TROTTINGS*. How to run an airline

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TROTTINGS*. How to run an airline

Following two recent developments, my comments on running an airline and how many airline managers seem not to know. I have a section entitled PAGPFT (pronounced pag-puffed. People Are Getting Paid For This), and many would qualify for an entry.

 

Two recent developments are Air Belgium’s decision to stop its (only) scheduled route Brussels-Hong Kong, and Cathay Pacific’s purchase of HK Express.

 

My comments need to be read in conjunction with our description of broad airline types, see Notes*.

 

Air Belgium

Quick trip: In 2016 AB announced plan to fly Brussels-Hong Kong and mainland China points in 2017. The first, to Hong Kong, started June 2018, but was stopped September. None other started.

 

Our contemporary (April 2018) comments:

 

We expect AB’s new businessplan, from new owners in 2016, to fail before year-end. Some of the reasons:

-Frequency/routes. 4/week is not enough for its target market – upmarket. At least daily is needed.

-Routes. AB’s potential customers will fly other to other places as well of course, thus use other airlines. As most upmarket travellers are likely to be members in loyalty programs, they may prefer to stay with those other airlines when they fly to Hong Kong. If AB cannot start other routes itself, it should sign deals with other airlines on selected routes.

-Aircraft. The 4-engine A340 is a good aircraft, but costly for fuel, particularly for a start-up airline. Many would try to operate a 2-engine A350 or B787 on this route if traffic is not enough for B777s A380s etc.

-It has two A340s at present. That is enough for schedule reliability for Hong Kong flights, but at least four more will be needed to operate those other planned routes and to offer schedule reliability.

-Airport. AB plans to use Brussels Charleroi, not good for connections.

-China. AB considers Hong Kong a ‘China’ destination. Although correct in theory, it is not ‘China’ in terms of politics or in airline route-rights. Six by summer is not impossible of course, but looks over-ambitious.

-Sales via internet, but also GDS and travel agencies. GDS and agencies are usually too costly for a start-up because of fees.

-AB plans to employ 100 in Hong Kong this year. That is a foolishly-costly decision. We would think one staff member (Hong Kong Manager), with a handling agent for operations, and a GSA for sales – at least until it is established and/or the first 2/3 years.

-AB’s A340s will have economy, premium, business classes. That is at least one too many, and will also cause confusion, eg is ‘premium’ above ‘business’?

 

The interesting thing is that there is a market for Brussels-Hong Kong. It is just that AB management does not know how to run an airline to suit a particular market. What should have been done is partly obvious from our report in 2018 on what was wrong with the AB businessplan. Just a few things to add/amplify:

 

-It is very hard (if not impossible) to start an FSA* with a single route, and anything less than once daily. What business traveller would fly AB knowing the miles earned could not be burned on any other route? And there are other elements, such as schedule reliability, that most FSA managers know.

 

-Fares should be low (at least as low as the lowest in the market – Aeroflot via Moscow?), and simple. No travel agencies, no GDSs. Direct booking only.

 

-Invite travel writers with ticket-only offers (plus deals with 4/5 local hotels, in exchange for editorial. Freelancers are good because they try to sell their reports to many outlets. Create some marketing buzz.

 

 

 

Cathay Pacific

The Cathay group’s purchase of HK Express (main owner is China’s deeply-troubled HNA group) is a smart move. It was a long time coming, and did not seem to be coming – although may not be coming, as there has been a legal challenge by an HKE shareholder.

 

But if it happens, there is one cover-all proviso – HKE must be left to run itself separate of Cathay’s two other airlines – Dragon and Pacific.

 

We are not sure that Cathay management is capable of that – because many have a superiority complex, and there are no indications that it knows how to run a NFA*. After all, it could have converted what is now Cathay Dragon into a NFA long ago. (Now, it would make sense to make Dragon an LCA*.)

 

However, and in an awkward twist, Cathay itself has to find someone to run HKE – because HKE has not been managed well until now. Thus Cathay must find a manager who does not think like Cathay managers. Although not categorical, an indication will be if Cathay makes an internal move from someone in the group, or looks for someone outside. Strangely, the media loves NFA CEOs with an Irish passport – because Europe’s highly-successful NFA is Irish!

 

*Notes: Following are our airline-type definitions:

 Airline groups selling at least 75mn seats/year should have these three types of airline.

 

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. Developments in technology are making some of these ‘requirements’ less important.

 

 

 

 

*Trottings = Trip Jottings

*The Fox Trots: Travel Stories from The Fox.

 

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Trottings*: Palawan, Philippines

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TROTTINGS*

 

Trottings*: Palawan, Philippines

Pristine islands, marine treasure trove, unique bio diversity

 

I thought I had seen many beautiful islands in my world travels, until I arrived in the Palawan archipelago.

 

Palawan’s endless coastlines, landscapes and seascapes are straight out of National Geographic spread. It feels like I entered a geological wonderland with stunning topography everywhere. Travelling along the coastline, the visual panoramas of karst limestone islands carpeted in lush greenery jutting out vertically from the seas is awe-inspiring.

 

Palawan is a terrestrial and marine treasure trove of the most bio-diverse islands in the Philippines. The island has had a Biosphere Reserve status since the early 1990s. With a farsighted former local mayor, Edward Hagedorn, who initiated and created blueprints for their conservation and sustainable development, most locals we met are well-versed in environmental preservation.

 

 

Where: Geographical location

Palawan is an elongated island province southwest Philippines, in the Mimaropa region. It is the largest province in the country in terms of total area of jurisdiction. Its capital is Puerto Princesa, but it is governed independently from the province.

 

The islands of Palawan stretch between Mindoro in the northeast and Borneo in the southwest. The province is named after its largest island, Palawan Island, measuring 450km long and 50km wide. Palawan, the least populated province in Philippines, consists of 431 districts (barangays) in 23 municipalities and the capital of Puerto Princesa.

 

Palawan is also the largest supplier of fish to the country.

 

 

Puerto Princesa, capital city

Landing in the capital, Puerto Princesa, was a welcome break after hectic Manila. It is the only urbanised centre in the low-density province, with low-rise buildings and an unhurried pace, retaining an old world charm.

 

 

Area

With Puerto Princesa City included for geographical purposes, the province’s land area is 17,030sq km.

 

 

Bio-diversity

The province also represents a significant habitat for bio-diversity conservation. The area contains a full mountain to the sea ecosystem and protects forests.

 

 

The Land

Pristine lagoons with serene turquoise-green waters, sparkling sea, emerald islets, hidden beaches, caves with unique formations, mountain ranges shrouded in mist, and a diverse variety of wildlife, many special to the islands. To many, this must be paradise on earth.

 

 

History

Researchers found evidence in Tabon Caves that man, along with his tools and artifacts, has continuously lived in Palawan for more than 50,000 years. They also found bone fragments, named the Tabon Man in the municipality of Quezon. Although the origin of the cave dwellers is not yet established, anthropologists believe they came from Borneo. It is known as the cradle of Philippine civilisation.

 

We visited a Batak village (highland tribes), and saw an interesting family performing a tribal dance. I believe their dances and culture are similar to the Bataks I have met in the Lake Toba region of Sumatra, Indonesia.

 

I bought some handwoven Batak baskets, which now adorn my desk.

 

 

Community-based tourism

Many of the tourist attractions are community-based projects employing locals and their families. Partly because Palawan does not have an advanced infrastructure and access, it also does not have some of the less-attractive aspects of big-numbers tourism.

 

For instance, I did not see large groups of tourists nor overcrowding in their attractions. The pace is laid-back, the locals are friendly and welcoming, sometimes breaking into a song after only little encouragement. Filipinos love to sing, and seem to be born with natural talents for music and dance.

 

 

Destination Highlights

-The Puerto Princesa Subterranean River National Park

This park has a spectacular limestones karst landscape with a long navigable underground river. The lower section of the river is subject to tidal influences, so those planning to take the tour should check with the coastguard for weather conditions. Especially for those who get seasick easily and not keen to be tossed around in a kayak.

 

The river ride consists of a motorised boat then transfer onto a kayak. The cave’s ceiling seems like nature has created and produced a sci-fi movie landscape, with fantastic shaped rocks, gigantic mushrooms looming above.

 

 

Island Hopping in Honda Bay, Pandan & Cowrie Island

A short and scenic boat ride takes the visitor from the Wharf to Cowrie Island where you can snorkel, swim and laze around amid coconut trees. Lunch was a buffet smorgasbord of Filipino seafood, rice and sinigang soup, zinging with sour tamarind and spicy chilies.

 

Then another short boat ride to Pandan island. There is a family selling their fresh catch of seafood in giant sizes, displayed on a wooden stall. Visitors can have an amazing grilled seafood lunch with big crabs, squids, prawns for five for less than US$15. By big-city standards, this is a feast and a great-value deal.

 

 

-Shopping

Everything seems cheap converted from Filipino pesos to US$. There is a bazaar-like market where one can buy local handicrafts, dried mangoes, pearls, colourful clothing, and souvenir T-shirts. My favourite buys are dried mangoes, strands of pearls, beautiful woven handbags, and handcrafted leather bracelets.

 

 

-Crocodile Wildlife Rescue and Conservation Center

At the entry, a large crocodile skeleton welcomes you. Visitors can walk over a metal bridge over a crocodile farm to see dozens of crocodiles lying on top, motionless for a long time.

 

The action starts when one crocodile from under the pile starts to move, the rest untangle themselves from the jam and scramble around. Fascinating but scary too if you imagine falling into the crocodile pits.

 

 

-Ugong Rock

Arrived on a windswept day in this almost deserted beach with undulating hills on east side and a splendid sea view on other. Activities available include cave climbing. The community guide may be an elderly white hair auntie outpacing you in stamina.

 

 

-Firefly watching in a mangrove river

This is one of the most unusual tours we have done. There is something special about being in a kayak watching the luminous fireflies emitting their bioluminescence in the silence of a moonlit night.

 

We had the incredible luck of a magical full moon and a knowledgeable guide – a combination of astronomer, botanist, etymologist. He held us enthralled in our canoe, pointing his laser beam light towards the sky and share insights of the constellations, etc.

 

 

Low Crime

Once when we were strolling in Puerto Princesa Chinatown, I saw our local guide’s wallet and phone sticking out of his back pockets. I told him he would be a target of pickpockets. He proudly told me “This is Palawan, we don’t worry. “There is zero crime here.” Certainly not zero, but unusually low.

 

 

 

*Trottings = Trip Jottings

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

 

The Fox’s Friends; Renee Chew

 

Trottings: Direct Ferries – False Promises.

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TROTTINGS*

 

Trottings: Direct Ferries – False Promises.

Direct Ferries (DF) is a UK-based wholesaler of ferry trips. The other week it offered a 25% discount on Italy’s GNV ferry company for sailings to Sicily booked before September 30.

 

I did it; I booked Sicily on the 30th on GNV via DF.

 

Where was the discount? It did not seem to be there. Indeed, DF even added a booking fee to the price it quoted.

 

I contacted them.

 

First contact after getting my details was to inform me that a bus transfer was not available on the DF site, but it was available on the GNV site. As I had not enquired about a transfer, bus or other, this explanation was a puzzle.

 

I reverted, and another agent replied, apologising for the reference to the transfer. The agent added that he/she did not know why I had received that first message. I replied perhaps he/she should ask the other agent, and would then know the reason, and could then tell me.

 

The agent also told me that the fare I was quoted included the 25% discount – if I had clicked through the discount offer on the DF site.

 

In fact, that is what I did – clicked through on the DF site. But I had also checked on another system on another computer, and the fare was the same as the one available from a click-through. Also, the fare was the same as when I checked two weeks earlier.

 

In other words, the DF agent either did not know, or believed that was the system, or was lying. Given that they sent me no further message, I am tempted to believe that they were lying.

 

I never got my discount.

 

Obviously, the moral of this message is for travellers to beware statements by Direct Ferries, and to assume they may not provide what they seem to be offering.

 

 

*Trottings = Trip Jottings

*The Fox Trots: Travel Stories from The Fox.

 

Trottings*; Nogo Opodo.

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Trottings*; Nogo Opodo.

A series of operational issues indicates serious faults at the Opodo OTA.

 

On booking a flight, the site indicated that I would be given the opportunity to book baggage before making the final payment. So I continued with the process. When I reached the procedure to pay, I still thought that a window or other opportunity would be given to add baggage. But no, it simply confirmed the booking – thus with no baggage included.

 

I then check under My Trip, or similar, where I was given the opportunity to add bags. So I clicked.

 

The wording, precisely, was ‘Whoops! It seems we can’t book this online’. In other words, Opodo could not do what it said it could do. But the solution, again in Opodo’s words, was ‘Please call us to add your baggage!’

 

So I called the number and made my request. After being put on hold and what seemed a long wait for a simple request (but perhaps it was only 2/3 minutes), the agent said No, they could not book the baggage now. Only 24 hours before the flight!

 

This means that on three occasions, Opodo had offered what it did not provide.

 

I asked the agent how much the extra baggage would cost. She could not tell me; I had to wait until I booked the baggage – but obviously there is a risk that just 24 hours before the flight, this would be costly.

 

On two separate log-in occasions (on different days), I went back to the Opodo site, My Trip, and opened chat. Four windows were requested, of which two were obligatory (first and last name; duh!). I could not connect with those two and so added the two others. No luck.

 

The message: ‘There was an issue starting your chat session. Please verify your connection and that you submitted all required information properly, then try again’.

 

The information required was obviously correct (as it was my name and there was no connection to a reservation or email address), and so I presume it is another Opodo fault.

 

Of course I will not use Opodo again. Even if the operational hitches described are fixed, there is still the matter of Opodo’s relationship with the airline. I chose Opodo because of its known reputation, but it seems that is no longer enough. There are services that Opodo cannot provide if its arrangement with the airline does not allow this.

 

And so if the price difference between the OTA and airline offer is not great, I will in future select the airline’s offer – although I might try one of the big others such as Expedia to see if they are slipping as Opodo is.

 

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

 

*Trottings = Trip Jottings

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

 

Scoop*! Peach & Vanilla to merge!

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TROTTINGS = Trip Jottings

 

Scoop*! Peach & Vanilla to merge!

The All Nippon Airways group plans to merge its Peach and Vanilla airline subsidiaries**, starting this year and finishing before March 2019.

 

It wants the merged airline to become the leading ‘low-cost airline’ in Asia.

 

Our comments:

 

-Neither Peach nor Vanilla is what we define (according to a set of our definitions) no-frills-airlines, see below.

 

They are an attempt by ANA management to follow an NFA businessplan, but are basically just lower fares and some lower costs. More like an LCA, see below.

 

-ANA management has shown no clear understanding of the NFA business-model. They thus seem incapable of making Peach-Vanilla bigger than the region’s current biggest, Air Asia, whose various divisions sold about 70mn seats in 2017, according to our counts.

 

-In 2014 we called ANA’s businessplan for Vanilla ‘soft’***.

 

-One further indication of this incompetence is the long time to merge these two – 12 months. We believe this should take no longer than three.

 

 

 

Notes:

 

*Headline-convenience only; this is not news.

 

**Peach started flying from its Osaka Kansai base in March 2012 (another mistake; it should have used Osaka Itami airport). ANA’s JV with Air Asia, from Tokyo Narita (it should have been Tokyo Haneda or best Tokyo Ibaraki), started in late 2011 and stopped in late 2013. After that ANA launched Vanilla, also from Tokyo Narita, in December 2013.

 

***What we said in 2014:

-Its base is Tokyo Narita, the worst choice of three Tokyo airports – best would be Ibaraki, then Haneda.

-It has three destinations in Japan plus Tokyo, plus international to Hong Kong, Kaohsiung (due next February), Seoul, Singapore, Taipei. Generally, a 2-hour maximum flight is better for NFAs – which means Hong Kong, Kaohsiung, Singapore, look to be financial risks.

-Even domestic routes seem to be chosen for their length – Japan’s top north or top south.

-Fares look cheap – US$60 (¥6300) one-way for the shortest route, NRT-Sapporo. But they are fixed – no discounts if travellers book early, no higher if they book late. That is bad for Vanilla’s profits.

-Schedules are not standard. It is better to have, say, 10.00 daily departure to Sapporo. Vanilla has different times and different days.

-Its initial publicity noted flight destinations, aircraft types, flight times, etc. But not fares. For us, the essential items to be included in NFA publicity are two only – Route, Price.

 

 

 

*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.

 

 

 

Trottings: Air Belgium’s flawed businessplan.

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TROTTINGS*

 

Trottings: Air Belgium’s flawed businessplan.

Relaunched Air Belgium has delayed plans for its Brussels-Hong Kong flights to April; they were planned to start October 2017.

 

It plans to start six more routes into China by this summer.

 

We expect AB’s new businessplan, from new owners in 2016, to fail before year-end. Some of the reasons:

 

-Frequency/routes. 4/week is not enough for its target market – upmarket. At least daily is needed.

 

-Routes. AB’s potential customers will fly other to other places as well of course, thus use other airlines. As most upmarket travellers are likely to be members in loyalty programs, they may prefer to stay with those other airlines when they fly to Hong Kong. If AB cannot start other routes itself, it should sign deals with other airlines on selected routes.

 

-Aircraft. The 4-engine A340 is a good aircraft, but costly for fuel, particularly for a start-up airline. Many would try to operate a 2-engine A350 or B787 on this route if traffic is not enough for B777s A380s etc.

 

-It has two A340s at present. That is enough for schedule reliability for Hong Kong flights, but at least four more will be needed to operate those other planned routes and to offer schedule reliability.

 

-Airport. AB plans to use Brussels Charleroi, not good for connections.

 

-China. AB considers Hong Kong a ‘China’ destination. Although correct in theory, it is not ‘China’ in terms of politics or in airline route-rights. Six by summer is not impossible of course, but looks over-ambitious.

 

-Sales via internet, but also GDS and travel agencies. GDS and agencies are usually too costly for a start-up because of fees.

 

-AB plans to employ 100 in Hong Kong this year. That is a foolishly-costly decision. We would think one staff member (Hong Kong Manager), with a handling agent for operations, and a GSA for sales – at least until it is established and/or the first 2/3 years.

 

-AB’s A340s will have economy, premium, business classes. That is at least one too many, and will also cause confusion, eg is ‘premium’ above ‘business’?

 

The Fox

*Trottings = Trip Jottings

 

 

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