December 2023 Newsletter

December 2023 Newsletter

Editorial

It’s the time of year when we select a news item from each month that grabbed our attention as the year progressed. The past year has not been without its usual challenges in the industry, though invariably many issues are not industry create i.e., wars and weather. For those of us within the industry, we don’t need a crystal ball to know that next year will also create its own issues aside of climatic and geopolitical sabre rattling. These will be more of a technical nature as travel suppliers e.g., hotel and airlines ramp up their own agenda to fragment the business and control the distribution of their own product. A bit irrelevant for the man in the street? Not when you find that price comparisons with alternative options become harder and harder to find: divide and rule will be the order of the day. The role of a TMC (Travel Management Company) will never have been so important.

Away from the future and looking back at the past, the twelve news stories per month we write are a mix of fact and opinion (based on fact!). One other story that also stood out was a tale about the increase in noise complaints at Dublin Airport. The numbers make great reading but dig deeper and you see that of the 26,196 complaints, an increase of 13,000 on the previous year, 24 431 claims were made by one person! The moral of this is that if you start to think about what is being presented to you, be that in print, on the TV or radio, you can very quickly challenge the narrative. As someone said recently though, people today are not taught to think and they are certainly not encouraged to challenge the narrative. The November piece reflects this perfectly.

Finally, whilst reflecting on the past year, it would be remiss not to take as swipe at the continued interjection of the green brigade in travel. we are all conscious of our planet and we each do our own bit in our own way to try help it. Travel contributes a miniscule amount to carbon emissions, there are much bigger fish to fry but many are politically sensitive and will not generate a vote winning election environment. Fron the number of children we produce to the amount of online shopping people now buy that comes with its incredulous amount of paper packing per item, the Amazon jungle has never been so threatened (sic). However, don’t challenge religion when it comes to population and don’t threaten big business (online shopping and electric cars), travel though is a soft target and will likely remain so as it’s easy to tax.

So may we wish you all a Merry Christmas and a Happy New Year and lots of travel in 2024.

Mark Thomas

Managing Director

Jamadvice Travel  |  BCD Bulgaria

January

On more than one occasion we have made note of the increasing lack of price differentials between tourism services at home here in Bulgaria and rivals in more established parts of Europe. Bulgaria has long been considered a cheap destination, whilst at the same time offering good value for money. The question on people’s minds is whether that is still the case? The Velingrad scenario seems now to be a widely used skit and as for the seasons ski prices go, the price the differential between skiing at home or elsewhere in Europe is minimal; however, the difference in quality is certainly “not minimal (sic)l!”: –

Why Velingrad?

Dinner chat recently had an amusing theme that several people were commenting on and that was the question of why it was cheaper at New Year to go to Dubai for 5 days than to Velingrad! Of course, not every hotel in Velingrad was charging stupid prices over New Year but it was plain to see that the rates being touted were eye watering and indeed holidays with flights and hotels in Dubai were being offered at similar prices! It was even mentioned that a week in Bali wasn’t massively more expensive than doing the New Year with all the buttons attached in Velingrad! Of course, many people perhaps don’t like flying or are ill at ease outside their home environment and let’s face it, it’s harder to take your flash car to Dubai or Bali isn’t it.

Prior to the last year end the fact had not gone unnoticed that the “” forthcoming”” ski season saw the cost of ski passes in the main Bulgarian resorts to be at similar rates to Europe’s main ski resorts. Ignoring special offers designed to temp people to don ski boots when there is no snow, the actual daily ski pass cost now in Bansko and Borovets is listed as 90 Leva and 85 Leva respectively. These two resorts have developed admirably in recent years and are more than adequate for many skiers. Taking two random resorts in Austria and Italy by comparison, Kitzbuhel in Austria is 105 Leva and Val Gardena in Italy is 115 Leva. The question though is this comparison comparing apples with apples.

Bansko and Borovets offers circa 70km of ski piste area; Kitzbuhel offers 233 km and Val Gardena over 1000 kms! So, when its is looked at more closely with regards to what one is getting for their money, the Austrian and Italian prices indicate better value Euro for Euro. That is also without going into comparisons of actual ski infrastructure. Of course, the local resorts will retort by saying that the extra costs associated with skiing such as accommodation, ski hire and food and drink are cheaper here than elsewhere in Europe. The answer to that is; probably, debateable and probably not.

Accommodation in European ski resorts, if you stay in main resort centres can indeed be higher, but many skiers in Europe and including those who travel from Bulgaria travel by car, thus the accommodation does not have to be walking distance from the ski lifts. Staying a 5-minute drive away from the lifts is significantly cheaper and this is what the vast majority of ski tourists do. Ski equipment in Bulgaria is probably best described as catering for the beginner and there is nothing wrong with that as this is its core market, whether hiring top of the range new ski gear (if it can be found at all) is cheaper here than elsewhere in Europe is an open question and the key component here is “new”, as good skiers don’t want to hire old equipment. European resorts usually have all the latest gear for hire. Finally, as for food and drink comparison this is a subject kept well clear of. Food and drink in the ski areas of Austria and Italy are about the same price as here and possibly cheaper,  but the comparison in quality is the same as comparing a Lada with a Mercedes. You can guess which is which.

If and when Bulgaria joins the Eurozone, the price of apples is easily compared and shoppers are not afraid of shopping elsewhere.

February

We have longed banged the drum of keeping accountants away from business decisions. February saw our editorial highlight short termism. Short term financial gains invariably yield longer term financial loses and that does not include reputational damage: –

It must be Brexit – no wait

As the world of travel gets back to near normality its perhaps curious to observe the challenges some profess to still encounter whilst at the same time questioning whether the challenges are real or if they are more smoke and mirrors to satisfy ulterior motives. “’Near normality’ is the expression that the sensible world uses to describe the situation now compared with the last “’normal” year i.e., 2019, as compared with the bizarre and unexplainable habit in business of comparing everything with last year when surely a business plan covers several years and not simply last year v this year! “Travel is down (say) 20% in 2022 compared with 2019: correct but 2019 had 12 months of normal travel habits, 2022 had between 9 and 10 months. So clearly the message that numbers are down is a rather opaque message. A case in question is the ever-important Lufthansa group who have done a great job in turning the ink black from red, strong demand through the back end of last year means the airline group may make as much as 1.5 billion Euro profit in 2022, up from its initial forecast of a half billion made during the summer. Perhaps more importantly its average yields for passenger flights were well above pre -pandemic levels. Translated, the revenue it earns per flight from passengers has increased significantly. Its profit in 2019 was some 2 billion Euro. Thus if 2022 had been a real normal year then clearly its profits would indeed be back to normal! So, what might the smoke and mirrors be in such a good news story?

Well, German media outlets are reporting that Lufthansa plans to cut 34,000 flights from its planned 2023 schedule as the carrier still experiences staff shortages. This figure also excludes potential cancelations being added by sister carriers such as Swiss and Eurowings! That’s 34,000 flights that people already have bookings on and have already made travel plans around, such as paying for hotels and car hire etc. Of course the PR spin says that the cancellations are being done ahead of schedule to allow passengers “’a more reasonable window of time make alternative arrangements and adjust their travel plans”’. One wonders if they will also pay for the required new bookings that will no doubt cost significantly more for passengers than what they would have been if they had been booked several months ago, as well as for the time and inconvenience this creates for travellers and travel bookers such as travel agencies? Then what, if any, is the impact of adverse publicity with this move or is the travelling public now accepting of being treated like second class citizens during the travel process.  A side point worthy of mention at this juncture is the fact that some of the flights that airlines generally have had to “reluctantly trim’ have been the ones contributing least to the profit margin and indeed contributing the negative yields! A fact the airlines will happily omit to divulge.

However, generally if “any lesson need be learned” to use an overworked cliché, learning not to listen to accountants will be one lesson learned the hard way by airlines. Accountants have no doubt saved hundreds of millions of Euro’s in cost saving measures such as reducing staff levels in the aviation sector; it’s just that the same moves cost them billions in lost revenue. Hopefully accountants are kept away from the top table in future years. Lufthansa also does not have the luxury of blaming Brexit for their current hiatus.

Lufthansa logo

March

This one ran and ran and the race may still not be finished. The bottom line is that despite the fact that aviation accounts for only a small amount of carbon emissions, this fact should not derail a  good story and one that the green followers, for some reason, want to use to prove a point that doesn’t exist.

Meddling in the Free Market

People see Western Europe as the bastion of democracy, the free market and freedom of speech; though as many are coming to realise, such perspectives are becoming more and more questionable. Ignoring points one and three, point two and the notion that Europe is a free market has long been a bone of contention; think exporting tomatoes to France or fishing your own catch around the coastlines of Europe. However, in the world of travel, the government of the Netherlands has taken free enterprise one step backwards by trying to reduce the amount of traffic its main hub airport and commercial link to the outside world, Schiphol handles per annum. It typically handles 500,000 flights annually though recently due to staff shortages the number has been a mere 440,000. The government is trying to cap this figure at 460,000 from November 2023 using the soft argument that its decision is based on noise and air pollution and this would appear to override commercial concerns.

This attempt to meddle in the commercial world of aviation has gone down like a lead balloon with IATA who have initiated legal action against the government in the Hague, citing that the move contravenes EU Regulation 598/2014 on noise related operating restrictions at EU airports. This act makes the point that a “’Balanced Approach includes consultation with affected parties, using flight reductions only as a last resort and balancing the interests of local residents, the environment, the local economy and with aviation’s economic and social benefits.”  IATA’s argument being that there was no consultation and the move was a first resort and not a last one.

The entire world of travel will no doubt hope the Netherlands Government intervention is vetoed and their civil servants are re-directed to things they no more about; this excludes commercial activity.

 

April

Just why Sofia should need to re-furbish its new airport terminal so majorly just 17 years after it opened raises questions (that no-one dare ask) about the quality of the original effort. Later in the year the plans were announced by the new Airport operators to rescue (!) the dilapidated car park as the first phase of this project:-

Sofia Airport Rebuild

Sofia Airport seems to be progressing with plans for its 24.5 million Leva reconstruction with the selection of architects and engineers announced. A local Bulgarian firm has been selected as the architectural and engineering company and will be supported by two international firms with experience in airport design and aviation infrastructure.

The plan is to do a complete re-development of Terminal 2 i.e., the “new” terminal, which will also absorb the traffic from the ‘”old” Terminal 1 which will be taken out of operation. Additionally, a new Terminal 3 will be built though this won’t be in operation until 2030.

The new Terminal 2 will have a brand-new baggage management system, will see a doubling of the check in counters, new border control area, 2000 sqM of Duty-Free shopping, new catering options and additional aircraft boarding bridges.

Question: why wasn’t the “new” Terminal 2 built properly in the first place some 17 years ago? Which by most measures is relatively recently.

May

In November, test runs were held on a flight between London and Rome where all passengers transited the airport digitally, ie no passports or ID were shown! Earlier than that in May, we saw the shape of things to come in Dubai where Emirates are already well advanced in the digital stakes. We are only a short time away from reaching the point where digital boarding passes will be the rule and old paper boarding passes will follow the old paper tickets into museums.

The Shape of Things to Come

When e-tickets replaced paper tickets years ago on the pretext that it was both a cost saving (to airlines) and it was more environmentally friendly, two studies that came out of the USA estimated that the amount of paper actually used by passengers who had to print off their tickets was between double and four times more than was used by the airlines in printing paper tickets in the first place. So much for saving the rain forest. It was however a cost saving and one of many such that passed the cost of operation from the airlines onto people further down the chain. Boarding passes also fall into the same category and its now normal to see people showing their boarding passes from their phones at the boarding gate etc. Emirates are taking this evolution one step further.

From May 15th all Emirates passengers departing Dubai have to use a mobile boarding pass instead of printed paper. Passengers checking in at the airport will receive their mobile boarding pass via SMS or email whilst those who check in online will receive theirs via Apple Wallet or Google Wallet.

Passengers flying to the USA and those with connecting flights on other airlines will still require a physical boarding pass as will passengers travelling with infants, unaccompanied minors and anyone requiring special assistance.

June

Not for the first time we mentioned that European travellers and third country travellers visiting Europe will soon need visas, though the starting date for these are being continuously being pushed back. They will appear one day however but it does beg the question of how many people realise that visa free travel will, for many, be about to change: –

EU & UK Visa

Both the EU and the UK will shortly require visitors to apply for “Travel Authorisations” before they can enter any EU state and to enter the UK. The EU system is called ETIAS and the UK system is called ETA. The UK one will cost the traveller 10 GBP when it starts to be phased in later this year, whilst the EU one will start sometime in 2024 and is slated to cost 7 Euro. The ETA will be valid for two years whilst the ETIAS is valid for three years. By comparison, the USA’s ETSA visa (remember, at the launch it was made quite clear that this visa was not a visa!) now costs 21 USD. It didn’t cost 21 USD when it was launched but neither will the ETA and the ETIAS cost the same in a few years once critical mass has been obtained and the relevant authorities feel confident, they can increase income from the visas.

Lufthansa Swiss logo

July/August

The local market depends on Wizz Air in a similar fashion that many countries rely on its own national flag carrier to provide connectivity with the rest of Europe. Wizz Air’s rise and continued rise has not been without its fair share of negativity. That negativity still prevails bur it seems that as long as it’s cheap, people have become programmed to accept whatever is presented (or not presented) to them by an airline:-

Wizz in the Bad Books – Again

Wizz Air has incurred the wrath of the UK’s Civil Aviation Authority after an avalanche of customer complaints with passengers not receiving the assistance aviation passenger rights demand. The statement produced by the CAA stated that the authority had been engaging with the airline for some time now regarding violations of passenger rights in respect of financial compensation when flights were delayed or cancelled. Many stories have already appeared in the media connected with Wizz Air withholding refunds and compensation to passengers even after court orders have been issued.

The CAA is going to closely monitor the airline’s future compliance with revised policies including faster refunds and compensation payments. The regulator will also work with Wizz to ensure that compensation claims where delayed passengers have had their compensation incorrectly rejected, are paid out.

Strange that Wizz at the same time reports whopping profits and one would bet their cash flow statements are extremely positive! Even in a pandemic. It’s better than borrowing money from a bank.

September

It’s the sort of story environmentalists didn’t want to hear yet a fact is a fact. People generally care about planet Earth but sacrificing travel is not something that will be forced upon them:-

The Return to Normality Cometh

As the summer season reaches its last lap here in Europe, the figures for the airline world start to appear, the intent being to clarify whether it’s business as usual or whether the Covid effect still prevails. If you look at the figures for July, when the peak season was just starting, traffic was around 97% of ‘’the norm”’ ie of 2019. Here, it needs to be mentioned that the impact of the war in Ukraine and the loss of these numbers needs to be factored in. So, Europe is doing very well thank you, which in simple terms means one thing; people want and need air connectivity. That’s not to say that the environment needs to be ignored for it shouldn’t. King Canute tried to stop mother nature, people travelling may not be mother nature, but to travel is human nature.

eatstaylovebulgaria

October

Not such a big story but certainly one that few people would know about and one that the car industry would not want to see replicated: –

Singapore Sting

Ever wondered where is the most expensive place in the world to buy a car, let alone rent one? It has to be Singapore. Before you can buy a car, you have to obtain a COE (Certificate of entitlement) which is a permit to allow you to actually buy go and buy a car. The cost of these permits can vary but they are auctioned every two weeks. There are different types of permits that are associated with the size of car you can buy i.e. small/medium sized etc. The cost of the permit to buy a small car is currently around 72,000 Euro whilst the permit for a large car is 101,000 Euro. Remember; that’s before you buy the car! This makes buying a car in Singapore multiple times more expensive than doing so for the same car in Europe and it becomes an almost impossibility for someone on the average wage of 48,000 Euro per annum.

The idea of course is that everyone uses the city states excellent public transport system. Whether this concept is effective is another question as there are still 1 million cars registered in Singapore out of a population of some 5 million. Urban planners across Europe freshly graduated and armed with their MBA’s will be drooling at the possibility of emulation.

 

November

Think back through life at various buzz words that came and went. Apply this to travel and you will be left with an outdated dictionary of words, expressions or concepts that today are irrelevant. What those fed by the corporate world have to do though is play the game and don’t upset the apple cart. Lots of money and lots of jobs depend on not upsetting the aforementioned applecart so the golden rule number one remains: don’t ask and don’t challenge the narrative: –

Don’t Challenge the Narrative

Some 2.5% of the worlds carbon emissions are apportioned to the aviation industry, but it would be an interesting exercise to survey the public at large to ask what they “think” is the aviation industry’s contribution; that figure is likely to be significantly more than it actually is, such is the perception. Everyone in the aviation chain now makes the right noises when the word sustainability is mentioned and the loudest noise recently has been surrounding SAF. This is the abbreviation for Sustainable Airline Fuels which is made from a variety of sources including crops, household waste and cooking oils and on the 28th November, the first transatlantic flight took off with a plane using 100% of such fuel. Planes are generally only allowed up to 50% of such fuels in the total mix and as yet there is simply not the capability to produce the fuels the aviation industry needs. However, is all this a smoke and mirrors exercise?

Planes still emit carbon when using SAF though the narrative is that it is less polluting. This may well be true, but away from the media hype and any connection with sustainability, the educated in the world and those with some connection to the world of travel, know that SAF is simply a small stepping stone and is absolutely not the end of the line; despite the media focus. In the next decades progress has to be made with e-fuels that are manufactured using captured carbon monoxide together with hydrogen or some other technology; SAF is not the answer. Yes, the world can produce enough crops to turn into SAF but there is a problem; that means converting crops away from the food supply chain and the impact on humanity will be frightening. There is also a nagging question about the use in aviation of any non fossil fuels and that is, how safe are they and how reliable are they?

There has been no accident involving anything connected with aviation caused by SAF etc. but how does legacy technology i.e. plane engines and the like cope over decades of sustained use with SAF and their equivalent, the answer is: we don’t know. The world of aviation has evolved over decades using known elements and that includes the fuel that drives this technology. Changing the force that drives engines may not have any effect on the wear and tear of an aircraft engine, but it’s probably too early to say that such fuels definitively do not. Have such fuels had consistent testing for thousands of hours in a commercial environment which includes ethe extremes of hot and cold temperatures? However, like with Covid when rushed vaccinations were forced upon the world that had no history of testing in an industry that demands years and years of testing, questioning the narrative incurs the wrath of the system.

Whilst on the topic of not upsetting the narrative, many people will have seen the impressive car park fire at London Luton Airport at the end of October, a fire that wrecked 1500 cars, closed the airport and caused 20m GBP in damages. What was also eye catching was the speed at which the media reported not that the fire was caused by a car catching fire, but rather the specific point of blaming a Diesel car for the starting the fire. Whilst diesel can indeed catch fire, it is extremely hard to do so and it is much less flammable than normal petrol. To ignite diesel, it takes intense pressure or sustained a flame to ignite it. The cause of the fire, as reported, broke the Guinness book of records for the apportion of guilt. On a recent visit to the UK via Luton Airport, an innocuous comment in passing was made of the fire to which the staff member laughed and explained in great detail how staff watched it unfold with colleagues taking out their phones to capture the scene. The discrepancy between what the world was told and what was explained is that the root of the problem was in the electric charging area of the car park where electric cars were parked. The implications of this, if it were true would be endless. Shopping mall car parks may have to be closed to electric cars and insurance premiums for electric vehicles may sky rocket forcing early adopters to review their choice of vehicles. Remember the mayhem around something as simple as the exploding Samsung Galaxy tablets? Billions has been spent on making the public switch to battery powered transport and even in aviation, we see ongoing test flights with only battery powered planes; again, how safe are they in reality. However, challenging the narrative once again would risk not only the billions of dollars invested in battery technology, it may change the public perception of this “new” technology. Questioning it too hard would also not be good for one’s carreer. So let’s agree it was a Diesel car.

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Tel:+ 359 (2) 943 3011;
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e-mail:mark @jamadvice.eu