October 2019 Newsletter
The Cash Dilemma
Following on from the sad demise of travel giant Thomas Cook, the usual comments abound regarding the clarity – or lack of – within the industry, of who owns the ‘’cash’” of travellers both in the middle of their holiday and also one the yet to be taken holidays. Which also leads to a deeper question that no-one seems to have asked with regards the modus of operations of airlines: “who owns the cash”?
As a passenger, the airline forces you to hand over your cash now for a flight to be taken in for example January. The airline will say that it uses this cash to, for example, spot buy fuel to use sometime in the future and which will also pay for the flight you will take in x months’ time. However, buying fuel is only a small part of the total operating cost. So what is the airline doing with the rest of your money? Quite simply it’s using it to pay for its current operating costs; such as crew or directors salaries, to purchase spare parts for planes, to pay for the rental etc. of new aircraft and even the rental of offices around the world. There is a myriad of things that a business needs cash “now” for and an airline is just one of them. The difference is, an airline seems to be able to use your cash now and if you cancel the ticket (i.e. the cash loan to the airline operator), they do not want to give you the already spent cash back despite the fact they can easily re-sell the now vacant seat again. In effect gaining twice the revenue.
It’s hard to think of any industry which operates with such impunity and where it sets its own biased rules which are so clearly anti-passenger and quite possibly illegal! It would be interesting to see a legal challenge in the EU courts regarding whether an airline (or indeed anyone) has the right to spend its own clients’ money and also provide them with no financial protection in the event of closure; here think Adria Airlines who recently went bankrupt also and also Malev the Hungarian airline who ceased operations many years ago, leaving many people out of pocket.
Surely some form of escrow account is worthy of consideration whereby a client’s money is deposited into a holding account and when the airline provides the service it is committed to provide, the funds are released to that airline. If the service is not utilised then the funds can be returned to the originator (the traveller).
Such a move would, on the face of it be rather radical but it would in reality only be an extension of how many industries and service providers work today. Legally, morally….and ethically.
Jamadvice Travel | BCD Bulgaria
The Flying Taxi Approaches
Uber is planning to test its flying taxi concept in the Australian city of Melbourne followed, by Los Angeles and Dallas. The firm plans to open a network of Skyports in a bid to alleviate traffic congestion with flights operated by ‘’Electric Vertical Take-Off” vehicles. Aircraft manufacturers Embraer and Pipistrel along with NASA are also involved in the project. Uber aims to be Commercially operable with the flying taxis by 2023.
The News Gets Worse For Boeing
The saga of the “unsafe’” Boeing 737 Max aircraft seems to rumble on and on. What many people thought would be a quick fix and a brushing under the carpet of past failings and a quick return to the skies for the ill-fated plane seems to have no end in sight.
The latest news is that it’s almost a surety that the Max planes won’t fly again this year and there is no firm date as to when they may be operable again. This is also bad news for those airline companies who were, or are expecting new deliveries of the machine to both replace both existing planes as well as to increase their fleet size. Not forgetting of course that these new planes are more economical than older planes and therefore generate greater profit for the operators.
To make matters worse, the Travel Managers of large companies are also wary of allowing their own employees to fly on the Boeing max aircraft. Some 80% recently stated they were hesitant to allow their workforce to fly on the plane.
For possibly the first time in recent memory, the image of the Boeing 737 Max and the nervousness around it may well influence the future of a plane. Aircraft have crashed with significant loss of life, but it’s hard to recall the actual “plane” being held totally responsible and in a manner than was not easily remedied.
Ask yourself – if the aforementioned plane came back into service next month would you and your family willingly fly on it?
Following hard on the heels of Thomas Cook grabbing the headlines in the travel industry, Slovenian national carrier Adria Airways has ceased operation. Adria was formed in 1961 and operated a fleet of 20 aircraft and flew to 25 cities across Europe as well as operating flights on a sub-contract basis for other airlines in the region including Austrian, who also suffered a knock-on effect of the collapse
Two other airlines that you probably didn’t hear about who also collapsed in September were XL Airways and Aigle Azur.
It seems like being a small (ish) regional carrier has a limited future. Who will be next airline failure in the industry are asking?
Plugging The Gap
Without wishing to dwell too much on what might and what might not happen on the Bulgarian Black Sea next summer, one thing is plainly obvious to those with an understanding of the travel industry, that is that the status quo of how things have worked in the past will not necessarily be the way they work in the future. Whether the government people et al involved in our domestic travel industry understand this is a totally different question. An even bigger question is even if they do, will they have the power and ability to act on it?
It will not be easy shifting circa 350,000 Black Sea holidays that Thomas Cook may have been responsible for into the hands of similar sized operators working on the same model. Some volume will be transferred to those operators both capable in handling the upsurge e.g. Tui and who have their own planes they can juggle with but smaller operators might not be so flexible or indeed have fleet of foot to fill the gaps and they also may not have deep enough pockets to borrow a few more aircraft for a year or so (sic). So how can the difference be made up?
A part of this answer may lie with the likes of EasyJet, Wizz and Ryanair or indeed with any of the Low-Cost Airlines. For example, EasyJet Holidays is a new offspring from its big brother airline. They planned to launch this year with some 500 hotels in their portfolio but have been inundated with requests from former Thomas Cook operated hotels requesting to be added into their portfolio. They in turn sense an opportunity and are trying to load in both the extra flights to those destinations they already have a relationship with as well as adding extra or new hotel capacity. Additionally, there are two other factors that might help them to fill a part of the gap.
Easyjet is a tried and trusted and well-respected name in travel and in an era where obviously even the biggest players in the industry can go under, trusted names are a bonus to all sides of the chain. Also, as opposed to the theory that the only way ahead is to “go direct”, EasyJet realise the value of the travel agency community and want to work with them as opposed to against them as is the theoretical fashion driven by the MBA graduates. A huge number of holidaymakers, as typified by the sorts of people who book Thomas Cook each year – some 9.5 million – want to work with a reputable company and also via their own trusted travel agency. Easyjet working with like-minded people driving traffic in their direction is a win win scenario for all.
Thus the bottom line questions are will Bulgaria see this opportunity to attract such a player as EasyJet? Also, will other Low-Cost Airlines or similar also have the ability to fill other parts of the space vacated by Thomas Cook? Only time will tell.
The New Big
The new Beijing Daxing International Airport commenced operations at the end of September and Is now the largest integrated transport hub in the world.
Work on the airport started in 2015 and the result is a single, albeit huge, single terminal with 268 aircraft parking bays and four runways. It aims for a passenger capacity of 45 million by 2022 and reaching 75 million by 2025. Eventually, it aims to reach a capacity of 100 million passengers.
The new facility is situated 50kms south of Beijing and accessed by the new Daxing Airport Express, high-speed rail, intercity rail as well as highway.
Airlines like to use the arrival of a new plane type to provide marketing content in an attempt to generate more sales. The latest addition to the Airbus range – the A350 – 1000 is one of the “new breed” of fuel-efficient aircraft that supposedly uses the latest technology and materials to make the planes both lighter and more comfortable for passengers. However, if you are flying on one of the new BA planes of the aforementioned type, then you may be in for a shock.
BA, in its attempt to squeeze in more seats, have six seats that won’t recline! Now if this was a plane flying ashort-haull journey of two or even three hours it would be annoying but not the end of the world. However, these machines are designed to fly much longer long haul routes that can be around 12 hours or thereabouts.
It is hoped that somehow BA will warn people of this restriction when and if they select these seats, but what if they are the last seats available? BA will soon have 18 of this type of plane in service and apparently all will have the same configuration. It will though be interesting to see public reaction to this stance although at the end of the day, if the airline sells these seats a bit cheaper (fat chance) then people may be prepared to accept the inconvenience. The danger being of course, that this becomes the industry norm. today six seats with no recline; next it’s 60.
NH Bomb It
The NH Hotel chain may be well known by some regular travellers as providing a good standard reasonably priced accommodation but the latest announcement of a new addition to its portfolio will certainly catch the eye.
A former word War 2 anti-aircraft bunker in the district of St. Pauli in Hamburg is being converted into a 136 room hotel with five stories added to its roof in the shape of a pyramid. The bunker currently hosts night clubs, a music store and office space.
According to the Hamburg Tourist Board, the building was constructed in 1942 to accommodate 18,000 people and its walls are 3.5 metres thick; designed of course to withstand the allied bombs falling on the city at the time.
Robots Move In
Istanbul’s new airport has deployed four robots to help with the customer service role. The “humanoid” robots move on wheels and can scan travellers tickets, give flight status updates as well as give directions in English and Turkish.
In the USA, California is the first state to pass a law banning disposable toiletry bottles with effect from 2023.
Hotels of more than 50 rooms will be the first type of accommodation targeted followed by all hotel types the year after.
Many global hotel groups such as the Marriott Group and IHG (Holiday inn, InterContinental etc.) have already announced they will ban such toiletries even before 2023.
The days when we will saunter through an airport – or other places where one embarks on travel – with security checks done based on facial recognition only, are not a million miles away. There are obvious benefits with such technology such as negating the need for boarding passes to be issued as well as helping authorities monitor criminals and terrorists.
On the side of the coin, the same technology is also helping less than democratic states to identify ethnic minorities and restrict their movements.
Just think; facial technology at bus and rail stations, in undergrounds, at shopping malls. 1984 might be just around the corner.
Finland MaaS Move
When we travel to a new city one of the first things we have to get to grips with is how to get from Point A to Point B. For a business traveller the option may be a privileged one whereby he calls a cab, regardless of the cost, safe in the knowledge that his company picks up the bill. For those paying the bills themselves the choice of transport usually boils down to one form or another of public transport. In Helsinki, the way we travel in the future may already be taking shape.
Mobility as a Service (MaaS) is perhaps the future; particularly in those cities who wish to push their green agenda. In the case of Helsinki, they have been working for 8 years to reduce the necessity for the city’s inhabitants to use a private car. The intention being that by 2025 the perception will be that it is ‘’unnecessary for people to own a car’”.
To get around using MaaS transport includes buses, trams, bikes, taxis and rental cars and integrates their use into an application that helps the user get from A to B using any combination of the aforementioned modes. The service is sold as a package e.g. currently ranging from unlimited use for 499 Euro a month to 62 Euro for unlimited bus travel and bike rides. In essence, it is a subscription-based service but already in Helsinki, 1.5 million trips have been undertaken by 45,000 subscribers.
It’s an interesting concept and obviously one that works based on the experience of Helsinki. One can’t help thinking however that some countries and regions such as in Scandinavia (yes we know Finland is not in Scandinavia), where the Green agenda has its roots, acceptance of such concepts are rather easier and give more opportunity than what would likely be the case in this part of the world.
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