IN BRIEF: News from August 2019

ROCKY road for Tempo & Bentours

The financial travails of Cox & Kings in India rippled into Australasia last month, with the company’s local subsidiary, Tempo Holidays Pty Limited and its Bentours brand having their AFTA Travel Accreditation Scheme (ATAS) participation terminated.

AFTA actually placed the company under review in early July when C&K India warned the Indian Stock Exchange that it was unable to make a key debt repayment, which was followed by IATA action to suspend the Indian firm’s ability to issue tickets under BSP.

Things spiralled from there, with Malvern Group, a large British operator 49% owned by Cox & Kings India placed into administration, disrupting the travels of an estimated 50,000 passengers.

C&K reported it was unable to release its quarterly results, but also confirming a glimmer of hope in the form of a “debt standstill” agreement with lenders.

Through all the dramas the company insisted its Australian and US subsidiaries operated completely independently from the beleaguered parent. It appears the Australian business in particular has been trading well, with the stellar efforts of many within the local Tempo and Bentours team seeing significant growth in sales.

However ultimately, after more than six weeks in limbo, it appears the company was unable to satisfy the requirements of ATAS and had its accreditation formally cancelled on 22 August, and was consequently excluded from coverage under the AFTA Chargeback Scheme (ACS). “The ACS Board has a duty to protect member funds, and as part of the risk management strategy may exclude or restrict suppliers from time to time,” AFTA said.

Tempo and Bentours continue to try to resolve the issue, reassuring trade partners that they are fully operational in Australia and New Zealand. “We would like to assure the trade we have already established a ‘Client Money Trust Account’ effective 16 August 2019, and all client receipts are now diverted into that account,” the company said.

Let’s hope it’s not too little, too late for this once-proud Australian business.

FC cruise backflip

THE launch of the new Cruise Boutique sub-brand for Travel Associates has effectively seen a reversal of last year’s brand consolidation initiative by Flight Centre Travel Group, which resulted in the shutdown of Escape Travel and Cruiseabout.

Flight Centre’s annual results announcement admitted the closures meant that “attachment of higher margin products that these two brands specialised in initially decreased after this strategy was initiated”.

Danielle Galloway, the company’s Group General Manager of Premium Leisure Brands, is enthusiastic about the prospects for the new specialist Cruise Boutique operations.

Initially 14 Travel Associates stores — staffed by highly experienced cruise experts — will come under the brand tweak, but Galloway told travelBulletin she’s targeting 20 by the end of the year, and that is just the start.

As with other players in the industry, Flight Centre’s annual result reflected tough trading conditions. Despite TTV surging $2 billion to a record $23.7 billion for the year, the company’s profit was down about 10% to $343.1 million.

MD Graham Turner confirmed the company was working to address challenges in its Australian operations, and was also seeing strong growth in emerging businesses including online, home-based and package deals.

QF Sunrise dawning?

Qantas continues to create anticipation of ultra long-haul services such as non-stop flights from Sydney to London and New York, with three upcoming Boeing 787-9 delivery flights “re-purposed” to conduct research into improving passenger wellbeing.

The initiative is part of planning for the airline’s Project Sunrise goal, with Airbus and Boeing both tasked with coming up with aircraft which could achieve the milestone.

Rather than flying with a skeleton crew from Seattle, the new 787s will be rerouted to travel via London and New York with about 40 people on board, to minimise weight and give the necessary fuel range. The passengers will be fitted with wearable technology devices and take part in specific experiences at various stages of the approximately 19-hour flights, with scientists to monitor sleep patterns, food and beverage consumption, lighting, physical movement and inflight entertainment to assess the impact on health, wellbeing and circadian rhythms.

Qantas CEO Alan Joyce said a final decision on Project Sunrise, contingent on aircraft economics, regulatory approvals and industrial agreements, was expected by the end of the year.

The research flights were announced alongside QF’s annual results for 2018/19, revealing a 17% drop in underlying profit before tax to $1.3 billion. Revenue jumped 4.9% to a record $17.9 billion, and the company paid out $32 million to about 25,000 non-executive employees each of whom received a $1,250 staff travel bonus.

Solid year for HLO

A spate of acquisitions by Helloworld Travel Limited over the last 18 months or so was cited as the key driver for a 9.1% uplift in Total Transaction Value (TTV) for the company when it reported its annual results last month.

TTV grew to $6.5 billion, with contributions from Magellan Travel Group, Asia Escape Holidays, Flight Systems (Skiddoo) and Show Group, and pre-tax profit jumped 21% to $54.5 million.

There were a few intriguing insights in the results, which indicated that the company’s 50% stake in MTA Travel contributed $1.3 million to the overall result, while a $2.5 million “contingent consideration” payable in connection with the Asia Escapes deal did not eventuate because the business failed to reach targets specified in the sale contract.

The figures also revealed that Helloworld paid $7 million for Show Group, $2.6 million for 60% of Asia Escapes, $1.4 million for Flight Systems and $800,000 for NZ agency Williment Travel, while receiving $2.4 million when it sold Insider Journeys.

Hong Kong horror

Travel to Hong Kong is expected to take some time to recover, amid ongoing unrest which has seen millions of locals take to the streets in recent weeks. Flights were heavily affected by a blockade at Hong Kong International Airport, impacting services for several days and taking a particularly heavy toll on Cathay Pacific which clearly is walking a fine line as it works to keep the territory’s Chinese administration happy.

The industry was shocked to hear of the abrupt resignation of much-respected CX CEO Rupert Hogg at the height of the protests — after seeming mixed messages about the participation of the airline’s staff in the civil uprising.

Chairman John Slosar initially said “we wouldn’t dream of telling our employees what to think,” but within days the rhetoric changed, amid the departure of Hogg alongside Cathay Pacific Chief Commercial Officer Paul Loo.

Slosar hinted that recent events had “called into question Cathay Pacific’s commitment to flight safety and security and put our reputation and brand under pressure,” reiterating the airline’s full support for Hong Kong under the principle of ‘One Country Two Systems’.

Qantas has already responded to reduced demand for Hong Kong flights, downgauging aircraft amid a 10% dip in booking volumes.

 

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