Fuel charges face industry challenge - Travel Industry Review
Fuel charges face industry challenge - Travel Industry Review
What the Four Seasons Hotel The Westcliff has lined up for Africa’s corporate elite. Page 6. More sales and earning oppor- tunities in the Cruises feature, from page 8. New attractions for the Kids & Family Travel sector, from page 15. Published by TTG Southern Africa Travel Industry Review South African buyers attending VisitBritain’s ExploreGB workshops in Liverpool last month later visited Fowey in Cornwall as part of a post-meeting tour. Overlook- ing the estuary outside the Fowey Hotel (l to r): Susan Thesen, British TIPS, Cape Town; Kay Ellison, Thomp- sons Tours, Johannesburg; Felicia Carollus, United Europe, Johannesburg; Angela Thomas, Flight Centre, Johannesburg; and Noorjehan Vadachia, Avoca Trav- els, Durban.
Cruises International received accolades at the recent Royal Caribbean World Summit in London, including the RCL Meetings, Incentives, Conferences and Exhibitions award in the Europe, Middle East and Africa category. The company produced US$2.2-million of the region’s US$3-million revenue. It also took home its third award for Azamara, a division of Royal Caribbean. Pictured (above, from left): Lizaan Schnettler with Incen- tive Manager Dalene Oroni and Michelle Hermans. ASATA/SAT project aims to boost trade’s domestic sales BY SARAH CORNWELL THE ASSOCIATION of Southern African Travel Agents and South African Tourism will implement the first phase of their new domestic tourism growth strategy this month, initially targeting the corporate sec- tor, with a mix of specially negotiated business-leisure travel deals and packaged itineraries.
It is a bid by ASATA to assist and encourage retail- ers to significantly grow their domestic business and channel more domestic travel through the trade. 20 ASATA-accredited corporate agencies or TMCs which have consultants at a corporate client were se- lected to pilot the project. “We start activation in member corporate customers in April,” said ASATA Gen- eral Manager, Kim Koen. “All the papers are signed… We are working very closely with our members, [with] product that has been negoti- ated as part of the pilot.” The agreement could be expanded but in a phased roll-out, Ms. Koen said, de- pending on the success of the corporate campaign.
It could also be adopted for the leisure sector.
The campaign is a spin-off from SA Tourism’s national ‘A Million New Experiences are a Sho’t Left Away’ do- mestic tourism campaign and follows a high-level industry think tank involving SAT, ASATA and its members last year. “ASATA put together a member advisory forum in- volving members but also sister organisations, who brain stormed and put to- gether a strategy that was presented to SAT,” Ms. Koen revealed. Fuel charges face industrychallenge BY RICHARD HOLMES THE retail travel industry is attempting to force airlines to ditch the fuel surcharges added to basic fares. The campaign is being led by the Association of Southern Af- rican Travel Agents.
ASATA said there would be immediate cost savings for passengers and called for government intervention to persuade airlines to scrap the carrier-imposed charges. The fuel surcharge has been one of the most conten- tious issues in the travel in- dustry, with the widespread complaint that fuel prices were a cost of doing busi- ness and should be factored into fares. It has become even more controversial with the collapse of the price of oil. Airlines maintain that the separate surcharge is needed to allow airlines to manage their fluctuating fuel bill, commonly affected by hedg- ing.
The fuel surcharge was in- troduced in 2004 when crude oil prices spiked, and contin- ued to climb above US$100 a barrel. Since then, the price of crude oil has fallen to a 12- year low, although airlines globally have been quick to point out that fuel hedging means savings are not imme- diately felt in their bottom- line. Compounding the issue is the fact that airlines do not buy crude oil; they require refined jet fuel that sells at a premium well above the crude oil price. “It is an oversimplification of the situation to expect jet fuel to be at the same low lev- els as the price of crude oil,” said South African Airways spokesperson Tlali Tlali.
“Every airline works with the various cost elements in their business and they make the decisions on levies Enter to win with TIR and American Tourister! TIR readers have the chance of winning great prizes from lead- ing luggage specialist, American Tourister, by entering the Spot- ted with TIR competition each month. Just send us photos of you reading TIR in interesting places... turn to page 6 to find out who this month’s lucky winner is… continued on page 4 continued on page 5
4 TIR Southern Africa • April 2016 News Digest 1 2 3 enews updates Most Read stories from the past month... 4 5 Bidvest Car Rental aims to grow market share Travellers warned to book ahead of April fare hikes ASATA Diners Club Awards finalists posted Comair chief clarifies CAA criticism report AVIS to launch new brands, incentives, websites “This is a pilot project so we don’t know if it is going to work, but we are committed to making it a success. South African Tourism has already been successful in promoting its Sho’t Left campaign… And we are negotiating pack- ages through basic market research.
“There are customers that may or may not buy in… but this is a pilot, with a start date and an end date. Based on its success, there will be additional [campaigns]. A top 20 [intermediaries] will become top 70. We don’t ever want to lose momentum.” Participating agencies will be provided with brochures and there are plans to kick- start the programme with launch events and presenta- tions to corporate SA. “One of the key tactics we will be employing… is a corporate roadshow address- ing the benefits of leisure add-ons to business travel to promote staff wellness and retention,” commented Otto continued from page 1 ASATA/SAT project aims to boost trade’s domestic sales de Vries, ASATA’s Chief Executive Officer.
Member travel agencies and consult- ants will be exposed to more local tourism product and destinations through online training as well as first-hand experiences, he said. Margie Whitehouse, Chief Marketing Officer at SAT, said the programme would immediately reach South Af- rica’s banking, telecommuni- cations and government sec- tors and expose more South Africans to new, local expe- riences.
“We know that worldwide there is a new breed of travel- lers who are called bleisure travellers because they put fun back into business travel by mixing business with lei- sure travel... this partnership presents the perfect oppor- tunity to not only grow this new trend in our own country but to continue entrenching the culture of travel. We truly believe that partnering with the travel industry is the best way to do so. “The criteria for selection has been in-house or implant [consultants]… But phase one is just the beginning. Hopefully we will go from phase one to phase 50. It is a litmus test for SAT… to see if they will get the return they are looking for,” said Ms.
The latest product sales, marketing and training resources for travel professionals. Sales Resource the Agents to receive tailored offers through Smartpoint. Travelport has introduced new functionality to its Merchandising Suite that will enable airlines to make tailored or personalised offers to individual travel agencies and/or the corporations that a travel management company services. So far, Air India is providing UK-based agents with the option to add a limo service to busi- ness class bookings. TAM Airlines is making business class lounge access available to economy passengers booking in the UK and travelling via Heathrow.
New Insight programme released.
Insight has released its new Autumn, Winter and Spring programme three months ahead of schedule, with early booking discounts of 7.5 percent with payment ending August 29. Tours run November 2016 – March 2017 and in- clude a new seven-day Iceland option, Scenic Iceland & Northern Lights (pic- tured right), from R41,700. Download the sales guide from: www.insightvacations.com/za/special-offers/2016-europe-aws Contiki relaxes change policy. Contiki Holidays has introduced FlexDeposits and done away with change fees when clients change their trip or departure. If the price of the new trip is more, the balance will be owed.
However, if the new trip is less, the balance will be refunded. The FlexDeposit can be redeemed on any trip until the passenger’s 36th birthday. For those aged 36 and older, it can be used towards a trip with another of The Travel Corporation brands. The Travel Corporation recently launched a ‘use it, don’t lose it’ promotion, giving passengers who had cancelled their trips within the last three years a travel credit of the R1,000 deposit amount towards another trip. The Holiday Factory adds Mauritius sales guides.
The Holiday Factory has launched its Mauritius brochure for 2016. To request a copy, email: email@example.com. Zanzibar and Seychelles sales guides are available from: www.theholidayfactory.co.za. > Email submissions to firstname.lastname@example.org With check-in required three hours in advance of de- parture for international flights at Heathrow, passengers travelling in the back can have a relaxed pre-flight experience at Swissport’s lounge in Terminal 3. Book in advance or just turn up, pay £18 for three hours’ access and get complimentary food, drinks, Wi-Fi, power outlets, newspapers and magazines and unbusy washrooms.
The cheapest lounge option and cheaper than buying food and drinks in the general terminal – and a lot more comfortable. ASATA Diners Club Awards to be presented at conference THE frontrunners for this year’s ASATA Diners Club Awards have been named. Winners will be announced at the awards evening on May 20, coinciding with this year’s ASATA conference. The finalists are: Exceptional Commitment George Argyropoulos, Cruises International Linda Benwell, XL Millennium Travel Lynn Howarth, HRG Rennies Travel Tomorrow’s Leader Irene Ferreira, Reynolds Travel Centre Robyn Daneel-Spicer, Sure Travel Stellenbosch Yolanda Barkhuizen, XL Boland Travel Corporate Travel Consultant Anria Kruger, Tourvest American Express Travel SA Tammy McFie, Reynolds Travel Centre Tarryn Classens, Sure 24-7 Travel Leisure Travel Consultant Evengeline September, Club Travel Algoa Bay Oriana Caldiera, Flight Specials Centurion Sharlene Galloway, Sure The Travel Agent ITC Charmaine McFarland, Travel Counsellors Gail Parker, Harvey World Travel Hayley Eberlein, Travel Icon eTravel Key Accounts Executive Chantelle du Plooy, HRG Rennies Travel Kristen Seeley, Reynolds Travel Centre Phumla Mjoni, Club Travel Algoa Bay Wholesale Consultant Jenny de Vries, Beachcomber Tours Ravi-Lee Loff, Thompsons Holidays Vanashree Moodley, Thompsons Holi- days Wholesale Representative Deanne Allchurch, Travel Vision Debbie Georghio, Cruises International Lindsay Roberts, Cruises International The Bidvest Car Rental brand turned a year old in March and the administration team at OR Tambo (pictured left) marked the occa- sion in style.
The com- pany claimed 19 per- cent market share at the start of 2016. Bid- vest currently has 120 locations in southern Africa, including Na- mibia and Botswana. Pictured: Tourism Minister Derek Hanekom (left) and Comair CEO Erik Venter in the cockpit of the new British Airways Boeing 737-800 aircraft, which joined the fleet at the end of February. It will operate the new Johannesburg - St Helena service, delayed while regulatory approval for the Atlantic Ocean island’s new airport is pending. Comair said last month it was expecting confirmation before the end of April. The new service will launch with one return flight a week on Saturdays.
Mr. Venter said the aircraft acquisi- tion was “a strong indicator of our confidence in leisure and business travel” and said, by November last year, African airlines had experienced five consecutive months of growth. “The new aircraft will help us embrace opportunities like the new Saint Helena route,” he added.
and surcharges to the best of their customer’s interests. We will continue to evaluate our cost elements, including the cost of fuel and, when we have reached the level of a compelling outcome, then we will revise the levies and or surcharges accordingly.” Compounding the issue for local airlines is the rand exchange rate. “Unfortunately, as the fuel is priced in US dollars, the current exchange rate is working against us. As the fuel price comes down the deteriorating rand counters any possible saving,” said Carlos Luis, Flight Centre’s Air Warehouse Leader.
“There cannot be a time- line as to when the surcharge will be reduced or removed.
There are far too many ex- ternal factors that impact on these costs for us to be able to predict such occurrences,” added Mr. Tlali. ASATA has revealed that a fuel surcharge study it un- dertook last year had been shared with the World Travel Agents Association Alliance, of which ASATA is a mem- continued from page 1 Fuel charges face industry challenge On Sundays, from 20 March 2016, Airlink will be flying directly from Johannesburg to Nosy Be, Madagascar – A tropicial paradise offering a range of surprises.
From rainforests, volcanic lakes, troupes of lemurs, yacht charters, a largely untouched coral reef for scuba drivers and snorkelers alike and so much more. Its ten-month tourist season, from mid-March until mid-January, means that you can visit almost any time... but why wait if you can book today? Visit flyairlink.com Spread your wings, fly Airlink – freedom of the African sky Nosy Be, Madagascar Unique African Island Getaway Freedomof theAfricanSky 33536 ber, and was being adopted as a global study “to be used to lobby airlines to incorpo- rate the fuel surcharge com- ponent in their base fares”.
“ASATA’s view is that it is no longer acceptable for air- lines to levy a fuel surcharge given the many changes to consumer laws, inclusive pricing and oil prices’ fall,” said Otto de Vries, Chief Ex- ecutive Officer of ASATA. “Fuel is a cost of doing business for airlines and should be presented in the base fare so that South Af- rican consumers can see up front and in a transparent manner what they are paying towards airfare.
“Consumers are also of- ten not aware that the fuel surcharge or carrier-imposed surcharges are not a govern- ment-levied tax and would perhaps be less content to pay these if they knew that it was an attempt by the airline to recover what essentially is a direct cost to them doing business,” he said. Nevertheless, the land- scape is slowly starting to change. British Airways no longer has a fuel surcharge on flights departing the UK and Europe and Qantas has bundled its fuel surcharge into the base fare. Recently, the Hong Kong Civil Aviation Authority ruled that airlines flying into the city would not be allowed to levy fuel surcharges.
In response, Cathay Pa- cific has adjusted its base fare levels to incorporate the fuel costs.
This is good news for the retail trade, as the increased base fare will be subject to the standard 1.01 percent commission. SAA has also adjusted its base fare for the route. “Self-regulation is the ide- al situation for any business,” said Mr. Tlali. “However we also have to appreciate that, with the vast number of airlines and airports, as well as service providers worldwide, the business environment is so dynamic that at times the au- thorities have to take some decisions on the basis of their territorial circumstances. It should not be viewed as a punitive regulation, but as an administrative decision.” News Digest Cost of jet fuel in Africa hits airlines hard WHILE the falling rand/US dollar ex- change rate has had an impact on local airlines forced to pay a number of input costs in foreign currency, it also affects local carriers which are forced to refuel in other parts of the continent.
Although the oil price has fallen to a 12-year low, in many parts of Africa aviation fuel continues to be priced at a significant premium. “If you are buying a ticket for a flight that takes you out of the country, de- pending on the length of that flight, the aircraft may have to refuel and then the airline is paying in US dollars,” said aviation analyst Linden Birns. “Obviously one would like to have a consistent ap- proach across the whole industry, but fuel is not sold at a standard price across all destinations.” That variation in the price of jet fuel can have a significant impact on the cost of a flight.
For instance: on March 15, the average price for jet fuel at Cape Town International Airport was US$1.04 per gallon. In Harare, the cost was US$2.91 a gallon. At Lilongwe, it had climbed to US$3.75.
Richard Bodin, fastjet Chief Commer- cial Officer said fluctuations are also of- ten a result of extra transportation costs. “For one of our most popular destina- tions, all of that fuel comes by road from Dar es Salaam. It is a fairly long journey and there is a cost associated with that.” By comparison, he said, fuel in Johan- nesburg would cost considerably less. “Johannesburg is a very cheap place to buy fuel. The further away from the ports and refineries, it gets higher. And there are still certain governments that will see it as an opportunity to add taxes because they see air travel as a luxury…” “It (a fuel surcharge) is a stealth tax….
They (airlines) are right in saying that the cost savings don’t always flow down to the consumer, that you don’t always get a straight line adjustment, but it should be included in the cost [of the product],” said Mr. Bodin.
As it stands, the fuel sur- charge is here to stay, at least for local carriers. Whether it is bundled into the base airfare or listed as a separate charge is, so far, up to indi- vidual airlines. “The question of pricing, fares and surcharges in the airline business is what de- termines the competitive na- ture of the airline industry,” noted Chris Zweigenthal, Chief Executive of the Air- lines Association of Southern Africa. “When passengers are considering travel options, they must look at the final fare and make their decision accordingly. The breakdown should always be provid- ed, but ultimately the final amount payable is the com- parison that the passenger should use to make their deci- sion,” said Mr.
Zweigenthal. TIR Southern Africa • April 2016 5 MARCO Ciocchetti, former Managing Director of San- down Travel, has been ap- pointed Chief Executive Of- ficer of the XL Travel group, taking over from Chief Op- erating Officer, Rod Rutter, who is to retire after more than 10 years in the position. Mr. Ciocchetti was pre- viously the president of the then Association of South African Travel Agents. He also played a role in the founda- tion of the XL Travel Group.
Mr. Rutter’s long-running career in travel included a term as Sales and Marketing Director and then Managing Director of American Ex- press Travel. He will still play a sup- porting role at XL. “It has come to the stage where I want to take my foot off the accelerator… I am not riding off into the sunset. I will sup- port Marco and be there for the agents... “XL is 15 percent of the market now. It has been a good journey – and I have had a lot of fun doing it. The market is changing… but I can still help the rest of the group,” Mr. Rutter said. XL appoints new CEO Pictured above right: Thompsons Holidays treated travel agents to a Sho’t Left expe- rience last month on the Johannesburg City Sightseeing Bus and an afternoon at Gold Reef City to highlight domestic packaged experiences in the Thompsons portfolio.
Pictured below, en- joying the view from Africa’s highest build- ing, Johannesburg’s Carlton Centre, during last month’s event (l to r): Melanie Leloup of South African Tourism; Henno Olivier, Cul- linan Outbound Tour- ism; Sandra Cassim, Avis and Angela Wood from Thompsons Holi- days.
Photos: Kate Els