Editorial
Forced Thinking
Democracy is an interesting word as by definition it translates to “power of the people”, the assumption being that this means the majority of people get their way as opposed to the minority of people. However, as we see in the election of governments in many parts of the world, the majority are quickly silenced. Isn’t that how Communism came to be? In our modern world we also find ourselves dictated to by the loudest voices in all walks of life. Standing up against these voices, like those who stood up against communism, often does not end well and even challenging the narrative in itself often makes people social outcasts. The world is getting smaller, and people want to do things they may never had the chance of doing in past era’s. Here in Bulgaria for the past two decades (or less), the population has had the chance to see the wider world and not just the world the Communist party wanted them to see. A quick day or two in Greece is nothing fancy, yet not even three decades ago, this was but a dream for many, despite it being within touching distance. There is also the argument that has the local population travelled more and more, they learned from their experiences and saw just what the country needed to do to “catch up” with Europe. It hard to imagine what the country would be like if its population had not had this opportunity to see the world. That world by the way does not stop at Europe.
Its thus hard to classify the New Economics Foundation and the group Stay Grounded as anything more than modern day Communists. A more endearing term might be to refer to them as radicals or extremists’ nutters. Sadly, they attract media attention. Their objective in the short term is to charge regular travellers with a frequent flying levy. In short, anyone who takes the plane more than once is charged extra. Just how this could be managed would be an interesting discussion that would tax the George Orwell 1984 theory to the absolute max. However, they argue that such a process would reduce carbon emission caused by aviation by 21% of which 54% would be secured from just 4.5% of the population of Western Europe. The additional taxes, they claim, would generate 63.6 billion Euro per year; a six-fold increase in European aviation tax revenues. Scratching your head already? Indeed, you should be as we assume not many of them are economists.
At this point its reasonable to suggest that they are making the numbers up based on hot air. It may well be that any revenue raised can help fund other NGO’s et al, to produce other nonsensical reports and door stops whilst keeping themselves in business. Might it just be that technology can produce a 21% reduction in carbon emissions by improvements in engineering and aviation technology! Just for the record, lest we forget, aviation is responsible for producing 2% of the worlds carbon emissions. The food eco system produces 37%. Aviation though is a soft and lucrative target that can help pay the bills and fund consultants everywhere.
As if to prove a point, a survey by our own BCD Networks consultancy arm, Advito, yielded the fact that in the “real world” sustainability is amongst the least important consideration when travelling. Just 4% of people surveyed indicated they take sustainability into consideration when booking flights. More important to them in the real world are arrival and departure times or flight duration (71%), price (51%) and their company travel policy (49%). In other words, they are influenced by what is important to them, as opposed to what is important to others. When it comes to travelling for business, the stick is more likely to be wielded by the Travel Manager i.e. the person who puts travel policy together and thus any travel “requirement” can be steered by him/her regardless of whether that person is a user (traveller). The process gets to sound more Orwellian the more one thinks about it. The point however should be made that travellers are not anti-sustainable in their own lives, it’s likely everyone does something to help planet earth but in a way that’s convenient and cost effective to them, be that cycling to work, re-cycling materials and even not taking a plastic bag from the supermarket check out each time. People are different from each other and each has their own priorities, they don’t want to be “told” what their priorities should be.
Mark Thomas
Managing Director
Jamadvice Travel | BCD Bulgaria
Boeing At The Bottom
“Too big to fail” is an expression etched into our lives over decades, except that in more recent times, no-one seems to be “too big” to fail. Ask numerous airlines, household brands, banks and mobile telephone providers. No-one is immune from not keeping pace with the changing times. Aircraft manufacturer Boeing are surely too big to fail; aren’t they? Yet looking at their performance (or lack of) over the past decade or so, the question begs whether they are capable of surviving in a dog eat dog world. The answer is more than likely that they will still be around a decade from now, simply because the USA government cannot imagine an infrastructure, both commercial and military, that is devoid of Boeing! In a strange way it’s a bit like central command economies where existence came about despite their individual capability – or lack of – and because of the political necessity not to be seen that a weak link in in the chain exists.
Boeing are haemorrhaging money to the tune of 1 billion USD per month, its workers are on strike and have rejected a 35% pay increase spread over 4 years. The company has supposedly almost 10 billion USD in cash reserves but still felt it needed to borrow another 10 billion to improve cash flow. Added to this is the fact that delays in delivering planes to airlines across the globe are starting to financially impact the airlines themselves.
Lufthansa as an example, has ordered 168 planes in total, 95 of which were from Boeing and of these, 43 should already be in operation: they are nowhere near. The knock-on effect is that older machines have to be used which are more costly to operate, new planed routes can’t be fulfilled and planned increased seat capacity on existing routes using the new larger planes has to be left on the shelf. If ever a company was deep in the mire, its Boeing.
Lest we forget that Boeing itself has come under severe scrutiny over recent years and the financial fallout is still not resolved from two of its planes falling out of the sky due to dodgy manufacture as well as from doors dropping off planes mid-flight. All this suggests an inherent quality issue that might place a Boeing plane on the same page as a Lada Car. That comparison is rather extreme, but if you as an individual are looking at buying a new product in the near future, regardless of what it is, do you consider one with a tarnished reputation? Car, washing machine or vacuum clear; the concept is the same.
Boeing’s loss is potentially rival Airbus’s gain. However, ramping up production to satisfy short term shortages simply doesn’t happen. From order to delivery, a plane can take between 18 months and 5 years to by seen in operation depending on the aircraft type. Of course, the option also exists to buy a new plane from someone who is about to receive delivery of theirs; for a premium of course. That though is costly and far from guaranteed. There are also other indirect effects of airlines not getting their new planes aside of their own profit and loss impact.
Sustainability is a buzz word, like it or not and airlines have to play the game in making the numbers stack up in the Carbon Emissions charade. The world sets targets with financial penalties for those not achieving these targets, in the case of airlines it’s reducing their emissions output, which they will have planned to achieve with the delivery of new efficient machines; except they don’t get the tools to do the job. Thus, is it reasonable to pass this financial cost on to that part of the chain that “failed’ i.e. the plane manufacturer?
There is another potential factor at play here aside of the commercial factor: the political one. In recent times to all intents, there was two major and two smaller airline manufacturers with critical mass: Airbus and Boing plus Bombardier and Embraer. The latter two were snapped up by the first two. However, as the political influence and power of the USA has waned in recent times in certain parts of the world, the power of China and Russia has been showing itself geopolitically. These two countries now also have their own Boeing/Airbus rivals in Comac (China) and United Aircraft Corporation (Russia). Both these countries, particular China, will continue to have an exponential demand for new planes for decades to come (they also won’t be too bothered by carbon emission targets either) and its more than given that their own domestic supply chain will be given preference during the procurement process. Additionally, by offering their own manufactured planes at a friendly discount to countries that were previously second-hand Boeing or Airbus users, this might also play its part in changing the landscape in the skies.
Another Delay
Whenever public servants are involved in a project; two words usually accompany it: delays and chaos. The bureaucrats at the EU are certainly living up to this perception with their amusing attempts to implement the pan European EES (Entry-Exit System). After countless delays already the latest start date has been pushed back once again from November 10th and to highlight their ineptitude, they haven’t a clue when they can suggest a new start date.
Leaving bureaucrats to manage such a project is always going to result in failure, but the sad fact is that everyone seemed to know that the deadlines being spoken about where unattainable. The latest delay is down to the common-sense approach of Germany, France and Netherlands who suggested tactfully that maybe the system should be tested first before it’s rolled out (in a rush). Probably financial bonuses were at risk hence the rush to roll it out before it was indeed ready.
Just to cut and paste what we are talking about with EES, this is the first part of new operational systems that will (try) control European borders. It is a biometric system which will use digital photographs and fingerprints for registering travellers from non-EU countries. In conjunction with the EES, once the system is working, ETIAS will then appear which is the visa that non-EU visitors will need to obtain to enter the EU. This will apply to visitors from 60 visa free travel non-EU countries and at the same time., the UK will also implement its variant of the ETIAS which is called ETA.
Confused yet? You will be, eventually.
What Asset?
ITA Airways, the successor to Alitalia seems to be getting sentimental as it has unveiled plans to resurrect the Alitalia brand at “” strategic touch points”’. Just what and where these touch points are was not qualified in the press release and just why ITA considers Alitalia an important asset is also an intriguing question.
Many would have put the Alitalia brand in the liabilities column as opposed to the asset column but each to their own we assume.
Just as a reminder, Lufthansa recently acquired ITA and things do look to be on an upward trajectory for the airline after years of strife as Alitalia revenues up 300 million Euros year on year with EBITDA up 130 million Euros. So, the question remains, just exactly what is the Alitalia asset?
More European Travel Than Ever
We have commented many times about the ever-increasing demand by people to travel which comes despite the noisy minority doing their utmost to change the face of the world. Halting peoples desire to travel seems at present to be the only facet of life where the minority voice fails to gain traction, people are not afraid to ignore the minority narrative.
However, we digress, the story is that during 2023, residents of the European Union made 1.14 billion tourism trips, an increase of 6% on the previous year. 90% were defined as being “’leisure trips” whilst 10% were for “professional reasons” (business trips). Interestingly, 73% of these trips were made domestically whilst more than half were relatively short durations of between one and three nights.
The value of this tourism expenditure was 553 billion Euro which equates to 97.6 Euro per night. Tourists from Luxembourg spend the most with 183 Euro followed by Austrians 161 Euro and Irish 143 Euro, At the opposite end of the scale were the Greeks at 48 Euro, Polish 52 Euro and Czech with 57 Euro.
Same As
London has maintained its top spot as the best Meetings and Events destination in the EMEA region (Europe, Middle East & Africa) according to a recent survey. This comes despite the continued upward trend of increased accommodation costs in the UK capital. The survey measurement criteria was based on ease of travel and transportation for attendees, cost effectiveness for organisers and participants, recent public investments, safety and security and sustainability attributes.
Madrid will feel smug as it leapfrogged Barcelona into second place which drops to third place whilst Paris and Berlin made also make the top five. It is interesting to note the reason why Madrid jumped into second place was due to its connectivity with Latin America which facilitated ease of access for people from South America. Proving that air connectivity is vital for many economies. Other countries should take note!
Berlin continues to gain momentum in the popularity stakes as it’s a popular choice for the budget conscious and offers many excellent venues without the price tag of say Amsterdam, which was previously in fourth, but is perhaps fast becoming a victim of the green movement.
Why Choose Rail?
French and German rail operators SNCF and Deutsche Bahn are to launch a new high speed rail link between Paris and Berlin. The trains used will be the Germans ICE (InterCity Express) trains and will feature 444 seats of which 111 will be in First Class. The trains will depart Paris Gare de L’est and will call at Strasbourg, Karlsruhe and Frankfurt South. The journey time is approximately 8 hours
You can interpret this however you wish but one can’t help but think that its much faster by plane and likely no more expensive! Of course, if you have time on your hands and you trust the rail network to actually provide what it says on the box, then why not!
Ryanair in the Dock Again
The Data Protection Agency in Ireland has launched an inquiry into Ryanair’s use of facial recognition technology as part of its online customer verification process for bookings made via third parties. The airline launched its controversial policy in 2023 requiring data from passengers who did not book via its own website.
The whole process of booking and then checking in for the flight has been made increasingly complicated by Ryanair over the past year and is especially difficult for passengers using corporate booking tools. The inquiry will consider if Ryanair’s move complies with its obligations under GDPR obligations, including transparency and data processing.
Bedding In
Two hotel chains, the IHG and Hilton Groups, have both noted that business travel is driving their continued growth and that much of this derives from the SME sector. Both groups are expecting their own corporate clients to increase their spend over the next twelve months not only in transient stays (standard business travel) but also in their meetings and events spend. The bottom-line message being that the outlook is rosy.
At the same time, the IHG Group announced that their average daily room rate for the third quarter reached 132.72 USD with occupancy reaching 71.6% worldwide (74.6% in Europe). The group also opened 98 new hotels in the period which equates to 17,500 new rooms coming on stream. Hilton meanwhile reported an average daily rate of 161.18 USD for the same period with occupancy at 75.3%.
Is It Free?
A past article touched on the topic of free Wi-Fi onboard flights with the comment that there is a chance that having free Wi-Fi can be a USP in the decision-making process of travellers when choosing a flight. It could also be argued that there is absolutely no reason why an airline these days should even consider charging for Wi-Fi, but of course the airline accountants will get nervous at the perceived drop in income from such ancillary services as their job is more about the bottom-line impact, as opposed to the customer experience. However, the tide appears to have turned as more and more airlines are announcing their intent to offer free onboard Wi-Fi on their fleets.
Air France is the latest airline to get its PR machine working as they announced they have teamed up with SpaceX’s Starlink to roll out high speed connectivity from next year. The sting in the tail of course is like others, you have to join the airline frequent flyer membership.
In the USA, United and Delta have announced similar plans and elsewhere, Turkish and Qantas have done the same whilst Cathay Pacific now have free Wi-Fi in business class with the people at the back getting their’ s for free sometime next year.
It’s Painful When It Goes Bad
As more and more airlines globally report record numbers post covid and the ink appears most definitely black on most sets of accounts, its interesting phenomena that two of Europe’s largest airlines are bucking the trend of positivity. Lufthansa have already unveiled a “’comprehensive turnaround programme”” as it tries to steady its own ship and steer in in the right direction, whilst KLM are the latest to announce plans to steer the ship away from the rocks.
The Dutch airline, which is part of the Air France-KLM Group, plans a 450 million Euro restructuring process despite their flights that are operating being full, the actual total numbers flying are still down following the Covod era. This difference is explained by the fact that airline is short of staff and equipment (planes). This, allied to increased operational costs makes the balance sheet look less than satisfactory.
KLM is of course the national airline which has been in the target sites of the Green facing Netherlands Government who seem to have adopted a dodo bird like culture when it comes to its approach to tourism and airlines, with its attempts to stifle Amsterdam Airports operations.
The Case For The Business Trip
The reason why and the benefits of, “travelling for business”, are often ignored by employers in favour of external non-commercial handbrakes that are employed each time there is a sniff of an economic downturn. Thus, the findings from travel payments specialist AirPlus survey into traveller’s perception of travel makes interesting reading.
At the top of the pile is the fact that 51% of people who travel for work consider this as a status symbol. Additionally, 37% felt it gave them superiority in their own social circles though this figure is the average of men who felt this to be the case in 44% of the cases and women in 29% (the survey didn’t consider the fashion of those who don’t know their gender).
One in three business travellers (31%) would consider changing jobs if they suddenly lost the ability to travel, a percentage that increases to 40% amongst younger Gen Y and Gen Z professionals.
When it came to justifying the need to travel for business, relationship building came top with 51% followed by travel for negotiations and persuasion with 40%, followed by the discussion of confidential or sensitive topics 39%.
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