Absurdity at Alitalia, Asia Pacific inbound/outbound, Milan Malpensa, Wrong direction

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WYSK – What You Should Know.

Absurdity at Alitalia, Asia Pacific inbound/outbound, Milan Malpensa, Wrong direction


Absurdity at Alitalia

We have extracted some data from Alitalia’s report on its first half. This is an exercise in obfuscation for the airline, and so we cannot extract much of value:


-‘Net result -€130mn’ (which we assume means a €130mn loss), which it describes as “only a €30mn increase compared to the previous quarter” and “a slight improvement if compared to the budget”. How can H1 be compared with the ‘previous quarter’? And I presume ‘increase’ in this case means a bigger loss. So did it lose €160mn in the ‘previous quarter’, or we divide (say €65mn loss in both Qs), and so… okay, even I’m lost now. See what I mean about obfuscation?


-Seat sales H1 were 10.3mn. No comparison given, so I assume it was a fall. The last time I had any meaningful figures on the airline (before it stopped giving them out, in 2011) it had sold 11.2mn seats in H1 2011.


-Load factor was 75%. Of course it gives no comment, or comparison, on that, but it is a bad result. It needs at least five more points, but it seems to indicate that the airline is a long way from viability.


-We knew Alitalia was a dud buy for its new 49% owner, Etihad. And Etihad’s owner (the Abu Dhabi government) as well as management must also have known. But did they know it might not be possible to turn it around? Or is Etihad’s Australian CEO simply on a CV-boosting ego ride?




Asia Pacific inbound/outbound

Our calculation of AsPac visitor arrivals/resident departures for latest-months May/June, in the current editions of the Travel Business Analyst newsletter, shows: +7.6%/+7.4%. Arrivals boosted by big growth in Japan, Thailand.




Milan Malpensa

Is Milan Malpensa airport getting out of trouble? It has been losing traffic badly – in some months around 20% – mainly to Bergamo but also Linate, and the country’s economic malaise. As for Narita in Tokyo, now the older airport (there, Haneda; in Milan Linate) can accept more traffic, the newer is losing because it is less convenient. But over Jan-Jun, Malpensa’s passenger total was down only 4%. And it is still a little bigger than Linate and Bergamo combined.




Wrong direction

-ECM/MKG reports hotel occupancy in the first semester – not defined, but usually would be Jan-Jun. For its work, ECM’s members should have only passing interest in this hotel measure; ECM management is not aware of this, partly because of its relationship with MKG.


-IATA credits July international RPK change to the (annual) change in timing for the moslem ramadan fasting month. We question that analysis: 1, because it changes every year and IATA has never given this as a reason for a growth (and fall when the period is not the ramadan period); 2, the effect on worldwide air traffic must be tiny – less than 1%? – so how would it have such a notable effect on a percentage change?




The Fox

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


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WYSK – What You Should Know.

Hong Kong & Macau from China, Malaysia Airlines, Tokyo airports, US visitors

*A report on these topics in our Travel Business Analyst newsletter contains some important additional information and analysis on the data shown here.


Hong Kong & Macau from China

Arrivals from China into Hong Kong have fallen in 3 of the past 7 months, but the total is still ahead 2% thanks to 32% growth in the Lunar New Year month. Worse news for Macau. Down in all months except that LNY month, and down 5% YTD.



Malaysia Airlines

It’s not getting any better. The fall in seat sales in June, -8%, was the biggest this year. That puts YTD -4%, and hard to pull back this year. New management of the ‘new’ airline will probably gain from the bad results in the last four months of 2014 (-8%).


DCB (Dead Cat Bounce; a phrase from the finance world) will probably mean growth Sep-Dec this year. But don’t be fooled; figures will still be lower than those for 2013, even if they are ahead on 2014. If you know how to play with figures, the game is easy.



Tokyo airports

No respite for Narita airport. Thru May (latest available) its passenger-count was down 11%, as Haneda airport grew 33%. Haneda is much smaller, but it has two runways and at these rates, it will count half Narita’s total by year-end.



US visitors

US 2015 visitor data has been absent until now. Therefore, more than usual information here:

-Q1 visitors 16.0mn +1.2%. Top-10: Canada -4%, Mexico +6%, Japan -7%, UK -3%, Brazil +8%, China +19%, Korea +16%, Germany +1%, France -15%, Australia -3%.

-March visitors 5.9mn + 0.2%. Top-10: Canada -6%, Mexico +5%, Japan -10%, UK +2%, Brazil -5%, China +19%, Korea +11%, Germany +6%, France -27%, Australia -4%.

Surprises: very weak France market, weak Australia, Canada. No surprise – good China, Korea.




The Fox

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


WYSK – What You Should Know.

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

Foxtrots – leading the industry in a dance.


WYSK – What You Should Know.

Singapore Airlines group, Drones, China visitors, IAG boom, Singapore recovery, Dubai airport, Stockmarkets, Ryanair.


Singapore Airlines group

The 4-airline Singapore Airlines group had its best month this year in July. Seat sales grew nearly 7%, which puts YTD just above (0.2%) its 2014 counts. Sighs of relief all round.



Washington Aviation Summary reports air pilot reports of drones in the US thru July were 650 +173%.



Another month of falling foreign visitors, now 4 out of 7 this year. That leaves YTD almost 1% down. Is this related to slowing economic activity (slowing growth, not slowing down) or something else? Outbound still seems strong – we estimate +14% but for a different period. And other measures, such as international airline traffic, are booming.



IAG (British Iberia Vueling statistically; plus Aer Lingus soon) is on a roll. Seat sales +10% thru August. Not all comparable figures are released, but it appears around 75% of the growth is coming from I and V – although together they are only about 70% the size of B.



Singapore data we have seen shows a turnaround in July in air passengers. Up 8% with particularly-strong growth on Thailand +18%, China +15%, Malaysia +11%, Japan +10%. But even the largest, Indonesia, was up, +3%. YTD is touching +2%. Not great, but nevertheless may indicate the end of Singapore’s 18-month hiccup.


Dubai airport

Dubai airport management says YTD passengers handled is 45.0mn +12.9%; our calculations indicate 51.2mn +14.1%.

Top of Form



Some serious falls in August. Our Travel Stocks Index shows AsPac has fallen 25% on end-2000 prices! And stockmarkets were in trouble also; the fastest growth was Dublin’s – but even that was down 2%! Read on.
Travel stocks (US, AsPac, Eur) in August. Airlines: biggest growth, Wizz +9%; biggest fall, Air Asia -36%. Hotels: MGM +4%, Wynn -27%. Others: Hertz +8%, Kuoni -25%.
TBA Travel Stocks Index: WW 165, US 296, AsPac 76, Eur 124. Index previous month: WW 175, US 302, AsPac 93, Eur 131. NVTT (Net Value Travel Tech) Stocks Index: 123; previous month 127.
Info via Travel Business Analyst. Details in next month’s newsletters.



When all counts are in for August, they should show that Ryanair in Europe has overtaken Southwest in the US to become the largest NFA (no-frills-airline) in the world. Caveats – there are bigger FSAs (full-service-airlines; such as China Southern), and on a YTD basis, SW will still be bigger than Ryan.




The Fox

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


Interview: Steven Pan.

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TROTTINGS = Trip Jottings

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


Interview: Steven Pan

This interview with the chairman and CEO of Regent Hotels was conducted by Renee Chew, editor special projects at Travel Business Analyst. Parts may be paraphrased.


Renee Chew: Describe Regent.

Steven Pan: Our philosophy?

-The only thing we specialise in is luxury.

-The commonality of all Regent Hotels is uniqueness.

-Regent hotels are a collection, like an art collection. They don’t follow a cookie cutter model, so each hotel is its own niche.

I believe in the ‘luxury of no choice’.


What does that mean?

Where 1-2 options for guests at any one time. At an onsen inn in Japan, the staff do the same things daily, such as standing at the entrance, greeting the guests personally. Where the inn’s daily activities follow a set schedule, ie the same every day for simplicity.

Guests follow the same track experience at the resort, which allows all staff to wait on you at all times.

The best service is invisible until you need it.


What do people want?

-Privacy and exclusivity. This means not the big-hotel-big-lobby philosophy hoteliers had in the past.

-Simplicity in the hotel business is more relevant today than ever, because the world is busier than ever.

-Hotels should be familiar to guests, with accessible technologies like the ones in your home.

-You should partner with existing restaurant owners instead of creating your own.

-We focus on the three ‘B’s: bed, bath, breakfast.

-We prefer hiring staff who are new to the hotel industry because old habits die-hard.

-If you get the formula right at the beginning, you do not have to change later on.

-We prefer to develop mixed-use developments – hotel, mall, office, and serviced apartments with flexible configuration, where three bedrooms can be reconfigured to smaller units and studios if need be.

-Hotels must be run like a craft and a business.


What is your perspective on equity participation?

I have been on both sides, I have been an owner. If you are a minority equity owner and you are doing a bad job what can you do? If your CEO is an equity partner you cannot (well, it is difficult) fire him if he is a majority shareholder.

I believe you can either do a good job or get fired. This means create value, sustainable cash flow through bespoke concepts.


With the current stockmarket turmoil and economic slowdown in China, what adjustments do you have to make?

This is not going to be near the proportion of the financial crisis of 2008-09 or the Asian financial crisis of 1997-98. It is part of a normal economic cycle and is symptomatic of regular economic over-expansion. This crisis is bound to correct.


Why did you invest in your Montenegro hotel?

The owners are four leading Jewish families who wanted to recreate another Monte Carlo in Montenegro – as there was a super yacht marina. The sale of attached residences financed the construction of the hotel.


Has your MBA and experience at Credit Suisse First Boston helped you?

Actually, our investment business is completely separate from our hotel business. We buy only from distressed sellers – fire sales.

We have three development guys who just look out for distressed properties. They make the company more money than thousands of other people in the real estate business.


The Fox’s Friends; RC