Singapore. Qantas and Jetstar.

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FOXTROTS 

 

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

 

2007 February 28

 

 

 


Singapore. Qantas and Jetstar.
 

 

 

It started first in 2004, in June. We said in our newsletter that a new Singapore-based airline, Valuair, would not last another year – based on what we saw as a misguided business plan. 

 

Most observers called Valuair a low-fare-airline – although the airline’s management were at pains to say that it was not, and indeed its fares were generally not low. In fact, considering the services it was offering (in comparison with other regular airlines), its fares were high. 

 

But we did not like its business plan because it was a small airline going against the big (and good; Singapore Airlines no less). Why choose Valuair when SQ was there with sometimes the same prices, sometimes a little higher? 

 

The Valuair MD – who was at one time MD for SQ, after all – should have known better. He should have gone the LFA route. 

 

Shortly after we commented about another Singapore-based airline, Jetstar Asia, disputing part-owner Qantas claims that it knew how to run a low-fare airline. After all, it had only just started one – Jetstar in
Australia. Starting is the easier part.
 

 

Then in February 2005 we said Jetstar Asia did not seem to be generating enough traffic for a LFA. There are no rules, and obviously there are different criteria – but if you have low fares (such as US$30 if booked three months in advance), you need low-operating costs, and seat load factors at least in the 80s. 

 

Observations of Jetstar Asia’s operations (including in Foxtrots) indicated that staff and management had not really grasped the low-cost aspect of a LFA. They obviously had not studied Ryanair close enough, or even Air Asia across the border. 

 

Then in July 2005 the two Singapore-based business failures merged. 

 

But the saga did not end there. In September 2006, after changes in expansions plans for the Australia-based Jetstar – including medium-haul flights to
Hawaii and
Asiawe saidWe presume Qantas will eventually, probably soon, buy at least majority-if-not-full control of Jetstar Asia”.
 

 

Well that is now happening, in effect – although this is presented as a merger between Qantas and Orangestar, the holding company that owns Jetstar Asia and Valuair. 

 

At the same time, we said that if this change-of-control happens, “we also presume that Jetstar Asia would be folded into Jetstar International.” That part has still to happen. Wait six months. 

 

 

end

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India. Comparing visitor arrivals.

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FOXTROTS 

 

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

 

2007 February 27

 

 

 


India. Comparing visitor arrivals.
 

 

 


India’s 13% growth in visitor arrivals for 2006 looks fast. But when compared with results in other comparable destinations in the region, it is not that much faster than the average 12%.
 

 

However, in terms of visitor arrivals growth since 2000, then the country’s performance matches the regional. Annual average growth for
India was 9%, as it was for the ‘competitive set’ of five other destinations in
Asia.
 

 

In sub-regional terms,
India’s 14% growth was faster than
Nepal and
Sri Lanka’s growths. And the faster rate for the
Maldives – over 50% – is linked to recovery from its decline in 2005 following the December 2004
Indian Ocean tsunami. However, that
Maldives growth was still not enough to take its total above the pre-tsunami count in 2004.
 

 

And as for
Nepal (visitors up 2%), if the political/social news is not necessarily good, at least it is not bad.
 

 

Outside
South Asia,
China’s growth in 2006 was below
India’s, but its annual average since 2000 has been a fast 14% – compared with
India’s 9%. And for
Singapore – which counts about 2.5-times more visitors than
India – growth was a strong 10%, much better than its 4% annual average since 2000.
 

 

 

 

end

Singapore. Qantas and Jetstar.

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FOXTROTS 

 

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

 

2007 February 14

 

 

 


Singapore. Qantas and Jetstar.
 

 

 

It started first in 2004, in June. We said in our newsletter that a new Singapore-based airline, Valuair, would not last another year – based on what we saw as a misguided business plan. 

 

Most called it a low-fare-airline – although the airline’s management did not, and its fares were generally not low. In fact, considering the services it was offering (in comparison with other regular airlines), its fares were high. 

 

But we did not like the business plan because it was a small airline going against the big (and good; Singapore Airlines no less). Why choose Valuair when SQ was there with sometimes the same prices, sometimes a little higher. 

 

The Valuair MD – who was at one time MD for SQ, after all – should have known better. He should have gone the LFA route. 

 

Shortly after we commented about another Singapore-based airline, Jetstar Asia, disputing part-owner Qantas claims that it knew how to run a low-fare airline. After all, it had only just started one – Jetstar in
Australia. Starting is the easier part.
 

 

Then in February 2005 we said Jetstar Asia did not seem to be generating enough traffic for a LFA. There are no rules, and obviously there are different criteria – but if you have low fares (such as US$30 if booked three months in advance), you need low-operating costs, and seat load factors at least in the 80s. 

 

Observations of Jetstar Asia’s operations (including in Foxtrots) indicated that staff and management had not really grasped the low-cost aspect of a LFA. They obviously had not studied Ryanair close enough, or even Air Asia across the border. 

 

Then in July 2005 the two Singapore-based business failures merged. 

 

Then in September 2006, after changes in plans for the Australia-based Jetstar, we saidWe presume Qantas will eventually, probably soon, buy at least majority-if-not-full control of Jetstar Asia”. Well that now seems to be happening, in effect – although this is presented as a cooperation agreement between Qantas and the holding company that owns Jetstar Asia and Valuair. 

 

At the time, we said that if this change-of-control happens, “we also presume that Jetstar Asia would be folded into Jetstar International.” That part has still to happen. Wait six months. 

 

 

 

 

end

Revolution & Philippe Bourguignon.

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FOXTROTS 

 

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

 

2007 February 09

 

 

 

Revolution & Philippe Bourguignon.
 

 

 

Philippe Bourguignon has an impressive CV (and a hagiography in Wikipedia). He has worked in senior positions at the Accor hotel group – in 
Paris head office and the field.
 

 

After that, though, he seemed to prefer his home base, running EuroDisney (which owns Paris Disneyland), and Club Med – but with an unremarkable record.
 

 

He is now with Revolution Resorts. Some recent quotes:
 

 

“We need to evaluate whether our businesses are going the right way or the wrong way. Today, you need global reach and critical mass to succeed, but that means people become less loyal to the brand. So you discount, and that reduces loyalty still further.
 

 

“We need to exercise good sense, personalise products, customise, treat clients as individuals, reinforce brands, focus on sustainability, integrity and ethics.
 

 

“Clients will be ready to pay more for eco-friendly hotels – and the cost has to be paid for by someone. To change today’s properties to eco-friendly requires huge investment. That’s why it’s easier to start from new.”
 

 

 

 

end

Travel. Online activity.

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FOXTROTS 

 

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

 

2007 February 07

 

 

Travel. Online activity. 

 

 

Research on online booking patterns by Shifflet for TIA – the Travel Industry Association (of
America) – finds that the online share of hotel bookings in the
US has increased 9% to 24%.
 

 

That is probably higher than most believed – both in terms of growth and in the resulting share, almost one-quarter. 

 

In other news, half-year results for the Expedia hotel-booking subsidiary, Hotels.com, showed bookings reaching US$1.2bn. The resulting growth of 23% is not fast – for an internet company. But perhaps this is the new norm. After all, Expedia can be considered a mature company in terms of the internet business. 

 

The company’s own merchant roomnight sales (which means, in essence, sales for contracted hotel rates) in the same period increased 13% to 18mn. 

 

PhoCusWright has also produced more research on the hotel business. Unfortunately, however, PCW does not show comparative figures in this case, and for the internet, the growth percentage is almost as important as the number itself.

 

 

 

 

end

Airlines. Flying fat.

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FOXTROTS 

 

 

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

 

 

2007 February 05

 

 

 

Airlines. Flying fat. 

 

 

As Silverjet takes to the air with all premium-class service, another one, Eurofly, bites the dust. 

 

(BC = business-class, FC = first-class, PC = premium-class) 

 

This week Eurofly is due to stop its daily
Milan-New York JFK, operated by 48-seat all-BC A319; its other flights continue. Last week, Silverjet launched daily
London
Luton-New York Newark in a 100-flatbed-seat FC B767.
 

 

At the end of 2005 two PC airlines started
London
New York, Eos in 48-flatbed-seat FC B757s and Maxjet in 102-not-flatbed-seat BC B767s.
 

 

Which will make it? Possibly Maxjet (although its London-Las Vegas route makes little sense), but my money goes on another – Privat (sic) Air. 

 

PA operates BC-only flights for KLM Amsterdam-Houston, for Lufthansa over Dusseldorf-
Chicago/
New York
Newark and Munich-NYC, and for Swiss
Zurich
New York
Newark. It uses either 48-seat A319s or 56-seat BBJ (Boeing Business Jet, based on the B737).
 

 

I believe PA has the best business plan for PC flights, and that the other three will struggle to survive. 

 

Because, at least: 

 

 

– The FC market is tiny, and most FC passengers will want flexibility of leaving, say, in the evening, not once-a-day as Silver and Eos.  

 

 

– A big disadvantage for Maxjet is that many regular airlines have flatbed seats in their BC cabins – and so many BC passengers now demand this. 

 

 

– For Eos, Max, and Silver, there is also the matter of ‘schedule integrity’ – what happens when unplanned maintenance keep the aircraft on the ground for 24 hours? Also, many travellers will also go on to
Miami, or Paris, and return from there; do they then buy a ticket on another airline?
 

 

 

– JFK in
New York is the right airport. But
Luton and Stansted in
London (which Eos, Max, and Silver use) are not, mainly because of connecting flights.
 

 

 

– The three cannot offer attractive FFP (because they have no or few other routes) – so that makes its fare level even more important. That means the price should not be much more than a (discounted) economy class ticket. Forget protests that they offer a FC product at BC fares. Few people fly FC, and most of those that do are not worried about the price, but about the product. 

 

 

– Another problem for Eos is its name. Lesson one in marketing should have told the backers to choose a name that will be remembered, and can be pronounced, and tells potential customers what it offers. Eos sounds more like a new Greek aperitif than a deluxe airline. 

 

Others with the wrong name were Ozjet, which tried Melbourne-Sydney for a year – too pleby, mate. And, of course, Eurofly – which sounds like a Brussels-sponsored insect. 

 

 

end