IN BRIEF: July 2018
Qantas and Air NZ partner up
Air New Zealand’s previously rosy relationship with Virgin Australia plumbed new depths last month when VA rival Qantas announced a wide-ranging codeshare agreement with the NZ flag carrier. Air New Zealand and Virgin had already announced that they didn’t intend to renew their long-running Tasman joint venture, leading to much conjecture about how Air NZ would maintain its feed of passengers from across Australia. That question was answered in early June with the new Qantas deal, which includes codeshares on 30 Air NZ domestic routes as well as 85 QF routes within Australia, along with coordination of check-in and handling at airports to shorten connection times. Eligible customers will also have access to a combined 36 domestic lounges on both sides of the Tasman.
Those with long memories will recall previous attempts by Air New Zealand and Qantas to form a tie-up. In 2006 a trans-Tasman codeshare deal was knocked back by the Australian Competition and Consumer Commission after fierce opposition from several quarters including Melbourne, Christchurch and Wellington airports all of which argued that the pact would reduce passenger choices and lead to higher airfares. This time around, 12 years later, the carriers have made it clear they don’t intend to codeshare on trans-Tasman routes. But watch this space as they begin to reap the benefits of their new agreement, with Qantas chief Alan Joyce and his Air NZ counterpart Christopher Luxon both noting “potential to explore areas of mutual interest, including research into biofuels, freight and ground-handling opportunities”.
Travel Counsellors investment
Travel Counsellors looks set for further expansion after the company last month received a second round of private equity backing. The “secondary management buyout” by investment group Vitruvian Partners follows the acquisition of the business from founder David Speakman four years ago, in a deal led by the company’s CEO Steve Byrne which was backed by Equistone Partners Europe. Financial details revealed with this latest deal indicated that since 2014 the company’s global TTV had grown by 130 million (34%) to 512 million. Profit had also grown by more than 20% annually, the company said, reaping the benefit of significant investments by Equistone including more than 6 million this year alone on IT developments.
Vitruvian Partners has a strong track record of supporting travel businesses, with previous successful investments including Skyscanner, airline tech firm OAG and online B2B accommodation specialist JacTravel, which was acquired by Webjet earlier this year. Byrne said the fact that Travel Counsellors had secured the secondary buy-out was “testimony to the confidence in the long term growth prospects and plans for the company”. He said Vitruvian would help the company “realise the many opportunities we have to grow in both the leisure and corporate markets globally and provide the platform for each of our franchisees to accelerate and future proof the growth of their own businesses”. The buyout also followed the recent appointment of former Travelport GM Australia Kaylene Shuttlewood as managing director of Travel Counsellors’ Australian operations.
Borghetti to leave Virgin
In what may turn out to be the longest of goodbyes, Virgin Australia CEO John Borghetti has confirmed that he will not renew his current contract which expires on 1 January 2020. Borghetti has led the carrier for more than eight years through tumultuous times, including a bruising capacity war with Qantas, a very much up-and-down relationship with Air New Zealand and a succession of deep-pocketed foreign airline investors including Etihad, Singapore Airlines, HNA Group and Nanshan Group. Under his leadership VA has morphed from its former upstart mode as Virgin Blue into a full-service rival to his former home at Qantas, where he left after missing out on the top job in favour of current CEO Alan Joyce.
Announcing his prospective departure, VA chair Elizabeth Bryan said Borghetti had signalled his desire to give the company ample time to recruit a replacement and allow for an appropriate transition, with a global search for a new CEO now under way. “I would like to acknowledge John’s enormous contribution to the Virgin Australia Group to date and thank him for his continued dedication,” she said. Until a successor is found, Borghetti said he looked forward to “continuing in the role of CEO and I remain focused on delivering the goals of the Virgin Australia Group”. Those goals include delivering a profit and boosting the share price which continues to languish around 22c — while Qantas has soared to levels around $6.50.
BridgeClimb era ends
Last month’s announcement that BridgeClimb Sydney had been unsuccessful in securing a new 20 year contract from the NSW government came as a shock to the Australian tourism sector, with the company rightly noting that the now world-famous climb had “turned the Sydney Harbour Bridge from a postcard to a global bucket list experience”. Founder Paul Cave has every right to be angry at losing the rights to operate on the Bridge, having developed the concept and brought it to the government in the early 1980s prior to the climb’s opening on 1 October 1998. Since then, more than four million people have experienced Sydney in all her glory from the top of the ‘coathanger’ with BridgeClimb hailed for its unblemished safety record and unparalleled levels of customer satisfaction.
The state government’s tender for the operation attracted global interest, with Merlin Entertainments seen as a strong bidder among a field also believed to include Dreamworld operator Ardent Leisure and the owner of the Cairns Adventure Park zipline attraction. However the successful contender turned out to be a company associated with the Sydney-based Hammon family which also operates the Scenic World attraction in the Blue Mountains. The NSW government’s Roads and Maritime Services said Hammons Holdings had outlined a “strong and clear vision” for new climb routes as well as integrating the latest technology and boosting the attraction’s accessibility. It’s also understood the winning tender provided for a significantly higher payment to the state than the $1.9 million paid annually by BridgeClimb.
Fiji Airways pioneers new oneworld tier
The oneworld airline alliance has opened the door to a new class of members with the creation of its “oneworld connect” tier, starting with Fiji Airways. The move is the first significant change to the alliance’s membership structure since its creation 20 years ago and recognises the fact most of the world’s biggest carriers are already signed up to one of the major global air partnerships. The group’s CEO Rob Gurney outlined the initiative, saying the alliance still had regions of the world it wanted to expand in.
“With fewer potential new candidates available to recruit based on our established membership criteria, oneworld connect enables us to link up with other airlines whose networks are relevant to a subset of our members, who cannot meet oneworld’s full membership requirements at this stage or who are not interested in full membership at present,” Gurney said. “This enables us and them to offer our customers more services and benefits across an even wider network and strengthen our relationship going forward, with a streamlined and rapid path to full membership later on where it makes sense for all parties.” Qantas will act as a mentor to Fiji Airways through its oneworld implementation process, while “talks are progressing” with other potential carrier additions around the world.
Green light for W Sydney
Marriott International is ramping up the expansion of its high-end brand W Hotels, revealing details of its long-anticipated W Sydney at Darling Harbour. Currently under construction on the site of the city’s former Imax cinema, the 593-room hotel will occupy a futuristic building known as The Ribbon and will feature a “Wet Deck” pool area with “Insta-worthy” views of Darling Harbour and a series of bars and restaurants in which to “see-and-be-seen”.
Set for an opening in 2020, the hotel is being developed by the Grocon Group, funded by Greaton Group, and is one of almost 20 properties under development in Australia for Marriott brands. It will be the W’s third hotel in Australia, with W Brisbane now open and W Melbourne also due in 2020. It also marks a return to Sydney for the W brand which previously operated a hotel at Woolloomooloo in the early 2000s, now branded Ovolo. “Sydney — with its glamorous energy, cultural diversity and statement architecture — is the perfect match for W Hotels,” said Anthony Ingham, global brand leader for W Hotels Worldwide.