Sorry for anyone here in the Cafe that's a bit bleary eyed this morning, as I'm cranking up the AC/DC in honour of our global airline industry:
(you know the guitar riff already so sing along in your head...)
Back in black
I hit the sack
I've been too long I'm glad to be back
Yes, I'm let loose
From the noose
That's kept me hanging about
I've been looking at the sky
'Cause it's gettin' me high
Forget the hearse 'cause I never die
I got nine lives
Cat's eyes
Abusin' every one of them and running wild
(Copyright 1980; B. Young, A. Young, B. Johnson)
You may ask if I've hit the espresso a bit hard this morning. But after some of my recent posts worrying about the supposed drop in premium traffic as well as the frenetic airfare discounting happening in some markets, you can forgive me if I'm now happy to hear that the airlines' worst days are behind them. Cut loose indeed - keep flyin' high boys!
IATA this week announced that they now expect airlines to post a global profit of $2.5 billion in 2010. According to IATA (http://www.iata.org/pressroom/pr/Pages/2010-06-07-01.aspx) "This is a major improvement compared with IATA’s previous forecast released in March of a $2.8 billion loss." A $5.3B turnaround? Yep, I'd say that is quite a major improvement.
Although good news for the travel industry as a whole (after all, a bankrupt airline industry is essentially a bankrupt travel industry) it also didn't stop IATA from taking a swipe at some classic "bad guys" in the industry group's eyes. Well at least the eyes of Signore Bisignani, IATA's Director General and CEO.
In the above referenced press release, Mr. Bisignani said the following: "Seeing black on the bottom line is a great achievement. The resilience of the industry has been strengthened by a decade of cost cutting, restructuring and re-engineering processes. IATA’s programs have contributed to this with $47 billion in cost savings since 2004 with efficiencies in safety auditing, fuel management, infrastructure costs, and Simplifying the Business.
"But even with all of our hard work, the result is just a 0.5% margin that does not even cover our cost of capital. The industry is fragile. The challenge to build a healthy industry requires even greater alignment of governments, labor, and industry partners. They must all understand that this industry needs to continue to reduce costs, gain efficiencies and be able to re-structure itself if it is to be sustainably profitable. We must all be prepared for a greater change,” said Bisignani.
All very true, and certainly all valid points.
But then in a speech delivered to IATA members in Berlin also this week, Mr. Bisignani blasted GDS's in particular saying: "they (GDS's) are leeches charging at least $4 per transaction when China Travel Sky does it for just $1.20. On top of that, they sell you your data with a seven-digit price tag. That is pure profit. BASTA. We will break their monopoly on your data with a cost-effective solution."
Yikes. As the old west cowboys used to say, "dem's fightin' words."
Which concerns me, as in his prepared comments in the press release about airlines coming back to profitability he professed the need for "greater alignment...of industry partners." Is yelling (albeit in Italian, which does sound cool doesn't it?) at those same partners his method of "alignment?"
Of course, Mr. Bisignani could be taking inspiration from the hard rockin' Aussies in Acca Dacca by "running wild." Perhaps being "back in black" isn't all that great for the industry after all? Depends on how you spin the tune, I guess.
Showing posts with label Premium Travel. Show all posts
Showing posts with label Premium Travel. Show all posts
Wednesday, June 9, 2010
Thursday, June 3, 2010
The Premium Conundrum Continuum...
Good morning, cafe patrons. I hate to serve up the same brew two weeks in a row, but I can't help but be flummoxed by this back-and-forth going on in the Antipodean market at the moment with regards to first/business class strategies.
In last week's cafe I talked about the new IATA report showing that premium traffic globally seems to be picking up, and the Asia Pacific region in particular is looking fairly healthy. However, during the last few months all we seemed to hear from Qantas, Air New Zealand, BA and a few other airlines was that the days of premium travel were drawing to a close. Or that at least a future much closer to economy class would be the new norm.
Although I'm pretty sure Qantas execs aren't yet frequenting this humble little cafe for their Friday Morning cuppa, I feel a bit vindicated following some of the comments QF leadership has been saying over the past few days. But I'm also a bit confused, to be honest. Which is easy to do, I get up early to open the cafe so sometimes I'm a bit bleary-eyed with all this airline stuff.
At the Australian Tourism Exchange this week in Adelaide, Qantas CEO Alan Joyce and Executive Manager Rob Gurney both made statements about the importance of premium products as they talked about deploying more A380's in the coming months complete with the new first and business class products. In addition, Stephen Thompson who is Qantas' GM of International Sales also stressed the importance of the premium product and the business travel market within Qantas' overall strategy.
So which direction is this going? I think it's safe to say that the A380's coming on line soon will of course have the new first and business (and premium economy, for that matter) products as part of the service as those cabin configurations have been set for a while.
But then in another article this week from Travel Daily Australia, according to travel agent GDS queries the Sydney-Buenos Aires and Sydney-San Francisco services will not get First Class back on those routes until late September - more than three months later than previously planned.
And I've also not yet heard any mention of putting the B747 back onto the SYD-JFK service, so as of early July it will still be a downgraded A330 on that route. Sure, I've flown that half-empty plane from LAX to JFK but I've also experienced every return flight from JFK-LAX as completely full so I would think that Qantas would prefer customers on QF metal rather than on feeder flights via American Airlines.
As I've always said, you couldn't pay me enough to be an airline revenue manager and certainly I'd be lousy at it anyway. However I'm sure whoever's running that department, along with the head of on-board products for Qantas, must be scratching their heads as much as I am as to what the premium strategy for Qantas really is.
EXTRA SHOT FOR THE DAY
Today's extra shot is taking a shot at cranky taxi drivers. Especially ones in Sydney who seem to not want to take passengers from the airport to the Inner West.
A friend of mine claims 5 straight journeys home with drivers who have given him all sorts of grief about waiting at the airport for hours only to get a "short fare." I've had this before as well, but not nearly as much as this gentleman has. And as he actually probably is going a bit further than I do in terms of how far the crow flies, I certainly can't understand why any cabbie has a gripe about "not far enough."
It's not like they have the right to gripe anyway, as the taxi charter clearly states that a passenger has the right to go to pretty much any destination in the Sydney metro area.
Not to mention that how do we know whether the cabbie's fare TO the airport wasn't a nice big fare so he's just annoyed he couldn't double up the success?
To be fair, I have to say that although this has happened to me in Sydney by far the worst city in the world for cabbie grumbling is New York, thanks to the flat fare from JFK to Manhattan. It's not like I set the price guys, so don't take it out on me!
Ah, if only we all could have London Black Cabs...the world's greatest form of public transportation. Clean, very comfy, with a driver who knows exactly where to go and the best way to get there. Happy to pay a premium for that level of service every time...take note, "Silver" Service!
In last week's cafe I talked about the new IATA report showing that premium traffic globally seems to be picking up, and the Asia Pacific region in particular is looking fairly healthy. However, during the last few months all we seemed to hear from Qantas, Air New Zealand, BA and a few other airlines was that the days of premium travel were drawing to a close. Or that at least a future much closer to economy class would be the new norm.
Although I'm pretty sure Qantas execs aren't yet frequenting this humble little cafe for their Friday Morning cuppa, I feel a bit vindicated following some of the comments QF leadership has been saying over the past few days. But I'm also a bit confused, to be honest. Which is easy to do, I get up early to open the cafe so sometimes I'm a bit bleary-eyed with all this airline stuff.
At the Australian Tourism Exchange this week in Adelaide, Qantas CEO Alan Joyce and Executive Manager Rob Gurney both made statements about the importance of premium products as they talked about deploying more A380's in the coming months complete with the new first and business class products. In addition, Stephen Thompson who is Qantas' GM of International Sales also stressed the importance of the premium product and the business travel market within Qantas' overall strategy.
So which direction is this going? I think it's safe to say that the A380's coming on line soon will of course have the new first and business (and premium economy, for that matter) products as part of the service as those cabin configurations have been set for a while.
But then in another article this week from Travel Daily Australia, according to travel agent GDS queries the Sydney-Buenos Aires and Sydney-San Francisco services will not get First Class back on those routes until late September - more than three months later than previously planned.
And I've also not yet heard any mention of putting the B747 back onto the SYD-JFK service, so as of early July it will still be a downgraded A330 on that route. Sure, I've flown that half-empty plane from LAX to JFK but I've also experienced every return flight from JFK-LAX as completely full so I would think that Qantas would prefer customers on QF metal rather than on feeder flights via American Airlines.
As I've always said, you couldn't pay me enough to be an airline revenue manager and certainly I'd be lousy at it anyway. However I'm sure whoever's running that department, along with the head of on-board products for Qantas, must be scratching their heads as much as I am as to what the premium strategy for Qantas really is.
EXTRA SHOT FOR THE DAY
Today's extra shot is taking a shot at cranky taxi drivers. Especially ones in Sydney who seem to not want to take passengers from the airport to the Inner West.
A friend of mine claims 5 straight journeys home with drivers who have given him all sorts of grief about waiting at the airport for hours only to get a "short fare." I've had this before as well, but not nearly as much as this gentleman has. And as he actually probably is going a bit further than I do in terms of how far the crow flies, I certainly can't understand why any cabbie has a gripe about "not far enough."
It's not like they have the right to gripe anyway, as the taxi charter clearly states that a passenger has the right to go to pretty much any destination in the Sydney metro area.
Not to mention that how do we know whether the cabbie's fare TO the airport wasn't a nice big fare so he's just annoyed he couldn't double up the success?
To be fair, I have to say that although this has happened to me in Sydney by far the worst city in the world for cabbie grumbling is New York, thanks to the flat fare from JFK to Manhattan. It's not like I set the price guys, so don't take it out on me!
Ah, if only we all could have London Black Cabs...the world's greatest form of public transportation. Clean, very comfy, with a driver who knows exactly where to go and the best way to get there. Happy to pay a premium for that level of service every time...take note, "Silver" Service!
Thursday, May 27, 2010
I Told You So...Didn't I?
At the risk of saying I told you so to Qantas and other airlines who recently announced they were cutting back on premium products...ah, why bother stating the obvious?
IATA's recently published Premium Traffic Monitor shows that "The number of first and business class airline passengers in March increased 10.8 percent worldwide, marking a fourth consecutive month of growth and the largest year-over-year increase measured for any month in at least two years. As business confidence and world trade have turned up sharply business travelers have returned," IATA said, while noting particularly strong growth in Asia.
Sure, there still are some trouble spots (indeed I am talking about Europe - can you say "Greeced" lightning?) and the Kangaroo route from Australia to the UK is not faring all that well, but for the most part premium demand is up. Way up.
And yes, these numbers are coming off of an abysmal 2 year stretch where no one seemed to be turning left when boarding an aircraft.
But who are we to believe - a few airlines, corporate buyers and travel agencies saying the days of premium travel are dead? Or numbers coming from the association made up of actual airlines themselves which would seem to indicate otherwise?
In previous editions of the Cafe I've lamented what I saw was the too-quick reaction by Qantas and Air New Zealand to start ripping out premium products as they said the demand for them was plummeting. If IATA's numbers are to be believed, the only thing plummeting will be those airlines' profits if they continue to pull back on premium services.
To be fair to Air New Zealand, their trimming of premium products is mainly across the Tasman. Depending on how Trans-Tasman flights are classified by IATA the numbers could be confusing as "Within SW Pacific" shows a negative March '10 vs. '09 but a higher YTD '10 vs. '09; yet "SW Pacific" is showing huge growth of premium traffic - 19.9% growth in March '10 vs. '09 and 26.7% growth year-over-year.
The Barista, is, of course, happy to pour his words in to a double espresso and swallow them quickly if I end up being wrong...but for now I'll stick with the "I told you so" to the airlines who were throwing out the premium passenger with the gently scented bubble bath water. Not sure which airline will offer on-board bubble baths first but I wouldn't put it past a few of them....
(Thanks to IATA: www.iata.org/economics and for the full report go to http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Mar10.pdf)
IATA's recently published Premium Traffic Monitor shows that "The number of first and business class airline passengers in March increased 10.8 percent worldwide, marking a fourth consecutive month of growth and the largest year-over-year increase measured for any month in at least two years. As business confidence and world trade have turned up sharply business travelers have returned," IATA said, while noting particularly strong growth in Asia.
Sure, there still are some trouble spots (indeed I am talking about Europe - can you say "Greeced" lightning?) and the Kangaroo route from Australia to the UK is not faring all that well, but for the most part premium demand is up. Way up.
And yes, these numbers are coming off of an abysmal 2 year stretch where no one seemed to be turning left when boarding an aircraft.
But who are we to believe - a few airlines, corporate buyers and travel agencies saying the days of premium travel are dead? Or numbers coming from the association made up of actual airlines themselves which would seem to indicate otherwise?
In previous editions of the Cafe I've lamented what I saw was the too-quick reaction by Qantas and Air New Zealand to start ripping out premium products as they said the demand for them was plummeting. If IATA's numbers are to be believed, the only thing plummeting will be those airlines' profits if they continue to pull back on premium services.
To be fair to Air New Zealand, their trimming of premium products is mainly across the Tasman. Depending on how Trans-Tasman flights are classified by IATA the numbers could be confusing as "Within SW Pacific" shows a negative March '10 vs. '09 but a higher YTD '10 vs. '09; yet "SW Pacific" is showing huge growth of premium traffic - 19.9% growth in March '10 vs. '09 and 26.7% growth year-over-year.
The Barista, is, of course, happy to pour his words in to a double espresso and swallow them quickly if I end up being wrong...but for now I'll stick with the "I told you so" to the airlines who were throwing out the premium passenger with the gently scented bubble bath water. Not sure which airline will offer on-board bubble baths first but I wouldn't put it past a few of them....
(Thanks to IATA: www.iata.org/economics and for the full report go to http://www.iata.org/whatwedo/Documents/economics/Premium-Monitor-Mar10.pdf)
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