To change or not to change?
If we are to believe the reports coming out in the local media, the current Bulgarian government plans to steam ahead with the adoption of the Euro with 1st January 2024 being the latest date touted, although that might, in the real world, be wishful thinking. The benefits or otherwise of adopting the Euro as the national currency are open to debate either side of the fence but one would be hard pressed to argue that in countries who have followed the transition previously, prices go upwards and never come down.
It may also be true to say that salaries also increase and this can be a longer-term benefit for both the local and national economy as a whole, but if we look at the Bulgarian Tourism sector, the notion that “everything will go upwards” i.e. salaries and prices, what then is the potential longer term impact to the local tourism sector?
Apples are easily compared with apples but less easy to be compared with bananas. If the apple is a Euro then the banana is the Leva. When one looks at the price of apples in one country he/she can easily compare them with the price of apples in another country; in other words the price of a beer, a meal, a taxi ride and even a hotel are easy to price compare when the currency is the same. It’s always been suggested that the Leva and its opaqueness has hidden the true cost of things in Bulgaria even though it’s hard to argue against the fact that many things in Bulgaria are still cheap compared with the rest of Europe. Bulgaria still routinely is bottom of the “cost of a shopping basket” comparisons which tourists seem to take note of. The bottom line danger for local tourism being that the adoption of the Euro will mean that the historic trend of entrepreneurs in Euro adopting countries, use the opportunity to increase the cost of everything. History has seen this achieved by “rounding up” or even worse, “using the same numbers but change the currency”. Will the 100 Leva meal be costed exactly to 51.28 Euro using the official rate of 1.95 or will it be made “easier” and rounded up to 55.00 Euro, itself a 7.25% price increase? It certainly won’t become 50 Euro. Will the 5 Leva beer on the Black Sea become 2.56 Euro or made simpler to pay by making it 3.00 Euro, a 17% increase. Or, frighteningly will it become a 5 Euro beer in line with parts of Europe.
Just what will happen to the local tourism product with any change in currency remains to be seen. The only surety is that the adoption of the Euro will, as has occurred in every country adopting the Euro, see prices increased to a level not previously seen. Whether Bulgaria remains viewed as offering good value, is another open question.
Jamadvice Travel | BCD Bulgaria
Sell less, make more
As those in business know full well, doing less to earn more is the utopian objective. So from an airline perspective it could mean selling less tickets at a higher price or, alternatively as Easyjet have twigged onto, simply sell less seats and still make more profit! How? Well, quite simply the Civil Aviation Authority rules dictate the number of cabin crew required per seats on an aircraft, so if there are 156 seats as typically a A319 plane has, you are required to have four cabin crew; if you have 150 seats you need only three. So Easyjet are removing six seats and also a cabin crew member from their flights this summer that are operated by an A319 aircraft. No doubt also they can create more leg room by the removal of these seats and sell the extra space at a premium to anyone wishing to pay more.
The move by Easyjet, which is likely to be followed by others who use the A319 plane is partly prompted by widespread staff shortages across the aviation sector which is also common across virtually all travel and hospitality sectors. Staff have left the industry and moved to “pandemic/recession proof” industries, often with higher pay and added to this is the lack of new blood coming into the industry which thus creates a perfect storm to confront the sudden upturn in demand for travel. This demand flying in the face of the doom and gloom merchants who gained media space selling the notion that travel would never ever be the same again. Obviously, it will not be the same: it will be in demand more.
Swiss Air by rail
Swiss is expanding its Air Rail service with a new connection that will link Zurich Airport with Munich Hauptbahnhof. The concept was previously named Airtrain and started in 2019 with a connection between Zurich Airport and the Swiss cities of Basel and Geneva. The new Zurich – Munich service can also be boarded in Bregenz and the route will be serviced by six trains per day from July 1st. Like other air/rail set ups, travellers can book the plane and the connecting train in one reservation with the same connection guarantees as are applicable with plane to plane connections. Both Swiss and Lufthansa offer flights between the cities which are 300 kms apart and will continue to do so.
Swiss also intends to extend the Air Rail service on existing routes such as between Geneva and Zurich where passengers will be able to join the train at Lausanne, Fribourg and Bern. In addition, the Lugano – Zurich service will offer a similar boarding option in Bellinzona.
USA Visa increase
The cost of the visa (that’s not a visa) to enter the USA has increased in price from 14 USD to 21 USD. The increased fee includes a so called 4 USD operational fee. The new fee took effect on May 26th. Part of the proceeds (note the word “part”) is to go towards promoting the USA as a destination.
Back to the top
London Heathrow has reclaimed its place as the busiest airport for international (as opposed to domestic) airline capacity in the world. The numbers are still some 16.5% down on 2019 with some 762,000 departing seats but is evidence that the world is fast returning to normality in the world of travel. This comes despite attempts in some quarters to deny the bounce is actually happening. Heathrow ranks just ahead of Amsterdam Schiphol airport with 712,000 and Dubai with 701,000 departing seats.
The world’s largest twenty airports are all still slightly down on 2019 numbers in total percentage terms although Dubai, Doha and Istanbul are only down in single digits. Airports in Asia are struggling the most, with most suffering from the wrong judgement calls from their governments. Hong Kong for example was the second busiest international airport in 2019 but is now down in 84th place!
Hotel prices soar
The European Hotel sector is most definitely on the bounce as anyone who has travelled in Europe will testify when they get their hotel bills. Indeed, the average daily rate the hotels are obtaining is already some 6% higher than they were pre-covid. The countries that have seen the biggest bounce are Ireland with 21% higher rates, Portugal with 18% and Spain 14%. The actual occupancy rates across Europe are slightly behind pre-pandemic numbers with the occupancy currently sat at 80% of what they were in 2019. Hotels in Poland are performing the best with 93% of benchmark levels (2019), UK 89% and Ireland 84%.
The translation of all this is that hotels are comfortable with charging more for their offerings and there is an undeniably huge pent-up demand for travel, both for leisure and for business purposes, and the higher costs are not deterring people.
Driving the growth
We have commented in past articles that the resurgence in the European aviation sector is being driven by the so-called Low-Cost Airlines. It is they we noted, who are driving the traffic particularly into summer tourist destintions that were once the bastion of Charter operators. Charter operators though are far less fluid or flexible in their operations and invariably need to plan their summer operations a year in advance. Both the Low Cost and indeed traditional airlines have realised there is a buck to be made in flying tourists to popular European hotspots in a manner they previously frowned upon.
As if to prove the point re Low-Cost airlines driving the recovery, both Ryanair and Wizz Air are now well above their 2019 capacity with the former offering some 16% more seats than this time in 2019 whilst Wizz are offering 28% more seats. Interestingly enough though, fellow Low-Cost airline EasyJet is down 13% with its numbers, whilst the traditional carriers are also lagging behind Ryanair and Wizz, with Lufthansa still down some 25% and BA down 20%.
A star appeared 25 years ago
It’s 25 years ago this month that the Star Alliance came into being with the initial founding members being United Airlines, SAS, Thai Airways, Air Canada and Lufthansa. To coincide with this anniversary, the alliance is launching a co-branded Credit Card which will offer cardholders the opportunity to earn miles and points. Reports also suggest that the points earned on the card will be convertible into a Star Alliance member frequent flyer programme of the cardholder’s choice.
Take the slow train
The attempt to encourage more people to use Europe’s rail network is being further encouraged with the news that a High-Speed train will connect Paris with Berlin. The project is a joint venture between France’s SNCF and German Deutsche Bahn, although no date was given for its start. The High-Speed service will be a day time one and is planned to run in conjunction with a proposed new overnight luxury sleeper train.
The route is already well served by the aviation sector and its likely they wont be worrying too much just yet about their new rival as it is being suggested that the train duration will be some 7 hours.
Hotel standards dropping
Whilst much of the angst of appallingly low service (if any at all) standards are directed at airports and airlines these days, the decline in service offerings at hotels should not go unnoticed and especially in those with a reliance on the business traveller.
The airline passenger has a belief that he or she is the airlines best customer when we are really perceived more like a hindrance once on board a plane or waiting for one. Are we then of the same opinion that we are the hotels best customer? “Quite possibly” is the answer, but the reality is that we are not and the best customer of the hotel in reality is the actual owner of the hotel building. For those scratching their heads already it should be pointed out that hotels are not owned by the operators e.g. Hyatt, Marriott, Intercontinental etc but the aforementioned “manage” the facilities on behalf of bricks and mortar owners. These owners also suffer from having a CFO whose sole focus is on making a profit and to do that means invariably to cut costs. Operating hotels during Covid has provided a challenge but it also provided a wonderful opportunity.
Staff shortages are felt everywhere in the travel and hospitality sector and there is probably not a hotel in existence where staff numbers have not decreased in the past two years, where the staff themselves now wear multiple hats during the day from being the receptionist to barman via bell boy. Housekeeping always seems to be the first area that suffers and Covid has allowed the reduction in times a hotel room is tended to and even how well it is cleaned by the reduced numbers of housekeepers kept employed. The anomaly is that has restaurants in hotels served food only to rooms during the pandemic, the rooms then become a hygiene hazard as hotel guests generate more rubbish inside their own four walls. Taking a black bin liner in your luggage to bury the bedroom junk into, something that takes up almost zero space, might become as usual as taking a phone charger!
The hotel bathrooms were also becoming the hot topic of conversation pre Covid as the desire to be seen to be going green was defacto the order of the day. Hotels are fast moving away from quality soaps, shampoos and amenity kits to cheaper re-fillable pump type dispensers that for sure do not contain the Molton Brown liquids one had come to expect. The solution thus now may well be taking your own ‘’good stuff” as you will never be quite sure what you are getting otherwise.
That brings us to the drinks part in a hotel room. Most hotels seem to somehow think that two coffee capsules and two tea bags are enough for a room. Of course, you can always ask room service to bring some more for you, but the problem with that is that the room service person is busy either at reception or carrying bags for an arrivals/departures. So, the best bet is to take a handful of both tea bags and coffee capsules from home and put them in your bag. Again, the space they take up is negligible.
Are the thoughts, comments and suggestions here slightly tongue in cheek? Yes, but only slightly and many a true word is said in jest. If you feel that the observations are unkind then have a re-think the next time you return from a hotel stay and compare what you are getting now to what you were getting a few short years ago. Oh yes, there is one other thing to throw into the equation, the hotels have not been slow at ramping up their rates to claw back lost profits over the past two years despite the reduced offering. Take a deep breath the next time you book a hotel as your wallet is the target.
Spot the difference
The difference between Low Cost Airlines and traditional airlines continues to blur and Lufthansa is about to blur the line even further. From June 21st they will charge travellers who wish to change their allocated seats in the lower/cheaper Economy light category, between 25 – 35 Euro. Seats are allocated free of charge – which typically means middle seat – if you check in within 23 hours of departure but are paid for if booked before that. This translates to 50 – 70 Euro extra per round trip if you don’t want the seat allocated. By contrast, Ryanair charges between 3 – 14 Euro for the similar changes. The move is currently intended for short haul flights only but this will no doubt be a pretext to employ the same system on medium and long haul flights sometime in the future.
Lufthansa points out that included in its prices are a snack and one 8kg carry-on bag, but this is hardly likely to be a USP for them and will likely force travellers to look carefully at other potential options if price is one of the main factors when looking at flight options.
The aviation industry has been made to suffer for two years and despite the massive state bailouts many airlines obtained from their home governments, the rapid surge in demand for air travel means airlines are now keen to recoup those lost revenues from the two pandemic years and maximise income from ancillary sales, just like Low-Cost Airlines do.
So “what’s the difference” would be a valid question.
From the local view
As far as Sofia Airport is concerned, airline activity would appear to be pretty much the same as it was pre-pandemic and perhaps even more vibrant currently. Whilst the figures for the first half of the year may show a decrease in numbers when compared with normality i.e. 2018/2019, this can be explained by the comment that whilst the first month and a half of the year saw increased traveller activity, it was still in the ramping up phase and the real traction began towards the end of February. Thus, comparing figures for the second quarter of 2022 with the corresponding period of 2018/2019 will provide the true picture of where travel is at on its road to recovery from a local perspective.
Whilst on the subject of travel from Sofia, several new destinations have appeared such as Zadar in Croatia which will be flown by Ryanair and Abu Dhabi to where Wizz will fly, though this is a direct replacement for flights to Dubai which have now ceased. Air France are returning with their flights to Paris and ITS, the successor to Alitalia are beginning operating flights to Rome.
What really seems to be creating an impact nowadays though is the number of flights by “scheduled” operators like Bulgaria Air, Wizz and Ryanair that are now serving pure tourist destinations, as well as the significant increase in volume of charter flights both by Bulgarian and non-Bulgarian operators, mainly to Turkey though other destinations do appear on the scene. From the aforementioned scheduled operators, destinations such as Heraklion and Chania in Crete, Corfu and Mykonos are available, whilst the Charter operators feature the likes of Bodrum, Antalya, Djerba and Enfidha in Tunisia, Olbia in Sardinia, as well as a limited period offering to Funchal in Madeira and Keflavik in Iceland.