Fox On Friday: Go young go.

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FOX ON FRIDAY

 

Fox On Friday: Go young go.

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

 

Oh; unfortunately, an II* report finds that young Europeans (*YEs) are not going; they are travelling less. This is despite great and many reports – on the tech revolution, greater activity on social media, mobile devices, last-minute- and on-trip-booking, and much more – is encouraging more travel, particularly among young people.

 

Does all this mean, yes YEs are more active than other market segments in all forms and media, but not necessarily that they are travelling?

 

In fact, we have questioned before the incidence of travel – relating it to the big overall travel movements. The excitement of great growth in ‘activity’ (whether on phones, websites, social media) has not clearly been converted into growth in travel. That seems to grow 3-4% each year, notwithstanding bright young millennials, great percentage growth in social media activity, and so on.

 

We have long assumed that some dull matter-of-life factors intervene in all that exciting new activity. Factors such as not enough money to travel, or time (for those young people in work).

 

As for the II findings, we are somewhat surprised by its headlines, as we have seen that with many II reports, the positive gets high billing, and the negatives are hidden. Sometimes not even noted, and sometimes covered with near-meaningless words such as ‘disappointing results’, ‘stagnant’, ‘negative growth’, and so on.

 

 

Findings include:

-Since 2007 foreign trips by YEs have fallen 10%, about 1%/year.

 

-In 2014, YEs took 54mn foreign trips and spent 430mn nights.

 

-In 2007, YEs main destinations were, in size, Spain, France, Italy, UK. Travel to these four fell 1-2%/year through 2014. Since 2013, Germany has become the biggest destination. [No other data given.]

 

-Total growth since 2007 – 60% to 7mn. [Because of II’s approximations, we cannot be certain, but this appears to indicate a 7.0% average annual growth rate]. II attributes this partly to Germany’s hosting of the soccer World Cup in 2006, which “contributed to a worldwide image of Germany as a hospitable and open country”.

 

-Other destinations – named are Sweden, Croatia, Netherlands, in that order – also had higher YE arrivals. [No data given.]

 

-Most-visited cities are, in size, London, Paris, Copenhagen, Munich, Berlin, Amsterdam. [No data given. We presume this list is related to arrivals or trips in 2014.]

 

-Main motivation given is holiday; one-third go on a short holiday trip. [Usually this would mean under 5-days; II does not clarify.] Other reasons “include” educational trips or visiting friends. [We do not know if this ‘inclusion’ list shows the two-next biggest, or is a no-importance selection.]

 

-‘Sun & beach’ holidays take a 25% share of all “foreign stays”. [We do not know if this is different from ‘trips’, which II uses for most of this report.]

 

-City trips and tours “closely follow” beach holidays in size. [No data given.]

 

-Another 25% share comprises other types of leisure travel – such as events, summer/winter sports, special occasions (such as weddings, birthdays).

 

-A 12% share is for business, where MICE trips “dominate”. [No other data given.]

 

-“Fewer than half” book hotel accommodation, although AAGR since 2007 has been 1%. [No other data given, and so we do not know what the other half do – use travel agencies, AirBnB?]

 

-AAGR for free accommodation has been 1% during this period.

 

-A “slight increase” in accommodation such as couch-surfing or AirBnB-type has been apparent only since 2014. [No data given.]

 

-YEs spent US$753 (at US$1 to €0.93) per trip in 2014, and US$86 per night. [No comparison data given.]

 

*II = IPK International and ITB Berlin, YEs = young Europeans, aged 15-24. We presume ‘Europeans’ means travel by residents in Europe, and not Europeans. At press time, II had not responded to our request for certain clarifications.

 

 

 

The Fox

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

 

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Fox On Friday: Euromonitor Puerilities

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FOX ON FRIDAY

 

Fox On Friday: Euromonitor Puerilities

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

Research company Euromonitor (EM) has listed what it calls “top emerging travel trends” (a misnomer) in the WTM Global Trends Report. We have criticised some EM reports and statements before, including its now-14-years of work for the GTR. But this latest list of blathers we find an insult to travel industry professionals in that most have little or no meaning:

 

EM’s TETTs are:

 

The new American dream: work less, play hard.

“A growing number of American companies offer unlimited vacation time to create a happier, loyal and motivated staff, which will have an effect on travel bookings.”

 

We know of no company (in the US or anywhere) that pays staff and allows them not to do any work. But we do accept that such employees would likely spend some of their money and great amount of free time on travel.

 

Smart technology drives travel to UK’s secondary cities.

“Digitalisation and hi-tech solutions are redefining the tourist offerings of UK urban centres to boost travel outside of London, currently the jewel in the crown of UK tourism.”

 

Smart technology is also driving travel to London, and everywhere. But what, we wonder, does ‘digitalisation and hi-tech’ do, in this case, for such travel that it does not do for others?

 

‘Hipster Holidays’ revolutionise European city break.

“Young and hip travellers’ interest in alternative city areas opens new business opportunities and helps diversifying urban attractions in European cities struggling with excessive tourism.”

 

We tried to understand this, but failed. And we wonder which cities are struggling, and what, indeed, is ‘excessive tourism’.

 

Travel 3.0: the advent of smart travel.

“Smart technology is transforming the tourism industry with personalised services to create enjoyable experiences suited to a traveller’s individual preferences.”

 

Well, yes, but is this an ‘emerging trend’? We would think personalisation has been around for at least five if not 10 years. And in some cases, much longer; such as Thomas Cooks’ trips from the UK to the French Riviera in the 1850s.

 

Iran: the next travel hotspot.

“The recent sanction lift sparked a scramble to open Iran to international visitors, attracted by its ancient Persian history, 17 World Heritage Sites, as well as natural attractions.”

 

Well, visitor growth was 4% in 2014, but that was before an agreement on sanctions (and, EM, should know, they have not been lifted, but some may be lifted.) On a 5mn total, small numerical increases could produce big percentage growth – but all this hardly deserves such puerile descriptions as ‘hotspot’ and ‘scramble’. We would be surprised if the 2015 total reaches as much as 6mn.

 

We also wonder if EM wants us to note that there is a difference for potential travellers between Iran’s ‘ancient Persian history’ and its ‘Persian history’. We are not qualified to make any comment on any difference.

 

Technology start-ups changing the face of Africa.

“With technology start-ups flourishing across the continent, Africa is entering a new era of innovation, which will help change the perception to international tourists.”

 

Although this ‘changing the face’ is a super-exaggeration, does the creation of start-ups – anywhere – motivate travellers?

 

Luxury hotels keeping in with the crowd.

“Luxury hotels are turning to crowdsourcing and crowdfunding to get their properties financed, rather than relying on traditional sources of investment.”

 

Please EM, put this into perspective. Under-1% of funding of the under-5% of hotels in the luxury category?

 

The sharing economy heads to China.

“After a shaky start, the sharing economy is taking off in China, with the rise of new local players in 2014, a trend boosted by the number of Chinese millennials.”

 

Finally, something we can agree with! But hardly news. And, of course, the sharing economy is taking off in most places, with or without the help from millennials.

 

Travel for the Indian unbanked.

“Travel firms are adopting ‘cash-on-delivery’ payments to cater to the half a billion Indians without a bank account.”

 

Yes again, but this is not a new phenomenon.

 

 

The Fox

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

Virgin on the cliff?

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Virgin on the cliff?

When the Virgin Atlantic airline was launched in 1984, I made the bold and brave statement that it would not last two years. 30 years later, I guess it is time to admit I was wrong!

 

But now I wonder again.

 

VA was protected almost 10 years by innocent managers at Singapore Airlines – who, despite having paid for 49% ownership of VA, and saving the airline from collapse, had zero influence.

 

SA sold to, ironically, an airline which once owned shares in SA itself – Delta.

 

Delta is a conservative and strong airline, and has survived in the maelstrom of the US airline business. I wondered why Delta decided to invest in such an operation as VA – which has a different management culture.

 

Was it an insurance policy for its US operations – always under pressure and with little chance of US support if times get tough? (Even now, leading the case against alleged government subsidy of Emirates, Etihad, Qatar, there is no government support or even encouragement.)

 

UK-based VA might not seem a good investment as security, however. True, the UK is part of the European Union (for the present; an in/out referendum is due 2016/17), but the UK is the most economically liberal of the EU markets, and in some ways more liberal than the US.

 

Now, the figures.

 

Our source does not provide timely figures. We have just VA’s half-year figures; in fact, just monthly, and we do the H1 calculation. These show a 5% fall in seat sales. And there has been a fall every month this year – in one, it reached 9%.

 

With Delta’s involvement I can imagine there is some ongoing rationalisation of schedules, prices, etc. But even for all-2014 growth VA’s growth was only 1%.

 

This time I will be more cautious, and not predict an early demise for the airline. But watch those traffic counts; if the current fall is confirmed for all-2015, then I may well dust off my prediction of doom.

 

 

The Fox

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

 

Fox On Friday: Cathay hides? China’s big-3 ALs. Singapore AL group . Japan travel agencies.

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FOX ON FRIDAY

 

Fox On Friday: Cathay hides? China’s big-3 ALs. Singapore AL group . Japan travel agencies.

Following my trawl through key Asia travel stats for WYSKs (what you should know) , note the following:

 

Cathay; hiding

I wonder. Cathay reports its figures only with Dragonair . Probably for the same reason that Air France-KLM and Lufthansa-Eurowings report only combined totals – to hide one set of figures.

 

With first-Q3s seat sales at +8%, is most of C/D’s growth coming from D? In other words, is C in trouble – as Singapore Airlnes, see below?

 

 

China’s big-3 airlines

Yes, them again.

 

Their international traffic still growing at remarkable rate – First 3Qs seat sales, +19% for Air China, +29% China Eastern (the biggest), +31% China Southern.

 

CE, having overtaken Asiana and Japan Airlines , is now approachig Thai’s total.

 

 

Singapore Airlines group .

(Part of this is a repeat.)

How much longer, I wonder, before management at the Singapore Airlines group (which I auguringly abbreviate to SAG) admits that things are not going right. (SAG took 10 years to extract itself from the mistake of investing in Virgin Atlantic, so don’t expect something quick.)

 

As I have noted before, SAG’s Scoot should not have been established (Tiger shoule have been expanded instead), and Silk should be SAG’s low-cost-airline, not regional-airline/SA-sometime-substitute. Indicates are that Tiger is being suffocated out (of routes, to give to Scoot, and thereby, life).

 

For the first 3Qs, SAG’s seat sales grew under 1%! Poor old Tiger (as I have said, the airline is giving tigers a bad name) fell 5%, and seat sales for the mighty SA were flat . Scoot can thank Tiger’s fall for part of its growth – which is now running at sustainable rates monthly, and +15% YTD.

 

 

Travel agencies, Japan

How can they survive?

 

Well, maybe they can’t. I have been tracking outbound sales of the biggest bunch for some years. At one time it was the top-60, but now I am down to the top-49. And probably – as in the US – still going down.

 

Mile Post Japan gives me some figures to help my tracking. From this I reckon the still mighty (just about) JTB fell about 8% in the first half, even the smart bright HIS challenger -5%, and once-proud Hankyu a painful -16%. The top-49 -6%. That’s down 11% since 2000, and an even-worse -24% since 2010.

 

 

The Fox

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

 

Fox On Friday: SAG-ing; Singapore Airlines Group

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FOX ON FRIDAY

 

Fox On Friday: SAG-ing; Singapore Airlines Group

I was diverted from my trawl through key Asian airline stats for WYSKs (what you should know) by news about the Singapore Airlines group. (I abbreviate that to SAG – rather appropriate given current traffic results.)

 

I wondered how much longer before management at SAG admitted that things are not going right. (It took 10 years to extract itself from the mistake of investing in Virgin Atlantic, so it may not be quick.)

 

As I have been saying since 2012, SAG’s Scoot should not have been established (Tiger should have been expanded instead), and Silk should be SAG’s LCA*, not regional-airline/SA-sometime-substitute. Indications are that Tiger is being suffocated out (of routes, to give to Scoot, and thereby life).

 

For the first 3Qs, SAG’s seat sales grew under 1%! Poor old Tiger (which, as I noted before, is giving tigers a bad name) fell 5% and seat sales for the mighty SA were flat. Scoot can thank Tiger’s fall for part of its growth – which is now running at good rates monthly, and +15% YTD.

 

Then this week SAG announced that it had offered to buy the 44% of Tiger that it does not already own. I presume shareholders will accept, because they can see Scoot is squeezing Tiger out of routes – which is hardly a good sign for future business potential. As a 100%-SAG owned airline, Tiger’s strategy could be part of SAG’s for the overall benefit of SAG – even if Tiger itself does not do so well.

 

SAG made comforting noises about ‘long-term success’ etc, but that is for public consumption today. I reckon what SAG does tomorrow will be based on what it will describe as ‘changed circumstances’ and a ‘redefined corporate strategy’ – or similar.

 

At present, SAG says it intends to take Tiger private. What this means is not yet clear.

 

I still think there is no need for SAG to have two NFAs* (Scoot, Tiger), so one will presumably go. Yet maybe not. Because also there is no need for two FSAs* (SIA, Silk), but one FSA (SIA) and one LCA (Silk).

 

Make your bets.

 

 

*Notes:

-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 no-frills-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. If relevant, 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.

 

 

 

The Fox

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