Aviation safety. The inherent dangers – in detail.

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FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 August 20

Aviation safety. The inherent dangers – in detail.

ICAO (the International Civil Aviation Authority) has looked at the “evolving commercial and operating environment” in air transport and how if affects safety.  Are developments like the intense pressure on cutting costs, and the impact of liberalisation, reducing airline safety? A report couched in ICAO’s cautious language indicates there are wide-ranging and serious concerns. 

Most countries operate under the 1944 Chicago Convention, which includes a requirement that each country is responsible for safety and security for aircraft registered in its country and operating in its airspace. Two major factors have emerged that threaten this simple ruling: [] An increase in aviation activity is putting a strain on the ability of some states to perform their role. Generally, this means not enough trained staff or budget; both are linked. 

[] Some commercial arrangements covering aircraft involve, in ICAO’s words, “a cascade of entities, blurring accountability, and making it more difficult for states to identify the line of responsibility”. ICAO hints, for instance, that there may not be enough attention on new airlines, which “might not have the desired safety culture or qualified and properly-trained personnel”. And after licences are awarded, can the authorities carry out adequate “continuous regulatory surveillance over their performance”? 

Similar challenges exist when airlines face cost cutting. The aviation authorities have to ensure that cost-cutting in operational matters does not compromise safety. The (unstated) answer to these seems to be the states are failing. 

Another factor is outsourcing of some regulatory activity – by governments to private organisations. When those companies are under their own financial pressures, do they also cut controls? In other words, is the government still controlling the controllers? If all these are tough-enough challenges, these generally concern activity in a single country. The situation becomes more complicated where it involves multiple parties in different countries. 

For aircraft, as noted above, the responsibility is with the country of registration. But commercial developments have started to challenge that simple trail of responsibility: [] Operations of foreign-registered aircraft. Aircraft might be leased and operated outside the country of registration. Which state is responsible? 

[] Flags of convenience. Some aircraft rarely if ever return to their country of registration. ICAO believes some groups use FoCs just to save money, but others to take advantage of a system with minimal or no economic or technical oversight. [] Flights with foreign flight crew. Existing rules say the pilot must be controlled and monitored by the country where the aircraft is registered. But as seen above, that might mean a complex trail. 

[] Offshore operations. Meaning flights operated entirely away from the country of registration and the country of the operator. [] Multiple parties and shared brand. Such as code-sharing. Whose rules to follow? Who checks, and who has authority to check, what? 

[] Cross-border airline merger/acquisition. Meaning some combined airlines have two principal places of businesses (for instance, Air Asia, Air France/KLM, Lufthansa/Swiss, Qantas/Jetstar). Again, who checks what? [] Outsourcing activities. Repair and maintenance in countries outside country of registration. 

That ICAO is aware of these problems is at least a start. And it has introduced what are called SARPs (ICAO standards and recommended practices) . And the other major industry body, IATA (International Air Transport Association) also has its IOSA (the IATA Operational Safety Audit) , introduced in 2003. And
Chile has just shown one solution. It has said that adherence to IOSA is now a requirement in the country’s airline certification process.
 

But the industry is under great pressure, financially and commercially, that it might not be possible for some states to carry out their responsibilities under the Chicago Convention and to follow ICAO’s SARPs or IATA’s IOSAs. So this may not be enough. ICAO now needs to debate all of the above points, and produce a list – no matter how lengthy – of new rules. And just as the European Union is publishing a Black List of airlines, a Black List of states is also needed. 

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Hotels. One bourne every minute.

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FOXTROTS 

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

 

2006 August 10

 

Hotels. One bourne every minute.

I have discovered other company executives that have not read my report How to Create a Luxury Brand on the Cheap.

A new company has been formed from that which ran four London hotels – Berkeley, Claridges, Connaught, Savoy – because the Savoy has been sold off and is now managed by Canada’s Fairmont. 

If you ask me (which, oddly, few do), I would have named the leftovers (Berkeley, Claridges, Connaught) the ‘Claridges Group’. After all, that name is reasonably well known.

But the owners, Quinlan Private, didn’t ask me. They asked Landor (which thinks up brandnames, like me, but, unlike me, probably gets paid US$100,000/snip). 

I suppose to earn its fee, Landor could hardly say ‘Claridges’ or even ‘Quinlan’. So it said ‘Maybourne’.

And Quinlan approved and, presumably, paid Landor, and a new meaningless hotel group name was born.

All that is needed now is to spend millions of dollars on getting ‘Maybourne’ as well known in a few years’ time as ‘Claridges’ is known today. 

Good to know there are still fools around who can easily be parted from their money.

 

The Fox

Easyhotel CEO job. My application.

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FOXTROTS 

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning. 

Foxtrots – leading the industry in a dance. 

 

2006 July 30

Easyhotel CEO job. My application.

Dear Stelios

You have met me 2/3 times. I once came to your office to explain to you about dynamic packaging.

I am interested in the Easyhotel CEO job. 

Two statements in particular that I have made about hotels might be relevant to my application:

1. “I can get a higher occupancy than any professional hotelier every day of the year.” (I don’t charge for the rooms.)

2. “Using a phrase over-used by no-frills-airline management, [Easyhotel’s prices in London] are a ‘rip-off’.” 

 

Let me explain. 

Most no-frills-airline (NFA) managers does not understand the NFA business plan. Most hotel managers are even further from understanding a ‘LRH’ (low-rate-hotel) business plan – partly because it has not been written. 

You must already have a sense of this – at least from one of meetings you panelled, where I was present, at ITB in Berlin in March. (So why are you looking for someone with hotel skills?) 

If you don’t choose me to run Easyhotel, you would be better to choose an airline person for this job – but from Air Asia, Easyjet, Ryanair, or Southwest, not the pretenders. (Although working for those four airlines does not automatically bring understanding of the NFA psyche.) 

The success for a LRH will be in cost control and marketing. You don’t need – as the job spec noted – an expert in franchising to run Easyhotel. In fact, I can go further – you should not have a franchise expert in that position. The franchise person can be No 2 or No 3 in the company, as it is a straightforward function. 

The most-important skill would be to apply an NFA business plan to Easyhotel – not to apply a franchising skill to a new type of company. (I hope it was not you who put that requirement in the job spec…)  

In addition, it should be noted that franchising for a LRH business plan could be risky. It can be done – must be done – but nevertheless, some careful thought is needed in advance. 

(Your new master franchiser has plans for 38 properties in the next five years. Man, you should have more than that each year! This could be big, big. Surely you are disappointed at how slow it has been so far?) 

Voila. There you have it.  

I know more about how NFAs work than most who work in them, and many who run them. I know a lot about hotels. Over the past five years I’ve asked hotel management about LRHs. Most don’t get it. I know that running Easyhotel would be more about running an idea than a hotel company. 

My CV won’t tell you much about all of this. And it won’t touch on most items you’ve listed in that job spec. However, I believe you may see that this might not be important for the success of Easyhotel. Let me know when you need to know more. 

 

Yours in anticipation,

The Fox

 

Little Macau gets big.

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FOXTROTS 

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 July 20

 

Little
Macau gets big.

 As many will know, I am an expert at studying a situation unencumbered with any local issues. This skill enables me to oscillate merrily from being uncannily accurate to awesomely wrong. 

With this in mind, I turn to
Macau. In its recent history, say 100 years, it has been considered a country-boy cousin of big-city neighbour
Hong Kong, and this sentiment still largely remains.  

Time to rethink. Firstly, with the main numbers. There are around 11,000 hotel rooms at present. Within 10 years that should be 50,000 – due to open at a fairly-even pace. That is about the same as
Hong Kong today; HK may be at 65,000 rooms then. 

But growth of that magnitude will affect rates. Currently,
Macau’s hotel results are well below
Hong Kong’s – near-15 points in occupancy, and around US$50 in rates. 

Will that performance gap widen as
Macau discounts to fill hotels, which will include some with 3000 rooms? Or will
Hong Kong’s rates adjust? After all, the journey from Macau to Hong Kong’s airport by sea is about the same time as from the central district of Hong Kong – that is travel time, however, and the bits before and after are currently a hassle and time-consuming. And if the proposed bridge from Lantau to
Macau gets built, then travel time to
Macau from
Disneyland will also be about the same. 

And that is without looking at what
Macau is building in terms of entertainment attractions. There seems no reason why the companies that are now building in
Macau – including big international names – will not make
Macau what
Las Vegas has become. Which is not just the gambling capital of the world, but an entertainment capital as well. 


Las Vegas attracts meetings business and people on holiday – as well as gamblers.
Macau may well race past
Hong Kong – which, remember, once aspired to be
Asia’s entertainment capital. 

 

 

end