Editorial

Travel on the rebound?

Now that the summer season is behind us, September has, for some time, been viewed as the month when the state the world is actually in will expose its true self. By this in travel terms, it is viewed as being the “’test”” month when those who supply travel services such as airlines and hotels, will see if the pent-up demand for travel really does exist, or if the system has managed to continue to dissuade many from conducting their lives as they would like to.

The early signs are that the business of people moving is cranking itself into gear, whilst that gear may still only be the second gear in motoring terms, this is a significant change on the past year when the gears were in reverse. The summer did see many people travelling again, but the numbers associated with it can easily be skewed by people returning home for summer from overseas work or study. Airlines who operate scheduled flights – this can be the old traditional airlines or the new Low Cost airlines – did their bit to stimulate activity with extra or new flights to leisure destinations they previously wouldn’t touch with a barge pole. So, whilst September has been a huge improvement, the dust needs to settle into early October to see whether the gear stick is put into third or first gear. Just a word of warning with the new world of travel, lost revenue for 18 months has seen air fares increase noticeably, this was something we forecasted last year. Just how long these higher fares will hold out is a totally different question and the answer will only be discovered when the true supply/demand balance is clearer. At the present this balance is far too opaque.

Whilst on the subject of the costs of travel, the common opinion was that the entrepreneurs on the Bulgarian Black Sea were keen to make up for lost time during the past summer. By “’lost time”” we actually mean “lost revenue”. The many who visited that part of the world commented on just how busy it was compared with past years but also how more expensive it was becoming. The Black Sea appears to have had an excellent summer in terms of visitor numbers, particular from domestic travellers but this sadly is crammed into a very short window whereas the resorts need sustained consistent numbers over several months, not a surge in a few short weeks. Whether the expectations in terms of quality of the services and facilities offered at the Black Sea measured expectations as well as matching the expectations for the prices being demanded, only time will tell. That will be measured in future years when the freedom to travel once again to the likes of Greece and Turkey etc will once again likely tempt many who this year were put off traveling away from home. This is especially true when the news filters back that prices in Greece seemed lower than in the past and the obvious higher quality found in Greece comes actually at no greater cost than the new Black Sea pricing.

Passports needed

The use of technology creates a better experience for anyone and everyone travelling: doesn’t it? The answer to that is yes if you are the technology provider or the one that saves costs from its introduction, the answer is generally no if you are the victim (traveller). Just where Air Traffic Control sits in the answer to the question may become interesting.

Air Traffic Control is the process whereby planes are guided across our skies from one place to another and also the control of their take offs and landings. Each country has its own ATC and a plane is passed from one country controller to another as a plane fly’s overhead. A simple process but one that has barely changed since the second world war. That, allied to the mammoth increase in air travel over the years, has resulted in a fragmented mess of how aircraft are managed and compounded by the use of the labour involved in air traffic control as a political tool, aka, the annual strike action by Air Traffic Controllers in Greece and France, the timing of which you can set your watch to. Can “’technology” improve things for the better in our skies?

By using the word technology, one would hope the word “’improve”’ is not mis guided in its addition to the sentence. Technology has the knack of reducing costs and passing the buck e.g. less staff, less costs and more hassle when things go wrong. With Air Traffic Control, it has long been muted that a pan European integrated system is needed for the aviation sector and not a series of individual national ones cobbled together. We are all familiar with the Air Traffic Control tower standing prominently and watching mindfully across every airport runway and apron, monitoring its charges as they manoeuvre their passengers and cargo, but these days are such towers necessary?

Sweden was the pioneer of remote Air Traffic Control and technology was designed to monitor and control traffic at (remote) airports where it wasn’t always possible to have staff present. More recently London’s City Airport, itself no small back water operation has used the same technology to implement remote Air Traffic Control that is actually based some 150 kms away. A series of mobile camera’s placed on masts at the airport are the eyes that previously belonged to humans. Is this the blue print for the future?

The point is almost reached where remote Air Traffic Control can be harnessed which requires far less human involvement and which thus (in theory) reduces costs. This technology can, again in theory, control all movements across Europe and facilitate a better control and monitoring of planes across our skies which in turn means less delays through inefficiency. All this is great, so why is the uptake slow thus far?

Technology cant strike but it also cant vote and in highly unionised countries such as Greece and France and where strikes by Air Traffic Controllers are as regular as the summer sun, the thought of these fiefdoms being given away is almost a non-starter. Safety concerns will also always be thrown as an argument about remote ATC use until it can be proven such a system is safe. Additionally, whilst on the subject of safety, as we see almost daily, the threat of technology being hacked makes most normal people burst into perspiration. Imagine a rogue state and what it could do if it took down a pan European air traffic control system; it would be shut down instantly and the skies would be empty. Which also brings along another point; a country’s Air Traffic Control also controls military flights and the military of any country will not wish control of its operations to be outsourced to some far-flung land. This aspect alone may be the fly in the ointment that delays a co-ordinated European Approach to Air Traffic Control, despite the technology being there to facilitate it.

In the meantime, as the world is slowly getting back to normality, the skies are still quiet enough to ensure that flight delays have become a temporary thing of the past, or at least in the short term and the Trade Unions across the aviation industry still have their tool to create mayhem firmly intact.

The joke continues

Don’t you just love the EU and its bureaucrats? A question you need not answer whilst keeping your thoughts to yourself. It wasn’t so very long ago that they forced the closure of several airlines using the argument that state aid was illegal in its use to support ailing airlines. Malev was a classic example of this. It wasn’t very long through before they perhaps realised that they had the power to bankrupt every airline if they persisted with such a stance. Certain countries whose national airlines were well renowned basket cases were allowed to flout these rules and the bureaucrats were encouraged to turn a blind eye. The current pandemic, if anything, has provided the perfect excuse to bin the stance of no state aid to the aviation sector.

So, it makes interesting and amusing reading to learn that in September, the European Commission declared that two loans made by the Italian government to state airline Alitalia were illegal. The loans were made in 2017 to the value of 900 million Euro. It’s also worth noting that it omitted mentioning any of countless other loans made previously whilst still running the rule over another loan made in 2019!

The ruling further states that “’Alitalia should pay back this loan to the Italian government”. Fine, except that Alitalia is closing down and will be replaced by a totally (?) new airline called ITA and the new airline will in no way be liable for the previous regime at Alitalia (sic). The Eu added further that in addition to ITA not being responsible for repaying the Alitalia debt, the new airline can receive 1.35 Billion Euro in loans from the Italian government as this is not state aid.

Anyone else laughing?

Record rooms arriving

The pandemic may not be over but that hasn’t stopped the hotel industry from continuing with planned hotel openings. Amazingly, across Europe, the number of “new hotel rooms” being made available is due to increase by 100,000 before the end of 2021! This even exceeds the previous record openings set in 2019 of 74,852.

Part of the reason for this deluge is the fact that the vast majority of planned hotel openings due for 2020 were postponed until this year. What this does show is that there is massive optimism in the future of travel from the hospitality industry; maybe those involved in this sector have seen the script!

Rules there to be broken

The individualistic approach to the pandemic by most countries across Europe has often been at odds with the controls that the bureaucrats and jobs worth at the European Union have tried to impose on countries. The bigger fear for the EU would be that the citizens of these countries lose both trust and faith is such centrally controlled social experiments. When push comes to shove, its not just individuals who will look after themselves as the number one priority, countries will do just the same and arguably rightly so. Holiday destinations such as Greece we savaged during summer 2020 so have made every possible effort to try and ensure that summer 2021 reverted to something akin to normality. To this end they can hardly be blamed for telling potential visitors from the USA that they are more than welcome to continue to travel to Greece and its islands, even if the EU rules attempt to discourage visitors from across the pond.

This may beg an even bigger question connected with Covid and the myriad of restrictions that have come with it: “does anyone really follow the rules – honestly?”

Seeking control of the data

IATA (International Air Transport Association), the body that (tries) to police/govern the aviation industry has put is backing behind the EU based Digital Certificate as it tries to set a global standard for the acceptance of vaccination certificates across the world of travel.

To date, every man and his dog has been trying to implement and gain international acceptance of their own systems in an attempt to “’get the world moving again”. A nice sound bite but might it also be equaly true that the real thinking behind the stampede to get your “’own system’” in place might be to gain control of the mass of data that each traveller would need to provide begore he/she jumped on one of their planes?

To use a quote from Winston Churchill; “never let good crisis go to waste”.

Last A380’s arriving soon

Dubai airline Emirates is to take delivery of its final three A380 superjumbo at the end of this year, one year earlier than originally planned. Airbus announced the end of the line for the one time “ future of the skies” in February 2019 and the current pandemic only hastened that demise.

Emirates has a total of 119 A380’s in its fleet but only around 30 are currently in service, the remainder being left in storage. So, the obvious question would be why bring forward the delivery of the three new planes when there are some 89 in storage? The answer is surprisingly simple.

The three new planes will all have the new cabins fitted in them when they arrive including the new to Emirates Premium Economy Cabin. The older planes have to be retro fitted which is time consuming and costly, so why wait for something when you can have it now.

Was it worth it?

The 2020 Olympics have now finished, albeit a year late. Not that it feels like many people noticed as the events themselves were played out to empty stadiums. Whether global viewing figures ignited the publics enthusiasm for the biggest sporting event in the world is open to debate. Usually there is an ulterior motive for a country to host the Olympics and also for that matter, the Football World Cup. At such times the eyes of the world are placed firmly on the host city and country. Beijing hosted the Olympic games in 2008 as a means to signal to the world that it had “arrived”.  The games were a huge success and indeed, China had arrived on the world stage.

At the same time as making a political statement, the Games are often cited as a mechanism to boost the local and national coffers with the income that visitors bring. A claim that is debateable at best but it’s a nice sound bite and ticks lots of boxes.

So, returning back to the Tokyo Olympics, the estimated cost of playing host was anywhere between 15 – 25 Billion USD, in return Tokyo got almost zero benefit. There were no visitors and hence no income from tourism, competitors were kept isolated from the rest of the world so they contributed little in real spend and thus, the local hoteliers, shopkeepers and restaurants earned absolutely zulch. No-one in the world needed to be told where Tokyo is or what it stands for. Through circumstances beyond its control, it became a vanity project.

The next Olympic Games are in Paris in 2024, one wonders what the population of France think about the vast sums of money the French Government will have to cough up to play host! This on top of an economic meltdown and on a French economy that is hardly prospering nor has been for many years. Losing the bid for hosting the 2024 Games was one which the cities of Hamburg, Rome and Budapest, the other initial bidders must thank their lucky stars they lost out on. So what is Paros purpose to host the games who begs to ask? The perception of being the new capital of Europe now that the UK has waved goodbye!

The real world

When the current farce eventually ends and the world starts to travel again, the Green agenda will soon become the most talked about facet of travel. Most rational people are aware of the need to do better to “save the planet” and most are doing their little bit to help attain this goal. Aviation is, for some reason, one of the prime targets of those following a green agenda, possibly because it’s a soft target and its also a good focus point of government to collect more taxes to swell their coffers under the pretext that this will also somehow help save the planet. This despite the sector being responsible for less than 3% of greenhouse emissions. Stopping people from travelling is not the big picture answer but the use of technology in helping reduce these emissions, even if more people travel, is the real answer.

Airlines with old fleets are actually the issue and conversely, airlines with young fleets of say 5 – 6 years old actually produce roughly 35% less emissions than older planes; however, you can’t dispose of planes after just 5 – 6 years for economic reasons. New materials, improved airplane designs and better in flight management (air traffic control) can make a huge improvement in green house emission and just possibly rid the industry of its bad boy tag.

Of course, there are many who are getting even more vocal in suggesting flying is ceased and the word can travel by bike or by train. There are elected EU Parliamentarians who think along the same lines (frighteningly). Just think what the carbon footprint would be in building tens of thousands of new rail lines across Europe and trains and stations to accommodate them. It would sink planet Earth! Still, the Green brigade will be happy in their new environmentally friendly HQ’s in Cyprus and Malta as they head to the train station there to travel to Brussels to attend yet another forum with likeminded people who have travelled from across the globe to re-shape the world. Sic.

An easy attack

Not so many years ago, EasyJet was the darling of the new era of airlines who had rapidly changed both the perception of travel as well as providing the ability for more people to travel to places previously financially inaccessible. The past month though has perhaps seen a cloud start to hover over EasyJet, a cloud that whilst not being black, is clearly opaque. That cloud appears with the news that EasyJet had been the subject of a bid by none other than new kid on the block Wizz Air.

Wizz Air are almost the defacto national carrier in many parts of Europe, including Bulgaria. Their rise and indeed profitability has been meteoric to say the least. Even in the current climate they have continued to grow and have taken the stance that as other airlines have retreated and shrunk back their operations, such moves provide Wizz with an opportunity to grab market share from both existing and new markets that would previously have been difficult to attain; a fast track growth opportunity that could not be missed. The theory with trying to acquire EasyJet would be to combine the strengths of Wizz in the East of Europe with EasyJet’s strength in the West of Europe: a new European super airline. This would have frightened the day lights out of traditional airliines such as Lufthansa, BA and Air France/KLM.

Even though EasyJet rebuffed the offer the sentiment may, for some time be, that they are there for the taking. It could be an interesting few months.

Trying again?

News that British Airways is seriously considering launching a new short haul airline (i.e. intra – European), from London Gatwick Airport is starting to feel a bit like ground hog day. Translated this means they want to get rid of a lot of staff and re-employ them on inferior contracts to reduce their overall operating costs and in effect, end up like a Low Cost Airline.

Some might say the BA operations around Europe are akin to those associated with Low Cost Airlines already with seat pitch less than some vilified Low Cost Airlines. It should also be remembered that BA did start a Low Cost Airline called “’Go” that ran out of Stanstead from 1998 but that was sold to EasyJet in 2001. At the time BA said that “Go did not form part of the core values that were associated with BA””. Seems like with an erosion of those core values, now is the perfect time to re-think their two decade old idea.

On the business side of things, running a slimmed down version of BA out of Gatwick across Europe makes some sense as the airline have recently discovered that there is money to be made these days with flights to Dubrovnik, Crete and Corfu where in past years such destinations were scoffed at. The location of Gatwick being south of London and in effect the wrong side, may restrict ambitions. It will also put into further doubt any hopes of more Long Haul flights being operated out of Gatwick with those being left to Heathrow but the big question remains how will the feeder traffic from across Europe reach Heathrow?

If you’d like to subscribe your friends or colleagues and for all your travel requirements, reservations or for more information about any of the items mentioned in the newsletter, please contact us:

Tel:+ 359 (2) 943 3011;
Fax:+ 359 (2) 946 1261;
e-mail:mark @jamadvice.eu