PAGPFT – Nice, Cote d’Azur

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

PAGPFT – Nice, Cote d’Azur

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

An excerpt from our monthly Travel Business Analyst newsletter.

 

Nice and many other private and (mainly) official groups in the Cote d’Azur* have launched a US$1.1mn marketing program (although we can see only half that sourced) to rebuild its visitor business. That follows a particularly shocking attack – over 80 killed but also the method (driving a truck through holiday crowds) in July.

 

Summer visitation has fallen at least 10% (we think at least 15%, perhaps 20%) and revenue more – as much as 25%.

 

The marketing program is impressively long (about 25 separate activities). We know some of these are part of already-planned activity – attendance at IBTM for instance. And some have been augmented – a press conference during a sales trip.

 

Unfortunately then, we cannot say what activities have been added post-attack. But we know enough to be surprised at the unprofessionalism of the overall plan – PAGPFT. Some mistakes:

 

-Going too early post-attack (October) to China. This market, we believe, has taken over from Japan as being the most sensitive to negative events. Earliest should be January 2017.

 

-A promotional trip to Russia!? Has no-one looked at the figures? Russia’s outbound market is down about 30% this year; the Czech Republic is a bigger market!

 

-Belarus? In these times, a waste of money and effort.

 

What could be done:

 

-PR. SMO to invite personalities to CDA from China, K-pop groups from Korea, movie-makers from India, stars from the US, and follow them.

 

-UK. Wait until mid-September to see exchange rate trend. If the pound is still falling, wait until it steadies.

 

-Trade show/exhibition with a conference part. Start one. It may be too late to tag on to the ILTM luxury trade show in December in Cannes, but try. In Nice; bus/train ILTM participants Cannes-Nice.

 

-Think again, please, about which markets. Why no visit planned to Korea? Does SMO know the market overtook Japan’s in 2014, and will soon be 50% bigger!

 

The saddest negative of all:

 

As noted, SMO plans to spend US$1.1mn to tell people to visit CDA. We presume it cannot say CDA/France is 100% safe (although it probably will do; “nowhere is 100% safe, but with the actions we have put in place…”), but presumably that it is safe to visit.

 

Yet…Lille cancelled a street market in November that usually attracts 2.5mn mainly local and domestic visitors. And Nice itself cancelled a European cycling event for next month!

 

After this, would you visit or send customers to Nice?

 

*We have abbreviated the destination to CDA, and the companies-etc to SMO, state marketing organisation.

 

 

The Fox

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

 

Advertisements

Double WYSKs – 1. EuroTunnel miscounts; 2. Asia Pacific inbound/outbound.

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs – 1. EuroTunnel miscounts; 2. Asia Pacific inbound/outbound.

WYSK = What You Should Know

 

EuroTunnel miscounts

EuroTunnel has (re)started* some monthly counts. From July – a tough month to analyse because of the UK’s Brexit vote the month before, and a shocking terrorist attack in Nice that month.

 

Nevertheless, ET does not try very hard:

-It notes +6.6% in cars-transported that month, describing this the highest since July 1998. Our records indicate July 1996 was higher than 1998.

 

-It does not note the -7.9% in buses-transported. We, and we presume investors in ET, would appreciate some comment on this. For instance, we guess 65-70% of ET’s bus traffic is UK-originating. That would make this segment more susceptible to the fall that month in the value of the UK currency. But it could be more related to the Nice attacks, as around half of UK-originating tour-bus traffic includes the south of France.

 

-Train traffic is weak, falling in both Q1 and Q2 – so hardly related to Brexit or the Nice attacks – albeit Q1 would have been damaged by the terrorist attacks in Paris in November 2015.

 

*The company appears to have forgotten it reported monthly until 1998. However, it has not restarted this for Eurostar; they are still provided quarterly.

 

 

Asia Pacific inbound/outbound

Our calculation of AsPac visitor arrivals for latest-month, in the current editions of the Travel Business Analyst newsletter, shows +8.6%. Unusually, many destinations reported growth at around that rate – worst of the big ones was Hong Kong, where we exclude travel from China residents.

 

Our calculation of AsPac resident departures for latest-month, in the current editions of the Travel Business Analyst newsletter, shows +7.2%. Most markets actually close to that average, including (only) 7% growth from China (our estimates).

 

 

 

The Fox

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

Double WYSKs – 1 July for airlines in Europe, 2 Visitors – France v Spain v US

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs – 1 July for airlines in Europe, 2 Visitors – France v Spain v US

WYSK = What You Should Know

 

July; airlines in Europe

July was a tumultuous month for the travel business – coup attempt in Turkey, serious terrorist attack in Nice, France. And the month following the UK decision to leave the European Union, within two years in theory.

 

Some WYSKs then (What You Should Know), in alphabetical order:

 

-Air France seat sales -4%, slower than its -1% YTD. But its Transavia no-frills-airline +23%, +20% YTD.

 

-British does not publish its seat sales. We estimate +4%, +3% YTD.

 

-Easyjet +7%, faster than its +6% YTD. Note around 50% of EJ’s traffic does not touch the UK (as an aside, that’s the half that is at risk when UK leaves EU).

 

-Norwegian, maybe 25-30% of its traffic UK related, +9%, slower than its +13% YTD.

 

-Ryanair, 12 bases in UK (at risk after Brexit), but probably similar to EJ – about 50% of its traffic outside UK. +11%, slower than its +16% YTD.

 

-Turkish -1%, slower than its +4% YTD. This is a substantial turndown; same month in 2015 was +23%, +11% YTD.

 

(Some of these percentage-change figures are my calculations on airline-supplied base data.)

 

 

Visitors – France v Spain v US

In my ongoing tracking of visitor trends, I expect changes this year – in 2015 in order was France, US, Spain.

 

That’s visitors; in spend top-3 were US, China, Spain – Spain half China’s total, China half US’s total.

 

This year France on track to count 84mn, US 77mn, Spain 75mn. However, I think these statistical trends will change, and all-2016 will show around 77mn for all three.

 

(I’m working primarily on WTO data, with other indicators from DMOs.)

 

 

The Fox

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

Double WYSKs – 1 Virgin Australia, 2 WTO and visas

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs – 1 Virgin Australia, 2 WTO and visas

WYSK = What You Should Know.

Virgin Australia businessplan bust

Forgot all those Chinese changes; look at Virgin Australia Group’s (VAG) traffic results. My analysis (always correct after I’ve tried all the others) is that its businessplan (BP) is bust – although many other airlines seem to be in the same position.

 

VAG’s BP, as I see it (VAG might not put it this way), is a FSA* domestically and internationally, via VA. And an NFA* domestically and internationally with VA’s fully-owned Tiger Australia.

 

The problem is that the standard FSA BP is hardly working anywhere. We believe the only way it can work (profitability; government-supported operations are easy) is if the group also has a LCA*.

 

VAG’s local rival, QAG (the Qantas group), has a LCA but is not operating it properly – so the BP does not work for QAG either. QAG’s has a few Jetstar subsidiaries – but some are NFA and LCA. In fact the LCA is on Australia-based international routes. But the airline should have different name and be more clearly a Qantas clone operating at lower costs. It could do worse the reviving the name of its misdirected closed subsidiary, Australian.

 

Back to VAG. In the first-half, VAG seat sales were +4% – but that hides +3% for VA domestic Australia, -7% for VA international, +15% for TA. The TA operation is near 20% of VAG total.

 

Clearly VA international is not working – the latest was the 5th-quarter running when it has fallen. This is what VAG needs to do:

-Convert VA international into a LCA and give it another name. Re-open Virgin Blue? Even if not a great name, it is not bad, and at least has some market value. VB should operate some international routes, but also some domestic Australia also, meaning that higher-cost VA pulls off some routes, or operates on peak 4/5 routes and/or at peak business-flight times.

-VA would become a clear FSA. That is almost the same as what many call a ‘premium’ airline, a term that has lost its original meaning. ‘Premium’ now means just full service – not necessarily business and first class, full meals, champagne, etc.

 

 

The WTO tells us:

-‘…visa facilitation [in the 10 Asean destinations] could create 333,000-654,000 new jobs in…three years…. [Asean can gain]… 6-10mn additional [visitors] from improved visa facilitation.’

 

Our takes on this:

 

-Meaningless because ‘visa facilitation’ means, in effect, ‘making visas available’. And so ‘improved’ VF means, sort of, ‘making visas more easily available’.

 

-Yet the prompt for these WTO comments was Indonesia’s decision to give visa-free access to nationals of 169 countries. ‘Visa-free’ and ‘visa facilitation’ are not the same.

 

-We are not very knowledgeable on employment data, but WTO’s data seems to mean an additional person is needed to handle 15-18 additional visitors. If we presume one visitor stays an average 10 days – each one of those new employees will have nothing to do for half the year. Back to the calculator we think.

 

-We are not quite sure how many WTO says are currently employed in Asean’s travel business – 30mn? Based on that, new employment would be 1-2%.

 

-That 6-10mn visitor figure came from a 2014 report, forecasting the additional ‘by 2016’ – which meant, presumably, thru-2015. Asean counted it had 89mn visitors in 2013.

 

(Our addition of DMO data to us shows 109mn visitors in 2015 – which is knocked down to 93mn if Malaysia and Thailand used the same methodology as Singapore, and up to 115mn if Singapore counted the same way as those other two.)

 

-WTO did not say, but we assume the 6-10mn would be over two years, 2014 and 2015; let’s say 3-5mn each year. That represents around 3-5% of the annual total.

 

 

*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.

 

What You Should Know – about France’s fall, Asia Pacific outbound

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs

What You Should Know – about France’s fall, Asia Pacific outbound

France’s fall

Reports in France talk of ‘official’ figures saying August visitor arrivals have fallen 10% as a result of the recent terrorist attacks in the destination. I have a few comments.

 

  1. Although the ‘official’ is not specified, I venture that these are not official figures – simply because they are not available this quickly , in most destinations and certainly in France. (France’s DMO has given only Q1 data to WTO.)

 

Thus they must be either what I might call ‘initial estimates’ or forecasts for August.

 

  1. In addition, a 10% fall would not be bad as could have been expected.

 

The most-reported recent attack was Nice, on July 14, just three weeks ago. Given the seriousness of that attack – over 80 killed – and the shocking method (a truck driving through crowds), I believe a fall in visitation of 25% could be expected in the four weeks following the attack.

 

  1. However, visual observations (ie a little better than an at-desk guess!) indicate the fall is greater than either of these figures.

 

Yet perhaps something else is happening:

 

-Yes, some travellers are changing destinations, but are those that do not change destination changing their intra-destination activity?

 

-Ie, not the Tour Eiffel but the (excellent) Musee de Quai Branly?

 

–Or continuing to visit the Tour but staying for a shorter time, and not drinking coffee in a nearby pavement cafe? That would change the number of visitors ‘seen’, even if the actual number was unchanged.

 

 

 

Asia Pacific outbound

Our calculation of AsPac resident departures for latest-month, in the current editions of the Travel Business Analyst newsletter, shows +6.3%. Slowed by 12% fall from Hong Kong, and only 7% growth from China (our estimates).

 

 

 

The Fox

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

What You Should Know – about Malaysia Airlines, First Halves

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs

What You Should Know – about Malaysia Airlines, First Halves

 

No Hope Malaysia Airlines?

Malaysia Airlines now looks unsavable. As I said a year ago, one rehabilitating move should have been to change its name. Although I am not so crass as to suggest it was the only solution, but it would have been an important one.

 

The crassness came from the airline’s government owners. They changed the name to MAB from MAS – Malaysian Airlines Berhad from Malaysian Airline System – prompting me to ask if this was no more than ‘BS’.

 

We estimate that the airline’s YTD international seat sales are down almost 30% (this is two years after the airline’s twin tragedies). This is not getting better – all-2015 was -24%. The airline is now half the size it was in 2014!

 

And I don’t think this is something the new new CEO – whose expertise is engineering – can fix. The first step, for something drastic, must be that name change.

 

This month the airline should change its name to ‘Air Malaysia’. And starting from September make a big marketing splash (new colours, new uniforms, etc; yes, next month). The content is less important than the ‘new’ and the flash splash.

 

Air Malaysia should take off its tie (personified with the new CEO; who does not know that the CEOs of bright airlines are forbidden to wear ties). And become the bright new airline of Southeast Asia.

 

Only I can save Malaysia Airlines now.

 

 

Some surprising/important first-halves:

Airline traffic (RPKs) +5.2%.IATA says this reflects uncertainty. To us, it is surprisingly-good given the plethora of bad news (mainly terrorist; some economic ([read Brexit]). Our files show H1 2015 was +6.3%.

 

Airline seat sales: Air Asia (group; inc AAX) +15%; China Southern (international) +24%; Lufthansa -1%.

 

Visitor arrivals (Travel Business Analyst estimates): France +2%; Singapore +12%; Spain +10-11%; Turkey -27%.

 

Outbound travel (Travel Business Analyst estimates): China +10%; Germany +4%; US +8%.

 

 

 

The Fox

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