April 2022 Newsletter
The Challenge in Ramping Up
Throughout the past two years of hysteria surrounding a re-branded flu epidemic, a healthy trade ensued in predicting the future. Journalists who with fleet of pen and keen to make sure their mortgage was not jeopardised, strung together stories (I hesitate in calling them articles) on what might happen to the world of travel in the future, its impact on society with the narrative that the world of travel will never again return to where it was; possibly, maybe! The longer we were deemed to be in a pandemic the more fuel was added to the fire. There was however, many level headed people not seeking attention and whose opinions were not sought as they didn’t suit that narrative. These people, if asked, would comment with a degree of confidence that history has taught us that we have both a short memory and a desire to travel, be that for work or leisure. The flu virus is parked for the time being (until re-branded again) and the pent up demand from people to holiday overseas, visit friends and family and simply to get away from the churn of claustrophobic normality is totally insatiable. All it needs is the supply taps turned back on again, in some cases, this is where the taps have become rusty through a lack of use.
The rusty taps are the airports (though not all airports) where a clear and obvious lack of planning in those tasked with ensuring those services required to ensure the smooth functioning of airports are re engaged on time and in sufficient numbers i.e., baggage handlers, border guards, immigration officials et. The failure to do the most basic of planning at some airports has meant some horrific delays and public in-convenience for those trying to get the industry back on its feet: the travelling public.
It’s also somewhat strange that in addition to whinging airlines, airports across the globe have been the most vociferous in claiming the poor tale and demanding tax payer handouts to ensure dividend payments can be met (sic). Yet when the time comes to start to recoup lost revenues they appear not to have even thought about the concept of increased business. Perhaps they have become too reliant on cash handouts that the thought that just as they planned carefully to downsize, they forgot that the same planning might be needed to “upsize”. The problem, one might cynically add, is that the CFO in modern times has more experience in demanding the HR department get rid of staff rather than hiring them. Therefore, it’s not only the inept airports that are paying the price for the lack of thought or consideration in how to ramp up operations, but also the airlines that use the airports are impacted too.
The battle, perhaps stated with a dark business sense of humour, suddenly becomes the one between the CFO and the COO: one wants to restrict spend and the other realises the operation needs to spend to get it back to where it needs to be in order for it to be long term sustainable and above all else, to meet the expectation of not only the airlines using it, but also the travelling public whom it is supposed to serve. Which do the shareholders support?
Jamadvice Travel | BCD Bulgaria
Aside of the gloom and doom merchants who have revelled over the past couple of years in communicating negativity whilst at the same time soaking up the acclaim that someone is actually listening to them for the first time, that is until it dawns on the listener that job descriptions of such people should include the word “Charlatan.” It will be the end of 2024 before people are confident to travel again and until the travel and tourism sector is back where it left off in 2019 was a common theme. However, when such claims are being made its always interesting to understand where the source of information is coming from and whether it’s just journalistic prose designed to catch attention and earn a pay cheque from someone equally in the dark, or it does have substance. So, to counter the doom and gloom, these facts from Eurocontrol i.e. the people who oversee airline traffic across Europe, makes for interesting reading.
Eurocontrol is estimating that by the end of this year, airline traffic will be between 83-96% of 2019 levels. So, in otherwords, this is not bums on seats but the number of commercial flights being undertaken across the skies of Europe. Indeed, the are also predicting that for summer 2022, the summer season will see more flights than in summer 2019. So far this year the figures have already attained an average of 76% of 2019 levels during the first quarter of the year as airlines ramped up operations, whilst April itself saw air traffic at 81% of pre-pandemic levels.
The bottom line is that such statistics from within the industry– as opposed to theoretical views generated from outside it – echoes the thought that there is a pent-up demand for travel and that the growth will continue not only to reach where it was just a few years ago; but exceed it.
In a remote corner of Columbia, a DC-3 plane recently spun off the runway and suffered significant damage to its under-carriage; the cause of the crash suspected to be a punctured tyre. No injuries were suffered by the 6 passengers onboard. So, what is interesting (or otherwise) about this incident? Probably the fact that the report also says the plane is 79 years old and is (or was) still in commercial operation.
It’s hard to think what the reaction would be at Sofia Airport if passengers were presented with a 79 year old plane on which they were expected to travel on. Obviously, the airline, who incidentally was founded 46 years after this particular plane took its first flight, is not worried about the age of its fleet, the exact opposite of many European airlines who like to use the young age of their fleet as a key marketing note.
Finally a profit
It’s hard (or maybe not) to believe that mega bucks Middle East airline Etihad has never made an annual profit in its 18 year history and probably equally hard to believe that after two years of battling both a global flu virus and now a psychotic individual intent on creating a piece of history for himself, Etihad is on the cusp of making its first annual profit.
The airline was fortunate in being ahead of the curve when back in 2017 it made a conscious effort to downsize which, come the pandemic, was a plan that was already well underway and has allowed the airline to post its first ever profitable quarter which could in turn lead to a first ever annual profit.
Even as recently as 2020, the airline lost 1.7 billion USD which was trimmed down to a loss of 476 million USD in 2021. Recently though, the airline has benefitted from high load factors (bums on seats), such as in March when they were even higher than in March 2019, as well as seeing a big demand for Premium (Business/First Class) offerings that have also outstripped pre-pandemic levels.
The airline has also seen a significant boom in cargo business with record breaking revenues of 1.73 billion USD in 2021 which was a 49% increase year on year.
Summer of confrontation?
It will be interesting to see what reaction, if any, there will be during the summer when holidaymakers from both the pro Ukraine and pro Russia camps potentially come together. Whilst it’s a fact that many normal Russians deplore the actions of their psychopathic political elite, others show no remorse and support the brutality of the regime. Turkey is traditionally a destination that has welcomed tourists from across Europe including Russia and is massively dependent on tourism generally for the survival of its hospitality industry. Before Russia let its forces loose on Ukraine, Turkey was expecting some seven million tourists from Russia following on from the 4.7 that travelled there during the pandemic year of 2021. The question is what happens next?
The answer is that magically the Turkish government has formulated a plan that will see Turkish Airlines providing 1.5 million seats dedicated to the Russian market via four Turkish Tour Operators with a presence in Russia. Fellow airline Pegasus will contribute 500,000 seats and a brand new charter airline will be established in Antalya that is dedicated to the Russian market and will contribute 1m seats! That’s a total of 3m tourists.
The situation in Eastern Europe leaves countries like Turkey in a dilemma and the risk is also run those potential visitors from Western Europe will not want to mix with visitors from a nation seen as being a threat to civilisation and democracy.
As travel rebounds with a vengeance and no doubt the clamour will follow from environmentalists that we should refrain from it, it’s interesting to note that using 2018 as a guide, aviation contributed some 1.04 billion tonnes of CO2 towards the downfall of planet earth, or 2.5% of the total of greenhouse gasses. At the same time and barely touched upon was the fact that the global fashion industry contributes 2.1 billion tones.
So, how about a green tax on the fashion industry or at least change the thinking of consumers away from a disposable society to one that is more considerate about what they buy and how frequently they use it. Should we stop wearing clothes!
Taxing travellers in obviously infinitely easier than taxing everyone who buys a new garment to wear and is less likely to alienate governments from the voting electorate.
Stripes in fashion
German Charter Airline Condor is seemingly re-defining airplane livery with eye catching, maybe even eye- watering paint jobs on its fleet of aircraft. The groups new livery sees aircraft painted in “beach towel / beach chair like” stripes along the entire fuselage. The stripey version sees a total of five colours used with the choices being: –
- Yellow (Sunshine)
- Red (Passion)
- Blue (Sea)
- Green (Island)
- Beige (Beach)
It’s also not just the planes that will get a distinctive re-brand as everything from crew uniforms to boarding passes and even drinking cups and staff ID cards will see the new branding, eventually.
A noisy hobby
An amusing story from Ireland where noise complaints against Dublin Airport saw a sharp rise in 2021 to 13,569 complaints compared with the usual average of 1500. The reason was not a massive uptick in activity or new aircraft type using the airport but rather one individual who submitted 12,272 complaints!
The individual concerned has not let up from his 34 daily average complaints, in fact in 2022 the individual is now averaging 59 complaints per day or 95% of all complaints received.
Some people do have interesting hobbies as well as too much time on their hands.
World Cup approaches
The Football World Cup starts in November and Qatar, the host country, has not been shy of attracting controversy with anything and everything associated with it. Speaking out about the related issues within the country appears to be treat with the same iron fist that Russia adopts to suppress freedom of expression within its borders.
For the less informed, human rights and the apparent abuse of migrant labour has been at the forefront of many media articles whilst the bizarre choice of the Country and how that choice came about (sic) by FIFA – the body that controls world football – has never gone away as upcoming court cases reveal. Whatever viewpoint you have or whatever angle you view life from, the “event’’ throws up countless aspects of both discussion and contention.
The competition itself will see Qatar producing 3.6 million tonnes of carbon emissions, an increase from the 2.1 million tonnes Russia, the last host, produced in 2018. A miserly eight stadiums, separated by just over an hour’s drive or 69 kms from end to end will be home to the event. Of the eight, seven have been built from scratch and the other extensively re-developed. Six of the stadiums will have about half of their seats removed afterwards and sent to developing countries whilst a seventh stadium will be dismantled. Only one stadium will be a home for a football team afterwards.
As for the stadiums themselves, the initial budget (note the word “initial”) was around 5.5 billion Euro and all will be powered by a solar panel farm and have detailed cooling systems including outdoor air-conditioning in some.
The bottom line is that the project is a vanity project to show the world the size of their wallets. China used the Olympic games in 2008 to announce to the world that it had “arrived” on the world stage and indeed truly it had. Brazil tried to do the same with the 2016 Olympic Games but seems to have failed miserably, whilst Russia used the Football World Cup in 2018 and before that, the drug laden Winter Olympics in Sochi as a part of its master plan to gain popularity at home as well as globally, especially to those it considered were key influencers, whilst at the same time preparing for its future military expansion and aggression on the democratic world. Cut and paste Nazi Germany and the 1936 Olympic Games.
It begs the rather cynical question as to whether this is the end game for Qatar or is it a mere step in the as yet unknown game?
Anyone hiring a car usually finds their actual hire car is a well-known tried and trusted brand that is known the world over. So, when Hertz announced that it is to buy 65,000 electric vehicles over the next five years the eyes would quickly flash over to which lucky brand would be receiving the order: the answer – Polestar.
One could initially be forgiven for thinking that this is some obscure Chinese start up when actually it is a joint-venture between Volvo and Chinese Conglomerate, Geely Holding which was set up in 2017. The company is already manufacturing EV’s (electric vehicles) and plans to be producing 290,000 by 2025 with the first hire vehicles due to be available in Europe in spring this year.
Just to add to the nerd factor of EV’s, the cars will also feature an “infotainment” system powered by Google Android Automotive OS.
Faith in a rebound
France based hotel company Accor plans to open some 300 properties in 2022 out of a pipeline of some 1200 properties which will add around 214,000 hotel rooms to its portfolio.
Judging from this, it’s clear that the management of Accor feel that the normal world still wants to travel be that for leisure or business and as a travel supplier, they are more than happy to help that wish come to fruition.
Satisfying the demand
The bub airports of Frankfurt and Munich have long played a vital role in connecting Bulgaria’s air traffic with the wider world. So, in many respects they are a leading indicator of what is really happening in the world of travel as opposed to the theoretical perspective. Thus, the news that already this year, Munich Airport has recovered to 70% of pre-pandemic passenger traffic levels should give us all hope that the world of travel is indeed rapidly returning to normal.
At the same time, “home airline” Lufthansa is predicting that summer air passenger numbers will reach around 85% of 2019 levels with its short haul European network reaching 95%. They also predict that the average for the year will be around 70% of pre-pandemic numbers.
If the aforementioned is good news, then the forecasts from Lufthansa owned Austrian Airlines is eye catching; they forecast flights from Vienna during summer will be 120% of 2019! The explanation behind this spectacular growth is that attention is now being paid on flights to short haul European leisure destinations that were once frowned upon by traditional airlines. The penny has dropped that there is a huge pent-up demand from passengers for such flights and the yield from them is not insignificant. The Lufthansa Group has the infrastructure and the capability to tap into this market in a major way and it is likely that this will become a long term feature of their business plan and not a short term fix.
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