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December 2016 Newsletter

Editorial

This is the month when we look back at what was hitting our travel radar during 2016 and we certainly weren’t short of news stories; the majority of them sadly were in the news for the wrong reasons. Anyhow here is a selection to remind us of the year that just past in the travel world.

We would also like to take this opportunity to be politically incorrect and wish you all a Very Merry Christmas and a Happy and Prosperous New Year.

 

Managing Director

HRG Bulgaria

January

Fuel costs were a fantastic opportunity for the airlines to pretend its wasn’t their fault they had to raise prices but in the interests of transparency they would show the extra costs for fuel as a ‘”tax’. What the MBA graduates forgot is that fuel costs can go down as well as up:-

What Transparency?

The airline community were quick to seize the excuse of ‘transparency’ as an argument to justify imposing fuel surcharges when they needed to increase revenue but didn’t want to be seen to be increasing their fares. The same argument was used to justify any other fees from charges for carrying bags to even choosing a seat number. At the same time, it’s strange then that when we buy a washing machine or a bag of potatoes the seller doesn’t break down the cost showing how much the fuel cost is for the truck to get the products to market. If the seller wants to make more profit then up goes the price of the washing machine or the potatoes. Of course airlines want to blind us with science; all in the name of transparency. So then, the airlines now have a major problem which, to all intents and purposes, has meant that the word ‘transparency’ has been put on the shelf – at least for the time being. That problem is the record low price of oil!

The airlines cried foul when the price of oil was around 150 USD per barrel but now it’s less than 30 USD a barrel, have the airlines – in the interest of transparency – reduced their fuel surcharges? Nope.

No-one begrudges any business, this includes an airline, to make a healthy profit, but why do they have to trick travellers into believing black is white and white is black. Just increase the fares; the cost of fuel is an integral part of the ticket cost of any travel just as it is with a bus or rail ticket.

So a New Year message to the airlines – “please try be honest….and transparent, just for once in your life”.

 

 

February

The story behind the February editorial would ironically come into play time and time again through the year and also had a local impact with the collapse of a local tour operator who had built their business on selling holidays to the places people no longer viewed as safe:-

A safe choice?

The ‘safe choices’ for summer holiday destinations as perceived by holidaymakers seems to be getting smaller and smaller. Once popular destinations such as Tunisia, Egypt and Morocco are very much now deemed to be ‘’out of favour’’ for many due to safety concerns. It now also looks like Turkey is being bracketed by people as ‘a place to avoid’”. Russians; who are the second largest source market for Turkey after Germany, are being discouraged from travelling to Turkey by their home government as the two wage a proxy conflict in Syria. Meanwhile European tour giant TUI is reporting that its sales for Turkey are also 40% down on what they should be and are quickly adding more capacity to destination such as Spain and the Canaries as a replacement.

Just whether Turkey can endure such a withdrawal of support from visitors is a hard call at the moment as tourism has grown massively in Turkey over the past two decades and contributes 10.6% (2015) to the countries GDP as well as employing hundreds of thousands of people. Turkey’s investment in tourism is looking anything but “safe”’ at the moment and that word ‘’safe’” may well be the key word that remains at the forefront of peoples minds for many years to come. This does not auger well for Turkey in the short and medium term. However it might, at the same time, also be a positive move for Bulgaria as potential tourists look for other destinations that are perceived to offer value of money holidays, something Bulgaria can accommodate. The flip side of this scenario though could also be that Bulgaria also gets partially tarnished with the same brush as Turkey if it starts to get highlighted in the media as a migrant transit route.

The bottom line of all this for both Turkey and Bulgaria is clearly that no matter what the tourism industry does in terms of service offerings, world and political events will ultimately dictate the success or otherwise of the industry.

 

March

This story had a very much tongue in cheek approach. it also highlighted the fact that the local press would print absolute rubbish or indeed anything as long as it was paid for. Most of these stories are laughable now but what to make of the journalists who write the articles?:-

Eight years on

Whilst taking the environmentally friendly route and re-cycling some old paper recently I came across a backdated copy of the local Dnevnik news. To say it makes amusing reading would be the understatement of the year…and its only March.

The date is 3rd December 2008 and the article suggests that many of the 4.8 billion Leva worth of projects look like they may be put on hold due to the Global economic recession. About 2 billion Leva was due to be spent on about two dozen (that’s 24 by the way…!)  golf courses around Sofia and on the Black Sea. The article amuses further with news that RilaSport had still not frozen its ski resort plans in Panichishte – Ezerata-Kabul which would be ready in 2016 and would deliver 27 ski runs covering 80 kmswhilst the construction of the ski zone by a local tycoon in Martinovi Baraki, Boricho and Iskrovetemight be slowed down but not stopped as a result if the crises. Finally the Super Borovets project due for completion is 2012 might also be put on hold.

Many readers new to Bulgaria may not see the funny side of all these projects and certainly at the time, people were indeed gullible to actually believe such projects would ever start; indeed they didn’t. Not that this prevented many people to part with their money in search of fools gold.

Of the 24 Golf Courses in Sofia and the Black Sea there are 5 (excellent ones) and the ski resorts were pure scams: even Super Borovets. One wonders if today’s worldlier wise journalists would be quite as stupid as they were some 10 years ago or whether the hunt for a news story, no matter how true it was, was all that was required to fill the news sheets? Unless of course the cynical side in us suggests that such reports in reputable media outlets were rewarded handsomely.

 

April

The Germans are not noted for making monumental cock ups; especially in engineering projects but the facts behind the cock up of all cock ups otherwise known as Berlins new state of the art international airport still has many people scratching their heads and yet the real reason for its continued closure has never been made public:-

Transparency only when required

We are force fed the virtues of transparency by the good and the great of the commercial world, transparency though is something fictional that only the deluded and those who seek some sort of a true utopia actually believe in. For the rest, transparency is something additional on the corporate speak list that homage or lip service merely be paid to it; you don’t actually have to believe in it in the real world. Take the new – perhaps the word ‘new’ is in-appropriate but it will suffice for now – yet to be opened airport in Berlin that will be the new flagship gateway to the re-instated German capital: or it should be except that it’s still closed. Not only is it still closed, it seems destined never to open! The facility was due to be functional by 2010 and advocates of German engineering and organization sensed little fear that this would not actually happen. When initially the opening was delayed due to (quote) ‘”safety concerns”, the world at large thought that this was due maybe to a lack of fire extinguishers or badly fitted fire doors! No, the real reason, six years later and still no opening has still not officially been announced though the whisper is that the design itself of the airport terminal is the issue. This most certainly is not ‘’German’! Now we are being told that despite the PR blurb that the facility may (note the word ”may’)  open in the third quarter of 2017, the real truth is that it wont be before 2019 when its doors may finally be ready to open. Funnily enough, despite the billions it cost to build the new airport, clever people are suggesting that if in 2010 or even shortly afterwards, the Germans would have thrown their hands in the air and admitted they had made a mistake and dismantled the new but unused facility and re-built a new one that actually works; it would have been cheaper and faster and would now be operable, So much for transparency.

May

Just how much spending money do you need for a trip? Someone should ask this person if he has ever heard of a bank transfer?

How much cash?

Theft on board planes is not new but a recent case on an Emirates flight heading to Hong Kong from Dubai caught the eye. A Turkish businessman reportedly had around 200,000 Euro in cash (!!!!!!) as well as valuables stolen from his hand luggage which was placed in an overhead compartment.

The first question has to be ‘”what about currency regulations” and the second has to be whether you believe the story or not!

If true the theft is claimed to be the most costly in years.

There is no mention if the passenger was in Economy class or not.

June

The UK’s decision that belonging to Europe was not for them is a story that will run and run until we have all turned out the lights. Whether this will impact us here in Bulgaria no-one knows but what is also intriguing is the continued belief by many Bulgarian’s who profess to be intellectual is that the Brexit wont actually happen. They obviously still have little experience of the word democracy:-

Brexit

It would be interesting to know who actually conjured up the word ‘Brexit’ and therefore inadvertently entered themselves into the history books. The strange thing is that whilst everyone now knows what the word means, no-one actually knows what ‘”it will mean!”. If that statement earns the wry of language purists,  then no doubt so does the word ‘Brexit”.  Like the Y2K scam where lots of people made a lot of money out of re-selling fresh air and re-packaging common sense, one would almost sense the same consultants are now thinking how to make the threat of Brexit into a revenue generating business opportunity where once again they can re-package common sense and charge an even bigger fee for selling their knowledge and expertise; which actually translates to zero knowledge and zero expertise. If any knowledge or expertise was in plentiful supply, the barer of such a fruit would have stuck their head outside the M25, which for those readers not knowing the UK too well, is the motorway the runs around London and so cutting it off from the real world that is the UK. They might also have discovered that Manchester Man and Lincoln Lady think differently to Marylebone Man and London Lady.

The bottom line of the UK leaving (unless there is some sort of coup) the European Union is unfathomable and yet the TV, Radio and other media outlets are talking as if it’s the end of the world as we know it. The UK has traded with the rest of the world for thousands of years and will continue to do so in the future. All sorts of yes, buts and if’s are put forward why this is wrong but at the end of the day we all live( most of us anyway) in a democracy and having the freedom to vote does not always give the results that external third parties wish for. Perhaps that is why the UK is an advanced democracy and perhaps that is why the electorate saw in the EU what others do not; rightly or wrongly. As for how this will affect Bulgaria no-one knows, even if they try to make you believe otherwise. It may well be the case that the UK views Bulgaria more favourablythan other EU countries and becomes an even bigger friend! It may be that without the constraints of EU red tape, more and more business is facilitated between the two countries. As we say, no one knows but as we have done in Bulgaria for a couple of decades and longer now; lets get on with it.

July/August

The relationship between America and Cuba looks like it is heading in the right direction after so many years of being a frosty one. Just why America thought Cuba was still a threat to it is beyond most people’s logic:-

Cuban First

The first commercial flight for over 50 years between Cuba and the USA will be operated by JetBlue on the 31st August.

The flight will operate from Fort Lauderdale to Santa Clara Abel Santamaria Airport. Other US carriers are slated to commence their own Cuban fights in September.

September

Just to prove that the business text books need to be re-written when it comes to explaining how you make a profit from a product, the point below – together with the fuel surcharge scam – shows how airlines focus their business models:-

The extras keep mounting

The world’s major airlines generated a staggering 40.5 billion USD in revenue from the sale of ‘ancillaries’ in 2015, a figure which is 8.7% of the total sales revenue. The USA’s United Airlines topped the list with 6,2 billion USD followed by American Airlines with 4.7 billion USD and Delta with 3.7 billion USD. In Europe the leader was Air France/KLM with 2.1 billion USD.

An ‘”ancillary’ sale is defined as ‘revenue beyond the sale of tickets that is generated by direct sales to passengers or indirectly as a part of the travel experience’. In normal speak this means the revenue from things like seat selection, in flightmeals and priority boarding.

October

It was big and it stopped everything at Sofia Airport: literally. The Lufthansa crew were equally enthralled by the MiG jets in this once in a lifetime occasion:-

Aviation History in Bulgaria

Aviation history was made on Sunday 16th October when the first ever Airbus A380 landed in Sofia in what turned out to be a win win situation for everyone involved in the PR event. The idea to bring the world’s largest passenger aircraft to Bulgaria apparently stemmed as an idea by a Bulgarian pilot employed by Lufthansa who also just happens to be the only Bulgarian pilot in the world qualified to fly the A380. As the months ticked by the concept became reality and with the help of the local Lufthansa office a PR opportunity was seized by the collar.

It wasn’t however just a select few who, specially invited by Lufthansa, flew back into Sofia on the Sunday morning that found themselves a part of a memorable day, the Bulgarian Air Force also played a pivotal role. Three MiG fighter aircraft joined in the fun as the passenger plane entered Bulgarian air space and conducted a ‘”visual exercise’” with the A380. The exercise replicated the procedures EU countries have now to initiate if radio contact fails with an aircraft or in the event of a hijacking; the military planes have to fly adjacent to the passenger plane with their wings almost touching each other. This allows the fighter pilots to see into the passenger cockpit and make a visual report to the ground. For this, the pilots not only need good eyesight but nerves of steel. Such exercises are usually difficult to realise with real life passenger planes and hence Lufthansa invited the military along to share their day and the MiG’sduly obliged before escorting the A380 to Sofia Airport and waved goodbye with a fly past.

As for the A 380 itself, this particular machine is the fourth of the airlines fourteen ‘”big birds’’ and came into operation in 2010. It usually carries 508 passengers. The plane returned later in the day back to Hamburg where it was to undergo a regular service complete with the Senior Lufthansa executives who came in with the flight that same morning.

PR events like that do have sentiment and judging by the plane spotters who braved the weather on the perimeter of Sofia Airport, even they appreciated this moment in history. What was also amusing was the number of airport employees who lined the runway and who must all have taken a lunch break at the same time just as the plane was due to land; 1.05pm was not the time to be waiting for the baggage handlers to get your bags back to you if you had just arrived on another flight.

November

Allied to the growing understanding of how airlines make a profit from a potential loss making service, peoples intelligence should not be questioned:-

An affront to the intelligence

British Airways may be assuming that fare paying passengers are ambivalent to the odd new fee they choose to add to their fares, but such an assumption might also be an affront to their passenger’s intelligence. From December 14th customers paying via credit card will be charged 1% of the total cost of the ticket up to a maximum of 20 GBP. The airline stated they ‘’don’t make a profit from these charges’.

It should be noted, as in fact it has, that since March 2016, interchange regulations came into force that the fees merchants have to pay to credit card networks of 0.3%. Thus by charging 1%, the airline will make a profit of 0.7% on all of its tickets that are less than 7000 Euro.

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e-mail:mark@bg.hrgworldwide.com