Hotels in Egypt.

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

Foxtrots – leading the industry in a dance.

Hotels in Egypt

Our research indicates bad news for Egypt’s hotel business is getting worse. Over H1 in 2014, occupancy fell a big 29%, see table, meaning an almost-50% fall since 2010.

(The Arab Spring started in December 2010, and January 2011 in Egypt.)

In 2013, occupancy increased, meaning these new results wipe out the gain in 2013.

There was growth in average room rate, of 8% and 16% since 2010. However, this will not make up for the fall in occupancy.

Hotel results in Egypt, Jan-Jun

Item                                 2014      2013     2012

Occupancy,%                  29.9      42.2       38.1

Growth over prev yr,%    -29.1     10.7       NA

Growth over 2010,%       -49.0     -28.0     -35.0

ARR,US$*                       61.3      56.8       52.2

Growth over prev yr,%   7.9         9.0         NA

Growth over 2010,%      15.8       7.3        -1.5

Notes: *ARR = average room rate, at US$1 to E£7.15. Source: Travel Business Analyst.

The Fox

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

France No 1? Yes, No, No.

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

Foxtrots – leading the industry in a dance.

France No 1? Yes, No, No.

An excerpt from our

The presentation of France’s visitor figures is suspicious. Part of the reason is that the sources of arrivals from the Schengen countries in Europe are not registered. Therefore, the figures must be estimates – but the authorities never say that.

In addition, this year – but not for the first time – the authorities have shown ‘0.0%’ movement for three months running. We are fairly confident in saying, without evidence, that that cannot have happened.

France’s share of the world visitor total has been falling – from 11.4% in 2000 to 7.7% in 2013. And share of Europe’s from 19.9% to 14.9%.

A measure better than simple visitor arrivals is visitor spend. And here France is third – the US is 2.5-times bigger, and Spain about 10% bigger. France’s share of the world visitor spend has fallen from 6.9% in 2000 to 4.8% in 2013. And of Europe’s from 14.2% to 11.5%.

Another measure is air traffic. Measures are not simple but in terms of seats sold, France is about 13th, and below markets such as Australia, Indonesia, Ireland, and, for instance, about 10x smaller than the US.

A minister responsible in France has set a 100mn target for visitor arrivals. But this is meaningless because he gave no date to achieve it. But at present growth rates it would take about 15 years to reach – 2030.

The visitor business in France is in trouble, and the government cannot see it – or does not want to see it.

The Fox

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

TinT: Alitalia; the real facts.

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

Foxtrots – leading the industry in a dance.


TinT: Alitalia; the real facts.


TinT (Truth in Travel) Rides Again!

Surely I am not the only one who sees the charades at Alitalia with the purchase of 49% by Etihad?


Some comments:


-No report I have seen so far – even in French media – notes that Air France bought 25% of Alitalia in 2009, with an option to buy more after four years, 2013.


-It paid €322mn.


-Its aim was a close alliance, helping to return Alitalia to profits after a few years, etc etc.


-In 2013, AF did not participate in a €350mn capital increase (“give us more money”) in 2013, and thus saw its 25% reduced to 7%.


-In 2014 along comes a saviour – James Hogan, head of Etihad, with Abu Dhabi’s money stuffed in his pockets.


-It is not quite clear yet how much Etihad is paying for its 49%. The figures are complicated by another capital increase of €300mn. It seems €388mn.


-Look at those figures: around €1bn in new funds (at least) for Alitalia in the past five years; 25% cost €322mn in 2009, and 49% costs €388mn in 2014, meaning the airline was worth about €1.2bn in 2009, now just under €800mn, down one-third.


-AF expected Alitalia’s turnaround would take four years.


-Etihad expects Alitalia’s turnaround will take 2/3 years.


-Hogan talks of making “hard decisions”, and cutting some lossmaking routes and some aircraft. I could do that!


-He also talks of reducing staff by 1000.


-Alitalia’s CEO Gabriele Del Torchio says he is now ready to leave now his job is done. What!? He was hired only in 2013 to, among other things, start the process to return Alitalia to profitability. He now says his job was to “lead the company towards an alliance”. Either something is lost in the translation or Del Torchio is being economical with the truth. Alitalia is already in an ‘alliance’ (Sky), and if ‘alliance’ means partner, there was AF. Shamefully, such blatant contradictions are not noted in the mainstream media.


-Alitalia needs to lose 7000 of its 14,000 staff. Do that and there is a chance the airline can be efficient and profitable. Don’t, and you are playing games.


-Hogan will probably not be at Etihad to see his strategy fail (and thus can blame it on others for poor implementation). Abu Dhabi will accept publicly (privately, it surely knows already) in about three years that it has wasted its money and cut Alitalia loose, as well as Hogan, if he has not already gone by then.


-Hogan will be a hero in the aviation world for his “bold moves”.



The Fox

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

Tiger Air. Giving Tigers A Bad Name.

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

Foxtrots – leading the industry in a dance.


Tiger Air. Giving Tigers A Bad Name.

Yesterday, I suggested that the Scoot airline should be shut down and folded into Tiger Airways – both part, at different levels, of the Singapore Airlines group (SIAG).


That suggestion might have left the impression that Tiger is strong and Scoot is weak. Sorry about that. I meant no more than that the two should be merged.


Tiger has actually been a disastrous business. Over the past four years, there has been:


-near shutdown following numerous flight delays, cancellations, etc;

-shutdown for about six weeks of its Australian division by the authorities for safety reasons;

-start and shutdown of its Indonesia division within a year;

-sale of its Philippines division to its competitor Cebu Pacific. Really!

-sale of its Australia division to Virgin Australia, competitor to its associate airline, SIA. Really!

-change of name (presumably to hide the negative image) from Tiger Airways to Tigerair, and downplaying the ‘tiger’ name. Really!


Such stunning continuing incompetence must be rare in aviation.


It is time that Singapore Airlines moved in. Having said that, SIAG’s business skills have not been obvious of late, as though it does not know how to handle the new realities of the airline business.


(I had a dispute with Tiger in 2013 when, I maintain, they cheated me out of about US$70 of excess-baggage charge. And management seemed incapable of taking the out-of-box solution. This colours my report on the airline, although at the same time it reinforces the theme of my comment that Tiger’s management is incompetent.)




The Fox

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

PAGPFT: Singapore Airlines.

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

Foxtrots – leading the industry in a dance.


PAGPFT: Singapore Airlines.

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

One quarter’s (bad) results would not really warrant a change in strategy. But two?


Singapore Airlines (SIA) should at least take a good look at what it is doing – corporately-speaking – and see if there is a need to make changes. Total revenue was down in the last two Qs – a bad sign. By -1.0% Jan-Mar and -4.1% Apr-Jun. And operating loss grew 36.4% Jan-Mar and operating profit fell 51.7% Apr-Jun.


For me, the changes needed were included in a special report on the SIA group in the December 2013 issue of our Travel Business Analyst newsletter. In essence, the SIA group needs to:


-Shut down Scoot, and merge its operations into Tiger.

-Increase its ownership in Tiger, to at least 51%, and rationalise aircraft fleet (such as Scoot’s too-big ex-SIA B777s).

-Expand Silk into an LCA*, which means operating on some medium- and long-haul routes, sometimes in competition with SIA. (It might even be able to take on some of Scoot’s B777s – although we think they are probably too big for most routes, at least to begin with.)


Not mentioned in the analyses of SIA recent results is the damage that I see Emirates doing to SIA’s business, and even its business model – which, ironically, Emirates copied.


Plus the fact that total traffic into SIA’s main point in Europe, the UK, is falling. In fact, that may be a statistical quirk. Because, say, an Emirates passenger flying London-Dubai and then connecting for Dubai-Singapore (or wherever), would not show up in statistics as a UK-Singapore passenger, but UK-Dubai.


Is SIA management strong enough to make such important decisions? There are not good signs. With its Virgin Atlantic 49% share, for instance, I had been saying for seven years that the alliance was not working. SIA management was in denial for another five years before admitting they wanted to sell.


And note also that SIA did not give a presentation this year on its Apr-Jun results – which usually specifically shows what is up and down, and by what percentage. It produced just an SGX announcement and a news release. Hold your head down when you have done something wrong?


*LCA = low-cost-airline. (Not a no-frills-airline.) An full-service-airline 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.)



The Fox

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


TinT: Lufthansa! Skymark! Fares fraud!

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

Foxtrots – leading the industry in a dance.


TinT (Truth in Travel) Rides Again!

My commentary on news from/on Lufthansa, Skymark, fares fraud.



For some time I have been saying Lufthansa is not doing as well as it, and most others, have been saying. I based this primarily on traffic results. A brief wrap-up:

-When Lufthansa sold its poorly-operating subsidiary BMI (ne British Midland) it was worth more for the flight slots it owned at London Heathrow airport than as an airline. And it was half the size when Lufthansa bought – 43% down on its peak in pre-LH 2006!

-Then there is its subsidiary Germanwings, created in 2002 as an NFA (no-frills-airline), although it seemed LH was not convinced of the need – keeping GW off important routes, for instance. Partly for that reason, business was bad – bad enough that LH has stopped publishing GW’s traffic results for the past two years. In the last batch I have, the NFA Norwegian, for instance, was selling double the number of seats that GW was selling! Norway has a population of 5mn, Germany 82mn; say no more.

-And LH itself is not doing well. In the first half, seat sales +1.3% at its own operation, +1.0% at the group (primarily Austrian, Lufthansa, Swiss). Not much sign of Lufthansa skills working their magic here!


Is the finance world finally getting my point(s)? For two months running, Lufthansa stock price has been the worst-performing of the airlines I track in Europe, US, Asia. -15% in July, -19% in June. It is -14% on its end-2013 price, and -9% over the past 12 months.





Obscure order obfuscated. In 2011 Japan’s Skymark Airlines ordered six A380s, of which the first was due later this year, as well as 10 A330-300s. Well, so it seems; Airbus did not show it on its list of orders, although it has made an announcement that the airline has now cancelled its ‘order’ (apparently just the A380s).


Thank goodness. Sort-of NFA (no-frills-airline) Skymark has been a failure since its first flight in 1998. It has 31 B737s and sold around 7mn seats in 2013. It also has some reasonable strategies – such as operating from Tokyo’s Ibaraki airport, although it also operates from the much-more-costly Haneda and Narita airports.


It no longer seems to know whether it is an NFA or not. It was frightened by the entry of Air Asia and Jetstar in Japan, and cut back frequencies and destinations. And management has showed no sign of being able to manage the change required to make A380s successful, even though an original shareholder was HIS owner Hideo Sawada – who still retains a 5% shareholding.


Skymark was thinking of flying Tokyo Narita to the US (some reports also indicated Frankfurt, London, Paris). If that wasn’t bad enough, it was going premium – with 114BC and 280EC-premium in its A380s – only 394 seats. So, new business model, new markets, new routes.


This costly cancellation may prevent the huge losses that looked likely with such an operating plan. But surely the company’s demise cannot be far away, particularly if Air Asia’s second attempt in Japan works – which I think it will. (Remember that I said, before the launch, that the first AAJ would not work.)




Fares fraud

Sounds heavy, but that, basically, is what it is.


A few OTAs (online travel agencies) and/or some search engines claim to offer/find the lowest fare on a particular route. With fares changing every three seconds, and many more frequently, this is almost statistically impossible to achieve.


If $100 is the cheapest* fare when I started typing this sentence, then by the end of the sentence the fare could be $101. So a claim to be the cheapest, either $100 or $101, needs to be made with the caveats.

*On a particular airline via a specific site at a specific time, searched from a particular location with a particular computer with a specific number of clicks before booking.




The Fox

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

TinT: Alitalia! Belmond! Scoot! Virgin!

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

Foxtrots – leading the industry in a dance.



TinT (Truth in Travel) Rides Again!

My commentary on news from/on Alitalia, Belmond, Scoot, Virgin America.




Last month, Alitalia held another shareholders meeting to propose another increase in capital – this one of US$347mn (at US$1 to €0.72). The last one was less than a year ago, and the amount raised was US$417mn.


This is running at around US$60mn/month; very useful if your business is not working.


That last time, Air France-KLM (which must wonder why they outbid Lufthansa to take a share in Alitalia) did not participate and so saw their ownership share fall from 25% to 8%.


Latest lamb is Etihad, the rich airline of Abu Dhabi run by an Australian who appears to be aiming for the Airline Hall of Fame. (There isn’t one.)


Etihad is taking 49% of Alitalia. How long before that share falls?


Who is paying for Alitalia’s constant more-funds requirement? The Italian people, or rather those Italians who pay taxes. Will it ever end? Will the Italian government follow the Belgian and Swiss ones (who let their Sabena and Swissair airlines collapse into bankruptcy)?


I cannot see that happening. The only alternative would seem to be a 100% takeover. But it would have to be a European company (to avoid problems with traffic rights; which is why Etihad is taking just 49%). And who wants to invest in a perennial loser? Alitalia needs to drop most of its staff (yes, at least 50%, maybe 60%) before it stands a chance of making profit and, ironically, becoming an efficient operation. And, politically in Italy, that cannot happen.


So more of the same. But there has to be an end to this. Maybe I’ll start an online competition – How Will Alitalia Fail?





Belmond (ne Orient Express Hotels) is the new name, proudly announced last month.


I reported earlier that OEH needed to change its name. And so for once, this is something I think is good.


What does the stockmarket think? Well, Belmond figured in my list of travel stock shares – but because its stock price showed the biggest fall in July among hotel companies! -14.7%!





Singapore Airlines, normally liberal with (basic) traffic figures – albeit partly because of stockmarket requirements – shuts up as far as its Scoot NFA (no-frills-airline) subsidiary is concerned.


It is in good company. Lufthansa stopped publishing figures on its Germanwings NFA two years ago. They are now hidden inside Lufthansa’s. We presume it is because the figures are weak. Bad company would be Aeroflot’s Dobrolet NFA in Russia, launched in June. Aeroflot has told me its NFA sold 19.1k seats in that first month, ASKs were 26.7mn, RPKs 23.6mn, passenger load factor 88.6%, revenue load factor 83.1%, flight hours 251!


Ok, back to Scoot.


Reading its announcement celebrating its 3-millionth passenger puts my mathematical prowess to its test. The essence (I have deleted to non-relevant bits): “31 July 2014, counted 3-millionth passenger…launched June 2012…1-millionth passenger took one year…most-recent 1mn [2mn to 3mn] took six months.”


So: Jun 12-Jun 13 1mn seats sold; Jul 13-Jan 14 1mn; Feb 14-Jul 14 1mn. Converting that to a monthly average: 83k Jun 12-Jun 13; 143k Jul 13-Jan 14; 167k Feb 14-Jul 14. So annually Scoot is selling at least 2mn seats.


That’s better than I thought. Its Malaysia-based rival, Air Asia X, is selling around 400k/month (3.2mn for all-2013), but it has been operating for five years. I reckon that at this rate, Scoot would overtake AAX in 2016/7.


‘Would’ because there is still a chance both AAX and Scoot will be shut down or re-structured. Because there is no need for these airlines, there is still the chance that AAX will be folded into AA, and Scoot into Tiger.




Virgin America

Virgin America is known, it says, for its “upscale service and low fares” (an oxymoronic claim). It launched in 2007, after two years of preparation etc.


It made its first profit in 2013 – US$10.1mn on revenue of US$1.42bn, just 0.7% – and has now filed for an initial public offering to raise US$115mn – 10-times that first profit.


Even with these somewhat-feeble figures, the IPO will probably succeed. The public seems to have a soft spot for airlines, even though they know there are not particularly profitable, and some are worse.


I would not put VA in my most-likely-to-succeed bag.




The Fox

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