Singapore Airlines. Under threat?

Leave a comment

 

 

FOXTROTS

 

 

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

Foxtrots – leading the industry in a dance.

 

 

 

October 13 2011

 

 

Singapore Airlines. Under threat?

 

 

A

RE we witnessing the end of a 30-year period of dominance? When Singapore Airlines has been what it claimed – “the airline other airlines talk about” (or similar)?

 

 

 

 

For more than a year now, I have occasionally reported that Singapore Airlines (SIA) is under-performing in its home market. For longer than that, I have noted that Emirates took the SIA business plan and made it better – albeit mainly because Emirates’ geographical location is better.

 

 

Singapore is good geographically for sixth-freedom traffic for not much more than Europe-Australasia. But that isn’t a giant market. Emirates’ Dubai, however, is good geographically for sixth-freedoms for a good share of the world – Kuala Lumpur-Lagos one stop, for example, or Manchester-Manila.

 

 

Emirates also provides good inflight service (arguably not as good as SIA though), and good prices (ie, low). SIA has moved away from its early-days good prices; it now generally charges a premium.

 

 

SIA management has not yet realised that passengers might be willing to pay more (20%?), but not a lot more. But when the premium is closer to 50% and the service of competitors is ‘good enough’, SIA will lose passengers.

 

 

In the year-to-date, SIA’s growth of 2% compares with the market’s 11%. That is a serious gap, and it is not just this year. SIA has been under-performing its home market on and off for about two years.

 

 

Worse, the SIA group is becoming dysfunctional. Following a disastrous purchase of a no-power 49% share of Virgin Atlantic a decade ago*, it launched Tiger Airways, a low-fare-airline, holding 33% of the shares, into a crowded market. That might have been a good move, but it is hard.

 

 

There have been operational problems with Singapore-based Tiger, but not too serious. Much more serious was the Australian-government-ordered shutdown this past summer of the Australia-based Tiger – for safety reasons. The airline is now flying again, on a restricted schedule, but this is, or should be, a serious corporate setback for the SIA group.

 

 

Silk Air, another subsidiary, is doing well, although I have long argued that there is no raison d’etre for the airline. Why not operate those routes as Singapore Airlines? I did note, however, that if Silk was turned into a lower-cost (not necessarily low-fare) subsidiary, ready to operate on all routes, including medium- and long-haul, then there would be some reason to have a separate airline.

 

 

(That’s as Jetstar International does for Qantas. I call them JPAs – J-Plan Airlines.)

 

 

SIA’s planned launch of a low-fare long-haul airline – what I have name Swing, for Singapore Wing – appears to indicate that management knows there is a problem at the core SIA airline.

 

 

(My relatively-minor criticisms of Swing’s launch plans were included in the September issue of People-in-Travel.)

 

 

But those YTD figures noted above should introduce some urgency into Swing’s launch. SIA talks casually of mid-2012, and it has not even given the airline a name. Launch should be April 2012 at the latest, and it should incorporate Silk Air routes. Or Silk Air should morph into Swing.

 

 

Any other way, then SIA may continue to fade – as Air India, Malaysia Airlines, and Thai Airways have done before it.

(*Before that, there have been still-born plans to launch airlines in India and Taiwan. And ones management perhaps wished had been still-born – into Air Lanka, and into Ansett/Air New Zealand in Australasia.)

 

 

 

The Fox

 

Advertisements

Trottings. Europcar – Caveat Emptor.

Leave a comment

 

 

TROTTINGS = Trip Jottings

The Fox Trots: Travel Stories from The Fox’s Friends.

 

October 7 2011

 

Trottings. Europcar – Caveat Emptor.

 

W

HAT I learned from my Europcar experience*:

 

 

 

 

-Europcar is not a big company. It is lots of little companies strung together (that’s ‘strung’, not ‘strong’). With resulting little-company service.

 

(On the day my problem started, the phone agent said my problem was not with Europcar but myself and the returning location. There were many other examples – “the France office”, “the Hong Kong booking”, etc.)

 

 

-Europcar will lie brazenly to get out of an apparent problem.

 

(They told me they could not refund my Amex card. They told me they had discounted my rental charge. They inferred the Hong Kong site had wrong office-opening information. They told me I had been informed the returning location was to be closed on the day of my scheduled return. And a few more. All lies.)

 

 

-Europcar are inefficient. They assumed lots of things about my booking that were wrong.

 

(That I booked in Hong Kong. That the delivery office was programmed to be closed.)

 

 

-The France operation is there for a Europcar flag; customers come No 2.

 

(After 10 email messages – each of which came with an automatic reply telling me they would look into my problem within a few days. And giving me a phone number to call. Once I had a ‘live’ email asking me to call them. My email reply was that I thought they should be the ones to call me. They did not. Never in the four months and all international communications did they address my problem.)

 

 

(I believe that the France office charged my MasterCard – but it was another office that refunded my Amex card. Finally, after all these problems, they first charged my MasterCard before crediting my Amex card. So I had to pay twice. We are talking of a 250 invoice and months of bad service and lies. Is this the mark of a big company?)

 

 

Obviously, my experience does not mean I will not use Europcar again. But for me, and for others, renters need to be careful when dealing with Europcar as when dealing with many little companies.

 

 

*Summary: My rental form and booking advised me that the returning location was open 1400-1800 on my day of return – a public holiday. It was closed the whole day. The Europcar help line (sic) told me it was a problem between me and the returning location; not a Europcar problem. I wanted to pay cash for the rental and not the credit card used for my deposit. Various Europcar interlocutors lied and misled me through a number of hoops. After four months, they did what I had asked – refunded the charged credit card, although they charged another, adding that they could not accept cash.

 

 

 

The Fox’s Friends

 

Advice for Avis. Relaunch Budget.

Leave a comment

 

 

 

FOXTROTS

 

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

Foxtrots – leading the industry in a dance.

 

October 5 2011

 

Advice for Avis. Relaunch Budget.

 

A

VIS has been bought by Avis. If you think that odd, remember it was only in 2006 that Hilton bought Hilton.

 

The devil is in the details, of course. US-based Avis Budget (AB) has bought UK-based Avis Europe (AE) for a figure put at US$1bn. I hope that included a few cars, because AE’s stock price has been falling for some time.

It was the “worst performing” travel stock in the Travel Business Analyst rankings in Europe in 2008 (when it fell 90%) and in 2007 (51%). The last year its stock price grew (over the previous year) was in 2006. In fact our records show that its price has fallen in more of the past 10 years than it has grown.

 

At end-2010, AE’s stock price fell 10%, which was 41% below its pre-crisis price in 2007.

 

Since 2009 I have written that AB must be on the verge of buying AE. That is probably a tad old for me now to claim “I Was Right!” – although I might do it notwithstanding.

 

So why did AB buy? Partly because it became messy, with AE controlling Europe, Middle East, and Asia (but AB had Australasia), a big missing market chunk for AB in its claim to be a worldwide company. AE had a presence in 110 markets, although some – such as in China – were not much more than a flag.

 

By some measures, the combined AB operation is the biggest car rental company – leaving Hertz behind, although Hertz is in the process of buying Dollar Thrifty. That might bring it a truckload of problems, but H needs volume, and cannot let AB get too far ahead. (AB with AE is in 175 markets and has 10,000 locations, H in 150 with 8000.)

 

The surprise with both AB and H is that they have not touched the ‘low-fare’ (LF) segment of the travel business. Hotels have a few LF no-frills groups, as have some airports (or, more usually, terminals within regular airports). Yet travellers have not yet got around to demanding lower car rental rates. (AB’s Budget division is lower but not much and not always.)

 

 

One car rental company that made a big splash in the LF segment was Easy Car (part of Easy Group, not directly linked with the Easyjet airline). But it jumped into the deep end, and could not swim. I still think the LF rental idea can work, and the reason it failed with Easy was as much bad planning and bad management. Stelios Haji-Ioannou, head of the Easy Group, appears to think that because EJ is a success, that everything he touches will be a success. He has been proven wrong.

 

Time, then, for AB to think carefully about the future, and re-launch the ‘Budget’ name as a ‘low-fare’ car rental company. I can probably run the new Budget successfully for AB – if you give me a few hours to think up a businessplan.

 

(PS. My troubles with Europcar have ended. Europcar failed; I lost. Details tomorrow.)

 

 The Fox