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September 2017 Newsletter

Editorial

Retribution time?

Ryanair have changed the face of air travel in Europe – for better or for worse. What they do is deliver to their passengers exactly” what it says on the box’”. They have brought air travel to those who could not previously afford it – many in Bulgaria would already testify to that –  and they have brought prosperity to regions across Europe by connecting the previously ‘’un-connected’’ with the rest of the outside world. Where they have always fallen short is in their arrogance and attitude of “don’t give a toss”’ towards business ethics within the industry they function in as well as in the service attitude towards their clients. In the past year or so, the penny has sunk in with their shareholders who realized that you can’t antogonise the fare paying public forever and get away with it. The strides they have made in this past year to change the public perception of them should not go unnoticed. Yet almost embedded in their corporate culture is that attitude of ‘we don’t give a toss what the law says and we will do what we want’”. Of course the law is the law and Ryanair will argue that they have always followed the law, or is that they have followed the laws as they have interpreted them? It was almost a game of cat and mouse with the EU lawmakers chasing the tails of Ryanair to ensure the laws of selling and operating within aviation were followed and that they were clearly understood; this invariably meant a fudge whereby Ryanair would get a slap and a warning for misdeeds and the world carried on regardless.

The recent farce surrounding Ryanair and the inadvertent oversight that their pilots might need to take their holidays before the year end (when the new service contracts kick in) emphasizes the fact that scant attention was ever paid to its own administration; the function of business administration perhaps viewed as an unnecessary cost and one that can be stripped out of the equation. Ryanair by its own measure considers itself to be lean and mean yet any international organization who makes such an elementary blooper as forgetting to schedule key employee holidays I.e. the pilot’s holidays, would probably find their whole board of directors removed from their posts and their share rating plunge. Amateurism would be an appropriate word to be used on this occasion. This though is only the start of the current nightmare journey for Ryanair.

The word retribution might be an appropriate choice if we place ourselves in the shoes of both the EU and the UK Civil Aviation Authority.  At the heart of the issue now is not the absurdity of cocking up the pilot’s holidays and being forced to cancel thousands of flights that affect 400,000 travellers; this in itself is a farce, but the real crux is the attitude Ryanair had towards their amateurism. EU laws dictate what an airline is and is not responsible for and what compensation and actions they should take in the event of any cancelled flights.  Ryanair historically have never encouraged (sic) people to claim against them and prospective claimants would describe the barriers artificially placed in their way. Indeed, obtaining such information from Ryanair in the first instance was the first challenge. The airlines communication with affected passengers at best was awful if indeed there was any communication. To communicate means more staff and more staff means expenses.   In the current saga, the lack of adequate organization within the airline meant that passengers had no information and no idea which flights would be cancelled requiring passengers to constantly try check websites for more information.  Even our own staff were affected and despite seeing that the flight had in fact been cancelled, it took an eternity for this to be actually communicated directly to the person affected.

The UK Civil Aviation Authority saw their chance and launched into Ryanair with an enforcement action for ‘” persistently misleading passengers with inaccurate information regarding their rights”. Under EU law 261, airline passengers rights are detailed with regards to what compensation they are entitled to for flights that are cancelled, the time frame this has to be paid by the airline, the methods and time frames by which the airline has to communicate these details to affected passengers and the rights a traveller has to be re-routed by the airline cancelling a flight.

At the heart of the matter was the aforementioned difficulties passenger were having not only claims against Ryanair but also in the communication being fed to them – which means it wasn’t!   More importantly, the CAA also reminded the airline it was obliged to re-route passengers with other airlines. This will have raised the blood pressure of the Ryanair’s executives who   never before have were forced to do this; re-booking to them meant rebooking on their own flights the next time a seat was available and that could be weeks away, if ever. The enforcement went further forcing the airline to pay all necessary expenses of affected passengers such as hotels, meals and transfers to other airports. In the past the airline just laughed at this.

Why suddenly did Ryanair yield to pressure? The answer is probably remarkably simple; they may have had a fine multiple times the amount it will cost them for their ineptness which is estimated to be around 25m GBP, indeed they could have been shut down. From a PR standpoint it will be interesting if Ryanair can turn this around to their favour. Maybe a long promotion of free flights or flights for 1 Euro will bring their credibility back? Maybe they never had any credibility anyway and people use them because they are cheap. What this episode has done without question is bring Ryanair into the same game as other rival airlines in the way they are now expected to service clients, their approach to any affected passenger and one would hope that from now on, like other airlines, they follow the established rules and regulations in the same manner as their peers do. The battle is in establishing a precedent: that precedent has now been set. Ryanair created their perfect storm for their own undoing.

Mark Thomas

Managing Director

HRG Bulgaria

Profits benefit who?

Airlines in Europe are complaining that whilst the prices of their tickets has remained stable for the past 10 years (though please don’t mention the ancillary charges they now hammer people on), the cost of airport taxes has doubled in the same period.

The airlines are putting the blame on this increase firmly on the fact that more and more airports across Europe are privately owned or managed and are thus profit driven as opposed to being a facility that serves the community or region. They argue that the EU needs tighter regulation to stop airports from fleecing travellers.

In other words, the EU needs more EU powers to stop monopolies and to ensure the economies of regions are not strangled by airports.

 

Food for thought

The recent Sofia Fashion Week held at the end of September is another example of a revenue stream that can aid both the local economy and the tourism sector. Everyone has heard of the Paris and London fashion weeks and the thousands of people that attend these events generate millions of Pounds or Euro’s in income for the local economies. Why can’t Sofia and/or Bulgaria, with its rich tradition in the textile industry and garment manufacture, make a serious attempt in expanding its own fashion week and thus benefitting the local economy significantly with the side benefit of creating a positive piece of PR for the country as a whole.

In a similar way, the Sofia Restaurant week which has now operated on three occasions, has proved a massive success and whilst the takers for this have been largely domestic, a week of gastronomy at low prices is also just one of many initiatives that can and will drive people to think of Bulgaria/Sofia when choosing a short weekend break.

 

Local routes binned

The adage of supply creates demand seems to have held firm in the travel sphere as airlines created demand by operating flights between previously un-matched destinations and this seemed particularly true in Bulgaria where Ryanair and Wizz launched flights from Sofia to everywhere and anywhere. Just as fast as some of these routes were launched however we see the harsh reality in the world of airlines kick in as the same airlines ditch numerous routes. Wizz Air from November will bin flights to three Uk destinations namely Bristol, Birmingham and Doncaster/Sheffield whilst Ryanair will, after the winter season, kick into touch flights to Memmingen (Munich), Castellon (Spain), Pisa, Stockholm and Venice.

Clearly this is serious stuff and shows that some airlines throw everything out of the window to ensure shareholder dividends and obviously the yields were not good enough from Sofia so out of the window they go. Allied to this is the announcement that Ryanair will also trim back frequencies to the destinations they will continue to serve from Sofia.

Obviously Sofia is not so boom boom for the airlines but this might also have a knock on effect to the ski season and the blossoming short break weekend tourism industry. The latter in particularly depends on cheap direct transport from numerous destinations. That may also mean that those who have converted their premises to suit Airbnb needs might need to have a hasty rethink.

A Chinese puzzle

Left of centre in the field of local goings on with regards the travel industry is the small matter of the concession for Plovdiv Airport. This past week has seen one of the three potential bidders being thrown out as they couldn’t prove assets of 20m Euros. That might (cynically) be translated to”” can’t show legal assets of 20m Euros!”

That leaves two players left: one a mage Chinese consortium which also includes China’s Hainan Airlines who, aside of having a sizable airline in China also owns 28% of the Hilton group and on the other side, a local effort of the Trakia economic Zone and a local transport company backed by the municipality.  In other words, David v Goliath.

Why should Plovdiv Airport be so sought after? That’s a hard question to detail but the interest might, or might not, be linked to the so called Mega Resort Chinese investors are cobbling together just outside Sofia close to the St, Sophia Golf Course and which would be about an hour’s drive from Plovdiv. So; add together Casinos+Chinese Airline+ Airport for their own planes to land at. A romantic idea? Maybe not.

 

Small the future

Hidden in the travel news way behind Ryanair’s farcical situation and also behind the “’what happens next?’” with regards to the Caribbean Islands who, dependent on tourism, find their livelihood threatened by mother nature, is an altogether boring story about Air Canada launching flights to Ireland. It’s only (us) anoraks that see the story behind the story with regards to this particular snippet of news.

The boring official line is that Air Canada will launch flights from Canada to Shannon and Dublin using Boeing 737 aircraft. These aircraft together with the Airbus A319/320’s are usually the work horses’ airlines use to operate short haul flights from points such as Sofia – Paris or Sofia – London. Only recently has this type of aircraft made its main stream debut on transatlantic flights i.e. operating regular scheduled flights across the pond through Norwegian Air who operate flights from the UK and Ireland to the USA. Norwegian though cram them in and have a simple all economy cabin whereas Air Canada will have a business and economy lay out.

The key point of this though is that by using the new generation of lighter more fuel efficient smaller aircraft, airlines are introducing a game changer. In many areas the operation of these planes will be cheaper than using larger less economical planes and thus making fares cheaper; though by how much is also open to debate. More importantly though by using such planes, it will become viable to fly from secondary airports across Europe direct to the USA and Canada without the need to slap it through the bottlenecks and patience testing major hub airports such as Paris CDG and London Heathrow. Filling an aircraft with 400 people from anywhere other than a major hub airport is a real challenge but getting 220 bottoms on seats is far easier, that’s what the new generation of smaller Boeings and the soon to be introduced longer range A321’s will achieve.

One of the arguments for Sofia not having a transatlantic service is that it doesn’t have the demand to fill a large plane; now that smaller plane scan fulfils the task, the option may be back on the table. Smaller planes with smaller capacity might also help airlines such as Air Serbia who have taken the plunge with services from Belgrade to New York but who find it difficult to keep the passenger numbers up to fill their aircraft. By switching to smaller aircraft types costs are likely to be cut and with a greater chance of seats being filled.

There is also another potential game changer: Low Cost Carriers such as Ryanair, Wizz and EasyJet can introduce these new longer distance planes as an extension of their current fleets e.g. Ryanair operate an all Boeing 737 fleet and if they so decide, they can bring in the new longer range 737’s and use them both for longer short haul flights but also for the much speculated long haul flights. That would indeed shake the cages of BA, Lufthansa and Air France.

 

Check the cars

The word security is well and truly rammed down our throats these days and nowhere more so than (for some strange reason) at airports. It seems like the job of airport staff is to make a passenger   have the worst experience as is possible. Nowhere else can a “’customer’” have so few rights when it comes to service levels than he/she has at an airport. All this, we are told, is to “”-ensure passengers are kept safe””. This is applicable not just in the process of checking in a bag or going through security but also with parking the car and getting into the airport. Hundreds and indeed thousands of people are employed at airports, all busy with making sure we are all safe and nothing amiss is taking place.

Except that is that sometimes airport security can’t see the wood for the trees. For example, a man’s body locked inside a car has recently been discovered at Kansas Airport Car Par.  That in itself is not the big issue, the big issue is that he had been there 8 months and no one had checked despite the cars registration plate being on a wanted list.  So if the Kansas police thought the airport staff would check and the airport thought the police would check: who really is really in charge of security? Surely a vehicle parked somewhere for 8 months would arouse suspicion – wouldn’t it?

On a similar note have you ever gone into the bowels of the Sofia Airport Terminal 1 car park and noted that many cars have several layers of dust on them and clearly have not been moved for several months? Has anyone checked these cars or is it a safe parking zone for the already stolen? Or is it, like Kansas, a mortuary…….. not for bodies but for cars not wanted anymore? The last point was the case in Dubai when the global recession of 2008/2009 forced thousands of ex pats to leave the country in a rush and leave their cars in the airport car park with their keys in the ignition.

Back again

We have banged on before about the ever burgeoning number of new brands that the worlds global hotel chains seem to churn out year after year.  The latest addition sees the Intercontinental Group announcing that its new mid-market brand will be called Avid Hotels and will be pitched slightly below the Holiday Inn Express brand.

Not forgetting of course that Sofia will soon see the opening of a new Intercontinental at the end of November in what is currently the Radisson Blu. Anyone who has been around long enough may recall the now named Marinella Hotel which used to be a Kempinski, also had a brief life as an Intercontinental.

What price to see your favourite team

Earlier this year, United Airlines saw fit to overbook a flight and then forcibly drag an overbooked passenger off the flights, face bloodied et al. Of course they failed to think about mobile phones and no faster had the unlucky passenger been dragged down the aircraft stairs and the whole episode was on Social media. The net result was massive bad PR for United and a whopping out of court settlement. What that also did was galvanize the US aviation system into establishing rules for the compensation of passengers who are overbooked on planes in the USA. This new system paid dividend recently in spectacular fashion.

Delta over booked a flight operating between Atlanta to South Bend, Indiana and immediately started to ask for volunteers to leave the plane in return for a financial compensation. An auction prevailed and the amount rose to an incredible 4000 USD before a person volunteered to leave the plane. Aside of the 4000 USD the passengers were also re-booked onto the next flight which was 9 hours later.

The reason why no-one wished to give up their seats was because they were all (or largely) American Football Fans and if they had given up their seats they would have missed the game they were going to see!

One way to go

Have you noticed that nowadays, it’s almost no difference in cost to book two one way fares as opposed to a return fare? Not so very long ago, a one-way fare was often more expensive than a return; much to the mystery of everyone and any excuse the airlines came out with for such idiosyncrasy had to be taken with a pinch of salt. Then along came the Low Cost Carriers and the whole landscape changed. Their pricing of course is based on” one way plus one way” and as a result, the traditional airlines started to follow suit: as they do with most things.

Thus the point often now is that one can mix and match even a Low Cos option one way and the other way with a traditional airline. In the USA for example just under half the flights booked are now one way fares whereas as recently as a year ago that figure was 29%.

 

Records ahead

As we approach the end of the summer season, the Bulgarian Minister of Tourism has been quick to reveal the state of play as far as tourism figures go thus far. Between January – July this year. the number of visitors to these shores had increased to almost 5 million; an increase year on year of 7%.

This is good news for the tourism sector as it is for the government. Clearly Bulgaria has much to offer and this offering is often viewed as ‘”value for money’’. The country has, in no small way, also been aided by the situation in Turkey which many European holidaymakers have blackballed.

A word of caution though, it’s easier to reach these heights than it is to stay there. Bulgaria must re-invest in its tourism infrastructure and in training. Holidaymakers expectation continue to rise and if any tourist resort, area or country doesn’t evolve with the ebb of flow of tourism traffic, they will suffer sooner rather than later.

A uniform problem

Here’s a new one: US carrier  American Airlines is facing legal action from its flight crews after the new uniforms they were given started to see crew members falling ill with rashes, headaches, fatigue and even respiratory issues.

Of course the airline and the uniform manufacturer have poured cold water over these claims but then again they would wouldn’t they? Their argument is that there is no proof to link the two together; though equally, surely there is no proof that the crew’s problems are not crested by their new attire!

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Tel:+ 359 (2) 943 3011;
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e-mail:mark@bg.hrgworldwide.com