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October 2018 T H E WO R L D O F C R Y S TA L® ILLUMINATES E VERY JOU RN E Y Beyond destinations. Past expectations. Shines a world that redefines what it means to travel. OCEAN RIVER YA C H T E X P E D I T I O N AIR CRYSTALCRUISES .COM
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Contents 14 30 38 52 Features Cover story 20 Business view 24 Cruise 30 Japan 14 The million dollar club 28 Industry in Focus Brian Johnston discovers what to do Find out which industry execs can when not watching World Cup rugby buy a private jet with their earnings 62 Last Word 38 Europe Jenny Piper explores Croatia from Monthly Columns the sea 02 From the publisher 06 Steve Jones 52 South & Central America Craig Tansley uncovers the best 02 State of the industry 08 AFTA View time to visit Torres del Paine 08 Issues and trends 12 TTF View 58 Sri Lanka 19 Business Events News 27 CLIA View Awaken your senses in Sri Lanka This month’s contributors Steve Jones, Joel Katz, Jayson Westbury, Leonie Spencer, Margy Osmond, Ana Pedersen, Brian Johnston, Jenny Piper, Emma Lovell, Craig Tansley, Harry Sargant, Jacqui Tufala, Sarah Beyer, Lisa Meyers EDITORIAL Advertising Suite 1, Level 2, 64 Talavera Rd Editor in Chief and Publisher – Bruce Piper National Sales Manager Macquarie Park NSW 2113 Australia Lisa Maroun PO Box 1010 Epping NSW 1710 Australia Co-ordinating Editor + Production – Ph: 0405 132 575 or 02 8007 6760 Tel: 1300 799 220 (+61 2 8007 6760 Sarah Beyer email@example.com Ph: 1300 799 220 or 02 8007 6760 firstname.lastname@example.org ART Design – Sarah Beyer, Wendy St George Contributing Editor – Jon Murrie Director – Jenny Piper www.travelbulletin.com.au 904 5,355 Avg Net Distribution per Issue This publication is independently audited under the AMAA's CAB Total Distribution Audit. Editorial team – Jasmine O’Donoghue, Adam FINANCE travelBulletin is part of the Business Reporting Period: 16 2016––30 Bishop, Anastasia Prikhodko, Sarah Fairburn 1 Apr Apr2017 16Sep Sep2017 Publishing Group family of publications 2016 - Publisher Statement email@example.com travelBulletin October 2018 1
State of the industry From the Welcome to the October 2018 issue of travelBulletin, which loyalty and other personal data. For example, in the case of a publisher contains our annual round-up of business traveller who generally some of the big earners in the flies with a particular airline, surely it Australasian travel industry. The would be a temptation for the carrier Bruce Piper Million Dollar Club feature is very popular each year, and in 2018 we to present a higher price based on the fairly certain assurance the have represented the fat pay packets client will buy that fare regardless of with a comparison of the number of the cost – in contrast to a potential private jets they can all buy. new customer that the airline is It should be noted, however, that attempting to woo? NDC would the Million Dollar Club only highlights enable this, versus current platforms the income of the senior executives where fares are the same regardless who have the first world problem of of who might be purchasing them. their packages being exposed due The new Sabre AirVision Fares to working at ASX-listed companies. Optimizer product “generates fare Many of the largest businesses in recommendations by estimating each the industry are privately held, and I customer’s potential willingness to would not be surprised at all to find pay”. It suggests pricing structures that similar figures are being racked based on customer segmentation, up by their owners too – without and is part of a broader Sabre the annoying scrutiny that a public strategy to build a Digital Commercial annual report brings. Platform that “delivers end-to-end MEANWHILE a recent technology personalised retailing for airlines”. launch by Sabre has rung alarm Some fear a future where flight bells among stakeholders concerned pricing uses Facebook-like algorithms about the propensity for IATA’s New based on personal details like age, Distribution Capability standard to address, employment status, family reduce transparency in flight pricing. situation, investments and even Because NDC has the ability to gross income to adjust fare offers provide deep customer insight, some based on the client’s ability to pay. have been concerned it may result in Current technology already enables prices charged to passengers varying some of this to happen, and the rich based on such elements as their data provided by NDC will facilitate a previous purchasing patterns, carrier further evolution of this possibility. IN Dream Cruises to come to Sydney construction of her sister ships with acclaimed service that is Asian at heart and international in spirit,” he said. BRIEF Australasia will welcome its first Dream Cruises ship in spring 2019, with the cruise line revealing it would bring Explorer Dream will be fitted with new facilities including The Palace, Dream Cruises’ luxury private enclave featuring sister brand Star Cruises’ ship, SuperStar Virgo, into the 50 suites and butler service. The ship will also sport all Dream fleet. To be renamed Explorer Dream, the ship will new food and beverage options “combining the best of East undergo a US$30 million dollar transformation in March meets West” and a new Crystal Life Spa. 2019, and then from October next year the vessel will Prior to her Australian season, the ship will homeport in homeport out of Sydney and Auckland, operating a series of Shanghai and Tianjin during the northern summer of 2019. 21 week-long itineraries. Explorer Dream will be followed by a Global Class ship Tan Sri Lim Kok Thay, executive chairman of both cruise “soon after,” with the line telling travelBulletin earlier this line’s parent company, Genting Hong Kong, said the move year it planned to bring a Global Class vessel to operate in accelerated the company’s vision to “develop Dream Australasian waters in 2021. Cruises into Asia’s Global Cruise Line” by sailing outside of Asian waters. Wollongong flight revival “With her strong heritage in the Asian cruise landscape and history in the region along with her world-renowned REGIONAL carrier Fly Corporate will re-establish direct links German engineering, SuperStar Virgo’s transformation into from Wollongong to Melbourne and Brisbane after the Explorer Dream will combine the best-in-class design and recent failure of rival JetGo. 2 travelBulletin OCTOBER 2018
The airline announced it would launch new services from 12 November, with a 6.15am weekday WENDY wU ENTRANCES xI’AN departure from Wollongong to Melbourne’s Essendon Airport and a four times weekly 1.55pm departure to Brisbane. Fly Corporate CEO Andrew Major said the new services would provide options for direct travel from the Illawarra region, as well as giving alternatives to Sydney for travellers heading onward to other domestic and international destinations. Flights will be operated by Saab 340B Plus aircraft, with launch fares available from $199 one way. Wendy Wu Tours founder Wendy Wu and CEO Joe Karbo took part in “We have chosen to operate the biggest tourism event in China this year along with about 1,000 this service utilising Melbourne’s VIP guests. The Shaanxi Provincial Government held an elaborate and Essendon Airport given its close spectacular re-enacment of the Ancient Entrance Ceremony at the historic proximity to the Melbourne CBD, Xi’an City Gate. The glittering ceremony has in the past been reserved for lack of airport congestion together visiting heads of state and royalty, and has been likened in magnitude to with economical car parking and city the opening of the Olympic Games. transfer options,” Major said. He noted that for passengers inbound to Melbourne wanting to connect on to other domestic and platform called Rapidbook to create a Agents who wish to book and hold international destinations, there is a unique offering. air bookings for Galileo and Amadeus free shuttle bus connecting Essendon He said corporate travellers were can now do so and have them ticketed and Tullamarine airports. increasingly seeking a “leisure by Insider Journeys. shopping experience” when booking, The update is the latest investment FCTG launches “Savi” with Savi focused on providing better in technology for the company, which engagement between travel bookers has also installed Tour Plan in the Flight Centre has unveiled a new and road warriors. Saigon office and is planning an corporate travel technology platform The Flight Centre offering includes “imminent review of its website”. “ called “Savi” powered by Artificial exclusive modules such as Savi The move to Calypso also makes Intelligence (AI) and designed in Select, Savi Voice and Savi Credits, it easier for agents to earn rewards collaboration with Serko. Being able to which Kavanagh promised would through the Insider Journeys “5, 10, Launched at Flight Centre Travel deliver “significant efficiencies for 15 Incentive”, which gives agents who Group’s (FCTG) “Illuminate” corporate book Insider business travellers, travel bookers and book five travellers on a Small Group travel event at the Melbourne Cricket Journeys their companies”. Journey a 10-day trip to Vietnam, Ground last month, Savi will be Cambodia or Laos, Mayell said. product available exclusively to customers online in Insider moves to Calypso Those who book 10 passengers of FCM Travel Solutions, Corporate can earn a 14-day tour to Vietnam, Traveller, Stage and Screen and the same Helloworld’s Insider Journeys Cambodia, Laos, China, Bhutan, Campus Travel. Flight Centre said Savi “sets a new way you can isreservations now on the Calypso wholesale system, allowing agents India or Burma while bookings of 15 travellers can take a trip on any of the benchmark in booking technology for book Qantas to book its small group tours online. company’s Small Group Journeys. business travellers” and incorporates Holidays is The company said the move provides functionality that would “generate agents “access to a greater level of an important Insider Journeys product than ever SQ Hotelbeds pact significant time efficiencies for individual users and overall cost step forward before”, with sellers able to make Singapore Airlines last month savings for businesses”. for the land and air bookings online though announced a major “holiday packaging FCTG corporate executive GM, Helloworld Wholesale’s Tango platform. partnership” with accommodation James Kavanagh, told travelBulletin Insider Insider Journeys MD Tony Mayell aggregator Hotelbeds, offering bundled the company had been working with Journeys said “we know all agents using Calypso flights and hotel solutions for the Serko for several years now. brand will welcome this news. Being able to airline’s customers across the globe. ” “We are the largest investor in book Insider Journeys product online The move is said to allow travellers Serko’s development pipeline,” he in the same way you can book Qantas to curate their own holiday packages, said, with Savi incorporating the best Tony Mayell, MD Holidays is an important step forward elements of another Flight Centre Insider Journeys for the Insider Journeys brand”. Continues over page travelBulletin October 2018 3
State of the industry Continues from previous page Cyprus-based Celestyal Cruises. Williams, who left Globus in with real-time selection of Singapore February this year for personal Ailrines flights alongside more than reasons after almost three decades HEADLINES 170,000 hotels. Transfers and with the organisation, will report to activities from the Hotelbeds platform Celestyal’s director of sales and travel will also be progressively added to services, Marios Polydorou. “He has 23 Aug FC profit hits new record the new offering. Hotelbeds Group will joined Celestyal Cruises to oversee 23 Aug QF’s record $1.6b profit provided a dedicated team, mostly and develop the company’s APAC 24 Aug Lux Escapes plans more based in Singapore, who will be business, and to enhance revenue 24 Aug FC flags wages increases responsible for “customer service, streams and maximise business pricing and product optimisation”. opportunities across the region by 27 Aug Expansion plans for SYD The combination is being labelled increasing the visibility of the Celestyal 27 Aug ScoMo shows tourism pride as “Singapore Airlines Holidays,” and Cruises brand across all distribution 28 Aug Google ups flight tools sees the relaunch of the brand after channels,” the company said. 28 Aug The Dorsett edges closer its wholesale operations were closed Williams told travelBulletin he 29 Aug Virgin hit by $653m loss down in Australia more than two years was very happy to be working for the ago after formerly being operated by operator, saying “the Celestyal cruise 29 Aug THL posts record profit the now defunct Pinpoint Holidays and experience and product is fabulous”. 30 Aug NSW upgrades target then Wendy Wu Tours. The cruise line’s Shanghai-based 30 Aug NCL looks to Aus season The move comes as Hotelbeds also business development executive, Wan 31 Aug CLIA, TAFE training pact confirmed a global consolidation of its Wang, will also report to Williams. 03 Sep Qantas Dreamliner boost retail businesses which will see legacy “Adding Stewart Williams to our 03 Sep TA’s $10m Asia campaign brands including GTA, TravelCube senior commercial team demonstrates and TravelBound combined under the our commitment to the Australasian 03 Sep On the Edge of a reveal? Bedsonline banner. Hotelbeds Group market,” said Celestyal Cruises 04 Sep TG slashes Aus capacity managing director Bedbank, Carlos CEO Chris Theiophilides. “Stewart’s 04 Sep Crystal joins QF loyalty Muonz, said “it makes strategic and role is a core component of our 05 Sep QF schedule self-service practical sense for us to continue to global commercial strategy, which 05 Sep Entire Travel Group lifts develop our travel agent proposition includes our expansion throughout 06 Sep Travel pay packets slip under one integrated global platform the APAC region, where we expect to and brand”. capture more opportunities to bring 07 Sep Facebook adds flight ads the Celestyal Cruises story to new 07 Sep World pax hit new high Cruise role for Williams passengers,” he added. 10 Sep Regulation to reap $18b STEWART Williams, formerly the Currently Celestyal operates two 11 Sep Trafalgar goes domestic long-time head of the Globus Family mid-sized cruise ships in the Greek 11 Sep Paulsen lifetime honour of Brands, has taken a new role as Islands and Eastern Mediterranean, 12 Sep Webjet packages Contiki the Asia-Pacific Regional Manager for focusing on “true cultural immersion”. 12 Sep McEvoy to head TTF board 13 Sep Flight Centre tech launch iceland’s cool credentials 13 Sep Dream to explore Sydney 14 Sep WTAAA payment push 14 Sep QF targets airport costs 17 Sep Celestyal appoints Williams THIS delegation of senior tourism officials from Iceland 17 Sep SQ, LH seek Scoot deal visited Sydney, Melbourne and 18 Sep Regulate airports – ACCC Brisbane for a series of trade 18 Sep Industry overall satisfied events last month, as part 18 Sep Airport investment at risk of the first official Promote 19 Sep TK plots SYD non-stop Iceland mission to Australia. The visit reflects strong 19 Sep BNE wins IATA conference growth in arrivals, with Iceland 19 Sep Joyce to head oneworld room nights by Aussies almost 20 Sep Travel insurance class quadrupling to 49,852 over 20 Sep QF ancillary revenue lead the last four years. Pictured 20 Sep Air NZ route suspensions from left are Þórir Garðarsson, Gray Line Iceland; Þorleifur Þór Jónsson, Promote Iceland; 21 Sep FCTG digital acquisition Íris Tryggvadóttir, Arctic Adventures; Helga Bergrós Bizouerne, Iceland Travel; Bjarni Hrafn Ingólfsson, Iceland Tours; and Ársæll Harðarson, Icelandair. 21 Sep Qantas, Cathay codeshare 4 travelBulletin OCTOBER 2018
Data Room All the latest statistics from the ABS and BITRE to keep you in the loop. Domestic On Time ARRIVALS RETURNS Performance Top 10 destinations, June 18 Top 10 destinations, July 18 August 2018 Source Trend Original Trend Trend Destination Trend Original Trend Trend (000) (000) Jun 18/ Jul 17/ (000) (000) Jun 18/ Jul 17/ Jul 18 Jul 18 Jul 18 Jul 18 % % % % China 123.9 153.5 +0.9 +3.0 Indonesia 105.4 125.9 -0.9 +4.5 New Zealand 115.2 132.8 +0.2 +1.9 New Zealand 119.3 125.4 +0.3 -0.3 USA 61.7 57.3 -1.4 -6.8 USA 93.4 106.8 +0.5 +3.7 UK 58.9 39.2 -1.5 +0.2 UK 55.9 92.5 -0.1 +8.3 Japan 37.9 38.6 -0.2 +5.6 Thailand 46.5 57.5 -0.4 -5.4 Singapore 35.3 29.4 -0.9 -5.9 Italy 21.2 47.3 +0.8 +12.2 Hong Kong 26.6 29.1 +1.4 +9.2 China 51.5 43.8 +0.8 +14.0 Jetstar Qantas Malaysia 31.8 28.0 +0.7 -9.8 Singapore 36.7 40.7 +1.2 +13.7 Arrivals on time 76.2% Arrivals on time 83.4% Fiji 28.4 35.7 +0.1 -0.2 India 30.4 22.9 +0.9 +17.7 Departure on time 74.1% Departure on time 84.5% Japan 40.7 32.3 +0.6 +22.4 South Korea 26.0 22.0 +1.7 +3.3 Cancellations 2.6% Cancellations 1.7% All outbound 931.8 1,133.6 +0.3 +5.8 All inbound 766.6 774.4 +0.1 +2.8 Source: ABS Source: ABS ENDED DECEMBER 2017 International Passengers Carried (thousands) - December 2015 to December 2017 +0 Virgin Australia All airlines .4% Arrivals on time 77.9% Arrivals on time 80.0% -1.6% Departure on time 80.3% Departure on time 81.5% Cancellations 1.8% Cancellations 1.8% +4 DOMESTIC AIR MARKET .8 % June 2018 -0.8% Jun 17 Jun 18 Growth Yr to Yr to Growth +3 % Jun 17 Jun 18 % INBOUND OUTBOUND .9 % +3 -0.5% Total pax carried 4.70m 4.72m +0.5 59.30m 60.77bn +2.5 .7% Revenue pax km (RPK) 5.46bn 5.50bn +0.7 69.49bn 70.87bn +2.0 + 0. Avail seat kms (ASK) 7.06bn 7.00bn -0.8 88.67bn 88.53bn -0.2 1% Load factor (%) 77.4 78.6 1.2* 78.4 80.1 1.7* Jul-17 Aug-17 Jul-16 Aug-16 Jan-17 Mar-17 Oct-17 Dec-17 Jan-16 Mar-16 Oct-16 Dec-16 Sep-17 Sep-16 Apr-17 Jun-17 Nov-17 Apr-16 Jun-16 Nov-16 Feb-17 Feb-16 May-17 May-16 Aircraft trips (000) 52.0 49.9 -4.1 641.7 635.1 -1.0 -3.6% *Percentage points difference +2.3% Source: BITRE International Air Market Share International Passengers by Major Airlines - Year ended December 2017 International passengers by major airline – year ended June 2018 INTERNATIONAL AIR ROUTES Top 10 city pairs, June 2018 Qantas QantasAirways, 16.7% Airways, City pair Passengers Passengers % of total % change 16.4% YE Jun 17 YE Jun 18 18/17 Auckland-Sydney 1,604,956 1,546,716 3.8 -3.6 Others, 31.4% Singapore-Sydney 1,462,736 1,519,662 3.7 +3.9 Others, 30.7% Singapore-Melbourne 1,397,996 1,450,040 3.6 +3.7 Jetstar, Jetstar, 9.1%9.1% Auckland-Melbourne 1,219,532 1,247,393 3.1 +2.3 Singapore-Perth 1,144,221 1,134,679 2.8 -0.8 Hong Kong-Sydney 1,072,024 1,076,578 2.7 +0.4 Auckland-Brisbane 964,570 965,463 2.4 +0.1 Emirates, Singapore Airlines,8.3% 8.1% Los Angeles-Sydney 883,685 869,202 2.1 -1.6 China Southern Etihad Airways, 3.1% Denpasar-Perth 869,868 865,358 2.1 -0.5 Airlines, 3.1% China Southern Singapore-Brisbane 798,510 836,844 2.1 +4.8 Etihad Airways, 3.2% Airlines, 3.1% Singapore Top 10 City Pairs 11,418,098 11,511,935 28.3 +0.8 Emirates, 8.0% Airlines, AirAsia X,X,4.0% AirAsia 3.5% 8.1% Other City Pairs 27,242,848 29,107,407 71.7 +6.8 Cathay Pacific Air New ALL CITY PAIRS 38,660,946 40,619,342 100.0 +5.1 Cathay Pacific Air New Zealand, 6.6% Airways, Airways, 4.5% 4.6% Zealand, 6.6% Source: BITRE VirginVirgin Australia, Australia, 6.1% Source: BITRE 6.0% International Passengers by Uplift/Discharge City Pairs travelBulletin October 2018 5 Australian Year ended Year ended Year ended % of % Change
State of the industry MAIN DOMESTIC ROUTES Most popular websites AUSTRALIAN AIRPORTS Top 10 domestic in travel - agencies International passengers through Australia’s city pairs, June 2018 July 18 compared with June 18 major international airports, June 18 City pair Passengers Passengers % change Rank Website Visits % Relative Rank City pair Passengers Passengers % of total % change YE Jun 17 YE Jun 18 share % dif Jul Jun 18 YE Jun 17 YE Jun 18 18/17 (000) (000) July 18 to Jun Sydney 15,559,762 16,431,177 40.5 +5.6 Melbourne- 1 Webjet Australia 13.34 -1.08 1 Melbourne 9,949,458 10,784,070 26.5 +8.4 Sydney 8,974.5 9,250.8 +3.1 2 Expedia Australia 10.50 +0.76 2 Brisbane 5,600,083 5,903,276 14.5 +5.4 Brisbane-Sydney 4,695.7 4,788.1 +2.0 3 Skyscanner Perth 4,423,833 4,354,646 10.7 -1.6 8.99 -1.04 3 Brisbane- Australia Gold Coast 1,104,987 1,070,411 2.6 -3.1 3,500.5 3,556.9 +1.6 Melbourne 4 Wotif.com 7.78 +0.00 4 Adelaide 950,943 998,570 2.5 +5.0 Gold Coast- 5 Flight Centre 5.88 -7.13 5 2,712.7 2,752.4 +1.5 Cairns 648,064 672,167 1.7 +3.7 Sydney 6 Velocity Frequent Adelaide- 4.37 +13.79 6 Darwin 284,136 251,181 0.6 -11.6 2,413.4 2,487.3 +3.1 Flyer Melbourne Canberra (a) 63,932 92,917 0.2 +45.3 7 Luxury Escapes 3.33 -1.55 7 Melbourne-Perth 2,048.1 2,057.8 +0.5 Townsville (b) 45,206 39,470 0.1 -12.7 8 Cheap Flights Aus Gold Coast- 2.49 2.23 9 Sunshine Coast (c) 13,728 13,719 0.0 -0.1 1,992.2 2,045.6 +2.7 & NZ Melbourne 9 Lastminute.com.au 2.40 -10.61 8 Port Hedland 7,556 7,738 0.0 +2.4 Adelaide-Sydney 1,886.5 1,908.6 +1.2 10 Google Flights Aus Norfolk Island (d) 9,258 .. .. .. 1.92 -6.69 10 Perth-Sydney 1,737.8 1,719.9 -1.0 ALL AIRPORTS 38,660,946 40,619,342 100.0 +5.1 Source: Hitwise Hobart-Melbourne 1,598.7 1,638.6 +2.5 (a) Scheduled services recommenced Sep 2016 (b) Scheduled services recommenced Sep 2015 (c) Seasonal services only (d) Scheduled services ceased May 2017 Source: BITRE Source: BITRE The allegations were serious, in, one where indiscretions, ranging from ripping off customers real or otherwise, just won’t be with inflated mark ups, to a “toxic” tolerated no matter how profitable culture rife with hard-drinking, bullying a company may be. and harassment. It wasn’t a pretty The market clearly didn’t like picture, but one denied by the the unpalatable culture that is retailer. Skroo Turner branded it a said to pervade Flight Centre, or “beat-up”. the negativity that ensued. Not so Was it? Should the complaints many years back, I suspect only the of the few – and it was a few when financials would have truly mattered. measured against the 10,000 But it is not only Flight Centre’s employed by Flight Centre in Australia integrity that has been called into – tarnish the reputation of the question in recent weeks. Meriton entire company? And when is such was fined a whopping $3m for insidious behaviour so ingrained that rigging TripAdvisor reviews, while it becomes an integral part of the Trivago is the subject of Federal “company culture”, as was alleged. Court action amid claims the Steve Jones’ “ What is clear is that we are living aggregator misled consumers and in a delicate era where suspect prioritised advertisers. Say behaviour, be it of a personal or professional nature, is being called The market clearly So, in the space of a few short weeks we have a hotel company out on an almost daily basis. manipulating online reviews, an A fuss about nothing or institutional The reaction, therefore, was didn’t aggregator accused of fooling unethical behaviour? unsurprising, at least not from like the consumers and the country’s largest Whatever your view of the individuals or the industry at large unpalatable travel retailer apparently adding recent Flight Centre shenanigans where the relish that some greeted huge mark-ups to the cost of flights. – disgruntled or easily offended the retail behemoth squirming under culture that And here is the problem. It is not ex-staff with an axe to grind, or the national spotlight was inevitable. is said to only that trio of companies to have an unpleasant culture that needs It was the market reaction which took pervade suffered reputational damage. It is addressing, and eradicating – the me by surprise. the wider industry. If it transpired market didn’t take too kindly to the Despite record financial Flight Trivago did act dishonestly, is it an allegations contained in last month’s results, released just as the ABC Centre, isolated incident or common place ABC investigation. investigation went to air, Flight in the sector? Who else attempts to Even on the back of another solid Centre’s shares lost 18% of their or the manipulate reviews? And do other financial result, Flight Centre shares value in next to no time. It highlighted negativity travel agents mark-up flights on tumbled, wiping countless millions not only the unpredictability of the that ensued the quiet? Those are the questions ” off the value of the company. At time stock market, but maybe reflected consumers will be asking. of writing, they had yet to recover. the environment we are operating Trust is hard won, and easily lost. 6 travelBulletin OCTOBER 2018
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Issues & trends Billions at stake AFTA view in airport stoush Jayson Westbury, chief executive AFTA Conflict between Australia’s airlines and privatised airports is now being played out before the Productivity Commission Price parity conflicts as it considers whether greater regulation is needed for the Unfortunately, the debate and conversation within the country’s major gateways. Australian community about hotel booking sites and the need After a long and public campaign – in which airlines have to book direct has taken a more confusing turn than perhaps accused the airports of over-charging and exploiting their was necessary, off the back of a public video rant by prominent monopoly powers – the parties have now had the chance to Australian Dick Smith. For those that have not managed to watch put their cases before a formal inquiry as the Productivity the video it can be found on Facebook, but having said that, for Commission prepares to make recommendations to the most Australian travel agents it will make you cringe. Federal Government early The ACCC took a decision several years ago to grant “ next year. permission for the two large American based OTAs and their Central to the probe is subsidiaries to impose “price parity” clauses within the booking the question of whether contracts they hold with Australian hotels and motels. Australian airports the current “light-handed” What that means is that the hotels and motels who have are currently able to approach to regulation signed up with these OTAs or hotel booking sites are not allowed use their monopoly has allowed the airports to to price rooms on particular days lower than the price they develop too much power, provide to the OTA. You might recall that the ACCC pursued one position to charge leading to soaring profits of the most prominent Australian travel companies for the exact prices that generate and high charges for both same practice, but in that case relating to airfares. passengers and airline It has been something that AFTA, along with the hotel industry excess returns, but “ users. In its submission associations, has been taking this is not delivering to the commission lodged up with the ACCC for some improvements in last month, industry group ACCC pursued one time. How can it be that a Airlines for Australia & couple of American companies quality or efficiency of the prominent ” New Zealand (A4ANZ) can be granted rights to do cites analysis by Frontier Australian travel something that the High Court Economics that found of Australia said an Australian greater regulation of the airports would deliver more than companies for the travel company can’t do, when exact same practice... the applicant to the case was ” $18 billion in economic benefits. “Australian airports are currently able to use their exactly the same government monopoly position to charge prices that generate excess authority – the ACCC? returns, but this is not delivering improvements in quality or While Dick Smith in his rant is attempting to say that it is efficiency,” said A4ANZ ceo Alison Roberts. better for Australian small business for consumers to book “Something has to change if consumers are to be direct rather than by the American OTAs, the problem is that the shielded from the impact of what is ahead,” she said. message gets all very confused as it unfolds. “While airlines have been able to keep downward It is important to note that the CEO of the Accommodation pressure on airfares over the past decade, globally, fares Association of Australia (AAoA) has made it clear to me and is on are expected to rise next year. It’s time for the airports to be the public record supporting Australian travel agents. However the part of a genuinely collaborative approach.” downstream impact is a confused message to consumers. However the airports argue that greater regulation The simple fact is that this complicated messaging has in would threaten billions of dollars in future investment at fact been caused by the ACCC. Even the chairman of the ACCC the country’s main gateways. In its own submission, the appears to be confused about what message should be sent to Australian Airports Association (AAA) says the major airports consumers. He has suggested travellers should book direct by have invested $15 billion in improvements since 2002, with telephone as they may get a better deal. It is 2018, right? I am plans to spend a further $20.6 billion in the next decade. sure that a message to most people that includes picking up the “Policy reform solely designed to reduce prices, as phone is unlikely to resonate as the best way to make a booking opposed to enhance efficiency… will place future investment for a hotel. at risk,” AAA’s submission said. The ACCC should apply the same rules to these American It also dismissed claims that higher airport charges OTAs as applies to all Australian OTAs and for that matter travel automatically lead to higher airfares, and says there is no agents. A level playing field should be made available to all evidence that savings would be passed on to consumers. suppliers and distributors regardless of the format, and for my “Even if modest reductions were to be imposed by a money if the Australian High Court has interpreted the law in a regulator, these would simply enhance the profits of airlines,” clear way then that should apply. the airports coalition said. 8 travelBulletin OCTOBER 2018
Tourism Australia Asia push Tourism Australia last month launched its biggest ever campaign targeting key South To the 82% of Singaporeans who think and South East Asian markets, with the Australia is all about aim of challenging traveller stereotypes of cute, furry animals Australia as a tourism destination. The $10 Think again million “Undiscover Australia” promotion debuted in Jakarta, Indonesia, with the aim of bridging the gap between intention to visit and actual arrivals by “providing a more multidimensional understanding of Australia’s high-quality experiences beyond the expected tourism icons”. Tourism Australia managing director John O’Sullivan said the region’s proximity, Port Lincoln, SA UnDiscover Australia emerging middle class, improving aviation capacity and increasingly competitive air fares presented enormous opportunities for Australian tourism. “One of the challenges the aim of showing there is “much more by an “airline marketplace” which brings we constantly face is that people from this to Australia than the typical stereotypes of together multiple airlines and online region feel they know everything about us,” koalas, kangaroos, the outback and well- travel agents to offer competitive airfares, he said. “This campaign will shine a spotlight known icons”. particularly highlighting the proximity of some on some of our undiscovered and hidden By showing a different side of the country, Australian destinations to Asia which makes holiday gems,” O’Sullivan added. Tourism Australia believes it will give high- it an ideal weekend getaway. Initially slated Different creative elements have been value travellers in the region compelling new for a four month run, Undiscover Australia developed for the major markets of India, reasons to visit. has potential to be extended to additional Indonesia, Malaysia and Singapore, with The campaign is also being supported markets in the future. WIN A TRIP TO MEET SOUTH AFRICA 6 SPOTS UP FOR GRABS VISIT SASPECIALIST.SOUTHAFRICA.NET T&C apply.
Issues & trends Clean sweep for Aust Cruise Association The huge pipeline of newbuild cruise ships under construction means it is essential that cruise lines, destinations, ports and ground operators work together to deliver quality experiences and itineraries, according to Carnival Australia president Sture Myrmell. Myrmell, who is also the chairman of Cruise Lines International Association Australasia, was one of the keynote speakers at last month’s Australian Cruise Association (ACA) conference in Broome, Western Australia, with his presence a clear reflection of the conference theme of “Forging stronger relationships”. Myrmell said the partnership between ACA was going from strength to strength, with a combined 2018 economic impact report to be released this month along with a joint sustainability report which will showcase how the cruise sector is working on a range of Pictured lit up by a Broome Cable Beach sunset are WA Tourism Minister Paul Papalia, ACA CEO Jill Abel, Carnival Australia president Sture Myrmell, and Royal Caribbean Cruise Lines vice president Australasia Susan Bonner. environmental fronts. He also highlighted the huge opportunity still available for cruise in Australia. Despite the local market having a Bonner, also spoke at the ACA conference, a second berth sooner than we thought”. world-leading penetration of 5.7%, “that still urging attendees to prepare for the arrival The conference wrapped up with a means more than 94% of Australians have of ever-larger cruise ships. She noted the fascinating breakfast presentation from not cruised,” he said. strong competition from other ports across the wardens of the nearby Broome Bird The Carnival president also dismissed the globe for cruise ship deployments, with Sanctuary, followed by the ACA annual concerns about worldwide cruising growth several Asian destinations already able to general meeting where a new management plateauing, noting that with an annual welcome Oasis-class vessels. Bonner urged committee was voted in. Officebearers include global total of about 27 million passengers the industry to work collaboratively to come chairman Grant Gilfillan from Ports NSW, ACA the entire sector is still smaller than many up with solutions to manage the potential CEO Jill Abel, Thor Elliott of Fremantle Ports, key tourism destinations such as Paris, influx of large numbers of cruise guests and Anne McVilly of Port Arthur Historic Site, Jay Venice, New York and Orlando. The pace of still maintain passenger satisfaction. McKenzie from Bob Wood Cruise Group, construction of new ships means that “at full The ACA conference included a Christine Cole of Tourism WA, Martin Bidgood capacity we can only grow globally at 3-5% – presentation from Port of Brisbane ceo Peter from Intercruises and Tourism NT’s Scott that is measured, steady growth,” Myrmell Keyte, who confirmed that bookings for the Lovett. During the event ACA CEO Jill Abel said. He noted that Australians are a “nation 2020/21 season had opened amid strong paid tribute to the late Tony Clementson who of sea-huggers” with cruise continuing demand from a variety of cruise lines. The had represented the NT on the committee, to afford a great option for domestic new facility, which has been underwritten and who died suddenly in late August. holidaymakers, while inbound cruise tourism through a long-term partnership with Carnival The 2019 Australian Cruise Association is also seen as a huge opportunity. Corporation, is scheduled to open in the conference will take place in early September Royal Caribbean Cruise Lines’ recently second quarter of 2020, with Keyte saying next year in Geelong, one of Victoria’s appointed vice president Australasia, Susan interest so far indicates “we’re going to need emerging cruise destinations. Hit the Road with DriveAway! Nothing beats a self-drive holiday with a car or motorhome hire booked with DriveAway. Call 1300 363 500 or visit driveaway.com.au
Trafalgar team photo featuring Sally Sylvester, Trafalgar national sales manager; Dee Morocco, Trafalgar chief marketing officer; Gavin Tollman, Trafalgar CEO; Matt Cameron-Smith, Trafalgar Australasia managing director; and Cassie Zuell, Trafalgar head of marketing. Trafalgar debuts domestic program Trafalgar global CEO Gavin Tollman has unveiled a in ways never previously imagined. Trafalgar- new program of tours in Australia and New Zealand, branded coaches on local roads will feature the with the expansion meaning the Travel Corporation brand’s rainbow colouring, and the programs brand now features programs in all seven continents. feature signature Trafalgar touches such as Developed in conjunction with sister brand AAT ‘Hidden Gems’ and ‘Be My Guest Experiences’. Kings, the 2019 Trafalgar Australasia brochure Matthew Cameron-Smith, the company’s comprises 12 trips in Australia ranging from five to Australian managing director, told travelBulletin 15 days, as well as four local “mini stays”. The New the huge contingent of Trafalgar past Zealand range includes five options taking in the North passengers was a prime market for the new and South islands, with Tollman saying the program program, which will allow them to have the will allow Aussies and Kiwis to “see your home and convenience of a Trafalgar guided holiday neighbouring regions in a whole new light”. close to home. “It costs twelve times as Trafalgar’s brand direction for 2019 focuses on much to acquire a new customer. We have “The Good Life,” inviting passengers to make “real been so successful over the past couple connections” with their destinations; have hassle-free of years, and some of that has included a holidays with “real ease”; and experience “real joy” as huge growth in repeat business. It’s an easy they take in people and places in their own backyard sell,” he said.
Issues & trends Cosmos LITE has TTF view Margy Osmond, CEO, a-la-carte Tourism & Transport Forum Australia Newly appointed Globus Family of Brands managing building cruise tourism director for Australasia, Gai Tyrrell, last month unveiled a Cruise season was kicked off a few weeks ago with Princess new Cosmos Lite touring option, combining the essential Cruises’ Majestic Princess docking in Sydney Harbour, bringing features of Cosmos trips with a personalised approach to more than 3000 passengers to the city. daily itineraries. To roll out in 2019, Cosmos Lite initially The cruise industry is growing rapidly and new figures show features ten journeys combining major cities with lesser- Australia’s cruise passenger numbers hit record numbers in 2017 known, undiscovered destinations across Europe. with 1.34 million people enjoying an ocean cruise. Tyrrell said Cosmos Lite trips include city-to-city Cruise tourism is a critical part of the Australian tourism transportation in motor coaches with complimentary wi-fi, offering – we need to support and nurture it. This is an industry as well as accommodation in comfortable hotels with daily that already pours billions of dollars into the Australian breakfasts. A professional tour director is available to help economy every year bringing visitors from all over the world curate the best sightseeing, dining and entertainment to taste the wonders of “ options, along with a range of MyCosmos optional Australia. Passengers on excursions which are available for purchase as desired. average are spending $527 a “Cosmos Lite gives travellers an innovative and Passengers on day in a port before or after independent touring option, with a new way to see, explore average are a cruise. and experience the world around them,” Tyrrell said. The We need certainty of port program “takes care of getting travellers to each destination spending $527 a options and we need the new and coordinating accommodation, but what they fill their day in a port before facilities to cope with the high days with – and the activities they plan – are completely up or after a cruise demand during the summer peak. ” to them”. Recently it was announced that A new CosmosGo app is also available, offering a Botany Bay will most likely be range of entertainment, dining, sightseeing and shopping the option for a new cruise ship suggestions. Tyrrell said Cosmos Lite holidays give terminal in New South Wales. While most agree that the iconic autonomy back to the traveller to fill their days according Sydney Harbour is the money shot, if Port Botany is an option, to their specific interests, passions and budget, “without let’s get on with it! having to stress about the itinerary fundamentals.” Rightly, the industry is very keen to see how the business case stacks up and the real feasibility of Port Botany, for both government and the tourism sector. The ingredients of this quintessential Sydney experience should not be taken lightly. Failure to find the right solution also has ramifications for our near Pacific neighbours who will also miss out on cruise traffic if Facebook takes flight Sydney loses its lustre as a cruise hub. Thinking nationally, for many cruise companies the vital destination in Australia is Sydney – if they cannot get the access they need in Sydney they will not come and therefore will not visit a wealth of other Australian regional destinations. Fixing Sydney, the national gateway, is a ‘must’ if we are going to have a slice of the global cruising ‘pie’ and see those benefits flow through to the wider Australian economy. We have to get it right. Social media giant Facebook continues to wring the most out of the travel value chain, with an initiative allowing airlines to target prospective travellers even before they search a particular booking website or app. The new “Flight Ads” solution tracks Facebook user intentions, detecting any plans to take a trip and allowing relevant advertisements to be served to them, even before they decide on a final destination. Facebook Australasia’s head of travel, Paul Nahoun, said it was important for travel advertisers to reach the right people with the right message, personalised depending on where they are in their decision journey. He said testing of the platform by Air France in the USA had boosted search traffic to the carrier’s website, and lowered the cost per search by 66%. 12 travelBulletin OCTOBER 2018
Global push for virtual cards The World Travel Agents Associations Alliance (WTAAA) has urged airlines to look beyond “blanket payment “ policies” and consider allowing the use of new, lower- cost virtual credit card options for settlements with travel agents. A statement issued by WTAAA chair Otto de Vries from the Association of South African Travel The result is Agents suggests a “more holistic view must be taken... that airlines instead of simply saying ‘no’ to card payments because of the perceptions around cost”. and other De Vries noted that IATA’s NewGen ISS and parts of the Transparency in Payments initiatives (travelBulletin travel value July 2018) aim to address the changing payment environment and reduce risk – but the “one dimensional chain are approach” has only focused on a single virtual card type missing out on as being representative of all virtual cards. ”Rather than the benefits encouraging commercial discussions, this has inhibited them. The result is that airlines and other parts of the that other low travel value chain are missing out on the benefits that cost virtual other lower cost virtual cards offer,” he said. cards offer same goes for travel agents... they no longer have to take ” The WTAAA chair noted that currently billions of on the risk of forward-dated travel, thanks to chargeback dollars are settled between travel agents and other protection they can draw on should an airline fail”. travel suppliers using systems that offer all of the “If the airline industry is truly behind a new generation risk-mitigation aspects desired by NewGen ISS but in a of payments, cards need to be directly in the conversation “modern way”. De Vries said the use of virtual cards by and simplicity needs to prevail, rather than further heavy- travel agents mean airlines are guaranteed to receive handed costly compliance that serves no real purpose,” 100% of their funds within a matter of days. “And the De Vries concluded.
Cover The million dollar The recent corporate reporting season for publicly listed companies has seen some record results, with many businesses in the travel and tourism sector rewarding shareholders with strong performances, dividends and share price increases. But how have the leaders of these organisations fared this year when it comes to their own personal remuneration? Bruce Piper delved into the data to work out who the travel and tourism industry’s top earners were in 2017/18. The 2018 Million Dollar Club 1. Graham Turner Flight Centre CEO $24,891,709 2. Alan Joyce Qantas CEO $11,475,335 3. Jamie Pherous Corporate Travel Management CEO $8,109,756 4. Chris Luxon Air New Zealand CEO (NZ$) $4,963,118 5. Andrew Burnes Helloworld CEO $4,494,618 6. Cinzia Burnes Helloworld executive director $4,455,672 7. Gareth Evans Jetstar Group CEO $4,072,319 8. John Borghetti Virgin Australia CEO $4,015,700 9. Tino La Spina Qantas CFO $3,537,292 10. Andrew David Qantas CEO domestic $3,536,959 11. Lim Kim Hai Regional Express Executive Director $3,465,540 12. Lesley Grant Qantas CEO Loyalty (to 31 Oct ‘17) $3,268,302 13. Melanie Waters-Ryan Flight Centre COO $3,084,520 14. Chris Galanty Flight Centre EGM Europe & South Africa $3,073,203 15. John Guscic Webjet managing director $2,998,537 14 travelBulletin OCTOBER 2018
club 16. Luke Trouchet Apollo Tourism and Leisure ceo $2,955,992 17. Karl Trouchet Apollo Tourism and Leisure cfo $2,812,131 18. Unnamed Air NZ exec ?Jodie King (chief people officer) $2,810,000 19. Dean Smith Flight Centre EGM The Americas $2,680,432 20. Olivia Wirth Qantas CEO Loyalty (from 12 Feb ’18) $2,544,874 NOTE 21. Unnamed Air NZ exec ?Cam Wallace (chief commercial officer) $1,990,000 22. Unnamed Air NZ exec ?Bruce Parton (chief operations officer) $1,810,000 To put the salaries of the top execs into real 23. Adam Campbell Flight Centre CFO $1,784,751 terms, this chart shows 24. Jane Hastings Event Hospitality ceo $1,682,959 how many private jets each one could buy with 25. Unnamed Air NZ exec ?David Morgan (chief flight ops officer) $1,630,000 their 2017/18 earnings. 26. Laura Ruffles Corporate Travel Management COO $1,585,988 The cheapest private 27. Alison Webster Qantas CEO Int’l (from 01 Nov ’17) $1,552,835 jet costs just under $3 million Australian dollars 28. Robert Sharp Virgin Australia Group Executive $1,437,393 (called the Cirrus Vision 29. Matthew Duff Event Hospitality commercial director $1,111,599 Jet), and can carry five adults non-stop between 30. Gregory Dean Event Hospitality finance director $1,006,051 New York and Dallas. travelBulletin October 2018 15
Cover F ancy a new Lamborghini, Tesla or tourism companies have their packages came in 13th on the Million Dollar Club even a Bugatti supercar? How about weighted towards driving performance in list with a total package of just over $3 a private jet? Such aspirations are terms of improving shareholder returns, million – just ahead of FCTG executive gm beyond the wildest dreams of many and so it’s only right that if they achieve Europe Chris Galanty and Dean Smith, who of us, but for the top earners in or exceed targets they are rewarded for heads up the Americas for Flight Centre, the Australian travel and aviation sector they doing so. 2017/18 produced some bumper who earnt $2.6 million. As well as good are easily achievable realities. Based on the outcomes which were reflected in short base salaries and bonuses, most of the now publicly released remuneration reports and long-term incentive payouts – but as Flight Centre top earners also reap rewards which every public company must include in in previous years, the executives who also from the company’s Business Ownership its reporting, it has been a pretty good year happen to be major shareholders are the Scheme (BOS) where they hold convertible all round, and senior executives have reaped ones who are most likely to be out shopping notes reflecting the performance of particular the benefits both in terms of their base for a new Gulfstream. business units. There’s also a further bonus salaries and bonuses, not to mention those scheme to incentivise them to stick around, all-important dividends. Travel agent top “ Every company on the Australian Stock Exchange must include a formal earners Remuneration Report in its annual report to Flight Centre has had a cracker of a year. shareholders. The document is required to Although the company’s share price has ...the executives who detail payments to the company’s directors recently dipped from record levels, the also happen to be as well as to designated “key management powerhouse surpassed just about every major shareholders are personnel” and include everything from base target in 2017/18, achieving profitability salary to bonuses, to share based incentives in all regions, an 8.5% increase in Total the ones who are most and even superannuation and travel fringe Transaction Value to almost $22 billion and a likely to be shopping benefits. Some fairly strong glasses are 14.5% increase in net profit after tax to $264 for a new Gulfstream... ” required to comb through the fine print, but million. With results like that it’s no wonder the effort is worth it, with the reports making that cEo Graham Turner once again came in for fascinating reading. The information at the top of this year’s travelBulletin Million generally details how salary packages are Dollar Club. Including bonuses his salary calculated, and gives an insight into how the package was a somewhat modest (if you with extra BOS payments based on their chiefs are incentivised to perform. There are can call it that) $1.43 million – but the hefty length of service. a few juicy nuggets in some cases too, such $1.54 per share dividend payout saw his At Helloworld Travel it’s a similar story, as details of sign-on bonuses, redundancy total income soar to almost $25 million, an although not quite on the same scale. The payouts and extra payments for relocation. increase of about 15% on the prior year. top earners are ceo Andrew Burnes and Most of the designated “key management Other Flight Centre executives did well too. executive director Cinzia Burnes, who are personnel” in Australia’s listed travel and Chief operating officer Melanie Waters-Ryan also the company’s largest shareholders. Travel Agent top earners (top 15) Name Company Base salary Other payments Share incentives Total salary Dividends Total income Graham Turner Flight Centre managing director $654,951 $762,615 $0 $1,417,566 $23,474,143 $24,891,709 Jamie Pherous Corporate Travel Management MD $460,319 $274,837 $0 $735,156 $7,374,600 $8,109,756 Andrew Burnes Helloworld ceo $480,000 $28,620 $0 $508,620 $3,985,998 $4,494,618 Cinzia Burnes Helloworld executive director $480,000 $28,620 $0 $508,620 $3,947,052 $4,455,672 Melanie Waters-Ryan Flight Centre chief operating officer $674,957 $595,719 $1,735,727 $3,006,403 $78,117 $3,084,520 Chris Galanty Flight Centre EGM Europe & Sth Africa $547,057 $252,275 $2,270,788 $3,070,120 $3,083 $3,073,203 John Guscic Webjet managing director $850,000 $590,938 $785,789 $2,226,727 $771,810 $2,998,537 Dean Smith Flight Centre EGM The Americas $812,501 $541,668 $1,322,114 $2,676,283 $4,149 $2,680,432 Adam Campbell Flight Centre CFO $840,821 $626,431 $314,983 $1,782,235 $2,516 $1,784,751 Laura Ruffles Corporate Travel Mgt COO $588,219 $955,244 $0 $1,543,463 $42,525 $1,585,988 Chris Thelen Corporate Travel Mgt CEO Nth America $579,524 $222,776 $0 $802,300 $70,956 $873,256 Steve Fleming Corporate Travel Mgt CFO $486,417 $353,082 $0 $839,499 $9,047 $848,546 Larry Lo Corporate Travel Mgt CEO Asia $501,051 $312,268 $0 $813,319 $33,996 $847,315 Shelly Beasley Webjet group COO $495,287 $216,077 $49,267 $760,631 $33,202 $793,833 Michael Burnett Helloworld CFO $450,000 $20,757 $128,333 $599,090 $90,000 $689,090 16 travelBulletin OCTOBER 2018
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