Correcting mistakes; Singapore Airlines Group.

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FOXTROTS*

 

Correcting mistakes; Singapore Airlines Group.

With the news that Silk Air is being merged into Singapore Airlines, the businessplan we outlined for SAG (Singapore Airlines Group) is almost complete.

 

We synopsised our points in a November 2013 report following a meeting with a senior SAG executive. Some of these points we had noted before, and of course later. The three elements were:

 

 

  1. Scoot should not have been established. SAG’s first NFA* Tiger should have been expanded instead. SAG did not own a majority in Tiger at that time, and so we suggested SAG should simply buy a bigger share.

 

Three years later this all started to happen. SAG increased its shareholding in Tiger. Then the two airlines Scoot and Tiger were put under a single management control, then Tiger was merged into Scoot.

 

Essentially then, this is what we suggested – just one (NFA) airline.

 

 

  1. Similarly there has been no need (for the past 15 years at least) to have two FSAs*. The inanity of this was illustrated in that there were some routes on which both SIA and Silk were flying. Duh!

 

There are nuances to our argument, of course, which make this not quite so blatantly stupid, but it was still was poor business management.

 

Now, following this announcement, what we proposed is happening – just one (FSA) airline.

 

 

  1. However, there was an element in our proposed businessplan for SAG that has not been implemented, and which in some ways makes the SIA/Silk merger the wrong move.

 

We proposed that Silk become SAG’s LCA*. As an LCA, Silk’s routes could be new ones for SAG – where it is usually better to start with a lower-cost operation until the financial viability for SIA to operate such a route is clearer. Or a Silk LCA could operate additional frequencies on routes operated by SIA – again, which might not be profitable for SIA to expand.

 

Perhaps SAG management believes Scoot will fill that market need – develop new routes. But as management knows, and says, Scoot serves a different market segment.

 

Under this new arrangement for SIA/Silk, the full-service market segment is not properly served (because any extra demand from the FSA market will be fulfilled by non-SAG FSAs). That, or higher-costs SIA will add flights to fulfil this extra demand, and lose money, at least initially.

 

Also, that would mean SAG’s market share would steadily fall – or at least not grow at the rate it could.

 

Will SAG management understand this?

 

The chances do not look good – back in 2013 they laughed (literally, but at the proposal, not the deliverer) at our three proposals – two of which they have now carried out.

 

 

*Notes: Our airline-type definitions:

 

-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 example), fewer fare types, may have first and business cabins as well as economy, 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: shorthaul point-to-point routes; market freedom in terms of fares, routes; single aircraft type; where relevant, competition against parent airline allowed; extremely-low fares when bought at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no (free) service frills; single economy-class cabin; no (free) 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’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

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Can Icca count? Paris still #1, not Barcelona

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FOXTROTS*

Can Icca count? Paris still #1, not Barcelona

 

ICCA*, publishing results for the association segment of the MICE business in 2017, has done it again.

 

It has:

–produced findings which belie market sentiment,

 

-attempted no clarification,

 

-interpreted its own data different to the way it advises the industry.

 

 

We explain:

-ICCA reports that Barcelona overtook Paris and Vienna in 2017 to become the #1 city for association meetings in Europe in 2017.

 

-How can this be when Barcelona was partially shut down for two months in 2017 during its political problems related to an unauthorised vote for independence for Catalonia?

 

-And when this was the year Paris recovered from terrorist attacks in the two earlier years?

 

-Surely the industry deserves an explanation for these results?

 

-We use an (ICCA)-recommended 5-year composite total – see below – which shows that Barcelona is not top. Paris is still #1, followed by Vienna, and then Barcelona.

 

 

 

*Amplifications/Notes:

-This is not the first time ICCA’s research has thrown up odd results. For example:

  i. How could Budapest get into the top-5 (in 2007) and, say, London could not?

 

  ii. One year Sandton showed up in the world’s top-5 – prompting us to google it. (It is part of Johannesburg.)

 

  iii. ICCA did not flag Taiwan’s 52% single-year growth in 2010, even though that took it above Singapore. With Singapore’s stunning new attractions at that time, we found that change hard to believe in marketing terms, even if strictly correct in statistical terms.

 

 

-ICCA’s counts are meetings of associations (and follow precise definitions), and thus are just one segment of the big MICE business. We have not seen estimates, but we would be surprised if ICCA’s segment was more than 20% of the total. Why do these counts attract so much interest? (Possibly, we answer ourselves, because no other worldwide trade body tracks the whole MICE business.)

 

 

-Until 2009, ICCA gave us additional information for our analysis, but has refused this since. Full data is reserved for ICCA members; a policy with which we agree, even if it causes us some difficulty. As a result, however, our coverage is now limited to meetings numbers, rather than adding commentary on attendance numbers as well.

 

-Our main analysis is based on multi-year results. We are motivated by those in the MICE segment of the travel business – who tell us that single-year figures can be misleading. As a result, we calculate average-annual totals based on 5-year periods – to balance out distortions caused by unusually-big or -small events in one year.

 

  Surprisingly, the industry itself still works on annual figures! Even more surprising is that in 2013 ICCA said it was following our lead and tracking results in 5-year averages. Despite that, all its analysis and observations continues to be based on single-year figures!

 

  In other words, after admitting another way is better, ICCA has continued with the old way. Duh!

 

 

-ICCA was initially an abbreviation for the International Congress and Conventions Association. Then it used ICCA as a name, which it described as The International Meetings Association. It has now reverted to almost the same – ICCA, International Congress and Convention Association.

 

 

-A report on this topic in our Travel Business Analyst newsletter contains some important additional information, qualification, and analysis.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

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

Foxtrots – leading the industry in a dance.

To all animals – don’t fly United

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TROTTINGS*

 

To all animals – don’t fly United

I had some sympathy for United when guards dragged a passenger off an overbooked flight. Because overbooking happens all the time, and it is the passengers’ fault – because if everyone turned up for their flights and/or never wanted a refund, the overbooking problem would not be there.

 

And it was the guards, not actually ‘United’, that did the dragging.

 

But that’s another story.

 

Here’s another:

 

I have just learned (via colleagues at Washington Aviation Summary) that of the 24 animals that died in major US airlines’ care last year, 18 were in the care of United. Another 13 animals on United suffered injuries.

 

Two of the other top-3 US airlines, American and Delta, each reported two animal deaths.

 

But whatever United is doing wrong (one dog died in an overhead luggage bin), things might get better.

 

Two senators (one D, one R) have introduced Wooff (sorry; it means Welfare Of Our Furry Friends) to ban storage of live animals in overhead compartments. And there’s another proposed act, also from two (different) D & R senators, and also with a baby acronym, Pets (Planes Ensuring Total Safety).

 

 

 

The Fox. Remember, I’m an intellectual in the parallel world.

*Trottings = Trip Jottings

 

April travel stocks’ ups and downs

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FOXTROTS*

 

April travel stocks’ ups and downs

Travel stocks (US, Asia Pacific, Europe) in April:

 

Airlines: biggest growth, China Eastern +15%; biggest fall, American -14%.

Hotels: Dusit +8%, MGM -8%.

Tech: Travelport +7%, Trivago -34%.

Others: ILG +12%, HNA -10%.

 

Comments: Actually, Norwegian was highest, +80%, after ICAG bought a small stake. Trivago in trouble; it will probably be sold before end-year.

 

Previous month:

Airlines: biggest growth, Hawaiian +8%; biggest fall, China Southern -23%.

Hotels: Wynn +10%, Shangri-La -10%.

Tech: Travelport +13%, eDreams -26%.

Others: HNA +12%, ILG -9%.

 

 

TBA Travel Stocks Index: World 248, Asia Pacific 123, Europe 204, US 407.

Index previous month: World 244, Asia Pacific 122, Europe 207, US 413.

 

 

NVTT (Net Value Travel Tech) Stocks Index: 130; previous month 132.

 

 

Stockmarkets. Biggest growth Paris +7%; biggest fall Istanbul -9%. Previous month: biggest growth Stockholm +3%; biggest fall New York-Nasdaq -5%.

 

 

Info from the Travel Business Analyst newsletters. Details in next month’s newsletters.

 

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

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

Foxtrots – leading the industry in a dance.