Scowsill soundbites.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Scowsill soundbites.

An excerpt from our monthly People-in-Travel report.

 

Soundbites (may be paraphrased) from David Scowsill, head of WTTC (World Travel & Tourism Council):

 

 

-The world’s travel economy (WTTC’s measure including economic activity in travel companies, and those serving it – such as car manufacturers providing vehicles for car rental companies) expected to increase 3% this year, and 4% over the next 10 years.

 

 

-Asia’s travel economy expected to increase 6% over the next 10 years.

 

 

-In 2023 China’s travel economy expected to overtake US. We think this will happen in 2020 at the latest, even given the current slow inbound business.

 

 

-The number of travellers from Brazil and China has doubled after our efforts to improve visa policies.

 

This is shameful humbug. China, for instance, has been working on visa liberalisation (even if still restricted) since the 1990s – long before the WTTC realised that China was emerging as an important outbound market.

 

And before Scowsill joined WTTC (2010), when he was involved in what turned out to be strategic errors at a Germany-based subsidiary of British Airways, and an important reason for the collapse of Swissair, with its purchase of TAT/Air Liberte.

 

 

-The travel tax in the UK (APD) causes a US$6.3bn loss of visitor revenue to the UK economy. Scowsill and WTTC have never explained their basis for arriving at this figure.

 

 

-Japan needs to cooperate with other countries because people want to go to visit more than one country in Asia.

 

This is badly-wrong analysis from an executive who should have a better understanding of the inbound business.

 

Most visitors (nearly 75%) into Japan come from within the region and are visiting Japan specifically. Scowsill may have been talking of the time when he worked in Asia, when only 40% of arrivals in Japan were from the region.

 

 

 

The Fox

Remember, I’ll be famous after I’m dead.

 

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PAGPFT (People Are Getting Paid For This)

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

http://mothership.sg/2014/04/this-stb-video-is-so-bad-it-will-go-viral/

 

The Fox

Remember, I’ll be famous after I’m dead.

Singapore Airlines; company thoughts.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Singapore Airlines; company thoughts.

The following is extracted from a Q&A session with the senior spokesman for the SIA Group (SIAG). The full version was published in the Travel Business Analyst newsletter. SIAG answers should be considered paraphrased. After this report are my comments; may be referenced with a superscript reference number in the text.

 

Q: I thought you planned Scoot for longhaul routes, but it is operating only short- and medium-haul. Are you not shutting it down to avoid loss of face? The airline is a mistake.

A: Who says so?

 

 Me.

Well, we would respectfully disagree.

 

Why didn’t you expand Tiger instead of creating Scoot? Why create another airline, which does almost the same thing on almost the same routes?

It is not almost the same routes. The first route for Scoot was Singapore-Sydney – beyond the range of Tiger’s A320. Second was Gold Coast, then Tokyo Narita, Tianjin, and several other points in China. There are some Scoot routes that you can do with narrow body, but Scoot was set up to tap into that market segment that is looking for budget travel but over a slightly longer distance than the traditional NFA* operates.

 

But not longhaul?

Longhaul is in the plan, but with today’s fuel prices, the plan is to focus on medium-haul for now. [Oil was about US$90/barrel when Scoot was formed; about US$95 now.] There is some shorthaul but that tended to be partly for aircraft utilisation1. But I don’t speak on behalf of Scoot, just general strategy. Why Tiger can’t do it? Well, although we are the biggest single shareholder (just under 33%) we don’t control it; it is a separately-listed subsidiary, independently operated, and separately managed2. SIAG has nothing to do with Tiger on a day-to-day basis.

But we own 100% of Scoot. We saw an opportunity to get into this new market segment and we did it. It is important to point out that Scoot was not created to take away from SIAG. It is additional, incremental. So on every route where both Scoot and SQ (SIA) operate, there has been no reduction in SQ frequency.

Scoot was established to create new growth and tap into a demand that SQ was not tapping into. The budget airlines in our group, Scoot and Tiger, are true NFAs. Having opposite ends of the spectrum works for us; we are not in the middle competing with ourselves.

That is the rationale behind the portfolio approach.

MI (Silk) is, as you described, our LCA*. But we look at SQ and MI almost as one operation. Yes, they have different branding and are separately managed, but the linkage between the two is enormous.

SQ is a true premium airline; MI is lower cost. SQ is wide body; MI is narrow body. SQ cannot offer same standard of service in a narrow-body aircraft3. In part because of customer expectations. SQ code-shares on MI flights where allowed.

 

Will MI ever operate medium- or long-haul?

There are no plans for MI to operate wide body. It is taking delivery of B737s to replace A320s, and some will be B737MAX, which has a slightly longer range. So there is a possibility for slightly longer haul, but there no plans to take over routes for SQ as you described for LCAs2.

Having the two does give the group operational flexibility. Two examples:

-When the Singapore-Kuala Lumpur route was liberalised, there was a great increase in frequencies. But not all can sustain wide-bodies, so SQ handed some to MI because MI had aircraft that were better sized for that flight time. But SQ wide bodies also fly the route at certain times.

-Yangon is the other way round. SIAG was able to increase capacity by SQ taking over seven of MI’s frequencies – it had 16 – and using B777s. So overall capacity increased 55% overnight.

 

SQ traffic growth was variable in 20134. I thought you preferred a steady 7%?

SQ traffic growth has been matching capacity growth. MI not so much; it is growing fast – 20% in ASKs – because some markets are opening up – such as India and Indonesia. Double-digit growth will continue for the foreseeable future. Sometimes it runs ahead of demand, but that will catch up.

 

Is the situation with Virgin Australia – which has three airline shareholders – awkward?

We own 19.9%, the maximum allowed. When we first linked up with VA, we did not plan to take equity, but as the partnership grew so well, it made sense. We had an opportunity. We put money into VA. It issued new shares. And it invested in Tiger Australia and Skywest, so we were helping VA grow. We bought the second batch of shares, 9.9%, from the Virgin Group UK. So it became a strategic opportunity. But you don’t need equity in all your partnerships.

 

Does Etihad’s investment in VA affect your interests?

We can’t comment on others. We are doing things on our own.

 

Is it strange that you exited from one Virgin airline to enter into another?

We don’t see it as an issue because we never got the synergies with Virgin Atlantic (VS) that we were hoping for. We bought into VS and then September 11 happened. [2001; SIAG bought into VS in December 1999.] Eventually we said we wanted to sell and eventually Delta came along. Perhaps it will work better for them because it is a transAtlantic partnership. So that is completely separate from VA, which is about interline Australia.

 

Notes:

-*In this report, we have used our definitions of airline types to avoid confusion. These are:

-FSA = full-service-airline. Offering first/business/economy, travel agency bookings, meals/bookings/baggage/cancellations included, etc. As its name indicates – full service.

-LCA = low-cost-airline. (Not a low-fare-airline; see next.) An FSA but with lower operating costs (cheaper longer-hours flight-deck crew, younger/new longer-hours cabin crew, tighter cost control (twinned 3-star hotel rooms, for instance), fewer fare types, which may have first and business cabins, and which allows bookings through travel agencies etc. Usually similar to the parent airline, but a different name, and competition against parent airline allowed.)

-*NFA = no-frills-airline. We believe that among the many essential elements that make a successful NFA are: market freedom in terms of routes and aircraft choice; single aircraft type; where relevant, competition against parent airline allowed; fares that are extremely low when booked at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no service frills; single economy-class cabin; no seat selection; two toilets for 150-seat aircraft; 25-minute turnaround time; cabin crew do daytime cabin cleaning; name and flight change charged at least US$25 each; no trade shows; plenty of consumer advertising and promotion; and much more.

 

1See comment below.

 2Travel Business Analyst believes that once airlines reach a certain size (not yet further defined), they need to develop into three types – as described above. Only one group comes close – Qantas, with its Qantas FSA, Jetstar NFA on domestic Australia routes, and another type of operation, but also named Jetstar, operating as an LCA on international routes from Australia.

 3See next.

-4Seat sales +3% Jan, +5 +3 +1 +1 +3 +4 +12 +4 +3 +1 +2% Dec.

 

 

 

 

 

My thoughts on the Singapore Airlines group.

I have certain opinions on SIAG (Singapore Airlines group), which have not been essentially changed by a recent Q&A session. In brief they are:

That the Virgin Atlantic acquisition was a mistake from the start (because Richard Branson would not let anyone share his business decisions, despite SIAG’s 49% share and that SIAG’s money was, at the time, a lifeline for his airline).

Although this episode has now passed (SIAG’s share sold to Delta Airlines), I believe it shows that SIAG can make some giant strategic mistakes, despite its reputation for solid management, and much-admired standard of service at SQ.

That the launch of Scoot should not have happened after SIAG realised that it could not operate longhaul profitably. If it wanted to operate medium-haul NFA routes, then it should have used Tiger. If that would have required increasing SIAG’s shareholding and buying slightly-bigger aircraft, then do it.

1That Scoot needs to do something quickly to increase profitable utilisation of its too-big B777s.

That MI should not be just a shorthaul feeder airline for SQ, but an LCA, operating on routes where the SQ premium model is not right – for whatever reason. 3SIAG’s belief – that it cannot provide premium service on a narrow-body aircraft and/or shorthaul routes– in fact beggars belief. Why should a customer wish a lesser standard on MI and then ‘premium’ on SQ? And why, on SIN-KUL, does SIAG believe it is better to have another airline (SQ giving some flights to MI) rather than one airline with different aircraft?

That Tiger is a badly-run NFA that one day will need to be overhauled by SIAG management – and I don’t mean mechanically.

 

 

 

 

The Fox

Remember, I’ll be famous after I’m dead.

 

Trottings: Trip To Taiwan.

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TROTTINGS = Trip Jottings

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

 

Trottings: Trip To Taiwan.

I was invited to Taiwan as part of a group of MICE media. These are some of my reminisces. Other related reports on Taiwan have appeared in the Travel Business Analyst newsletters, on travelbusinessanalyst.com, and in the Foxtrots blog.

 

 

Recycling Culture:
Warehouses and factories, abandoned for newer compounds, are finding new occupants, and with them, a new breath of life. Artists searching for workshops, residencies and exhibition space are taking them over. And local governments are using them to push for private and collective development in innovative areas, thus combining culture, creativity and innovation.

 

 

In Taipei, the Songshan Cultural and Creative Park – an old tobacco and wine factory – has hosted the Taipei Arts Festival and Taipei World Design Expo.

 

A tall grand multi showcase hall (formerly the basketball court) provides a site with an unusual atmosphere suitable for exhibitions. The semi-tropical baroque garden is available for cocktail parties and press conferences. The boiler room and mechanical repair field have been converted into a creative dinning space combining artistic and cultural exhibitions.

 

 

In Kaohsiung, it’s the Pier-2 Art Center (what we call P2) run by the Kaohsiung City Bureau of Cultural Affairs. P2 comprises five warehouses, the last one is occupied as a centre for video game and software development and testing. A leading international digital innovation company is in Warehouse Number 7.

 

P2 has now become comparable in the artistic world where imagination, creativity, and animation have become building blocks for the future.

 

 

 

Quick Trip:

THSR (Taiwan High Speed Rail) runs 345km from Taipei in the north to Kaohsiung in the south along the western coast – every 15 minutes! I slept through most of it – quickly, as the train hurtles through the island at a top speed of 300kph – arriving in Kaohsiung two hours later.
Nothing To Declare – apart from the funky fact that you can swing a rack of 3-united seats round to face another rack of three seats and face your friends/colleagues for a high-speed meeting. Accompanied with snacks bought from the pleasant trolley-lady.
 

 

Floating Fiasco:

An evening cruise in Kaohsiung’s container port was kindly written up on our Fam Tour planning. Two local officials made their speedy speeches then exited – sensibly, as it turned out – while we were still anchored.

 

Nine foreign tourism professionals (and their three official guides) were left on board and urged by dishevelled rather-not-be-here floating staff to indulge in a tasteless and hard-to-keep-warm buffet.
A gentle ex-sailor equipped with a fishing hat and screeching microphone happily described the strip of steel and water he had frequented for over 40 years – for 90 minutes. The sound was projected downstairs so there was no escape.

 

All this time, a trio that might have fitted better into a dusky piano bar played on the windy top deck spreading their sound to shore via wave lengths.

 

Kaohsiung has better to offer than this.

 

 

 

Fish Feature:

Walking through – or should I say determinedly twisting my way through one of Taipei’s many busy night markets – I fell upon a typically-Asian fair game. The principle is simple: there are hundreds-nay-thousands of tiny fish swimming in their aquariums. An adult hands over coins and receives a net-with-handle for their child charge. According to how many fish they fish, they receive a take-away bag-with-water with their prized fish inside.

 

A friend back home had recently acquired a household aquarium; its occupant was a lone goldfish. A fish from Taiwan, I thought, would be an inspired gift to take back.

 

So I knelt down among the local 3-year-olds, handed over a coin, and was handed a fishing net in exchange. I won’t linger describing the looks of awe and maximum respect I received from my young fellow fishers when my time was up. After negotiating with the stand holder, I continued on my way conscious that I had a new mission for my return trip: smuggle Taiwanese fish back home.

 

A day and many trips to 7-Eleven later, I had finally found suitable containers for the trip and multiple x-ray stages: a 100ml bottle of water with local aquatic plants and a 20ml aluminum zip-lock style vitamin-C packet.

 

I was proud of myself!

 

So there I was, departing Taiwan, transferring two fish from bottle into packet every time I arrived at and left an x-ray zone (that meant four fish transfers just in Taipei). I tried to look relaxed, not at all bothered by the length of the queue, while inside I feared for the fish’s lack of oxygen and consequently, their lives.

 

We all made it back home safe and sound – I set the fish on the kitchen table on my arrival home, and got busy heating the house up. My friend arrived and after chats and drinks I went to present him with his gift. To my complete and utter horror, my fellow travellers had keeled over and frozen! Just gone and given up after all our combined efforts!

 

My friend, amused by the situation, heated the bottle between his hands and incredibly, managed to resuscitate one of the fish. The survivor spent the evening by the fire, which died in the wee hours, taking him out along with the embers.

 

Moral: inanimate gifts have a better chance of having the desired effect.

 

 

 

Notes: Other related reports on Taiwan have appeared in the Travel Business Analyst newsletters, on travelbusinessanalyst.com, and in the Foxtrots blog.

 

 

The Fox’s Friends; NB

 

Taiwan Update.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Taiwan Update.

We were invited to Taiwan as part of a group of MICE media. This is our report. Other related reports on Taiwan have appeared in the Travel Business Analyst newsletters, on travelbusinessanalyst.com, and in the Trottings blog.

 

Quick Train Trip:

Daily ridership on THSR (Taiwan High Speed Rail), running Taipei-Kaohsiung, is about 130,000 on about 135 departures daily.

 

It decimated air travel; half the air routes between Taipei and the country’s western cities had been discontinued. Total domestic air traffic was expected to be halved and the last Taipei-Kaohsiung flight stopped in 2012.

 

It also affected other modes of transport:

 

-After THSR started, non-high-speed traffic Taipei-Kaohsiung fell 10%. We are surprised it was not more. So this probably indicates that THSR took most of its traffic from air, but see also next.

-The parallel expressway also lost 10% of its traffic, and long-distance bus companies lost 20-30%.

 

 

 

Humble House:

The Humble House hotel opened in December. Its appearance and style shows its independence – which can sometimes be a disadvantage.

 

For a start, its name is wrong for its targetted international audience. It sounds more like, well a house and 2/3-stars – rather than the slick modern 4-star hotel that it actually is.

 

The HH is located in Taipei’s Xinyi financial district, which means 40 minutes from Taipei’s international airport. It has 235 rooms, including 10 suites, plus a ballroom that can accommodate nearly 1000 guests.

 

A standard 26m2 room costs US$395 (NT$12,000).

 

Given the quality of its hardware, the hotel should do well – although those rack rates are on a high side for a non-chain hotel. If business is not so good, however, it will be partly because of a marketing weakness – starting with that name.

 

 

 

MICE:

In 2009 Taiwan’s ministry of economic affairs started a 4-year “advancement program” for the MICE business. The specific objectives were not clear, and so even less clear if they were achieved.

 

But at end-2013, a bureau (for foreign trade; BOFT) launched a 3-year follow-on program – ‘Taiwan’s MICE industry Pilot Program’, what we call MIPP – for 2013-16.

 

MIPP aims to steer Taiwan’s MICE industry onto the global stage, with its strong government support. The objectives are:

-“to turn Taiwan into a leader of excellent MICE services,

-“to elevate the quality and efficiency of MICE services,

-“to hone Taiwan’s international image and competitive edge as a MICE brand,

-“to make the destination one of the top for MICE business.” Unfortunately, a measureless target, because Taiwan MICE is already “one of the top” – but top-500, top-100, top-10, top-5? According to ICCA measures (albeit on only one, small, segment of MICE) Taiwan is about 7th in Asia Pacific.

 

Unfortunately, as with the first program, many of these objectives are difficult of impossible to measure clearly. And so results will be similarly difficult to measure.

 

Now in its second year, and as part of their promotional efforts, Taitra (Taiwan External Trade Development Council, which is implementing this pilot program) has created the ‘Meet Taiwan’ logo, planned international marketing campaigns and domestic promotion, and set up a cloud MICE portal.

 

MIPP introduced some marketing slogans:

-Meet Taiwan; Love At First Sight. General.

-Meet Passion; Encounter Taiwan’s Splendid Life. For the M(eetings) and I(ncentive) segments of MICE.

-Meet Inspiration; Listen To Your Idea. For the C(onference/congress/convention).

-Meet Expo; Come Together In Taiwan’s Exhibition. For the E(xhibition).

 

Unfortunately, the English-language translations of these slogans seem unlikely to have the desired effect.

 

Other Taitra activities:

-Organises attendance at some MICE exhibitions, ICCA/UFI events.

-Runs road shows. However, in 2013 Taitra ran only two overseas promotions – one in Indonesia (which has not much potential), and only one in China.

We would have thought there would be potential for at least two road shows in China annually, and/or to other Chinese-ethnic markets such as Hong Kong and Singapore.

Taiwan has probably gained from the China-v-Japan political squabble. In 2013, for instance, McDonald’s China held a business meeting–cum-incentive travel for 2500 management-level staff.

-Organises Fam Tours, in which Travel Business Analyst has participated.

-Publishes ‘Green MICE Guidelines’. In 2013, five events applied these.

-Issues the Meet Taiwan discount card. It forecast 60,000 would be issued but it was wrong; about 105,000 had been issued by end-2013.

-Also, subsidises new conventions and exhibitions, does industry research (including surveys).

 

Other support for MICE from the government:

-Established an annual awards program in 2013 – to incentivise Taiwan’s MICE industry. The first, held last September, had seven award categories.

-Introduced a training and certification program – notably with a CEM (Certified in Exhibition Management) and CMP (Certified Meeting Professional) diploma. So far, about 45 CEMs and 20 CMPs have been awarded.

-Introduced a marketing contest with 15 places of learning – most in Taiwan, but also in Hong Kong, Malaysia, Thailand.

-Training courses, not just in Taipei, but also Hsinchu, Kaohsiung, Taichung, Tainan, Taitung.

 

MICE market measures:

-34% growth in exhibition space sales over 2008-12.

-Hosted 74 exhibitions, up 1.6%, in 2012 – making it 6th in Asia.

-2013 C and E ‘output’ (not clearly defined) US$1.1bn (NT$33.8bn).

 

Taiwan’s DMO (destination marketing organisation) has carried out some surveys. We have extracted the conference and exhibition MICE segments of the visitor market. Findings:

-Visitors who had seen advertisements or read reports about Taiwan before visiting – all types of visitors 63%, MICE (just C & E segments; likewise for rest of this section) 49%.

-Spent their spare time on sightseeing during their visit in Taiwan – all 58%, MICE 89%.

-Made trip as a “group tour arranged through a travel agency” – all 40%, MICE 3%.

-First time to Taiwan – all 68%, MICE 66%.

-Daily spend – all US$234, MICE US$213. Most observers maintain that MICE visitors spend more. The DMO had no comment on this contrary finding.

-Spend breakdown – hotel (all 32% share, MICE 52%), meals (all 13%, MICE 13%), local transport (all 10%, MICE 8%), entertainment (all 8%, MICE 4%), shopping (all 36%, MICE 20%), miscellaneous (all 1%, MICE 2%).

-Applied for tax refund – all 15%, MICE 7%. Thought tax-refund procedures were convenient – all 93%, MICE 100%.

 

 

 

Kaohsiung:

Taiwan’s up-and-coming MICE destination.

About Kaohsiung MICE locations:

-ICCK. Seating capacity 1500 guests.
-Kaohsiung Arena. Seating capacity 15,000 guests.
-Kaohsiung World Games Stadium. Seating capacity 55,000 guests.

-KEC. Seating capacity 3800 guests and 1716 3x3m booths.

 

International Convention Center Kaohsiung:

ICCK is government owned and privately managed by the Grand Conference Management Company. The venue is more reminiscent of the 1980s than its fresh and modern sibling, the KEC, see next. Yet the ICCK is notable for its enthusiastic managers, dynamic young staff, and pro-active role in practising green MICE.

 

It is located by the popular ‘Love River’. Once you step outside you’re in the heart of Kaohsiung, amid the bustling city or the siesta-inducing sea breeze, depending on the time of day, and not a hike away from a shop, bus, or bench.

 

About ICCK:

-32 meeting rooms (capacity from 20 to 1500 guests), space for 380 3x3m booths, banquet hall, lecture hall.

-A catering company based in the centre caters for the ICCK and private parties.

-Taken over in 2012, the renovation period lasted eight months. Grand held 750 events in its first year of management (almost comprising all-2013); it projects double that this year.

 

Kaohsiung Exhibition Center:

KEC, the first conference centre managed by Uniplan, a Taiwan-Germany joint-venture, is due to open this month – on the 14th. It has signed a 12-year management contract for the government-owned centre.

 

Located on the waterfront, where a pleasure port and luxury-yacht manufacturing centre are planned. The KEC is a 10min walk from metro station – a design fault, as it should have its own station.

 

About KEC:

-On the ground floor, the showground, with glass panels on either side of the halls, can be opened onto the esplanade. Floor space 18,000m2, with a capacity for 1024 3x3m booths.

-On the 2nd floor are a media centre and a business room.

-On the 3rd floor, five conference halls, two of which, with their moveable panels, can merge. Their combined floor space of 3400m2 provides 3600-seats plus nine meeting rooms with 210m2 floor space providing 120-seats

-Until now Uniplan has done event management.

 

 

Notes: Other related reports on Taiwan have appeared in the Travel Business Analyst newsletters, on travelbusinessanalyst.com, and in the Trottings blog.

 

 

 

The Fox