The anti-competitive travel business.

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FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

2009 November 28

 

The anti-competitive travel business.

 

I have just had a revelation, courtesy of a new plan from France’s visitor promotion organisation, Atout France (don’t ask).

 

It concerns competition and the European Union efforts to try to ensure there is a level playing field in business activity in the EU, and in particular when it comes to state-owned companies.

 

The story begins with plans by France’s VPO to spend US$730mn over the next decade to promote what it calls “social tourism”. The government wants to make it easier and/or cheaper for disadvantaged people in France such as disabled, single-parents, seniors, or young workers to take their holidays in France.

 

Details of the plan have not yet been clarified, but the support seems likely to be in form of subsidies – giving a hotel say, $100, so that the actual price of a week’s holiday is $400 to the disadvantaged traveller rather than $500.

 

(It also wants to build what it calls “affordable accommodation”. Coming from the country that gave Accor’s Formule 1 US$45/€30 hotels to the world, which might be a bit dumb.)

 

Criticising a plan to help disadvantaged people is obviously a task fraught with danger. But to me two things seem wrong. Firstly, why are seniors and young people considered ‘disadvantaged’? That seems to be a somewhat negative interpretation of society.

 

But my other point is not so academic.

 

Look at the plan this way. The government in France is paying out money so that its own citizens (and only its citizens) travel in their own country. Isn’t that anti-competitive?

 

If the government also gave money for them to travel to Germany or Italy or the US, ok, but only in France?

 

Think of a parallel. The government pays money to car companies in France so that they can sell their cars at a lower price – $1000 for a Renault, compared with $1200 for the equivalent Fiat or Opel. Then yes, that would be clearly anti-competitive and the (non-French) car manufacturers and their governments would likely complain.

 

I think governments still do not think of the travel business as an industry, despite its size. So they have not thought of moves like this in terms of competition.

 

There is no problem with a VPO promoting travel-in-France, but once money starts changing hands, then it moves into another element. I look forward to seeing the EU at least make a comment on these plans by France’s state agency.

 

The Fox

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British Airways/Iberia. Two wrongs make a right?

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FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

2009 November 23

 

 

British Airways/Iberia. Two wrongs make a right?

 

Okay, I accept that calling two grand airlines such as British Airways and Iberia “wrongs” is not quite right…

 

But I do want to draw attention to a few factors. Firstly, British Airways.

 

I have criticised the Open Skies (sic) subsidiary of British Airways for a number of reasons on a number of occasions. The reason that OS has failed (or up for sale; meaning in this case, almost the same thing) is not the economic recession – that is just a convenient explanation, which will be widely accepted.

 

The reason is that it was a badly thought-out plan. A dumb name for a start, although the person who first thought of it (we suspect BA CEO Willie Walsh) thought it was very clever. The best name would have been British Airways. Why did it need a different name because it was flying New York to Paris instead of to London?

 

Any why oh why did BA buy a failing airline (L’Avion, un nom debile) to merge into a not-yet-started airline? Particularly that L’Avion had a different market and product than planned for Open Skies!

 

As I am so often saying, PAGPFT – people are getting paid for this?

 

I guess BA’s Open Skies is worth the same as two other failed airlines that it created and then sold (DBA and Go) – US$1?

 

Secondly, Iberia.

 

Interestingly, Iberia has also just admitted a new-airline mistake similar to BA’s. Well, not admitted in words, but by moving it out. IB’s creation was Clickair, a so-called low-fare-airline, which it has now merged into Vueling, the surviving name. From the start, Iberia’s management did not appear to understand LFA operations, as seen from its decision to give Clickair some IB flights to operate.

 

(That’s actually a hybrid, not an LFA, and similar to what Qantas is creating with Jetstar. I am not sure Jetstar will work – at present it is a marketing mess, but not yet clear that it will be an economic mess.)

 

Iberia did not seem to know what it had created, or what it wanted to create. But then Antonio Vazquez took over as chairman and CEO of Iberia, replacing Fernando Conte, who resigned. “I’ve come to Iberia with the objective of closing a deal with British Airways,” Vazquez declared.

 

It all seemed too pat. Vazquez was chairman of tobacco company Altadis and negotiated its acquisition by Britain’s Imperial Tobacco. Hint – so he must be the right man to negotiate a merger of IB with BA.

 

The now-departed Conte was making statements that might have been true but which were not politic. He pointed out that now BA was weaker than when talks started, so the IB share of the combined operation should be higher.

 

The BA/IB merger deal is expected to 55/45 in favour of BA. In fact, that is extraordinarily low for BA. In terms of seats sold, the ratio in 2008 between the two airlines was 59/41, in terms of capacity (ASKs) 69/31, and in terms of traffic (RPKs) 68/32.

 

I think Vazquez has been just a facilitator, making the best deal he can. I think he has done very well.

 

Conversely, I already thought that Willie Walsh, was not actually qualified for the BA CEO job. As CEO of Aer Lingus, he had converted the airline into a sort of low-fare-airline. It seemed to be working, but is now unravelling. I wonder, in fact, if Walsh should have got BA to merge with a failing Aer Lingus instead of Iberia? Now, another airline will do that.

 

Has Walsh surpassed his capabilities? He is due to become CEO of the combined group – not a good sign. Do BA and IB deserve one another?

 

The Fox

PAGPFT in France. ‘All’, or nothing?

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FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

2009 November 14

 

PAGPFT in France. ‘All’, or nothing?

 

(PAGPFT, pronounced PAG-puffed; People Are Getting Paid For This.)

 

For understanding the French language, I am quite good. But for misunderstanding it, I cannot beat the French. In this case, ‘the French’ is France’s destination-marketing-organisation.

 

Earlier this year, a new logo for the DMO was introduced. Quite neat, and clear – the words ‘France’, its red-white-blue colours, and a female line drawing.

 

Now, the promotional body has changed its name from ‘Maison de la France’ to ‘Atout France’. This change also includes an administrative change because ODIT, which thinks up development strategies for visitor promotion, has been merged with MDLF into Atout France (AF).

 

(As a digression, how can anyone justify having ODIT as a separate body? Didn’t MDLF need to work out development strategies for visitor promotion before it did any promotion? The probable explanation is that this is France, perhaps the best advanced economy outside communism for creating wasteful bureaucracies.)

 

I believe that AF will run into confusion similar to the MDLF experience.

 

Many, even in the travel business, did not understand that MDLF was the name of the destination’s visitor-promotion body. In fact, many changed the name when marketing in other countries (including Singapore, UK, US); no-one seemed to interpret this as a slap in the face for HQ.

 

In some ways, the MDLF name was clever. But being ‘clever’ in terms of marketing and promotion is not necessarily an advantage. You need to be effective. They might be boring, but Visit Britain, Tourism Australia, etc, are unbeatable.

 

From poor comprehension of the ‘MDLF’ name, to ‘Atout France’. Wow.

 

What does ‘Atout France’ mean? (And the fact that the question needs to be asked means that the name is already a failure.)

 

It is complicated in that ‘atout’ is a not-common French word. It means ‘trump’ or ‘plus’ or ‘advantage’. Or could it be ‘a tout’ combined, meaning ‘all’, ‘everything’? Forgetting that ‘maison’ is a better-known word than ‘atout’, it still needs explanation.

 

The oddities do not stop there. The AF logo highlights the letter ‘A’ in both words, so you read ‘AA’. Don’t worry, this has no meaning; it is just a designer affectation.

 

Stop to think – when you flash-read ‘Maison de la France’, ‘Atout France’, and ‘France Tourism’ (or even ‘France Tourisme’), which tells you immediately this is about the visitor business? No brainer.

 

I presume the AF name was thought up by a minister unfamiliar with the travel business; the minister who announced the change, Herve Novelli, also looks after other activities, so he fits the description. Or even El Presidente, Nicholas Sarkozy? Or Christian Mantei, the head of AF?

 

Whoever, he did not realise, or ignored the fact that that the main audience is outside France, and mostly non-French speaking. Surely only a senior person could have thought it up; if a middle-ranking manager came up with this name, he would have been ignored. It seems pride in France has got in the way of commonsense.

 

Last oddities:

 

-The website address for AF is http://www.odit-france-fr!

 

-Don’t go there to learn more; it is all in French – no other language.

 

The Fox