Growth, the mantra of any airline business is coming back, the planes are full again and the losses are falling, well not by much, even Singapore Airlines took a reported a net loss of S$159 million ($114.6 million) compared to a net profit of S$324 million a year ago, but that’s good isn’t it…well maybe.
No doubt most all airlines have taken a battering and any news is good news, thank god, but what of Japan Airlines, it is still losing more than ever and is still sinking slowly into the Sea of Japan, Qantas declared a profit before tax of $181 million for the full-year ended 30 June 2009, down 87 per cent on the prior year, but most of that if not all came from its ultra successful Jetstar operations, for the International branch well they don’t want to highlight that portion of the cake.
If you wanted to travel and were one of the few mortals that still had cash or your credit card has some disposable income to dispose of then 2009 was a bumper year for deals and airfares, in fact it was downright amazing, Europe from Australia was only AUS $1600.00, USA AUS $1000.00 or even less, Asia was the same as a few years ago as going to Melbourne to Brisbane, instead it is now Melbourne – Thailand for less, and the Aussies love to travel and the emptynesters have all headed off to Europe, so all in all its been a bonza year, even city hotels have been doing games like “Name your price” for a room and have been filling the discounts with business.
But in all this the result has been good and survivable instead of the downright disaster they were predicting last year, in fact it has been a relatively good year by all accounts, the business sector is next to zero in the planes and in the rooms but the eyes glint of a new tomorrow is when it is certainly going to go back to boom and champagne times of the mid-noughtys.
So the general censorship around the Airline and Hotel boardrooms is “Lets get back to normal”…2010 prices are back to normal and “that is your cricket”…insane profit will be back and we can start those wonderful corporate functions, general freebie’s and tax dodges we missed so much this year and bring them all back again.
There is no doubt that 2009 has been a year of horror to most of the Travel Business, but I love years like this as it gets rid of the free loaders, throw out the over expanded fleets and gets the books back onto an even keel, there is nothing like a good house clear out and general stocktake to make your business feel better, out go the old inefficient planes, fire all the good people who fly or service them, in fact everything that is not useful can go to the tip, and soon the balance sheets will balance and the numbers will stabilise and you are where you are right now thinking “Well it could have been worse, but in fact it worked out for the better in the end”.
“and that brings us back to doe”
I don’t want to throw a bad light on a good moment but…
The general feeling is “well if that GFC was the 1930’s type recession then what were they all complaining about”, we have actually enjoyed our small trip into the deficit and back, in fact we have shopped and travelled like well “no tomorrow”, but the little point not to miss was that the stock exchange did the dive in 1929 but the deepest part of the depression was not until 1932, 3½ years after the sudden shock and awe…why.
The effects are really not felt until the game is played out and people start to run out of savings and cash (or have to cut up their Credit Cards), and the plus point is that all those people who have lost jobs are now lost customers, governments have thrown subsides at anyone who wants them just to keep the economies operating but that has to stop sometime and the above sheer survival of keeping your business afloat by doing he greatest deals of the new century.
So what happens when these three or more things change and you think that things are going so well “its time to put your prices back up”, the effect will be no business and the buoyant optimistic of great profits again will soon go the way of Bernard Madoff, in fact it will be suicidal, the point is Qantas still made a profit of Aus $181 million and shouldn’t get greedy in fact they should be able to hold the fares lower because if they have rationalised their business correctly then they should be saving enough to keep the wolf’s from the door, but they won’t…and that will be the worst decision since sub-prime loans debacle.
Worse the huge alliances of Star, OneWorld, Skyteam et all will band together to push tickets higher as noted by Tim Clark of Emirates Airlines recently, Emirates won’t play that game and that is why they are growing successfully more than anyone in the industry, so you will have higher tickets on one hand and no money to spend in the other, in fact the effect of the GFC will be after the GFC has happened and not while it has happened.
So the reality should be “all hands on the wheel”, in that in 2010 if you can get away with not losing and make a very small operating profit then adjust your fares to match and that way you won’t lose customers and keep flying, but they will put the fares through the roof for the USA/European summer, and you will crash, as like mentioned “it’s too much too soon”.
It has been an interesting year, but no doubt 2010 will be even more so, we have a chance revolutionise the Global Travel industry within the next few years, but greed must be not part of the new model, service certainly, lower costs from both sides even more and if the new model works then the profits will follow, but greed will cause disaster as it is a road to nowhere, and at the moment we are at that crossroads.