October 2020 Newsletter
What seems like an eternity ago, we were asked our opinion on which way the cost of travel would head at the end of the current farce. Of course the word farce wasn’t used, it was probably “crises”; it’s just that government actions across much of Europe have the rank and file (the masses) shaking their heads in dis-belief at the perceived ineptitude of those in governance who have created the farce by which the rest of us in smaller countries now follow. The only thing that seems to be missing from the government speak is “’we will learn from our mistakes”, which, hopefully will not be the case as those making such comments will long have been banished far away from the rest of humanity. Anyhow we digress. So, in short, will the cost of travel head north or south i.e. up or down when the world returns to normal?
Our opinion back then, was that more than likely the cost of air fares would reduce as airlines tried to entice passengers back in to the sky as a means of kick starting their business. Planes need to fly and staff need to be paid, hence the need for quick cash flow. What perhaps wasn’t considered at that point was the fact that planes would be removed from fleets en masse, indeed many to be scrapped, therefore the need for the previous level of employees was not there, so staff numbers were or are being culled like there is no tomorrow. Having half a fleet and half the staff seems like the preferred default stance of airlines. Thus the comment from the Airlines for Europe (A4E) group, an organisation that represents 70% of all European Air Traffic including the likes of Lufthansa, BA, Ryanair and EasyJet that “’flying is not going to get cheaper” probably sets the tone of what happens next (if anything). Additionally, the message was that “consolidation is inevitable”” with airlines and thus, the less competition the more process increases. Another likely outcome will be that the recent trend of airlines flying to and between less crowded and cheaper secondary airports will be reversed and airlines will focus on those airports that have volume and where they can connect people.
At the same time as the A4E Group were making their predictions based on their members comments, IATA (International Air Transport Association) was also commenting that the airline industry will burn through 77 billion USD in cash during the second half of 2020. The “’good news” (sic) doesn’t stop there though as into 2021, it is predicted that these losses will still amount to between 5 – 6 billion USD in losses per month.
The negativity in travel on a local level though Is not always followed and there has been a silver lining in one area of the travel industry and that is with local hotels. Hotels across Bulgaria, particular well-run mid-range ones, have been having a boom time as more and more people take weekends away in the country or in spa hotels etc. There would also appear to be a pent-up demand for people to “’get out” of the cities and into the country at every opportunity, in particular at weekends and away from the masses and hence the higher risk of getting a virus that’s knocking around. So well done to those hotels. There also appears to be a surprising level of demand for Meetings/Conferences amongst the Medical fraternity who, in their dozens and even hundreds attend their usual annual shin digs whilst suggesting to everyone else they stay at home. The relevant message from these people apparently being ‘do what I say not as I do”. Déjà vu?
Jamadvice Travel | BCD Bulgaria
Germany to get closer to Denmark
Plans have been approved for an 18km long tunnel under the Baltic Sea that will link Germany and Denmark. The budget for the tunnel is 7 billion Euro and is due for completion in 2029. Currently a ferry crossing taking around 45 mins plus the queueing time is the only option to commute between the two countries other than flying. When complete, the journey will be shorted to around 10 mins (minus the queueing time).
The actual tunnel itself will be built using “’pre-cast” segments each measuring 217m long, 42 m wide and 9 m tall and lowered into the sea with the water then pumped out; the Channel Tunnel by comparison, which cost 12 billion Euro to build, was built using a boring machine.
The tunnel will also create a major land route between Scandinavian Peninsular and Central Europe and whilst some environmental groups have expressed the usual concerns, these concerns will not stop or delay the go-ahead of the plans.
Don’t look East
In the current economic climate, the worlds aviation industry and in particular, the two major airline producers Airbus and Boeing, can ill afford to turn their noses up at lost business opportunities but that seems to be their stance when it comes to selling planes to China. The noises coming out of the airlines HQ’s is that the Chinese market is not “of relevance” to them, which was not quite the message a decade or so ago.
What seems to have changed the two big boys’ tact is likely to be a mix of political correctness in not dealing with China and the realisation that Chinese companies will buy Chinese products. So unless Airbus or Boeing move a manufacturing plant to China, they are unlikely to be selling many planes there. Enter Comac.
Comac is the “Commercial Air Corporation of China” and it has great plans to be a major player in aircraft production. The companies C919 plane is pitched to compete with the bread and butter of Airbus and Boeing, i.e. the A320/ B737 planes and thus far the C919 has acquired orders for 305 planes and options on a further 703; that’s 1000 planes in the potential pipeline. That also equates to around 50 billion USD in potential income lost by Airbus and Boeing.
In today’s climate, that makes a bad situation even worse for the “’big two” and there may be worse around the corner as it will only be a few years before Comac wheels out its C929, a plane designed to compete at the long haul end of aircraft industry i.e. with the Airbus A350 and Boeing 777/787’s.
Sky’s the limit
Athens based airline Sky Express is probably an airline that very few people have heard of, even in this part of the world. The airline is perhaps surprisingly 15 years old and serves a number of domestic routes using a variety of ATR 72/42 aircraft, but is making the news as it has just ordered 4 brand new Airbus A320 planes, also the first sales for Airbus in a while! In addition, it is leasing 2 other A320’s.
The airline will focus on its domestic network with Crete and Thessaloniki being its main focus but with this new fleet coming into its ranks, it might not be too far way when its focus shifts to a regional one.
The airline may also have a key role to play in re-booting the country’s tourism industry now that many tour operators and charter companies have downed tools. In which case, now may not be a bad time at all to start making longer term strategic business plans if your pockets are deep enough.
Not an easy future
In keeping with the message of doom and gloom in the travel industry, EasyJet has said it expects to record annual losses of between 815m – 845 m GBP (896m – 930 m Euro), its first annual loss in its 25 years history.
The airline is expecting to operate just 25 % of its capacity in the first quarter of 2021 although it hopes to cover the majority of its network with a reduced capacity.
What is interesting however is that like other airlines, tour operators and indeed hotels, the forward bookings for summer 2021 are the same for any other year; a shining example if one were needed that people want to travel and are nor scared to travel if governments weren’t holding them back.
Little risk of contagion
Research by IATA (international Air Transport Association) indicates that just 44 cases of the Coronavirus have been reported where transmission is believed to have taken place associated with a flight journey. Over the same period 1.2 billion passengers have travelled which equates to one case per 27 million travellers!
The organisation is of course serving the interests of the airlines and not the wider travel community so anything they do say must be tinged with some degree of scepticism. However, there is likely some truth in these facts. Airline manufacturers and their suppliers tasked with the air-conditioning and air flow systems on planes have also been testing various scenarios and they came up with the statement that sitting next to someone on a plane is the same as standing some 2 meters away in a typical work place environment.
It is perhaps fortuitous that extensive work has already taken place on the air flow inside aircraft to not only improve the flow of air, but also to lessen the potential spread of any type of virus that we typically see on a yearly basis.
Too good an opportunity to miss?
Not wishing to miss any sort of opportunity, Ryanair have raised eyebrows by supposedly offering to buy between 150 – 200 of Boeings troubled 737 Max aircraft at a time when, not only are potential customers shying away from the 737, but passenger surveys also show their reluctance to fly on the plane.
On the other side of the coin, from a pure hard-nosed business perspective there may never be a better time in which to get the best deal out of an aircraft manufacturer.
Boeing already have 135 Boeing 737 Max planes waiting to be delivered (with the word Max already painted out) and no doubt their thinking is that time (to forget the issues the plane has had) and low fares are the best healer.
Some benefit at least
One of the benefits (if there are any) of the Coronavirus on a local level is that people have restricted their movements somewhat. The net effect being that there has been a significant reduction of road deaths in Bulgaria during the first 9 months of the year. A total of 333 people died during this period which is some 113 fewer deaths than the previous year.
Black Sea summer reality
The overall impact on this summer’s tourism numbers is yet to see the light of day, but just as an indication of the severity of the issue, in August the number of arrivals of foreigners to Bulgaria was down by 67.9%.
This figure is even worse when you take account that of these, ’leisure visitors’ were down by a whopping 81.6%’, whilst visitors for business were down by a “mere” 60.6%. For September, those arriving for “’holidays” was down by 67.3%.
When one considers that the number of business visitors is low anyway and the huge majority of people arriving on these shores are coming for their summer holiday, a August deficit of 81.6% converts into a lot of lost revenue.
In what might seem as an overly optimistic move, Lufthansa has added some 15 “’leisure destinations” to its summer 2021 schedule. Included in them is Varna.
It is interesting to speculate the reasoning behind the move to primarily leisure focussed destinations, British Airways seem to be following a similar path. Both of these airlines were hardly focussed on “point to point” leisure based passenger traffic in the past. One reason might be that Lufthansa, like any airline, will look for absolutely any destination in the current climate where they think they can make some profit. Another part of the thinking might be that they can put bums on seats to destinations that Charter Airlines and Tour Operators once served but who are no longer in business or have had to shrink their Tour Operating offerings e.g. Thomas Cook.
The adage no doubt is that in the short term, any business is good business for the airlines, or translated, any bum on a seat is a bum.
Better late than never
By the time you read this, the new Berlin Airport (BER) will have opened! Usually such an opening is barely worth a mention but the new airport that will serve the German capital has hardly been out of the news for the past decade. The actual opening on the 31st October will see parallel “’Opening landings” by both Lufthansa and Easyjet planes (the two being the two major airlines in the new airport.
On the 8th November, the last flight will depart Berlin Tegel airport. This flight will be an Air France flight in recognition of Air France being the first airline to land at Berlin Tegel during the Cold War in January 1960. Tegel itself is actually located in what was the French Sector of Berlin after World War 2.
Back in time
Not many people will remember that there used to be a network of Trans European trains running across Europe (TEE’s) that provided a comfortable and swift means of point to point travel between major European cities. This was pre high speed trains and the emphasis was on luxury. Typical routes included Paris – Brussels – Amsterdam, Frankfurt – Amsterdam and Zurich – Milan. Customs and immigration carried out checks en route to save time and to avoid these types of trains having to stop at borders. Germany now has a plan to bring these trains back.
The idea is that by 2025 a network of international long-distance trains spanning much of Western Europe will be created that would also bring into play destinations that previously wasn’t possible for political reasons. Proposed routes include: –
- Paris – Brussels – Cologne – Berlin – Warsaw
- Amsterdam – Cologne – Basle – Milan – Rome
- Berlin – Frankfurt – Lyon – Montpelier – Barcelona
- Stockholm – Copenhagen – Berlin – Munich
The plan also envisages overnight trains.
Not so very long ago this idea would have fallen on deaf ears but in today’s climate as people are being made to be afraid of airports and the green brigade try to make flying a sin, the pecking order of travel preferences for people shifts from speed and cost to other factors, a trip back in time with luxury thrown in may well have its appeal.
If you’d like to subscribe your friends or colleagues and for all your travel requirements, reservations or for more information about any of the items mentioned in the newsletter, please contact us:
Tel:+ 359 (2) 943 3011;
Fax:+ 359 (2) 946 1261;