WYSK: ITB Asia’s misleading data

 

FOXTROTS*

 

WYSK: ITB Asia’s misleading data

WYSK = What You Should Know.

Messe Berlin (MB) continues its practice of using misleading and/or incorrect data for its events, the latest one for the 11th ITB Asia (ITBA), due in Singapore this October.

 

However, most of these appear to be due more to ineptitude than duplicity.

 

MB reports:

-Exhibitor numbers expected to be +21.8%, which would make 1136. ‘Presence’ from Europe (which we presume means exhibitor numbers) +13.8%; previous data not given.

 

-85% of exhibition space booked. But if there is 22% growth in exhibitors, how can booked space be down – surely exhibitors are not reducing their booth sizes?

 

-MB describes the 2017 ITBA as an ‘enormous success’ with ‘record-breaking numbers with 113 countries’ at the event. ‘Record-breaking’ has occurred on most measures in most of the nine years. Not many figures were released for the 2017 event but attendance grew only +0.2% and countries +2.7% – although exhibitor growth was good, +11.1%. We interpreted some of these small growths as a relative loss due to the start of ITB China – when China is the biggest single part of growth in Asia’s traffic growth.

 

-MB reported worldwide outbound trips as growing +3.9% in 2017. In fact*, that was 2016 data, and for only Jan-Aug.

 

-Likewise the +11% growth given as Asia outbound growth* in 2017 – data was for Jan-Aug 2016 only.

 

-In addition, those figures MB uses include data for China, yet China should now be excluded from the ITBA prospectus, because China now has its own stand-alone event.

 

-Blatant misuse continued, with MB forecasting +4-5% growth in worldwide outbound travel ‘over the next year’. In fact*, this was a forecast for 2017!

 

*Notes:

-MB (mis)-uses its own ITB Berlin World Travel Trends for its data.

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

-At press time, MB had not answered our request for clarifications.

 

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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Double WYSKs. What’s working, what’s not – airlines in Asia Pacific, Europe.

FOXTROTS*

 

Double WYSKs. What’s working, what’s not – airlines in Asia Pacific, Europe.

WYSK = What You Should Know.

 

Asia Pacific Q1

Our summary of traffic results for the leading airlines in Asia Pacific, excerpts from the current editions of the Travel Business Analyst newsletter, over January-March.

 

Seat sales at biggest FSAs (full-service-airlines) in Asia Pacific (whole-group results for all), in alphabetical order: Air China +8%; Cathay +3%; China Eastern +8%; China Southern +10%; Japan +2%; Singapore +5%.

 

Notes (on notable details):

 

–Air China. International still growing faster than domestic, +11%. AC has usually been slower than its two control-freer rivals, China Eastern and Southern. Times are changing?

 

–Cathay. That’s the two airlines. Which one is doing badly? What needs to change? Why do investors let the company get away with this deception?

 

Cathay says it wants to match the no-frills-airlines challenge without creating an NFA – a modernised version of its old phrase “intelligent misuse of our B747s”. That would mean low-low no-options fares and no-frills service in the same cabin. This won’t work. One passenger would say “I paid $1000 for this seat, and my neighbour paid $200 just for missing the dinner” – even if not completely true. And then the $200 passenger will demand a wine, because his $1000 neighbour got one. And so on. The Cathay Group has already made a mistake with having two airlines with the same level of service, just different routes. As at the Singapore Airlines Group (Silk folding into SIA) Cathay will eventually fold CDragon into CPacific. But, better, it should convert CDragon what we call a low-cost-airline, and create another airline as an NFA.

 

–China Eastern. Rarely do CE’s figures match with the period one-year-earlier. Unusual in that international is slower than domestic.

 

–China Southern. The biggest, and the fastest, of China’s top-3. And international is growing faster.

 

–Japan. International growing twice as fast.

 

–Singapore. Parent airline just +1%. Its NFA division, Scoot, +12%, taking it to half the size of SIA itself.

 

 

Europe Q1

Our summary of traffic results for the leading airlines (not, where relevant, airline groups) in Europe, excerpts from the current editions of the Travel Business Analyst newsletter, over January-March.

 

Seat sales (RPKs for British; our estimates for Ryan), in alphabetical order: Air France+KLM (from this year, no longer separated) +4%; British +2%; Easyjet +5%; Lufthansa +8%; Ryanair +6%.

 

Notes (on notable details; on whole-group for Air France, British (=ICAG), Lufthansa):

 

–Air France. Group +5%, which looks good, although we believe AF itself is well below that – +2-3%, with KLM possibly around +8%, and Transavia +14%. Transavia has an impressive seat factor – 94% for the month, 92% YTD.

 

-British (=ICAG). British is still the weak partner; Iberia, the group’s other FSA (full-service-airline), is at +8%. ICAG’s two NFAs (no-frills-airlines) are doing well – our estimates, AerLingus +13%, Vueling +18%.

 

–Easyjet. Signs of concern? YTD at +5%, but March at +3% – is that the lowest-seen for an NFA in Europe?

 

–Lufthansa is the region’s star performer; +13% and even +15% in March. But most of that is Eurowings; +41% YTD, +46% March. As we have noted before, EW is already bigger than most of other airlines in the group such as Austrian and Brussels. And now it has overtaken Swiss to become 2nd-largest. Its capacity is now about-20% the size of mighty Lufthansa.

 

–Ryanair. Slowing growth, but seat factor 94%, squeezed up 1pt.

 

–Others of note: Wizz, which gets fawning press coverage, is doing well, +24%. And growing faster than that fading-fawnee, Norwegian, +12%. By mid-year Wizz should overtake Norwegian in seats sold.

 

 

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.

 

May travel stocks’ ups and downs

FOXTROTS*

 

May travel stocks’ ups and downs

Travel stocks (US, Asia Pacific, Europe) in May.

 

Airlines: biggest growth, United +21%; biggest fall, Jet AW -36%.

Hotels: Belmond +12%, Millennium & Copthorne -6%.

Tech: Amadeus +12%, Last Minute -16%.

Others: China Travel Service +18%, Hertz -31%.

 

Comments:

The threats from the US – of many types – have understandably had an effect on some travel stock prices, mostly in the negative direction, and not only in the US.

 

For airlines, even if Etihad’s India-based Jet was the worst performer, others were almost as bad. Air Asia, for instance, fell -20%. AA made a big error in getting into politics, and worse, making the wrong choice. AA’s head, Tony Fernandes, supported the previous government, and even repainted one AA aircraft with a pro-(now-ex-)government message. This is unlikely to spoil prospects for the airline, even in the short-term. But Fernandes himself may have problems the next time he wants something from the new government.

 

Also a big fall was -16% for Air France-KLM – mostly punishment for an AF strike. Notwithstanding any public statements, KL must be looking for a way out of its link with AF. The problem will be cost. The value of the company has fallen since the strikes, and so KL would lose on selling its shares in the company.

 

We worry about Hertz, not only down -31% in the past month, but also down -32% this year. However, it could also be partly the business model, as Avis-Budget also fell heavily, -21%.

 

Previous month: 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%.

 

TBA Travel Stocks Index:

World 248, Asia Pacific 114, Europe 217, US 412. Index previous month: World 248, Asia Pacific 123, Europe 204, US 407.

 

NVTT (Net Value Travel Tech) Stocks Index: 136; previous month 130.

 

Stockmarkets:

Biggest growth Dublin +5%; biggest fall Kuala Lumpur -6%. Previous month: biggest growth Paris +7%; biggest fall Istanbul -9%.

 

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.

 

Correcting mistakes; Singapore Airlines Group.

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.

 

 

2. 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.

 

 

3. 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.

Can Icca count? Paris still #1, not Barcelona

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.

April travel stocks’ ups and downs

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.

 

What’s working; what’s not. Airlines in Europe.

FOXTROTS*

 

What’s working; what’s not. Airlines in Europe.

Our summary of traffic results for the leading airlines (not airline groups, where relevant) in Europe, excerpts from the current editions of the Travel Business Analyst newsletter, over January-February.

 

Seat sales (RPKs for British; our estimates for Ryan), in alphabetical order: Air France (no longer separated out from AF-KLM); British +2%; Easyjet +4%; Lufthansa +6%; Ryanair +5%.

 

Notes (on notable details; on whole-group for Air France, British (=ICAG), Lufthansa):

 

-Air France. As noted, the unhappy managers at AF-KLM, who are mainly AF despite the faster-growing strength of KLM, have elected for results-opacity. Starting this month, data for AF and KL are no longer separated – probably because AF is doing badly. And no data for new subsidiary Joon either.

We are surprised that the Dutch stockmarket allows this (we understand that the Paris market would be sympathetic). The group’s no-frills-airline Transavia not doing well (+6%); is Joon getting favoured treatment (in all forms?).

The whole group at +4%. Because figures are now hidden, we cannot determine what is doing what, and thus we are left with just one observation – the group is not doing well.

 

-British (=ICAG). Iberia +7%, good for a full-service-airline. AerLingus’s +8% (our estimate) should be better. Barcelona-based Vueling’s +17% (our estimate) good; are the Barcelona troubles over (that’s travel; political ones are not).

 

-Easyjet. Whoops on traffic, but at least its already-impressive seat factor grew 1pt to 93%.

 

-Lufthansa. Austrian +16%; is this a market-share war as a number of players push their product in the market? Brussels, at +17%, is becoming a big player; it is almost the same size as the much-longer established Austrian.

The Eurowings story should be covered in all the trade (and consumer) media, but relatively, it gets little attention. Yet in seat sales, it is the biggest airline in the group after Lufthansa itself! And look at that growth – +44%! Swiss is the weakest (although one airline must always be last), with +3%.

With group growth at an impressive +13%, the Lufthansa group might even be able to relax with AF-KL in disarray, and ICAG troubled and soon to be more so as one of its members, British, gets caught up in the UK’s coming exit from the European Union.

 

-Ryanair. Growing slower than rival Easy is close to becoming the norm, after years when Ryan was fastest as well as biggest. Norwegian is growing faster, but with its (too?) fast medium/long-haul route growth, is no longer a direct competitor. Today, Europe’s No3 no-frills-airline is Wizz, +24%, with a 92% seat factor.

 

 

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.