The Travel Adviser: 10 things you can take to the bank

The Travel Adviser 10 t

By
September 26, 2009 20:57

The Jewish New Year has begun, the Days of Awe are upon us and Succot is approaching. With that in mind, let me give you 10 items you can take to the bank as we commence the new year. 1. The recession - It's over, ended, kaput. By all standards, most of the world is back in positive growth territory. Though technically it requires two consecutive quarters, or six months, to declare that it has ended, take it to the bank; it's over. 2. El Al's CEO Haim Romano is now a lame duck. Having being fired from his job but with 18 months compensation, he will sit idly at his desk until March. Most airlines tend to promote from within. While the business models may be similar to other companies, the reality is that the aviation industry has a very long learning curve. Bringing in outsiders is a sure way to slow down a company's growth and cause considerable harm to the bottom line. You can bet on it. El Al will not promote from within; it will bring some hotshot from outside the company. He or she will then have to spend several months learning the business. And in an industry which requires foresight and quick decision-making, El Al will flounder. 3. Easy Jet - London based, one of the largest low cost carriers in the world, has decided to enter the Israeli market in November and fly from London to Tel Aviv, one of the most competitive routes to and from the country. El Al, British Airways and BMI already fly six flights a day on this route. In fact prices have never been this low, and the battle between these carriers is fierce. Many readers remember how Thompson Fly was flying last year from London and Manchester to Israel. Notice any planes at Ben-Gurion Airport lately? They gave up operations. Take it to the bank: Easy Jet won't last a year. 4.Continental Airlines - Giddy as a teenage girl at her first dance, it's busy promoting its departure from Sky Team and joining the larger collection of airlines known as the Star Alliance. New kid on the block joins forces with such behemoths as Lufthansa, which owns or controls Swiss, Austrian and BMI. Inside the US it may dwarf US Air and United Airlines and have a strong voice, but here it'll be hard put to match Lufthansa. However, the flying public will not necessarily benefit. When airlines collude, fares tend to go up. Now if they can avoid antitrust laws they'll do their utmost to match fares and permit mixing and matching of cities and airlines. While this may open up more options, be cognizant of the basic rule: There is no such thing as a free lunch. You will pay more. 5. Travelers' loyalty - Airlines and respective alliances do their utmost with their frequent flier programs to build an almost feudal loyalty. Recent surveys have discovered that the vast majority of clients no longer choose their airlines based on frequent flier programs. Leisure clients in particular have voted with their feet, and their luggage, and they now choose airlines based on one overriding factor - price. No longer content to pay a bit more and fly a specific airline, their only concern is the bottom line. This paradigm shift is permanent; "the price is right" will be how most people chose to fly 6. Business travelers - They are the exception to this shift. In fact more and more companies have clamped down on the independent spirit of their workers. They've signed great corporate rates with airlines, hotels and rental cars and are standing firm in insisting that employees travel on the airlines they've chosen, sleep at the lodging they've selected and rent a vehicle from the agency they prefer. They may let you fly business class, but it is substantially less than what it cost just one year ago. Be very clear, for this group it's all about premiere service and good pricing. 7. Airline fees - As the airlines have discovered that they cannot raise fares enough to cover their losses, they've had to get very creative about additional revenue. The International Air Transport Association forecasts airlines will lose $11 billion this year, more than any other time in their history. With leisure clients choosing price over service and business travelers locking in corporate rates, what's left is for the airlines to continue to raise ancillary costs. Checking in bags will cost, reserving a specific seat will cost, using a cellphone will cost. This trend will only increase - keep in mind that the CEO of Ryanair has floated the idea of charging passengers to use the bathrooms on his planes, though he has agreed to give away bottled water on the flights. He wants you to drink up. Make no mistake, they will get you one way or the other. 8. Israeli hotels - While unofficially the recession has ended, unemployment will remain stubbornly high around the world. This would lead to the assumption that the largest factor in the hotel industry, salaries, could be kept down. The result of low costs should in turn keep hotel rates low. Whereas rates in London and New York have dropped more than 30 percent, rates in hotels here remain quite high. Lots of new hotels are coming on-line in the next 12 months, with the majority still overpriced. Take it to the bank, prices will remain high. 9. Incoming tourism - Like Succot springing up right after Yom Kippur ends, incoming numbers will reach new highs over the next 12 months. Group requests, both from North America and Europe, are flooding into travel offices. A small rise on the stock market has customers thinking fondly of a visit to the Holy Land. 10. Mergers and Acquisitions - M & A activities will accelerate in the next 12 months. If your industry loses $11 billion, it's either eat or be eaten. Even a strong low-cost carrier like JetBlue will see Lufthansa increasing its ownership, as rising costs cannot be passed on to the customers. Airlines will flounder this winter, passengers will be stranded and consumer organizations will complain that passenger rights are being abused. Take it to the bank, several airlines will cease operations this year; the conundrum is trying to figure out which ones! The writer is CEO of Ziontours, Jerusalem. mark.feldman@ziontours.co.il


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