Weekly Wrap – 27th May 2023

BRUCE PIPER wraps up some of the big news in travel and cruise over the last seven days.

AFTER a couple of fabulous weeks in Europe earlier this month I’ve come down to earth with a thump, having contracted a dose of COVID a few days after my return. Fully vaccinated (x4) it hasn’t hit me as hard as the last time, but has still had me down for the count this week – however as usual our crack team has soldiered on because as usual there’s been so much happening.

Probably the biggest news of the week was a massive profit upgrade from Qantas, while a stellar result from Webjet also shows how these businesses are successfully navigating the post-pandemic landscape. Qantas predictably attracted plenty of attention for a new forecast of underlying pre-tax profit approaching a whopping $2.5 billion, partly due to moderating fuel prices but also simply because of the seeming incessant demand for flying despite record high fares. It was also interesting to see the appointment of former American Airlines CEO Doug Parker to the Qantas Board, which the company said would help it “maintain the expertise needed as it enters the important ‘next phase’ in its history” – i.e. without having Alan Joyce around. Probably not the sort of vote of confidence that Joyce’s replacement, Vanessa Hudson, needs right now.

Under Parker’s leadership of the American carrier, Qantas cemented a wide-ranging trans-Pacific alliance with AA, which notably also now houses the global headquarters of the Oneworld alliance where former QF senior executive Rob Gurney recently resigned as CEO. The Qantas announcement confirmed extremely strong forward booking trends, with current “revenue intakes” at 118% of pre-COVID levels for domestic and 123% for international flights, despite lower capacity than in 2019. As I wrote last week, aviation continues to make hay while the sun shines, with Joyce confirming an “ongoing mismatch between supply and demand that’s likely to persist for some time”.

The Webjet full year results announcement was also heartening for some who had been concerned that the travel sector globally may be starting to the feel the pain of high interest rates and inflationary pressures across many economies. During an investor call to discuss the results, CEO John Guscic once again took the opportunity to show off his musical expertise, citing Aussie singer Sia when he modestly told analysts “Like a Porsche with no brake, Webjet is unstoppable”. Webjet’s $14.5 million profit was a significant turnaround from the $81.6 million prior year loss, with the burgeoning WebBeds division providing much of the momentum. It was interesting, nonetheless, to note the inclusion of a $5.9 million writedown of Webjet’s previously hyped investment in blockchain technology which had promised to have the potential to revolutionise wholesale accommodation transactions.

Also in aviation, the ramp-up of Singapore Airlines’ NDC strategy will see its GDS EDIFACT surcharge increase 33% to US$20 from the start of next month. Perhaps indicating some impatience at the slow adoption of NDC by the wider travel sector, SIA is adding both carrots and sticks to its NDC proposition, with NDC fares now up to 6% cheaper across all fare classes and RBDs – while in August the carrier will also make some of its fares exclusive to the NDC channel. The move is certain to put even more pressure on travel agency franchise groups and consolidators to outline their plans for NDC, with some seemingly having their heads in the sand about this inevitable, and far-reaching, change to airline distribution.

There was also lots of cruise action this week, including our exclusive revelation of Viking Cruises’ first ever Arctic expedition season using the purpose-built Octantis. Viking Cruises will also become the first European river cruise operator to offer year-round itineraries, a trend which may prove very popular with the Australian market given our propensity for a long stint overseas during the Christmas holidays. A visit to Australia by Ponant Global CEO, Herve Gastinel, saw the company confirm that its global sales are up a massive 80% on 2019 levels, while the fledgling Explora Cruises continued to drip-feed features of its revolutionary newbuilds, the first of which will debut in the next month or so. Explora’s parent company, MSC, also confirmed that the debut next week of its Euribia will include the world’s first “net zero” sailing from its Saint-Nazaire shipyard to Copenhagen, during which the LNG ship will be powered by a specially sourced batch of “bio-LNG” to neutralise carbon emissions.

And also in cruise came the late breaking news yesterday that the proposed third cruise terminal for Sydney is a no-go, with the recently elected NSW State Government putting the axe to the Botany Bay proposal after years of to-and-fro. NSW Transport Minister Jo Haylen suggested revisiting cruise ships at the Garden Island naval facility – perhaps unaware that this proposal has been roundly vetoed on multiple occasions by the military and the Federal Government.

Other noteworthy news included the opening of applications for the $9 million Reviving International Tourism Grant Program for ATEC and CATO members, the appointment of the inaugural board for the newly formed Australian Business Events Association, a big move by the Commonwealth Bank into travel in partnership with Canadian travel tech unicorn Hopper, and the annual IPW inbound trade show in the USA where a large Aussie delegation enjoyed the delights of San Antonio, Texas.

After all that, I’m ready for a good lie down – but I’m firmly on the mend having tested negative on day six. So have a great weekend everyone and we’ll be back in action on Monday.


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