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September 2018 Newsletter

Editorial

The future is online, isn’t it?

We are constantly bombarded with the ‘’it’s online” slogan by everyone from banks to retailers, from government to utility provider. The world does, at times, feel like it’s totally ‘’online’’.  Doing anything online offers both solutions but it also offers us challenges, what it also does without question is to remove the human element in much of the process. This is, of course, the desired effect of any business or service provider who places their offering” online”.  The unspoken bottom line in all this in many cases is that it drives increased profit; often at the expense of service levels.

The travel industry was possibly one of the first to harness the online world, largely to good effect. People could research and book travel themselves where previously they required third-party assistance and whilst the person now enabled to do this can derive great pleasure from doing “the job themselves’ in the same manner decorating one’s own house or fixing the car brings self-fulfillment, it is often tenuous to suggest that booking travel online saves money, in most cases it doesn’t.  Saving a fee that might be paid to a third party (travel agent) can be outweighed by the fact a cheaper hotel or even the same hotel, car or flight could have been booked cheaper or more efficiently if the task was outsourced to people who perform such tasks for a living!  However, it is perhaps not the cost but the aspect of wanting or not wanting human interaction that may well drive the future habits involved with booking travel.

The UK and Germany are possibly two of the leaders in the world of Travel Management (note: Travel Management refers to the booking of business orientated travel as opposed to individual leisure travel) and with the UK, the travel trade literary publications each year produce a “Top 50’” TMC list which shows various information about the actual TMC (Travel Management Company) such as turnover, key business sectors, key contacts and business make up. Whilst scanning the 2018 list, something peculiar was noted in the ‘business make up’ area; this being typically how they book and what they book in regard to TMC services. Those TMC’s ranked between 30 – 50 in size which typically have turnovers of between 11 – 43 m GBP (12 – 48 m Euros) averaged only 17% when it came to how much business generated that was booked online by their clients. Indeed, some of these did zero business online. Between 5 – 15th ranked this figure was 60%, a considerable increase but one needs to look deeper into these figures. Such TMCs may have an individual turnover of say 400 m GBP (450 m Euros) or perhaps that should more accurately state” handle 400m GB or travel business”.  If 60% or 240 m GBP (270 m Euros) of this is handled through online transactions by their clients, then 160m GBP (180 m Euro’s) isn’t! It’s booked offline which therefore means it’s booked using humans.

It may be worth pointing out with the above data that it may well be that the TMC’s are using some of the same travel booking technology that would usually be available to their clients directly (think Booking.com etc.), but the fact that a huge percentage of these TMC’s clients are not and will not use their own online options, is telling. Just whether these percentage figures will increase or decrease as the year’s tick by will be interesting. The result of this may be significantly influenced by the age profile of those managing the travel booking process for businesses. Typically, such influencers will currently be senior or older employees not necessarily au fait with the world of technology and as the millennials take power, this scenario may change. Then again, people may become wiser, cynical or more conservative with their own ideas and the whole thought process of what is wanted by society may turn full circle. If indeed the (booking) circle ever did get as far as some would lead us to believe.

Mark Thomas

Managing Director

HRG Bulgaria

No sitting in Venice

The locals in Venice have been somewhat tetchy for some time now- as we have reported in previous newsletters – the problem: ruddy tourists! In short, the non-stop procession of tourists be they from the numerous cruise ships that stop of at the Italian city or just the general tourist flow, have driven Venetians to the end of their wit. The latest move designed to alienate those brave enough to open their wallets in Venice is the threat to fine tourists for sitting in ‘” undesignated areas, pausing or stopping on bridges or attaching love locks on the numerous bridges”!

The Mayor of Venice qualified the move by saying the aim “is to create a deterrent to people who think they can come to the city of Venice and do what they want”. Presumably, that might also mean ‘” enjoying themselves’”.

All large cruise ships (over 55,000 tonnes) will be banned from docking by 2021 and in April the city installed gates at the end of two bridges to keep tourists’ flows regulated (to stop them).

Always check the paint job first

A newly painted Cathay Pacific plane failed to pass the quality control test when it was spotted that the F had been omitted from Pacific. So it was back to the paint shop before the new plane took to the air.

In fairness to the airline they did also ridicule themselves via social media et al perhaps taking the approach of all publicity is good publicity.

 

The battle to be longest

Australian national carrier Qantas is encouraging airline manufacturers Airbus and Boeing to give them an aircraft that can fly for 20 hours; in effect to allow direct flights between London and Sydney. Earlier this year Qantas launched a 17-hour direct flight between London – Perth.

In October Singapore Airlines will start a Singapore and New York flight which will take up to 18 hours and forty-five minutes to fly the 16,700 km’s, the longest flight currently in operation is the 14,535 km Qatar flight between Doha and Auckland which takes 17.5 hours.

Padding out the schedules

Anyone who has been a regular flyer over a couple of decades will no doubt have noticed that the
‘”flying times’” seem to have got longer despite the modernization of the actual planes . UK’s Which Magazine has noted that 76 out of 125 flights it looked at now had longer flight times than they did in 2006!

As a rough rule of thumb, airlines have tagged on around 20 minutes per flight over the years which therefore gives them more ‘” wiggle room’” to claim on time operations and at the same time potentially avoid having to pay compensation for delayed flights!

There is one thing that airlines are, they are not stupid when it comes to duping the fare paying public.

Don’t forget the rubber gloves

When passing through airport security and you are asked to take off your shoes and coats, you might also want to think about slipping on a pair of gloves!

A new study finds that plastic bins used at security checkpoints are crawling with more germs than one would generally find in the airport toilets!

Also highlighted as being germ ridden were payment terminals, staircase railings, passport checking counters and children’s play areas. The security trays were especially germ ridden, largely because they are handled by so many travellers.

A suggestion for travellers is to use hand sanitizer immediately after passing through security to avoid spreading germs.

 

Bags more trouble for Ryanair

Ryanair’s next legal battle looks like its looming in Italy where the authorities have launched an enquiry into the carrier’s hand luggage policy change. The new rule would allow a small personal bag only being allowed to be brought on board, which must fit under a seat and only ‘fee-paying priority passengers’ would be allowed the usual hand luggage, with anyone else paying a fee for the regular sized hand luggage.

The Italian courts interestingly are suggesting that hand luggage is ‘an essential element of transport’ and so airlines like Ryanair should include the price of regular hand luggage in the cost of a ticket. The antitrust case argues that the Ryanair policy could amount to unfair commercial practice in that it distorts the final price of the ticket and does not allow a true comparison with other airlines prices.

There is though a far deeper scenario around this case; Ryanair earn 1.7 Billion GBP (1.9 billion Euro’s) from add-ons such as checked baggage, that’s one-third of their revenue. A Court ruling anywhere in Europe against them and the questionable pricing policy of how “add-ons “are charged will not just impact Ryanair, it will impact the whole game on how airlines charging for baggage etc. and more importantly, how they present these charges.

Long live free competition

The French Government are revered (sic) for their obsession to protect their home companies even if at times, this defence seems to stretch the legality of the European legal system. One of the bastions of all things French is their railways and that in particular means the state railway operator SNCF.

SNCF, have managed to effectively block out competition on their own domestic railways unlike their counterparts in Italy, Germany and several Eastern European countries where “proper’” competition already exists. A new railway operator based on the typical airline Low-Cost model called Ouigo started operating five years ago in France and offered Low-Cost rail journeys from out of the way stations around Paris to varying cities across France. The difference with this new operator was, it was actually SNCF by another name! Or, to put it in other terms, it was like VW versus Skoda where both are owned by the same people and have many similar components; expect one is cheaper than the other!

All this comes as the EU once again tries to push EU countries to allow domestic competition on its home rail networks. Not that Bulgaria need worry about domestic competition we think.

However, just to ensure any more competition finds into impossible to compete with SNCF in whatever guise they adopt, the newer version i.e  Ouigi is to start operations from more central railway stations in Paris and also conduct their engineering services at these central depots. Why is this interesting? Well, because anyone wishing to enter the market will be forced to conduct maintenance outside Paris and therefore increasing their cost of operations as any new trains will have more downtime and lose time shuttling between maintenance centres and points of departure i.e. an operational nightmare and a barrier to entry.

Let’s be friends

Buried away in the not so interesting categories (for many) of aviation news recently was the press release that EasyJet will soon start to partner Singapore Airlines and its Low-Cost subsidiary “Scoot” in its new “worldwide by EasyJet’ connections service. The two Asian airlines will help connect EasyJet passengers in Milan and Berlin onto Singapore and Scoot flights to Asia. What is more important is that such tickets will be able to be booked via the EasyJet website, in the same manner, one could book say a Lufthansa ticket to the USA and then domestic travel with United who are the Lufthansa partners.

The Worldwide connection programme already includes Norwegian and WestJet at London Gatwick Airport as well as lesser-known airlines from both the business and leisure side of the equation including Thomas Cook, Corsair, La Campagnie and Logan air.

In effect, very subtly EasyJet continues to morph into a “traditional’ airline and away from the stereotype perception of the Low-Cost model. Such a move should not be a surprise as eventually, the big three in Europe of Air France-KLM, BA and Lufthansa will have to start using an EasyJet, Wizz or Ryanair to act as feeder flights for their own long-haul services and this steady evolution by EasyJet is the forerunner of this scenario.

eatstaylovebulgariaThe travel industry – a soft target?

Hardly a week goes by nowadays without reports of yet another cyber-attack of one establishment of another. Last week saw Uk’s Bristol Airport targeted with the downing of the airports flight information board which resulted in staff using chalkboards to announce arrivals and departures!

Whilst this hack on Bristol Airport did not cause any significant financial impact on anyone, the same cannot be said of some of the high profile cases that the travel sector has seen over recent times:

BA announced in August that 380,000 financial transactions had been hacked via its website and mobile app during August with the theft including personal and financial details of customers.  Back in 2015 BA also spotted that members of its Executive Frequent Flyer Club had had their accounts hacked.

Uber admitted that in October 2016 its drivers and clients around the world had been compromised by a hack on its systems. This potentially impacted worldwide the 57 million Uber users and 600,000 drivers.

Intercontinental Hotels Group discovered in March 2017 that between September and December 2016, data from guests staying at the groups 12000 hotels was being stolen which included guests card names and numbers as well as verification codes.

Hyatt Hotels discovered in 2015 that around half of its hotel’s systems had been hacked with guest’s information compromised. In a second hack, 200 of the hotel operators Gold Card members had their private accounts hacked.

Hilton Group also suffered the same problem as rivals Hyatt and IHG in 2014 when their systems were hacked with guest’s card details including expiry dates and verification codes stolen.

The Starwood Group – now part of Marriott – found that 54 of its properties payment systems had been routinely hacked between November 2014 and October 2015! Almost one year elapsing before the discovery was made!

Continuing on the hotel theme, obviously a popular and indeed easy target for the hackers, the Mandarin Oriental Group confirmed security breaches in 10 of its upmarket properties in 2015. Again these breaches went on for up to nine months before someone twigged!

It is clear from this that the travel industry is or at least, has been perceived as a soft target for those wishing to inflict financial damage on a company or individual. In previous years it would certainly seem that there was some degree of naivety around the security of personal data but even now, some of the brands who want us to believe that they are tried, trusted and reliable as well as being safe, are far from it when it comes to data maintenance. At the end of the day, it’s always the customer who suffers financially and the expression “caveat emptor” might need to be re-calibrated to “card user emptor” (there is no Latin for credit card!).

 

Remember whatitsname

Remember Eyjafjallajokull? This was the Icelandic volcano that wreaked havoc across Europe when it erupted in 2010. Apparently its neighbour, the Katla Volcano appears to be preparing itself for an eruption which would dwarf the one in 2010.

The Katla Volcano is overdue an eruption having last done so in 1918 and monitoring of CO2 emissions around Katla indicate a significant and unexplained increase which are similar in nature I to the increase in CO2 gases prior to the recent volcanic eruptions in Hawaii and Alaska.

Let’s hope that if this scenario does occur airlines fly through the confusion and if they don’t, then make sure you get stranded in Bali or the Maldives rather than Birmingham or Malmo.

Reliability questioned

The reliability of TripAdvisor as a source of advice for travellers has, for some time now, started to be questioned. Reports abound of reviewers who have stayed in 3000 hotels during one year and even hotel operator’s employees whose job it was to write fake rec=views on rivals. Even in Bulgaria, we hear of companies who earn an income from writing reviews of whatever nature the client requires. TripAdvisor are also obviously aware of the threat to their own reputation and have asked hotels and travel businesses listed on its website to report if they have been approached by companies offering fake reviews.

In Italy, such a firm was fined 8000 Euro and its owner sent to prison for nine months for running a fake review business; the first criminal prosecution of its kind. TripAdvisor also claims to have stopped more than 60 other fake review companies since 2015. TripAdvisor now adds a red badge on its listings where it has noticed suspicious activity.

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e-mail:mark@bg.hrgworldwide.com