State of the Industry: September 2015

Gurney to head EK USA

Aviation is most definitely in Rob Gurney’s blood, with the Emirates Australasia chief this month relocating to New York where he will take up the role of Emirates senior vice president for North America. Before heading up Jetset Travelworld Group (later Helloworld) Gurney was head of commercial operations for Qantas, and there was therefore little surprise that after his controversial detour into the travel agency business he turned up as Emirates vice president Australasia – albeit with speculation that this was likely part of a bigger plan. 

Less than a year later he’s moving on within Emirates, where he will take on the gargantuan task of overseeing the carrier’s rapid expansion in the US, at the same time battling the entrenched opposition and lobbying power of the “Big Three” legacy airlines, United, American and Delta.

Replacing him in Australasia will be Barry Brown, who is returning to Sydney from Dubai where he has been Emirates senior vice president Commercial Operations East for the last two years. Brown will continue to report to EK chief commercial officer Thierry Antinori, with senior industry sources speculating that his return is evidence of the importance EK places on the Qantas relationship where having an Australian who knows both businesses well is a key asset.

Rich Virgin Australia content

Travelport claimed a major coup last month when it announced that Virgin Australia had signed up to its “Rich content and Branding” merchandising solution which allows airlines to showcase their full suite of offerings via the GDS channel. It’s a significant evolution for VA, which only embraced GDS distribution four years ago, with Travelport’s Asia-Pacific vice president Damian Hickey telling travelBulletin he expects other carriers in the region to follow Virgin’s lead.

Virgin enthused that the Travelport offering would particularly help it promote its new A330 business class seat, as well as the soon to be revealed long-haul business class offering and new premium economy cabin on its Boeing 777 flights to Los Angeles and Abu Dhabi. As well as enabling ancillary sales via GDS, Travelport’s merchandising solution also facilitates easier up-selling by travel consultants and provides the same detailed information as is available on airline direct websites. More than 110 airlines worldwide have signed up for the system, including Lufthansa which announced its participation in late July.

Travel Counsellors ups ante

The appointment of industry veteran David Hughes as the Australian managing director for Travel Counsellors is likely to only increase activity in the home-based sector, which was pioneered by the group when it launched here more than eight years ago. Since then the group has had a succession of leaders, with inaugural local chief Peter Watson abruptly departing in 2010, followed in succession by Cathy Burke, Samantha Hutton and Deb Duncan before current general manager Tracy Parkinson stepped up in 2013.

Parkinson remains in the GM role, working alongside Hughes whose extensive industry resume includes senior positions with Jetset Travelworld Group, Qantas and the Global Business Travel Association. Travel Counsellors, which was sold by founder David Speakman about 12 months ago to private equity group Equistone Partners, sees Australia as a key growth market, and Hughes will be expecting to capitalise on local fundamentals which are seen as key for the group, including a buoyant outbound market and a large pool of professional travel consultants. 

Signature targets Australia

Another US agency group has turned its sights on the Australian market, with Signature Travel Network confirming it’s “currently in discussion with several interested travel agencies” here. California-based Signature has long been focused on North America, and announced an international push in late 2014.

The group describes itself as a “memberowned travel cooperative” and has almost 200 member agencies and 440 retail locations in the US and Canada. Signature added its first member in Brazil last year, and also recently expanded into New Zealand with the addition of Auckland-based Quay Travel.

Signature’s Kimberly Waters told travelBulletin members have access to the Signature Hotel & Resorts Collection, a Destination Specialists program and “cutting-edge technology solutions” as well as the group’s annual conclave in Las Vegas attended by over 2,100 travel professionals. Last year US based Ensemble Travel launched operations in Australia with a fanfare under the leadership of American Express agency Trish Shepherd; however the organisation is yet to publicly announce any new members here.

CX earlybirds early again

There were a few red faces early last month when Cathay Pacific continued the tradition of recent years by being the first carrier to release its 2016 earlybird fares. Although the announcement appeared to imply they were available to all, it turned out that there was a “pre-earlybird” period during which the deals were offered via Flight Centre and Helloworld only, with the carrier swiftly issuing a corrective statement saying it had chosen to work with “selected trade partners”.

However as travelBulletin goes to print the CX deals have been opened to everyone, and for the first time there are Cathay earlybirds to North America as well as the UK and Europe.

CX is also allowing passengers to mix and match Premium Economy and Economy legs, as well as offering open jaw flights which are ideal for Australians touring or cruising in Europe. Cathay has also increased its economy class luggage allowance under the deals to 30kg, “so there is plenty of room for shopping and souvenirs”.

Destination NSW looks abroad

Destination NSW has sealed a landmark two year agreement with Air New Zealand, which is believed to be the first time a state tourism organisation has directly targeted a marketing partnership with a foreign carrier. The two year deal aims to attract Kiwi visitors to the state, with Destination NSW ceo Sandra Chipchase saying major events are a key focus.

“The close proximity of our countries means that Sydney and regional NSW are fantastic short break destinations where New Zealanders can come to enjoy our spectacular scenery, food and wine and many of the best major events in Australia,” she said. Air New Zealand ceo Christopher Luxon, who inked the deal with NSW state premier Mike Baird, said the carrier flies “more seats from New Zealand to Sydney than to any other international destination on our network”.

Destination NSW is also looking to China, with another two year pact sealed with Ctrip, the country’s largest online travel agency – cementing a partnership which has been in place since 2013. Ctrip senior vice president Li Xiaoping said the alliance “represents the start of a new chapter for tourism destination marketing in China, which will see NSW benefit from the scale of our platforms and customer base”.

Low fuel boon for airlines

Airlines around the world are enjoying a respite from high fuel prices, and Australian carriers are no exception. Qantas and Virgin both reported significantly improved financial results for the 12 months to 30 June, with both also benefiting from the détente from the previous year’s domestic capacity wars.

With fuel being one of the biggest costs of operating an airline the sub-US$50 per barrel price automatically flows through to the bottom line – but nevertheless Virgin’s result was still a $49.5 million net loss, which the carrier highlighted as a $213 million improvement on the previous year, as it continues its Virgin Vision evolution and claws back on the poor performance of Tigerair.

Qantas on the other hand met expectations by reporting
a $789 million pre-tax statutory profit, with every part of the business in the black, according to CEO Alan Joyce. The Qantas announcement also saw the carrier confirm it would not invest any more in the failed Jetstar Hong Kong venture, while the turnaround of its international division has allowed it to finally make firm fleet plans with the acquisition of eight 787-9s (see page 9).

Quest looks internationally

Home-grow n accommodation group Quest Serviced Apartments is spending $10 million for what on the face of it seems to be a fairly simple name change, evolving to become Quest Apartment Hotels.

CEO Zed Sanjana told travelBulletin the move would “ensure we remain relevant,” with “lots of terminology globally for what our segment reference is called. Some say Apartment Hotels, some say Apart’hotel and some say Residences…it’s all over the place,” he said, with the new name seen as more appropriate to a global company, as opposed to one focused on Australia and New Zealand.

Sanjana said Quest was looking to build a pipeline of growth in the UK, as a key milestone in exporting its successful model. Plans for the new operation would primarily involve newbuild properties, he said, because in building a new brand in a new market “consistency is critical”.

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