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April 2015 Newsletter

Editorial

Fares Fair

For locally based travellers, trying to conduct ones business travel without involving any of the Lufthansa Group of airlines is like driving to Bourgas and not seeing a black car flash past you in the outside lane: impossible. Not that this is being dis-respectful to both Lufthansa and Austrian who are the main brands we see in Bulgaria. Indeed without them the country would be far worse off commercially as business people rely on them to help them attend meetings, conferences and events and generally to help them meet their clients and suppliers on a face to face basis. Whilst Lufthansa and Austrian have remained fairly consistent through the years, things are changing in their stable.

Starting with Austrian, they are re-launching with a subtle new identity; ‘my Austrian’. The airlines first plane to carry the new livery has already taken to the air and the rest of the fleet will soon follow. What travellers will soon become aware of is a change in how their short haul (European) tickets are priced. Instead of the traditional, complicated and illogical myriad of booking classes in every type of travel class, Austrian will have just four tiers of fares starting from the autumn with each tier having a different service feature such as the option for the ticket to be changeable, to allow checked baggage and to pre book seats.

This does not mean that fares, once set will remain the same no matter if one books 6 months or 6 hours in advance, the airlines will still be able to manipulate the new fare structures depending on whatever yield management concepts they presently engage.

Austrians parent airline, Lufthansa has already announced that it too will adopt the same or a similar type of tiered fare structure within its Germanwings brand. They have named the levels as “’Light, Classic, Flex and then Business”.  For those unaware, Germanwings is the Lufthansa short haul brand that operates throughout Europe from most of the German Airports with the exception of from the carriers main hubs of Munich and Frankfurt where the master ‘”Lufthansa’” brand prevails. However since the Germanwings crash in France during March, things have perhaps, not surprisingly, gone quiet from the Lufthansa group and many aspects of how the theory of the new fares will be conveyed in practice have yet to emerge, indeed, also if the Germanwings brand will survive.

This new type of fare structure is not new and airlines such as KLM, BA and Air France have been experimenting with elements of this new structure for some time; to good effect. Some would say that its very much in the mould of Low Cost carrier type fares, which to some extent is true and indeed may also be an admission that the fare paying public prefer such simplicity in the modern era. The reality though is that each airline is now doing their own thing with fares and soon there will not be any standard practice for pricing air fares as people have become familiar with in the past. This is not to say that the KISS approach (keep it simple, stupid) is a bad thing for it is not; the simpler the better, its just that passengers risk getting confused on what the have to book and what they will get when they do book when  they use different airlines. One would think perhaps, that IATA, the body that oversees the industry, would establish updated and consistent fare guidelines for each member airline to adhere to. However IATA dance to the tune of the airlines not the passenger and if the airlines don’t want any standardisation then indeed, there will be no standardisation. For them, the more complicated the better the chance there is reap in more revenue.

 

Mark Thomas

Managing Director

HRG Bulgaria

 

Sardines wanted

The news that Emirates are to roster an A380 superjumbo on their Copenhagen route is hardly earth shattering. What is earth shattering though is that it will be set up to carry 615 passengers (no doubt thin ones). The flight will also be a first for Emirates in that it will have just a business and economy section and no First section.

Not only is this flight the airlines first to Copenhagen, it’s also their first to Scandinavia.

P.S. someone should tell the airline Scandinavians are not that thin.

 

Planes can be hacked

With the rise and continued rise of technology in our lives, it’s no surprise that airplanes are almost totally controlled by technology as opposed to being controlled by humans. With that however comes a threat; as planes now are being forced to provide more and more wi fi for their passengers, the reality is that the planes operating systems share the same routers as passengers use for their own wi fi. The net result being that it would be relatively easy for a techie expert to hack into a planes operating system and take control of the machine.

As yet there are no global standards controlling such technology but the industry is being advised to act sooner than later to prevent such a scenario happening.

Unless of course it’s already happened; think ‘Malaysian’.

 

Heads we win tails you lose

Did you know the average life span of a commercially flown airplane is around 25 years? This figure is down from around 30 years in the late 2000’s.

These figures may come as a surprise because the theory would be that as oil prices decline; airlines are under less pressure to replace old machines with new fuel efficient ones. However  what seems to be occurring is that reduced fuel costs equate to more profits for airlines  which means they buy new planes sooner that then use less fuel than their older counterparts and this then in turn makes then even more profits.

A win win scenario not only for the airline but also for airplane manufacturers Airbus and Boeing.

 

Congestion Charts

Ever wondered which of the world’s great cities are the most congested? Think no more because here are the worlds top (bottom) ten cities that have the worst traffic congestion:-

  1. Istanbul 58%
  2. Mexico City  55%
  3. Rio 51%
  4. Moscow 50%
  5. Salvador 46%
  6. Recife    45%
  7. Saint Petersburg  44%
  8. Bucharest   41%
  9. Warsaw  40%
  10. Los Angeles 29%

 

Another one disappears

Despite the fact that if the airline was based in any other part of the world except the USA, it would have disappeared into oblivion through bankruptcy years ago, but thanks to generous USA state bail outs it was kept alive, the US Airways brand will soon finally disappear after the USA authorities awarded a single operating licence to it and new bedmate American Airlines.

The joint venture will simply be referred to as American Airlines and both airlines will use the ‘American’ call sign.

 

Fireman Sam presses the wrong Button

Celebrations by Virgin to mark its inaugural flight between Atlanta and Manchester turned into a PR disaster after the traditional water cannon salute at Manchester went (badly) wrong.

Instead of the Manchester fire fighters using water in their cannons, someone, obviously suffering from either a bad night out or had lost a contact lens pressed the button marked ‘”foam’’ instead of the one marked “water’.

The net result was the planes jet engines became clogged up and the flight had to be cancelled with the passengers housed overnight in a hotel.

Wonder what Richard thought about that?

 

So who needs pilots?

Following on from the tragic Germanwings disaster, one of the figures connected with the aviation industry shows that in 2014, airlines carried 838.4 million passengers on 8.5 million flights. Many of these flights are heavily influenced by automation. So much so that research on pilots flying a typical Boeing 777 aircraft reveal that they actually only spend 7 minutes per flight actually manually flying the plane.

 

Now in Cuba

Many regular travellers will now have become familiar with the Airbnb property sharing company even if they haven’t used its services yet. The rise and rise of the concept has been nothing short of meteoric. The new kid on the block has been in the news again twice recently for all the right reasons.

The company is firstly about to open its doors in Cuba (of all places) and already 1000 properties have been listed on its site. This particular market is targeted at ‘pre-approved’’ US travellers wishing to visit the embattled island (wasn’t America supposed to be the land of the free?).

Also in Airbnb news, the company has signed an agreement to be the official alternative accommodation supplier to the Rio Olympic Games. The site claims to have 20,000 properties in Rio available for sports enthusiasts.

Airbnb started life in 2012 with 3500 listings and now has 45,000. Who said small is beautiful?

 

Another Irish Scrape

Is it just Ryanair whose planes seem to scrape each other on airport runways or is it the fact that the media prefers to demonise the airline more? The latest scrape of two Ryanair planes occurred at Dublin Airport when a plane bound for Zadar and one for Edinburgh got too close to each other and had a minor collision.

Last year in June at London Stanstead Airport and in October also at Dublin similar situations arose with planes ‘clipping’ each other.

Does this occur at Sofia Airport we wonder except that no-one reports on it?

 

 

Bad losers?

The US government has announced it will conduct a formal review in the argument between the various US Airlines and the Gulf Carriers. The US side claim that the likes of Emirates, Etihad and Qatar have received state subsidies to the tune of 42 billion USD.

Whether this is true or not and it should be noted the Gulf carriers have always denied they get state aid and indeed they do show massive annual profits so one wonders why anyone should think they get state aid!

What the US airlines are forgetting is that in the past decades, US airlines were so badly managed they almost all went into bankruptcy that in any other country would have forced them out of business. Except that is that they combined, received US state aid to the tune of 155 billion USD up to 1999 according to a leaked WikiLeaks publication! Oh yes and this figure is in ‘”historical dollars’” and not a figure adjusted for inflation through the years. If this were to be recalculated some say the subsidies to US carriers would be a trillion USD over the past decades.

The US government wont say how much their national airlines have received since then but the stance taken  by US politicians is that ‘this was in the past and what matters is now!’

One can’t but help think the US are just bad losers.

 

To late to gain

The ski season here in Bulgaria finished almost a month later than usual thanks to the amazingly good snow conditions that blessed the ski resorts this year, in complete contrast to the previous year when the season was as bad as it could possibly be. Even on the 19th April when both Borovets and Bansko closed, there was still enough snow to ski for another month! However since the usual third week in March date when most Tour Operators call time for the season, one thing has been missing from the fantastic ski conditions: skiers.

The problem with the ski season is that people perceive it to finish at the end or March regardless of the snow situation and Tour Operators base their pans on this, not just for Bulgaria but for many other ski resorts too. They cannot add on a few extra planes at the flick of the fingers. Consequently Borovets and Bansko were quiet to put it mildly for the past four weeks and relied almost exclusively on the small domestic market and for the odd Macedonian during Easter. It was also telling that 90% of the hotels, restaurants and tourist facilities in Bansko were closed even at Easter when one might logically expect a rush of tourists regardless of the fantastic weather conditions. One would have thought businesses in the ski resorts would have been basking in the extra revenue; obviously the cost of opening an extra month outweighed the potential extra revenue they could gain. That same notion may also be applicable to the operators of the ski slopes. The continued operation and maintenance of the ski slopes for the extra month may, judging by the lack of people, actually cost the operators money as it is hard to see the revenues from such small numbers covering the high cost of running lifts and the preparation of the slopes.