waiting to depart after check in and security hassles, plus the aforementioned waits at the arrival end. It’s therefore easy to see why more and more people prefer the simplicity of regional airports both from a reduced stress factor perspective as well as possibly a cost perspective.

It might also be true that some airlines have been smarter than others in spotting this preference or trend towards regional airports. If we look at Germany then we see that national carrier Lufthansa has taken a battering in routes that connect east. Turkish Airline for example fly to fourteen airports across Germany which is double the number of airports served by Lufthansa and sister airline Germanwings combined. Also in Germany, Lufthansa operates to Dubai – one of the main connecting hubs for all points eastwards – from just two airports whilst rival Emirates fly’s to four cities. In the UK, British Airways is often referred to as London Airways as it only serves the London area with international flights whilst European rival KLM operates over 440 flights a week to over 20 regional airports across Britain to its hub in Amsterdam!

The bottom line is that it’s a downward spiral for accountancy inspired decisions by airlines that focus its operations on one or two main national airports. Yes, costs are reduced but at the end of the day if you have no passengers or are losing them to your arrivals then reducing your costs is hardly the answer is it. If you have the passengers you can then make money from them; if you don’t have them then its unlikely you will be surviving very long. The accountants meanwhile will have moved on to their next place of employment.

 

Mark Thomas

Managing Director

HRG Bulgaria

 

Flying scared

Not being a nation that’s resilient to world affairs, Americans seem to be shunning international air travel due to ongoing Ebola issues. A survey by Reuters reported that 50% of all Americans are suspending travel abroad due to fears they may contract the virus. Only 19% of those surveyed took a more pragmatic view and were carrying on with life regardless of the worlds media obsessive focus on Ebola whist other bad news offerings are somewhat scant

 

Weight logic

Knowing the total weight of a plane complete with the passengers and cargo onboard is vital for any pilot. From this he then decides how much fuel to put onboard prior to a journey. Of course passengers all weigh differing amounts and some take luggage with them and others not; which also makes a mockery of baggage charges. How does an airline justify charging a 50kg woman with a suitcase weighing 30 kgs a charge for excess baggage weight when a man on the next seat weighing 90kgs and carrying a bag of 20kgs is not charged anything?

The reality is that’s its all a charade to get more revenue. So how about the other side of the issue this week when Easyjet found that one of its planes was carrying too much weight and asked for 10 passengers to volunteer to be off loaded – for a financial consideration of course! The volunteers duly came forward but came in all shapes and sizes with some carrying hold baggage and others not! How did the airline arrive at the requirement for 10 people as opposed to 11? Did they weigh the people – No! Did they ask beforehand if they had luggage or not – No!

Anyhow despite the mystery 10 passengers were 300 EU better off thanks to their social gesture.

 

Visit Iran – by train

Fancy a train journey with a difference? Then the new Golden Eagle Danube Express may be just for you. The journey will commence in Budapest and travel through Romania, Bulgaria (Veliko Turnovo and Kazanlak) and Turkey before entering Iran. The train will in fact be the first ever European private train to be allowed to enter Iran.

The journey takes 15 days eastwards and 16 days westwards. Prices kick off from 15,000 Euro’s: Ah!

 

Brazil loses off the pitch as well

Not everyone made a financial killing during the recent Football World Cup in Brazil; hotels may have been rubbing their hands in glee but some airlines serving Brazil were not. Even though passengers numbers in total were up some 15% on a yearly basis, missing from the equation were high fare paying business passengers who decreased in number by around 30%. This meant that airlines were actually seeing their total revenue reduce by up to 25%.

 

Big in Beijing

Universal Studios has announced plans to open a 3 billion USD theme park on a site of 300 acres on the outskirts of Beijing.

The park will feature a Universal City Walk entertainment complex with shops, restaurants and entertainment outlets as well as a hotel.

The park will open in 2019 and will compete head to head with the proposed Disney Park in Shanghai.

 

Back track

The German authorities have back tracked on an earlier ruling this week when it initially blocked Etihad’s code share agreement with Air Berlin. Etihad is a part owner of Air Berlin but what is strange is that before the Gulf carrier’s investment in the German carrier, the pair already operated 34 code share deals.

The game likely being played is a political one with a certain degree of lobbying taking place behind the scenes by other threatened airlines in the country. The U turn also coincided with the shock announcement that Lufthansa will stop flying to Abu Dhabi, the home base of Etihad due to low yields i.e. the amount of revenue per seat it earns on the route. This low yield is explained quite simply by the fact that more airlines flying a route means more seats which means more competition which in turn reduces fares!

The traveller wins but Lufthansa loses and this may not be the last route that Lufthansa is “chased’ from.

 

 

Disruption in the air

Israeli airline El Al has always been ahead of the pack when it came to handling security, something they can show other airlines how to handle successfully. What they really are finding to be a thorn in their side however is intimidation by their own passengers.

The ongoing issue revolves around ultra-Orthodox Jewish male passengers who refuse to sit next to females. This has caused some ugly on board scenes with planes being delayed as the orthodox males refuse to sit unless their demands are met. The response from other Israeli’s has been an online petition asking El Al to forbid such disruptive actions and to take the appropriate measures to ensure they stop.

The answer maybe for El Al to set aside rows of seats for such people and charge them accordingly like Low Cost Airlines do; or is that too logical?

 

Vienna competition hots up

Vienna Airport, for long the ‘preferred” connecting airport for locally based travellers has, like many airports in Europe, seen a change of the guard when it comes to which airline operates in and out of it. The Gulf based carriers have shaken up many home carriers across European airports. Austrian Airline is predominantly a European focused operator and the arrival of airlines such as Emirates and Qatar into Vienna simply meant that there is no way that Austrian can contemplate flights to anywhere in the east with the exception of the odd niche route such as Bangkok and Beijing.

To make matters worse, Etihad and Fly Dubai have also announced that they will arrive on the scene, perhaps not to compete with Austrian but rather with the present two incumbent’s. Fly Dubai actually will operate from Vienna’s ‘sister’ airport i.e. Bratislava which is a mere 65kms away. Also, whilst Eithad will be the brand, its flights will be operated by partner Niki which is owned by Air Berlin with in turn is partly owned by Etihad.

The net result is more flights equates to more competition which means cheaper fares.  It also begs the question that if all these carriers feel there is a market, then didn’t Austrian get their strategy wrong?

 

Lufthansa catch the illness

Lufthansa has already suffered eight strikes this year and the ruling this week by a German court that such strikes are not illegal has prompted the airlines unions to state they plan further strikes this year. This will not only go down like a lead balloon with the Lufthansa management but the airline is starting to attract a rather unwelcome reputation.

Travellers are starting to ask if they can rely on the German carrier not to strike when they plan their own travel. Such a comment has, in the past, cynically though accurately aimed at Air France who, despite their excellent service, all too often are suffering from unionized strike action. Like Ebola, the ‘illness” seems to have passed onto their next door neighbours.

This, as Lufthansa begins to suffer from increased competition both from Low Cost carriers across Europe and from the Gulf based carriers for long haul traffic, the last thing it needs at this moment is internal disorder.

Bulgaria also needs Lufthansa as the airline is one of our country’s main communication channels with the outside business world. Inward investment into countries like Bulgaria depends very much on its connectivity with the outside world; not having connectivity hinders economic growth.

 

Almost real

Visitors to the Dubai Mall in Dubai can now try out a real size Emirates A380 superjumbo simulator. The experience also allows you to choose to land or take off from twelve of the busiest airports.

Sounds a great way to pass the time; not that the Dubai Mall is short of entertainment anyway as any recent visitor will testify.