Editorial

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 28^th 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.

All Change to Charge

The operators of Sofia Airport have announced plans to spend 24.5 million Leva on infrastructure improvements connected with the (new!) Terminal 2. Work will start next year on major renovation work on the four story covered parking area, which itself will take a year to complete and in the meantime, a 1000 space outdoor parking area will be the substitute; the two parking areas will run in parallel once the project is completed providing 2900 spaces in total. No mention is made exactly where this outdoor will be located.

What is perhaps more important to the capitals airport users is that a whole new road infrastructure is planned on the approach to the airport which will include a curb side control system containing barriers and number plate recognition, the plan being that this will improve drop off and collections for those using friends cards or taxis to or from the airport. Maybe though the key part of all this is in what is not stated rather than what is stated!

Airports across the Europe have found a lucrative income stream from charging whopping fees for simply dropping off someone at the airport as well as collecting them on their return. The time allocated for this task is a few minutes in most cases and even then a not insignificant charge is made. Stray a minute or two over this time and the fees become jaw dropping. The big unwritten question is whether this is what ultimately the operators of Sofia Airport have in mind and if so, how are the car drivers who drop off/collect from Sofia Airport going to react? The wise bet will be that mass queues form at the closest point where parking is free.

The Shape of Things to Come

The Shape of Things to Come is a Science Fiction novel written by H.G. Wells back in 1933, which was subsequently made into a film in 1979 and featured the far-fetched notion of space ships and robots. The shape of things to come in how we navigate airports has just been seen on a BA flight between London Heathrow and Rome Fiumicino Airports in what is described as the world’s first “integrated digital identity experience”. Passengers on the flight used digital wallets, digital passports and biometric gates to travel through the airport.

The trial required passengers being checked through their digital passport before they arrived at the airport, ready to fly confirmation is then sent to the passenger together with their seat assignment. Then once at the airport, the biometric data is used to navigate through security, into airport lounges and onto the aircraft. No passports/ID cards are required during the process.

The message being provided after this trail is that this is how the travel process of the future will look with your smart phone storing your digital wallet which in turn stores your passport details. This will be all that is required for travel. That is, until 2016 when, as the books says, the world as we know it ends. Hackers and scammers will already be rubbing their hands already in eager anticipation of opportunities in the meantime.

Alternative Gifts

As we approach Christmas, the scramble to find that extra special novel gift for our loved ones creates the annual pre-festive season headache. However, one solution might be to give a gift that’s been re-cycled from airline materials. Emirates are not the first airline to go down this route, but like most things they do, it tends to be much bigger. They are taking parts from 120 of their A380 and Boeing 777 fleet that are undergoing refurbishment and up-cycling them with items used including leather from couches in the A380 lounge, seatbelts, headrests and fur from the captain’s seat. Items they are made into include limited edition suitcases, backpacks, handbags, cardholders, toiletry gangs, belts and even shoes.

So far, 14,000 kgs of material have been used from the first 16 aircraft with the airline estimating that there is scope to recover 270 kgs of leather and 627 kg of seat fabrics per aircraft. With such numbers it would appear that the airline needs an entire new staff structure to manage the project. Also, worth noting is that proceeds go to the Emirates Airline Foundation.

Common Sense at Last

The protracted on-off saga involving Amsterdam Schiphol Airport and the airline community may have reached a (temporary) conclusion; the Dutch Government suspended its plans to try regulate the market by reducing the number of flights that usually operate to the airport and banning certain types of flights that don’t meet with their approval i.e. private jets!

In short, the green agenda met Commercial realism when the Dutch Government realised that banning some US based airlines might incur some tit for tat reaction that wouldn’t go down well at home. The threat of retaliatory action by the USA DoT (Department of Transport) was also being lined up not just against the Dutch, but against the EU, at which point clearly someone from the EU obviously had a quiet word with the Dutch Government. The reason for the back track is pure speculation of course, but the eventual outcome was as expected in the real world just as Santa is expected at Christmas.

Running a country is like running a business, unfortunately politicians with no business experience get too involved in day to day business decisions and instead let their individual beliefs take precedence to the detriment of both the country and its inhabitants.

Numbers Grow

The Hotel sector continues to show a robust trend with numbers and financials getting healthier by the month. Global Hotel brands have been at the forefront of this recovery to the point whereby the word “recovery” is about to be consigned to the history books as a temporary state of being. The Marriott Group have a whopping 557,000 beds in its pipeline which one could say translates into Marriott have huge confidence that more and more people will want to travel in the future and that these same people will want to choose a well-known and respected hotel brand. For the third-quarter 2023, their hotels were averaging a daily rate of 179.84 USD per night with occupancy around 72.1%. Their total income for the period was 5.93 billion USD which is 11.7% up on the previous year, whilst net income was 752 million USD, up from 630 million USD the previous year.

Meanwhile Hyatt Hotels third-quarter average room rate was 202.13 USD per room with total revenue at 1.62 billion USD, an increase from 1.54 billion the previous year. Net income was 68 million USD, an increase of 28 million USD on the previous year.

Both these hotel groups also made the point that all types of travellers, be they leisure, business or groups, are helping to improve their financials, but the one sector that is really standing with its performance is the Group sector. This particular sector can be defined differently depending on the hotel group, but very loosely it would be any booking of over 10 rooms or 10 room nights. Indeed, as Covid started to be a thing of the past, it was the meetings and events sector that gained momentum the first. This is despite the nay Sayers who were happily reporting the death of face-to-face meetings. The exact opposite is true. People instinctively want to meet other people and real business is done in a face-to-face environment and not on zoom calls. Just as there is now a steady but consistent flow back to office working from a remote working environment, this comes despite the media narrative telling us the opposite. The fact of the matter is that there is theory and there is reality and then there is also human behaviour.

Lufthansa Local Facts

It’s not quite the end of the year yet, but a local presentation recently by the Lufthansa Group emphasised how key the group is to the connectivity of Bulgaria with the outside world. The LH Group (Lufthansa, Austrian, Swiss, Brussels Airlines and Eurowings) expect to carry 840,000 passengers from Bulgaria during 2023 and will have offered some 1.1 million seats on its flights throughout the year. During the current winter season (Oct – March), they will provide 69 flights per week from Bulgaria to their hubs in Munich, Frankfurt, Vienna and Zurich. Bulgaria also generates revenue of 45 million Euro to the group.

The onward and upward trend of the group explains why they are actively trying to recruits 2000 new pilots to meet the expected future demand for travel.

Consistency on the Roads

Bulgarian roads are renowned for being one of the most dangerous in Europe though one thing that can be said about the driving in the country is that its consistent. To that end the country still has the second worst figures for road deaths in Europe with 78 deaths per million inhabitants. A figure beaten only by Romania (as usual) with 86 deaths per million inhabitants. In the first ten months of 2023, 444 people lost their lives on Bulgarian roads, a figure of 22 more than the previous year.

Profits Like Never Before

Middle East mega carrier Emirates has just announced record profits for the half year period 1 April – 30 Sept of 2.7 billion USD, 138% more than the previous year. The Group revenue hit 18.3 billion USD, an increase of 20% on the previous year. Profit for the period comes in at a whopping 2.6 billion USD: remember this is half year and not full financial year numbers. The airline carried 26.1 million passengers during this period, an increase of31% on the previous year. Back in May Emirates were proudly announcing record annual profits of 3 billion USD, a figure which looks like its going to be broken next time around.

Similarly, Ryanair were also not backward at coming forward with its financials which also saw significant profits akin to Emirates. For the half year up to 30^th September the Irish based carrier made a profit of 2.18 billion Euro, a figure 59% higher than the previous year. Total revenue rose to 8.58 billion Euro with a total of 105.4 million passengers carried, itself a 11% increase. Interestingly Ryanair, is expecting an annual profit up to the end of March of approximately 1.85 – 2.05 billion Euro as the winter period traditionally yields negative results. What is also noteworthy from the Ryanair financials is that their average fare is 58 Euro per leg with ancillary services such as reserved seats, priority boarding and inflight sales yielding 24 Euro per passenger. Translated that means each flight sector generates revenue of 82 Euro per passenger on average.

Bags of Issues

The (relatively) new fashion for travellers to avoid checking in large suitcases and instead rely on carrying the wares they need during a trip in the form of hand luggage only, has led to several things. Firstly, in the cat and mouse game airlines play with their fares, hand luggage that was initially a free element of travel, ie wheelie suitcases is now usually charged for. Secondly, the scramble by the same travellers to get on board the plane first so that they can their “paid for” bags into the overhead compartments above their own seat (otherwise the advantage of being able to disembark first is lost) provides the opportunity for airlines to charge passengers even more in the form of priority boarding, a function which translates to “increase your chances of putting your bag close to you’’.  This whole aforementioned concept perhaps forms a part of the laws of supply and demand: as the demand is now clearly for hand luggage only, then introduce or increase the cost for those wishing to partake in the process of travelling only with hand luggage!

A new dynamic is about to enter the fray though that might have the accountants and revenue management people racking their brains and it’s a simple one: the overhead bins are about to get much bigger! In effect new aircraft will be soon be fitted with what are described as L bins which will allow vertical loading of overhead bins and allow for a 60% increase in the number of bags stored. What’s worse (for the airlines) is that these bins can be retro fitted onto existing aircraft in around three days. So, if passengers travel knowing full well they can get their carry-on bags stored onboard and close to where they are sitting, why pay extra for any other service that currently guarantees that? The question then becomes what will airlines introduce as a charge to compensate from losing this current revenue stream (priority boarding)? History has shown some new cost or other will be conjured up that, after initial ridicule, will gradually achieve acceptance. Perhaps a “priority disembarking fee” where the rank and file have to stay seated until those who have paid for priority disembarking alight the plane first. A stupid idea? Wasn’t charging a fee for carrying a bag a stupid notion not so very long ago!

Away from Home

The world, as we knew it, changed dramatically during and following Covid and one of the most significant change was the ability for people to work from home. The jury is out on just how in the longer term this trend will pan out, but for sure currently a significant chunk of staff work either partly of fully from home. Working from home though also provides a marvellous opportunity for “homeworkers” to relocate their homes (temporarily) to a beach, a ski resort or absolutely anywhere they see fit. Quite often, this is done without the employer being aware of exactly where in the world their employees are actually sat. A recent survey revealed that employers believed that 6% of their staff have worked “away’” from their normal home base. In otherwards they were aware of 6%. In reality, 36% of employees admitted to working from an alternative location where they didn’t want their employer to know where they were.

This creates several issues, such as the potential that security protocols will be breached such as internet connections not being secure and laptops being taken overseas that contain sensitive corporate information. It also raises issue surrounding taxation and health and safety concerns for staff if they are overseas.

As for the staff themselves, they appear they ahead of the curve in covering their tracks with many of them ensuring they don’t use social media whilst away from home and also hide behind virtual backgrounds whilst on conference calls.

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