Editorial

A Summer Thought

The peak summer season is now either in full flow or waning, depending on how your perception is of summer. This is probably true in terms of ticking off the days on the calendar, but is also more applicable to the local summer season than that across other parts of Europe. By mid-September – unless we are totally behind the times – the Black Sea resorts are approaching shut down mode if they haven’t already closed their shutters. This fact also perhaps explains the perceived gouging of tourists as far as prices are concerned, this is both in terms of accommodation and ancillary services such as food, drink and sunbeds. The season locally is a relatively short one and so the years income has to be earned in double quick time. This accusation might be slightly wide of the mark as the actual costs are probably more or less the same as rival resorts in Turkey, Greece and Spain, except the standard and quality of service offered in the three aforementioned countries is usually far better than local offerings where, in theory, the cost of providing those services are lower i.e. salaries etc. No doubt the statistics connected with the summer season at home will reveal that the garden is rosy and all is well in the world; it usually does. As we have commented before, when (if) the Euro is adopted, the move might be a game changer in the longer term, though for the wrong reasons.

Just to see how the world connected to local tourism evolves, the Northern part of Greece between Thessaloniki and Alexandria has become very much en vogue for Bulgarians with one visitor describing it a bit like Kiten from years gone by. Whether that was a compliment or not is open to debate, but what it shows is that the audience the Southern part of the Black Sea once attracted, now finds it easy to reach this part of Greece and also likely finds the prices favourable too. The small entrepreneurs of Northern Greece will no doubt be rubbing their hands as this region was most definitely under used as a tourist destination. How long their new visitors will continue to visit is another conversation. The bottom line is peoples holiday habits can and do change with the times.

Whilst on the topic of tourism, it was interesting to note that singer Taylor Swift generated around 1 billion GBP in income for the UK economy off the back of her playing to 1.2 million across the UK. There are many differing types of tourism that can boost the income of a country, all it needs is a bit of thought outside the box and a desire to use the opportunity. Harnessing a large stadium, a singer and a decent number of hotels to accommodate people in is not rocket science. As Charles Darwin said, “it’s not the strongest of species that survives, nor the most intelligent, but the one most responsive to change.”

Talking of change, a change of mindset is perhaps needed in other sectors of local tourism. Bulgaria is striving to boost alternative tourism such as hiking, spa visits and wine tasting. There are many excellent new wineries in the country, often thanks to EU grants. Like spa’s they are likely to be t popular at weekends as this is the time people have down time from work. ‘’Weekend or short break” visitors are commonplace at every European city worth a mention, this is when people are able to travel and visit other destinations to try new places and experiences. So, it was perhaps surprising that whilst trying to organise wine tasting at a winery the response was ‘we are not sure we can do it on a weekend!” Doing the tasting mid-week was fine, but for some bizarre reason weekends didn’t seem to exist. The comment is akin to a shop in a mall not opening weekends or the gold course closed on a Saturday and Sunday! Its only when you hear comments like this that you start to appreciate the fact that there is still a lot of catching up to do mentally in the drive to make a visit to Bulgaria (at weekends) an attractive proposition.

Mark Thomas

Deal or No Deal

Visa Visa

The only surety with the European Union is that whatever they say, things will be delayed. If only they employed ‘” best in class” people to fulfil a task or a project then things would likely be different, instead they engage public servants. Its akin to am amateur trying to do a professional’s job. Anyhow the latest EU fund raising project hidden behind the mask of security sees its new EES (Entry Exit System) delayed now until November,

Just for anyone who switches off from life, the EES is a biometric system for registering travellers from non-EU countries when they cross international borders. It will apply to both short stay visa holders and visa-exempt travellers.

Allied to this, the sister project, the ETIAS (European Travel Information and Authorisation System) will not be applicable until mid-2025. This is the new visa that’s not called a visa, but costs 7 Euros for citizens of non-EU countries to obtain in order to be able to enter a European Union country.

Watch out for the fun and confusion in autumn.

Europe Tops Connections

Europe dominates the rankings in airport connectivity with the top three airports globally for connectivity all based in Europe. Istanbul leads the way followed by Frankfurt and Paris Charles De Gaulle. Istanbul serves 309 destinations; Frankfurt has 296 and Paris CDG 282.

In fourth comes Amsterdam with 270 alongside Chicago O”Hare, the first non-European airport to appear in the list. Rome is the only other European airport to feature in the top 10 in the actual 10^th position with 234 routes.

London Heathrow is 12^th with 221 destinations but is still regarded as Europe’s prime airport based on passenger numbers.

China and the USA each has four of the top 20 airports in the list whilst the Middle East has 2; Dubai and Jeddah. The other 10 are all in Europe.

Another One Bites The Dust

It wasn’t so long ago that the likes of Malev (Hungary) and Czech Airlines were key players in the aviation sector in this part of the world, popular mainly for their keen fares as they constantly tried to be cheaper than each other. This in turn dragged in the likes of our own Balkan Airlines into the economic fray with the net result that Malev and Balkan bit the dust whilst Czech laboured on. That is until now. Founded in 1923, Czech Airlines is about to cease operations in the way that we remember it from the end of October.

Whilst the brand name will remain in sorts, its owners, Smartwings will take over flight operations using its own airline code of QS. Thus, that looks like the end of the iconic OK flight code that was synonymous with Czech.

The death of Czech Airlines has been a slow one with its operations now down to just two destinations from its Prague base: Madrid and Paris.

Opposite Ends

It’s hard to form any valid opinion about the profitability or otherwise of an industry when you see totally diverse financial results coming from major players. Within Europe, the Lufthansa Group and IAG (British Airways /Iberia/Aer Lingus) are two of the three big traditional airline players with the other key player being Air France – KLM. For Lufthansa and IAG, their respective figures either indicate a business at different stages in its evolution, or that one is getting it “’all wrong”’ and the other is getting it “all right”.

First the positive; the IAG group have posted an operating profit of 1.3 billion Euro for the first half of the year with revenues of 14.7 billion Euros. Passenger revenue increased by 10.7%. this is on top of a capacity (seat) increase of 7.5%. the Load Factor (bums on seats) was 85%.

Then the not so positive; the Lufthansa Group posted a loss of 265 million Euro for the first six months of the year despite total revenue increasing by 6% to 17.4 billion Euros. Whilst for many airlines, the first six months of the year can be the least financially productive, the group were still forecasting an annual profit of 2.2 billion Euros but this has now been scaled back to between 1.4 – 1.6 billion Euros for the year. The seats available in the group meanwhile have also increased by 11%.

Certainly, the longer term success of an airline should not be viewed in just one period or one year, but as Lufthansa indicated, a significant reason for the red figures is the regularity of strikes in Germany and in particular at the airports that impact the airline both directly and indirectly. What was once the French disease is now the German disease.

Open Book

Ever thought how much an airline generates in income per passenger per flight? Historically, the traditional airlines of this world have always been shy in disclosing such details, almost as if they didn’t want rivals to know details of its own inner workings. Along came the Low-Cost airlines who conversely seem proud to disclose how much revenue they garner per passenger. Ryanair have never been backward in showing these figures and for the second quarter of the year, it generated 41.93 Euro per leg from each passenger, the year prior it was 49.07 Euro. Ancillary revenue was 23.40 Euro per passenger which in total contributed 1.3 billion Euros to the total revenue. The airline had 55.5 million passengers during this second quarter.

The Tide of Travel

King Canute found it rather difficult to stop the momentum of the sea, the force of the tide being an unstoppable, immovable force of nature. The world of travel is not a force of nature but it is created by human nature and humans insatiable desire to explore. Like King Canute though, those who try to stop or even restrict human’s ability to travel are trying to stop an immovable force, regardless of the narratives they spin. Thus, the same people will be less than happy to read the report by aircraft manufacturer Boeing who say that over the next 20 years, some 44,000 new aircraft will be needed to satisfy demand.

What is perhaps interesting in this figure is that 76% of the planes or 33,380 by number, will be single aisle planes, the sort that historically have been associated with short haul travel. The demand for twin aisle planes will amount to 8, 065 with 44% of these being operated by airlines from the Middle East. Also required will be 1,525 regional jets and 1, 05 freighter aircraft.

Eurasia is expected to be the main destination for some 22% of these new machines with both North America and China expected to accommodate 20% each.

The Coffee Test

The ongoing rebuild (we can’t think of a more suitable word that doesn’t cloak the truth) of Sofia Airport is certainly not slowing and the new airport operators have to be applauded for the work completed so far, especially airside in the departure areas. Having also to factor in the new Schengen requirements will also likely have been a small headache. One thing that is noticeable however is the prices of the food and drink in the various cafes.

We challenge anyone to come up with a more expensive cappuccino at any major airport in Europe. 11 Leva for a standard cup of coffee certainly lays down a marker that will be difficult to challenge. Clearly the prices are not designed with the local economy in mind and one can only assume that the rents are so high for the tenants that they are forced into price gouging the captive audience. Please let us know if you find any more expensive coffee’s; regular size and not large that is.

A word of warning also for Sofia Airport users, don’t be surprised if plans are on the table to charge cars for dropping off and picking up passengers; many airports already employ such charges across Europe and this will be a significant revenue earner for the airport operators. Just how that sits with the local population and what methods are employed to avoid such fees will be an interesting watch.

Turn Back The Clock

From September 1^st, European airports are re-introducing the 100 ml rule for liquids taken on board an aircraft. Some airports have been able to lift this long-standing requirement with the introduction of modern scanners, a project that sees all European airports at some point in the process of introduction.

What this does is punish those airports who have been at the forefront of scanner investment. The explanation given is that the re-introduction (quote) “addresses a temporary technical issue”.

Just what this “temporary issue” is could be anything, but its certainly nothing to do with airlines halting flights to Israel and equally nothing to do with the looming conflict in that region. Absolutely nothing. Sic.

New Rooms

Owning a hotel certainly seems in vogue as more and more hotels appear in our towns and cities. Across Europe, nearly 44,000 new hotel rooms in 330 new hotels will appear this year alone with equally eye catching numbers set to follow in subsequent years. However, just who makes the money in hotels is a different question as many hotels are actually managed by hotel management companies. The Intercontinental don’t own the property that carries their name in Sofia and nor does the Hyatt or Hilton, yet we often mistakenly appropriate profits to the hotels when rather it should go to those operating it. All the major hotel operators seem to be making hay whilst the sun shines as the following numbers testify.

The Hyatt Group are generating some 204.73 USD per room per night from their hotel rooms globally. Whilst in Europe that figure is 253.08 USD per night. That has allowed them to generate 1.7 billion USD in income for the second quarter of 2024. They also reported a 359 million USD profit but this figure is boosted by the sale of certain assets.

The Hilton Group saw revenue in the second quarter of 2024 for its rooms average 163.70 USD per night globally with the figure in Europe reaching173.38 USD. Revenue for the same period was 2.95 billion USD. Its hotel pipeline sees 3,870 new hotel additions planned which equates to 508,000 rooms though this will be spread over several years.

IHG (InterContinental Hotels Group) opened 126 new hotels in the first half of 2024 and this no doubt helped the group report revenues of 1.1 billion USD for the period which also generated 535 million USD in profits.

The French based Accor group recorded revenues of 2.7 billion Euros for the first half of 2024 with profit or 393 million Euro’s. France generates some 43% of the European income but the hosting of the Olympics by Paris will likely mean depressed figures for the year as – perhaps surprisingly – many people stay away from a country that hosts Olympics for fear that prices in anything connected with the hospitality sector will soar. That said, the group did note that the Groups performance in Germany during the Euro 2024 Football Tournament yielded better than usual results. The group opened 146 new hotels in the first half of the year which equates to 24,000 new rooms.

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