March 2020 Newsletter
It doesn’t require us to make any more statements about where the world is at currently nor where it is going. Even between typing this and someone reading it, the world could be in a totally different place. Business nerds always state that the business world hates unpredictability, preferring the sanctity of normality when deciding with whom to invest. One assumes that now though, the thinking will most certainly have to be out of the box. That is especially true of banks, generally, the biggest barrier to real business needs, but equally by those at the sharp end and that will include the travel industry.
What is present in the outside world are facts and figures if people can bother themselves with looking for them. For example: if we take the USA – up to 75,000 people die each year from flu related issues, last year this figure was 35,000; between October – February this past winter some 370,000 people required medical attention with flu symptoms; 61,000 people died of flu related issues in winter 2017-18 and 34,000 died in winter 2018 – 2019.
In the UK, 10,000 die each year due to flu related symptoms ; in 2017, 34,000 “excess”’ deaths were recorded due to a flu strain that affected the elderly; in early December 2019 a 8 fold spike in flu cases requiring hospital attention had already been recorded by the British National Health Service. Officially, globally some 500,000 die each year due to flu related illnesses.
The current virus, we are told, has the power to be deadly for us all, yet from the figures available it would appear that the issue has been with us a long time, through neglect or perhaps through the fact that tracking influenza is not a fashionable subject for medical experts, the problem crept up on us when it could have been snipped in the bud some time ago, maybe years ago. Whatever is going on at the moment will never fully be known by the public at large, just like many other great mysteries of our time. To blame all this on bat droppings from just a few weeks ago would indicate you are both a member of the flat earth society and a supporter of the “Elvis is alive” theory. The source of the shutting down of the world may be something else in Wuhan, then again, the route cause may be totally left field as somewhat coincidentally, pandemics also coincide with advances in air wave technology. This though gives flavour to the conspiracy theory and this is especially a popular means to pass the time of day on in this part of the world.
As it stands, what we have with us appears to be no worse than what has gone before. Governments though are acting like scalded cats; hence there has to be reason for this behaviour. Very shortly the planet earth will shut down, on the ground and in the air. Whilst we may sound like fully paid up members of the Elvis is alive fan club; one can’t help but think outside the box and ask: why? What we are not being told is the real story, not what we are told.
Airlines above the law
The airline fraternity is angry with the EU, though thank goodness the EU has maintained its stance on being the defender of the consumer. In short, the airlines want to keep passenger’s money for flights that they have either had to cancel or government restrictions means they can’t operate. As we type, there are virtually no commercial flights taking place around Europe; what is operating is miniscule and no doubt by the end of March they will have stopped as the world is “’re-set”. There is no point in listing which airline and which routes may still be operating as this is fruitless. In any case people aren’t travelling; period. This of course leaves a massive hole in the cash flow of airlines who of course are the first in the queue to knock at their government’s door. Not forgetting of course that EU laws forbid state support of any airlines – sort of, or when it suits.
Anyhow back to the airlines, obviously they are desperately short of cash so many decided to re interpret/ignore EU rules on their obligations towards passengers. What many sought to do and indeed still try to do so, is to restrict refunds for flights and instead offer vouchers for use at a future date; which on the quiet, have a use by date on them which is not too far in the future. The airlines need this “cheap” cash for their cash-flow, borrowing money from a bank is too expensive. The airlines seem to consider this as being in their rights and don’t for one moment think this is unethical. So the scenario is, an individual, a small business operator or even a bit multi-national, can’t get his money back now at the time he really needs it because the airline thinks that they are higher in the pecking order to keep themselves alive than the individual, small business operator or multi-national. Additionally, if the airlines can’t keep these funds, how will they pay shareholder dividends they promised? sic
We should point out that not all airlines have taken this stance but even those who have refrained from such action, would be the first to cheer if this were ever allowed legally by the EU. In essence, all passengers have the right to a refund if their flight is cancelled, it is another matter of how fast the airline, IATA or whoever collects the money on the airline’s behalf, processes the refund and gets it back to its owners.
For the airlines desperate to get some cash, may we suggest the speak to a) the banks like everyone else, b) existing shareholders or c) potential investors who understand the airline business model who must realise you have to give before you can take.
Of course, if you are an American airline and part of the system that punishes and even tries to ban organisations involved in travel that are seen or perceived to benefit from state handouts; your government is giving you 25 billion USD in loans and 25 billion USD in grants (state handouts). We assume the noises from the USA chastising the Gulf carriers will now be buried once and for all.
Use it or lose it
One of the lesser known facts of airline operations in Europe is the fact that airlines have to use the landing slots they are allocated at airports or lose them! Simple as that. The threshold over a given period is to use the allocated slots 80% of the time which meant that as the Coronavirus kicked in, airlines were operating ghost flights/empty flights simply to maintain their rights to landing slots.
Over the years, selling slots has become a very lucrative revenue generation tool as demand for take-off and landing slots in some popular airports, has sky rocketed. Oman Air for example, paid 75 m USD to Air France/KLM for a pair of landing slots at London’s Heathrow Airport.
Today though the landscape is slightly different and this has forced the EU to temporarily scarp the “use them or lose them”” rule when it comes to landing slots.
The temporary rule will remain in effect until October which then might lead to an enforced return to the skies for many airline’s; unless that is the lobbying of airlines enables an extension. If October is kept in place, it could provide just the stimulus for many economies to kick start themselves, though October seems a long long time away.
Will summer happen
It’s April very soon and that’s usually when the first hardy tourists appear on the Bulgarian Black Sea. These early arrivals tend to be the elderly from across Europe, getting in some cheap relaxation before the throngs arrive in July and August. This year though, April will not happen as far as tourism is concerned and one wonders if indeed May will, or even June and we dare not breathe the months of July and August.
Tourism brings in some 3.1 billion Euro to the country or roughly 11.7% of the nation’s GDP via some 9.3 million tourists (2019 figures): this year, these figures will dwindle frighteningly, but to what?
It’s hard to forecast anything as we sit here at the end of March. A lot has happened in the past weeks and most will hope that the same but in a positive manner will happen the next month or two, if not the word catastrophic would not be strong enough for what might be left behind.
Hundreds of thousands of local people rely on the Black Sea summer trade to make a living: often for the entire year. Hotels, shops and restaurants have around 15 “real” weeks of business during summer, at the moment they will be lucky to be able to open for 12 of them at best and this number is shrinking as each week goes by. That in itself may not sound too bad but the other side of the equation sees the ability to travel for potential tourists dictated by their own governmental rules and the ability and desire for airlines and tour operators to “’re-set’’ and start working again. The possibility exists whereby the Bulgarian Government gives the green light for hotels to re-open but there are no takers! No tourists as they are scared to travel, simply don’t have the finance to travel after X months without pay, or there are no planes as the airlines or tour operators have gone bankrupt or are lacking the will to punt on tourists showing up.
it promises to be both nerve racking and stressful for everyone involved in travel and tourism over the next weeks. At present the government is doing its best to keep business afloat as when this saga ends, it needs business to be in place to lead the recovery. Let’s hope the majority don’t throw in the towel as otherwise there will be a lot of fire sales of tourism assets across the country.
The first to go
UK based Flybe is the first airline to go “under”, either directly or indirectly due to the Coronavirus outbreak. They will certainly not be the last.
In truth, the airline which acts as a vital feeder for some of the UK’s outposts, had been fighting an uphill battle for survival for some time and the Coronvirus was probably simply the straw that broke the camel’s back.
The airline had only been acquired a year ago by a consortium that included Virgin Atlantic, the Stobart Group and Cyrus Capital, who invested around 100m GBP to try salvage the airline but even that was proving not to be enough as the current year started.
What’s the best way to become a millionaire in the airline industry? Start with a billion.
Will it ever open?
Last month we wrote to say that finally, the new Berlin Brandenburg Airport will open in October 2020 and trials were about to start at the facility which had become the elephant in the corner for German engineering. With the current crises in the world and with airlines the size of Lufthansa effectively moth balling some 90% of its fleet (as we write), one wonders if this now will be the right time to open the airport?
Certainly, the call for 20,000 volunteers to help with the testing will go out of the window, so once again, the opening may be delayed.
Just for the record, the airport was due to open in 2011.
Cheap rail to gain traction
When the current malaise finishes and Europe gets back to normal, assuming that is possible, one thing we may suddenly see is a rush of Low Cost Trains.
The concept of Low Cost Trains has been rather slow to catch on, that’s largely because European member States control either their domestic rail operator or the rail infrastructure. Rail, unlike aviation, has been something the EU could not seem to regulate nor control with each country or rail operator acting in almost complete isolation from its European rivals.
In France, rail company Ouigo has/was gaining traction with its version of Low Cost rail travel as a rival to SNCF, though as one would expect in centrally planned economies, SNCF owns Ouigo, so perhaps the start-up won’t be allowed to be too successful. German Low Cost Train Company FlixTrain is also trying to muscle in with an application to run its own services across France and onto the UK; something the free market orientated French in particular will no doubt welcome (sic).
Think back twenty years or so and at that time, Easyjet and Ryanair were in their infancy and the thought of them becoming European powerhouses when it came to air travel would have been laughed at. Hopefully rail may go the same way; though it won’t be without its state-controlled detractors.
So, when will we see Low Cost rail travel in Bulgaria: ah, wait a minute.
The grass is always greener
The past months and indeed year or so have seen the great and good of Venice chastising and bemoaning the people that keep them afloat: tourists. Countless inuendo’s and indeed actions were initiated to get rid of some of the masses that throng the streets of the historic city. Cruise ships were made into public enemy number 1, visitors from outside of the city were forced to walk in certain areas only and the city, in short, wanted to take control back of itself.
Fast forward a few short weeks and businesses are closed, the streets are empty and the future doesn’t look exactly rosy. The birds are just about the only visitors to St. Mark’s Square and they are reluctant to pay any admission fees or over inflated amounts for a coffee.
The enemies of the city, the tourist masses, just happened to be the same people that kept the city vibrant and business’s alive. When will we hear an apology and see open hands welcoming back tourists?
Indeed, the grass is always greener on the other side.
Good for the climate
Without giving the impression that we might be anoraks when it comes to weather watching, the past few years in Bulgaria have been somewhat ‘’so-so” when it comes to the notion that summers should be blazing hot and winters snowy white, as the beach and ski resorts would prefer them. Globally the weather has been unpredictable to say the least. Might the current Coronavirus issues correct matters?
We are continually bombarded with the impact global warming is having on us, no-one would ever have imagined that to all intents and purposes the world would be closed down! Satellite pictures show us the huge positive impact shutting down industries across the globe have had on air quality, the question now is whether this will reflect in us once again having a hot hot summer followed by a cold cold winter?
We could of course be exaggerating the impact of this reduction in greenhouse gasses but if the world is righted by a freak of nature, it begs the question of what the green brigade and their followers will do in future?
This is probably not the time nor the occasion to start talking about the recently curtailed ski season but credit where credit is due; the ski resorts across Bulgaria did a fantastic job in ensuring there was skiing to be had even when it felt it hadn’t snowed for months.
The ski resorts of Bansko, Borovets and Pamporovo have nowadays the same capabilities as any major Alpine ski resort when it comes to creating snow and then keeping it. This is a skill that was lacking for many years here, but the progress over the recent years of those tasked with managing our slopes has to be applauded.
The absence of snow is almost inexcusable these days for a ‘ski resort’ or at least any resort that considers itself as being a serious ski destination. It was equally almost as ironic that after the sterling work the ski resorts did through the winder, the largest snow fell at the end of March when they had all been forced to close. This however will be the very least of their worries for the time being.
Seasonal workers dilemma
Apparently some 200,000 Bulgarian’s returned in haste to their homeland during the first weeks of March, preferring the space of their own home than whatever and wherever they lived when faced with a lockdown. Many of these are key workers across many industries who will need to travel back to work at some point. That need may be sooner than people realise.
The UK is just one of several countries that has voiced concern over the possible lack of seasonal workers to work in agriculture, that need starts in just a few weeks. Without them, the real possibility exists that fruit and vegetables that the Western (and other) markets depend upon as a vital link in their food chain, might collapse. That threat is as real as the current lockdown.
Fears always exist in some people’s minds and the media generally like to play on such fears as it makes and sells news; this time a food supply issue might be the real thing. As airlines run mercy flights, might it be that flight charters are set up to re position seasonal workers back into Europe and place them in the “essential services” sector i.e. the farmlands.
The 2020 Olympic Games is the latest sporting event to disappear from our sporting calendar for this year, the event itself is being promised to re-appear in 2021. This event is massive for travel and tourism with no doubt many teams and spectators having already booked flights and (expensive) hotels. What is bizarre though was the original obstinate stance of both the hosts, Tokyo and the IOC (International Olympic Committee) in saying that they will make a decision on whether to go ahead with the event in about 1 month’s time (end April).
Once again it seems certain people in certain positions live on their own planet. Athletes at the top of their game can’t be in isolation and wheeled out like circus animals a few days before the competition, though judging by the comments of the aforementioned organisation, this seemed to be the last consideration on their minds. Money seemed to be at the top of the thought process. Though, then again that is hardly surprising considering that a bad Olympic games can bankrupt both a city (e.g. Montreal in 1976) as well as the organising body who are fully committed to sponsors.
So the situation can be considered “same as”……… money first – humans second.
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