IN BRIEF: April 2020 issue

COVID-19 destroys the industry

COVID-19 destroys the industry

The sudden impact of the government-imposed restrictions attempting to curtail the spread of coronavirus has effectively crushed what was previously a bright spot in the Australian economy. Each day has brought new announcements, forcing industry suppliers, agency groups, airlines and cruise companies to react swiftly by cutting costs to save at least some remnants of their businesses.

The rapid collapse of business for publicly listed entities has been a stark indicator of the carnage being rendered right across the industry. Flight Centre, Helloworld Travel, Webjet, Corporate Travel Management, Qantas, Virgin Australia and Regional Express have all announced massive cutbacks, with Flight Centre having already stood down about 3,800 of its Australian workforce and axing the Universal Traveller (formerly Student Flights) brand. Flight Centre has also suspended trading in its shares, along with Webjet, as both companies urgently seek new liquidity. Share prices have taken a massive beating, smashing the wealth of travel company leaders but also creating some potential buying opportunities for people who are optimistic about a recovery.

Amid the collapses, however, one move was somewhat intriguing. In contrast to Flight Centre, which suspended its planned dividend payment, the Helloworld Travel Limited Board paid out more than $11 million in dividends to shareholders just four days before standing down about 65% of its workforce.

Vale industry legends

The Australian travel industry was saddened to hear of the death last month of Bill McNamara, a larger than life character whose generosity and friendship will long be remembered. McNamara, described as an “unstoppable salesman,” started his career with Stewart Moffatt Travel in Melbourne, and then moved onto a range of other roles including at Pan Am, British Caledonian Airways and Hilton Hotels. Ultimately he established his own travel representation company, and in recent years maintained his network by convening regular “Travel Elite Club” events.

Also dying after an extensive career last month was Mike Lee, who held a range of roles including at Orient Line, ANZ Bank Travel and Landmark Travel. Lee, aged 85, was also Australian President of Skal International from 1992 to 1996, and passed away in Sydney after a brief respiratory illness unrelated to COVID-19.

Fly365 crash and burn

Although it now seems like a distant memory, it’s only a few weeks since the owners of online travel agency Fly365 placed the business into administration. The Gold Coast-based business, headed up by former Bestjet executive Scott Mayne and Dubai-based Mustafa Filizkok, ceased trading, leaving thousands of travellers in limbo. The situation has of course been exacerbated since Fly365 shut down, with the COVID-19 crisis seeing flights across the globe cancelled and impacted ticketholders having difficulty dealing directly with airlines as they seek refunds, rebookings and chargebacks.

Ironically despite the outrage at the collapse, it appears that the chargeback provisions of the Australian Consumer Law have by and large worked well. Initial cries of despair by Fly365 customers on a Facebook support group have been replaced by expressions of delight as travellers receive refunds along with generous support from several airlines caught up in the collapse.

No so much joy, however, for Helloworld’s Air Tickets consolidation operation, which appears to have been the only ticketer still dealing with Fly365 when it went under. Air Tickets’ operations in Australia and New Zealand are owed more than $3 million by the business, according to figures from the Administrator, with the only other major creditors being metasearch providers Skyscanner and Kayak, which were a key part of the Fly365 business model.

Unfortunately it appears AFTA was blindsided by the collapse of Fly365, which was part of the AFTA Travel Accreditation Scheme when it went down. However some customers of the business have highlighted some very strange behaviour in the lead-up to the collapse, including issuing bookings in the most expensive “Y” class which allows up to 30 days’ deferral of payment.

AFTA CEO Jayson Westbury said the Federation “strongly believes that contributing circumstances beyond the control of AFTA and the ATAS scheme have resulted in this outcome…AFTA does all that it can to monitor and review travel businesses who hold ATAS accreditation and for the most part this has enabled AFTA to predict certain outcomes but on this occasion, unfortunately AFTA was not in a position to either provide advance support to the business prior to its failure or predict this outcome”.

It’s hoped that more will become apparent as the Administrator’s investigations proceed.

SQ outlines NDC plans

Last month Singapore Airlines kicked off a national roadshow, closely engaging with Australian travel agents in relation to the rollout of its new KrisConnect NDC-based platform. SQ GM Agency Sales Greg McJarrow stressed the airline’s strong desire to collaborate with the industry, noting that “in Australia NDC is not new, and rollouts so far have caused some angst, which has resulted in some trepidation towards our position at Singapore Ailrines”. The elephant in the room, was of course the controversial introduction last year of the Qantas Channel, which in the opinion of much of the industry has so far not delivered on its widely touted promises.

Singapore Airlines is undertaking wide collaboration, with a variety of options to connect to its NDC content and a range of exclusive NDC-only discounted fares and the ability to earn commission on ancillaries. The KrisConnect platform will allow agents to be offered incentives for the sale of fare add-ons, along with bonuses for achieving high levels of usage.

Executive appointments

Several senior industry vacancies were filled just before the COVID-19 apocalpyse, with new appointees looking to have been thrown into the deep end of managing the crisis. Roles included the return of Andrew Mulholland to Wendy Wu Tours, taking over as Managing Director of the touring specialist after the shock departure of Troy Ackerman from the role after just a few weeks. Mulholland formerly headed up Wendy Wu’s local business in 2016 and 2017. Ackerman meanwhile has moved to Collette Tours, taking on an 18 month contract as Director of Strategic Partnerships, helping to cover the absence of Amanda McCann during her maternity leave.

Another big change took place early last month at The Travel Corporation’s Insight Vacations, with the planned departure of MD Alexandra O’Connor after four years in the role. She is being replaced via the internal promotion of Karen Deveson, who has been Head of Marketing for Insight and Luxury Gold since May 2016. Deveson is expected to take up her new position early next month, according to an announcement from The Travel Corporation.

On the cruise side two senior marketing roles were also filled in recent weeks, with Cruiseco’s Emma Mumford becoming Head of Marketing for Celebrity Cruises in Australia, while former Scenic and Brand USA staffer Liz Glover has become Marketing Director for Silversea Cruises.


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