Stelios. Fast and loose.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

September 22 2011

Stelios. Fast and loose.

 

 

I

LOOK at the troubles between Stelios Haji-Ioannou and the airline he founded, Easyjet, in a way different from many other commentators.

For me, Easyjet (EJ) would be well rid of Stelios Haji-Ioannou (just call him SHI). He is not as clever as he thinks he is (count up the ‘easy’ businesses that have not worked), and EJ itself was a copied idea. SHI was good in the early days of EJ, but then maybe the hagiography got him, and he began to believe what people said – that he was a good businessman.

Take the ‘serial entrepreneur’ on his business card – although I first thought that meant he was planning to invest in cornflakes. I too can create a lot of companies. But the trick is to make those companies profitable. For SHI, EJ is one of the few that has worked for him, and that has given him money to spend on his other badly-executed ideas – look at Easy Car, Easy Cruise, Easy Hotel.

Then there is EJ. There are not many people who know how to run low-fare-airlines. There’s Herb Kelleher (ex-CEO of Southwest, who actually admitted they copied the businessplan from PSA in California), Rollin King (sic; actual founder of Southwest; Kelleher was initially King’s lawyer), Michael O’Leary (not one of the founders of Ryanair, who started it as a regular airline, but MOL changed all that). Plus me, of course, and a few others.

But now EJ has sort of lost its way – partly because of its struggles with SHI. And EJ’s current leadership has not shown any clear sign of vision for the future – just to plod on with what it has always done.

We already suggested a way out for EJ – change its name, steadily. Some years back it bought Go (whose full name was Go Fly). Why not start changing to that – firstly by painting ‘Go Fly’ on its aircraft as a tagline?

For his part, SHI seems to be threatening to create a new airline, Fast Jet. Most think it is a ploy. But if it starts, it will be good for travellers (lower fares from Fast and from its competitors) but a disaster for investors in Fast – unless SHI re-learns the basic low-fare-airline businessplan.

Or he could try something newish – like longhaul LFA. One is already doing it (Air Asia X), and another plans it (Singapore Airlines with a subsidiary that I have named SingWing). However, the business model has not been proven (AAX says it is successful; I maintain its 80% loads are too low), but that has not stopped SHI in the past.

 

 

 

The Fox

 

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Air Asia. Flawed award floors.

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FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

September 17 2011

 

Air Asia. Flawed award floors.

 

I

AM surprised that the UK has given Tony Fernandes, the head of Air Asia, one of its regal awards – an anachronistic Commander of the Order of the British Empire. He has already been given a title in his homeland, Malaysia – Dato Sri, a high title, perhaps similar to ‘Lord’ in the UK.

 

 

The citation says the UK award was conferred “for services to promote commercial and educational links” between the UK and Malaysia. Yet his main claim to fame is making an airline in Asia – Air Asia – a success, and starting a daily route to the UK with one of its operating divisions.

 

 

I presume the UK has been duped by hagiographic publicity. To me, Fernandes is little more than a clever and successful businessman, having copied a businessplan from UK airline Easyjet, which copied it from Texas-based Southwest, which copied it from California-based PSA.

 

 

He also helped a middling fee-paying school in the UK, Epsom College, to open in Kuala Lumpur.

 

 

But the UK is not alone in giving Fernandes senseless awards. France gave him Legion d’Honneur, in 2010. Why? For “outstanding contributions to aviation”. I still do not know why France gives an award for contributions to aviation, outstanding or not, but I presume in reality it is because Fernandes buys assembled-in-France Airbus aircraft.

 

 

(His airline has now started a route to Paris. I believe that as presumably he gets help for this route from the France government, it is he who should be giving an award to the France government for “services to Asian airlines”.)

 

 

The Fox

 

Interview. Robert Hornman, Worldhotels.

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FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

September 16 2011

 

Interview. Robert Hornman, Worldhotels.

 

M

ANAGING director of Frankfurt-based Worldhotels (WHs), Robert Hornman, is in effect running a new company.

 

 

 

Until 2008 WHs was owned by member hotels, when there was a buyout including the then-head, Michael Ball, and KP Capital. The WHs group now includes Trust, a reservation system, IFH, a training company, and Nexus, a sales management company. Its main business has been hotel marketing and sales, but now it is adding management services.

 

The following paraphrased comments follow a one-on-one interview with Hornman.

 

 

[] News. We have added a ‘Full Licence’ model (FLM) to our current affiliation model. This is in effect a new hotel brand, as the name ‘Worldhotel’ [singular] will be added to the hotel name.

 

Services, including management, will include, for example, a personal website for the hotel. Hotels are not required to standardise their hardware – in the way that, say, a Hilton would – although WH-brand hotels will need to meet WHs’ quality criteria. The hotels will be reviewed twice yearly in secret-guest visits.

 

We target 50 branded hotels by 2013, new as well as existing members. It will be good if we can convert 5% of our existing portfolio into the FLM. At end-2011 we will have close to 20 hotels. We hope we will have 50% in Europe and 50% in Asia Pacific.

 

 

[] Profile. We have a good global footprint; 450 hotels, of which 250 are in EMEA. If we counted all our hotels we would be 11th largest group in terms of rooms. The 10th largest has about 130,000 rooms; we have 110,000. This year WHs will have added near 50 represented hotels, taking us above 100,000 rooms.

 

We have dropped our 3-star category; now we have only first class and deluxe. But FLM hotels will just be Worldhotels – no category.

 

 

[] Philosophy. To be a real hotel company. We thought why can’t we make the brand more prominent? More of our hotels have to compete with group hotels, so many of them want something between franchise and full management. There is a requirement for some standards and some flexibility; but standards does not have to mean standardisation.

 

 

[] New brand. We want the ‘Worldhotel’ name first, with signage on the roof. Our target is for new hotels, not necessarily existing ones.

 

Branded hotels will pay a percentage of room revenue; we require a 10-year contract.

 

 

The Fox

 

Love-In. China, WTO, WTTC.

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FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

September 7 2011

 

Love-In. China, WTO, WTTC.

 

I

DON’T want to spoil the party (ok; I do), but there are a few questions over the latest love-in for WTO, WTTC, and China. The news is that China has joined the WTO/WTTC campaign – Global Leaders for Tourism Campaign.

 

 

First, that campaign. Essentially, it is to “stress the importance of [the travel business] to global growth and development.” Well, ok, but kinda self-evident. So is shoe-making.

 

 

Second, China “will double its efforts in tourism”. This does not mean double the marketing budget, double its staff, double outbound travel numbers, of course. So what does it mean? Over to you…

 

 

3. China will “take an active part in the WTO/WTTC initiative to promote tourism around the world”. What does it mean? Dunno, but certainly not what it says. It will continue to promote China as a destination, fullstop.

 

 

4. China, says the WTO, will put the travel business “at the centre of economic growth and development”. The centre? Meaning not at the top, and not at the bottom, I guess. So, once again, meaningless.

 

 

5. WTTC says China’s commitment to the travel business was “underlined this year with the declaration of the National Tourism Day of China”. Sorry, but isn’t that underwhelming?

 

 

6. Joining that ‘global leaders’ campaign “demonstrates China’s leadership role” in the business. Eh?

 

 

 

Does anyone else find it odd that China gets all this praise at the time when it still restricts its citizens from freely travelling internationally? Individuals are allowed to travel for leisure purposes only to Hong Kong and Macau – a category that now makes up 50% of visitors from China in those two destinations.

 

 

Surely that restriction is against what WTO and WTTC stand for? Why do they ignore this inconsistency? I suspect, like many others, because they need China and are willing to close their eyes to such inconsistencies in order to maintain their friendship with Beijing.

 

The Fox