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December 2015 Newsletter

Editorial

At the end of the year we always reflect on some of the news stories that have featured in the years monthly editions. Some news stories are humorous, others far from it. The recent terrorist attacks in Paris underline the fact that for the foreseeable future, terrorism is going to be on our doorstep and on our TV’s. Terrorism is not new though many people will already have forgotten the IRA, ETA and before them, the Red Brigade. What is a fact is that we, in Europe, are resilient and whilst any act of whatever nature can put a temporary blip on our travel habits, they are just that – temporary, we get on with our business and our lives regardless of the obstacles put in front of us.

If we were to ask any regular traveller what has been his/her ‘biggest’ travel gripe this year, we are sure the answer will be Lufthansa. Not that the German airline will be viewed in a positive light because for whatever reason, they seem to have alienated themselves to travellers, the travel trade and even the German public all at the same time. Strike after strike after strike wears down the patience of all. The word strike was once the domain of France but that association seems to have migrated to its next door neighbour in recent times. Lufthansa are an outstanding airline but travellers patience is not infinite and whilst there are alternatives for flight travel, travellers are not duty bound to any one particular carrier. Those causing the mischief at the airline should get taste of reality otherwise they may find themselves without an employer. Thank goodness sister airline Austrian continues to fly the flag for the group and maintains its prestige and importance on the local market.

So as the year ends, no doubt the next year will see the more of same issues that threaten us all both within the workplace and in our daily lives. Not succumbing to these threats is the best route for all to take.

Finally for 2015, the price of oil is now at its lowest point for seven years; so what you ask? Airlines used the price of oil as an excuse to increase their fares, not that there is anything wrong with increasing the price of your product if the cost of production or operation increases due to the market price of fuel. Except that is, airlines pretended this was a ‘”one off’” and was a flexible ‘”tax’’ that varied with the market price of the liquid. Now that oil is as low as it has been since this airline ”fuel tax’’ came into being, will airlines reduce the fuel taxes accordingly and to their levels of seven years ago? Don’t be stupid; this would expose airlines pricing and mean they would cease to make the record profits they now make. So a final request to Santa: can we please have a honest, truthful and ethical airline, please?

From us all at HRG Bulgaria we wish you a Very Merry Christmas and a Happy and Prosperous New Year.

 

Mark Thomas

Managing Director

HRG Bulgaria

 

 

A YEARS REFLECTION

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JANUARY – cynicism

 

January started with news that was starting to become rather familiar; the closing of yet another airline: this time it was Cyprus Airways. Their crime was that their executives weren’t as smart as those at Polish airline LOT and Italian carrier Alitalia; both of whom squirmed out of being closed down under EU rules for much the same reason as Malev and now Cyprus Airways were shut down by the EU. The moral of the story: size matters.

No more Cyprus Airlines

The year started badly for Cyprus as its national airline, Cyprus Airways, was forced to close after the EU ruled its owners i.e. the Cypriot Government, must repay over 65m Euro’s in illegal state aid. The aid had been paid repeatedly between 2007 – 2013 as the airline entered into a series of loss making years. Despite outside investors being sought, none were forthcoming.

The EU commission undertook an in depth investigation into the airline that yielded some highly critical results; namely that the Cyprus Governments restructuring plans were based on totally unrealistic assumptions and they failed to address the route causes of the airline’s difficulties and additionally, equally, they were taking longer to implement changes than EU rules allowed.

No doubt other airlines will step into the breach that has been left by Cyprus Airways, that notwithstanding, this reflects negatively on both the islands tourist and business industries.

Being a rather remote part of Europe, the island relies exclusively on air travel for its connections to the outside world.

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FEBRUARY – we told you so

 

Prophetic or simply knowing how the world works? Our February editorial chose to focus on the ever growing importance of the Russian Tourist for certain markets, Bulgaria included, but also highlighting Turkey. Since Turkey shot down a Russian plane and the world waits for Russian military retaliation, the Russians have served Turkey with an aperitif and banned their tourists from visiting Turkey. The economic fall for Turkey from this has yet to be felt but it’s likely to be huge for the Turkish travel industry.   

The Russians are coming

“The Russians are coming” is an old classic cold war film quote, for many countries in 2015; this very statement is made more in hope than anything else. We are not referring to some Russian speaking enclave stuck into apart of another European country, but rather echoing the thoughts of tourism bosses and those dependent on tourism the world over. To be more precise, many European destinations such as Greece, Bulgaria and even Turkey have become heavily dependent on the Russian market that even a nominal decrease in Russian tourists can be disastrous. To have massive amounts of Russians not traveling can be catastrophic and that’s putting it mildly.

 

MARCH – the shape of things to come

 

If there was ever a case study to plan to how to devalue a once tried and trusted brand, Lufthansa would be top of the pile. Lufthansa is needed badly by business travellers in Bulgaria, the airlines trade unions and management combined seem to know exactly what not to do – so they do it. Their never ending strikes and their general attitude towards the travel industry is shocking. This article was written in March and by this time we were already fed up with their antics, yet the same situation continues to exist even now. Some 14 strikes in around 20 months (apparently) is not the best advertisement for a blue chip brand. At a recent gathering of numerous large agencies (not just our own) from countries across Central and Eastern Europe, the antipathy towards the airline from the agency community was a shock; it was relentless. These are the same people whom Lufthansa rely on to feed them business yet this seemed not to matter to them. On the other side of the fence are the travellers who unfortunately have reached the same point that was once the domain of Air France i.e. they now ask if they can trust Lufthansa not to be on strike and can other alternatives be offered?  The answer to the first part is no and the second part is yes. Thank goodness sister airline Austrian keeps aside of all this and continue to be the life blood for local travellers.

 

Strike Out

 

There are not many things worse than finding your travel plans disrupted by strike action. Usually, notice of strike action is given well in advance of the actual event and sometimes one just knows what will happen before it actually does e.g. Greek Air Traffic control strikes in August.

The Lufthansa/Austrian group is heavily relied on by Sofia based travellers so last year’s debacle where strike after strike affected many peoples travel plans went down like a lead weight. We all hoped that it was a case of ‘’that was last year but this is this year’ with the Lufthansa group strikes, alas not. This past weeks strike by the group not only came with very short notice but it also rolled on unexpectedly day after day, causing not only huge amounts of extra work for the likes of ourselves but also for the travellers who were having to re plan and re plan again their meetings and work schedules.

Lufthansa are being attacked full on by the gulf carriers at the moment and are losing territory with every passing month, they would be wise to end such strikes as they may lose the only friends they still have. Equally their shareholders will also likely not be amused if such a scenario continues.

 

APRIL – its when not if

 

The winter ski season was arguably the best in living memory in Bulgaria; at least for the quantities of snow and for the amount that hung around. However having all this snow is no use if it’s not here at the right time! As Bansko opened this year on the 12th December and there is no snow, we recall that in April there were tons of snow and no people! The problem being that people seem to pre plan their winter weeks regardless of the ski conditions; the ski season finishes at the end of March and so it does, regardless of whether there is snow or not. This may derive from the infrastructure operators saying that they don’t open longer than say early April because there are no more tourists; or it’s the tourists who say we don’t come to ski after the end of March as the infrastructure closes Meanwhile the piles of snow continued!

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.

 

MAY – Good Night

 

It wasn’t as much as good night as ‘’good bye’ as in May we noted the case of the disappearing Sofia ‘5’ Star Hotels. At the end of the day, Sofia needs no more than a few 5 star hotels and the more there are, the lower the rates hotel can charge i.e. supply outstrips demand. It will be interesting to see what happens with the former Kempinski as from an infrastructure and size perspective, there is a lot that can be done with the space above and beyond a standard run of the mill hotel. 

 

Bedding down to the future

The Kempinski sign has finally come down from the hotel perched on the hill off to the right as you head up Cherni Vrah Blvd. The new owners, the Victoria Group who already own several high profile hotels across Bulgaria could not come to an agreement with Kempinski hotel Management Company regarding how the facility should be operated. Depending on whom you believe, the reason can be attributed to money, management style or anything else you wish to mention. This also follows on from the relatively recent withdrawal of the Sheraton name from the hotel located opposite Tzum in Sveta Nedelya Square. If these descriptions sound a little farcical, its done deliberately to emphasise the point that we have come to identify these hotels as ‘The Sheraton’” and ‘”The Kempinski”, referring to them now as ‘The Marinella’ and ‘The Sofia Hotel Balkan’” is likely to draw blank looks from many of the local population.

The merits of ditching any global brand can only be assessed sometime in the future, one assumes that the owners of the respective brands, hotels in this case, have a business plan they think will work in their properties and it may well be true that this business plan falls outside the box of logical thinking.

Branded hotels are usually the first hotels people look for when travelling to a new destination and even when travellers become familiar with a location, they invariably ‘trust” brands they know. The withdrawal of the Kempinski and Sheraton brands means that there are now just two deluxe hotel brands in the capital, namely the Hilton and the Radisson and it will be interesting to see if they benefit from these moves.

The location of the former Sheraton hotel is still a landmark and one wonders if that alone will support its economic viability. The hotel, once seen as being a ‘”grand old dame’” is now more akin to a shopping mall but if, at the end of the day this works for the hotels owners then so be it. It will always be close to government offices so in theory a client base sits on its doorstep.

The former Kempinski building is also prime location and if, as reliable hotel analysts say, the hotel needs some 40m Euro spent in it to bring it up to international five star standard, one wonders if there is a Plan B or even a Plan C?  Plan B could be to ignore the five star hotel market that frankly Sofia is not suited to nor can it support in worthwhile numbers (think room rates in excess of 200 Euro a night in most capital cities) and downgrade itself to a lesser rating but with all the bells and whistles attached. Plan C may be the most interesting however. This could mean altering the structure of the facility and maybe even building onto it new bricks and mortar that would form a mixed use facility.

A mixed use facility could include some or all of; office space, long stay serviced apartments, private apartments and standard hotel rooms. It may even be argued that it could be cheaper to pull the existing building down and build a totally new one that’s ‘”fit for the purpose’’ as opposed to modifying the existing bricks and mortar. This type of facility is now common in Asia and the Middle East and has is also being in Europe by some of the traditional hotel management companies such as the Marriott who find this formula successful in main or capital cities.

 

JUNE – There’s hope

 

Benidorm in Spain is about 30 years ahead of Sunny Beach in its evolution. The Spanish resort has many similar characteristics to Sunny Beach and rest assured, what Sunny Beach is trying to do now, Benidrom was doing it a long time ago (and more). The fact that Benidorm is/was considering to apply for UNESCO World Heritage Status would have many people who have sampled the resort falling off their chairs. Forget the Taj Mahal or the Serengeti National Park, the UNESCO future seems to be in bricks and mortar with lots of concrete thrown in. Unless of course someone was having a laugh? 

Hope for Sunny Beach yet!

Benidorm in Spain, who for anyone that doesn’t know too much about it, is akin to Sunny Beach but a hundred times bigger and brasher than the new kid on the Black Sea, plans to apply for UNESCO World Heritage Status. If successful, the resort will stand alongside other famous Spanish sites such as the Alhambra in Granada and Sagrada Familia in Barcelona.

Tourism chiefs from the resort say its ticks six out of the ten criteria required for such a status with only one criteria actually being needed for actual application. If one thinks about Sunny Beach and all that goes with it and, one would hardly use the quote that Benidorm bosses are using to describe itself which is that the resort is ‘’a masterpiece of human creative genius’”. Really

 

July/August – What ever did happen to……

 

Remember the case of the missing Malaysian Airlines plane? In summer the story was once again dragged onto the front pages of the worlds press with the supposed find of a part of the missing plane. It’s surprising how quiet the story suddenly went after the initial news frenzy. This particular story will no doubt follow the shooting of JF Kennedy into the category of one of life’s great mysteries; though we all now have a better idea of who orchestrated that.

The mystery continues

It finally looks like a part of the mystery surrounding the missing MH370 flight is about to be answered. Just as we go to press, the authorities are expected to announce that a part from the missing plane has been found in Western Indian Ocean on the coast of La Reunion. A suitcase possibly from the plane was also found nearby. That some remains of the plane have been found here are not such a great surprise as oceanographers have, as one of their numerous suggestions, indicated that this is the area where debris may be washed up.

Only a small part of the mystery though looks like being solved and many more arise from it.

Immediately after the plane disappeared, numerous islanders in the Maldives claimed they saw the plane (they described its logos) flying very low over the islands in a south westerly direction at the same time that the plane had gone missing from its original flight path. These people were normal people and not some unreliable drop outs. The witnesses were so many in number that what they had seen had to be believed. Live reporting also evidenced this fact. Just why the authorities across the world choose to ignore this hard fact is indeed “strange”. A rush of alternative chaotic explanations and justifications driven by pings and pongs off satellites has subsequently been proven (and admitted privately) to be absolute nonsense.

It’s almost as if someone wanted the search for the plane to be well away from where it really and obviously was flying towards.

The conspiracy theories will continue for some time yet and all theories are at least as good as the official theories. Just for the record, La Reunion is south west of the Maldives; Diego Garcia is also in the same direction and much closer.

 

September – Five to go to London

 

A country or city knows its ‘’made it’ when Ryanair starts to fly to it. Thus the news that Ryanair will commence flights to Sofia in 2016 can be taken either as a positive or a negative. London is by far the most popular destination that people travel to from Sofia with BA, Bulgaria Air, Wizz and Easyjet already operating direct flights. The winner in this case is likely to be the traveller as more competition usually means cheaper fares and Ryanair always pride themselves on being the cheapest.

Cheaper fares to London?

The good news for local travellers is that Ryanair are coming to town! The bad news for local travellers is that Ryanair are coming to town.

Love them or loathe them, Europe’s largest airline measured by passenger numbers are to commence operations to Sofia from London Stanstead in summer 2016. This is in addition to their successful initial foray with flights to Plovdiv which will also remain.

The potential big loser, Bulgaria Air unless they aim to get immersed in a price war.

 

October – MBA students may have a new case study

 

Ever noticed that business graduates get told about the theories of business life without necessarily ever being exposed to the realities of the true business world? Entrepreneurialship can take different forms and is not restricted simply to start up dot coms. This story about the free lancing airline cabin crew member enabled the (business imagination) to run wild. No-one though seemed to be able to define what tax status the ‘business’ might be bracketed in. Which leads to other ideas such as casino’s in the sky, gourmet flights and off course ‘”mile high club’ flights. The simplest ideas are maybe the best. 

The Mile High Millionaire

Being a member of an airline Cabin Crew, or what used to be referred to as a steward or stewardess, ceased being both a well paid and glamorous job many years ago. Some airlines obviously pay their staff more than others but the fact that an employee has a stable income does not seem to detract some cabin crew from having other part time means to supplement their income.

A female cabin crew attendant for a Middle East Carrier must surely therefore, be on the short list for ”entrepreneur” of the year award after reportedly earning over 700,000 Euro’s by having sex with passengers in the toilets of the aircraft. The airline with whom she was (past tense) employed by has not been named. One is not sure if this is for legal reasons or down to sheer embarrassment. One must also assume she was working in the First or Business Class section of the plane and charged a premium for her services. Otherwise she will have been a very busy person indeed if she was stuck at the back of the plane (economy class).

For anyone who fly’s regularly, having the ability to have sex in a planes toilet would generally require the two participants to be either dwarfs or contortionists!

For those who like to let their entrepreneurial imagination run wild, one wonders if such a revenue generating scheme has previously been thought of by any other traditional or Low Cost Carrier? Strictly speaking the fact those airplanes operate above our heads at 31,000 ft or around 10,000 m, would mean in theory they are not under the legal jurisdiction of any one country and hence would not in fact be breaking the law? Indeed the laws on such professions vary from country to country and equally there appears not to be a common EU law on the subject. If the concept is given to the bean counters of both the Low Cost Carriers and other airlines then no doubt they could come up with a business plan for the notion that would generate them extra income? Equally, from another legal perspective such a service would surely be VAT free as it’s not within the jurisdiction of any one EU country i.e. it’s viewed as an export service as air travel and other air travel services are viewed now.

Just think of the booking options when we book our favourite carriers: hold bags, extra leg room, on board meal, mile high service etc. Mind you, explaining this on your expenses sheet might take some doing.

 

November – Amazing!

 

Maybe the shortest story of the year but non-the-less an amazing one. That an airport has a record of never ever losing a piece of luggage is almost beyond belief. Beyond belief that is for all of us who at sometime or another have waited in vain at the baggage carousel as the last bag is claimed by its grateful owner and you are still looking down at the now dormant machine. The story is not life changing but almost as unbelievable as discovering there are no corrupt politicians.

Top of the Pops

Quite amazing really; Osaka Kansai International Airport in Japan has not lost a single piece of luggage since it opened in 1994.

Obviously the baggage handlers are well paid (sic).