This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
The Magazine On The Business Of Travel. Like It?
Etihad Airways (Etihad) will temporarily suspend all flights to, from, and via Abu Dhabi following a decision by the National Emergency Crisis and Disaster Management Authority, and the General Civil Aviation Authority (GCAA), to suspend all inbound, outbound, and transit passenger flights in the UAE. This decision has been made to limit the spread of the COVID-19 novel coronavirus and to protect citizens, residents, and international travellers.
The suspension of flights to and from Abu Dhabi International Airport will commence at 23:59 (UAE local time) on Wednesday March 25, and will last for an initial 14 days, subject to further directives by the relevant authorities. Cargo and emergency evacuation flights are exempt and will continue.
Tony Douglas, Group Chief Executive Officer, Etihad Aviation Group, said, “These are unprecedented times and unprecedented decisions are being made by governments, authorities and companies, including Etihad, to contain the spread of the coronavirus and to help minimise its effects around the world. We stand with our loyal customers, who are having to endure disruption and inconvenience to their travel and their daily lives, and we dedicate all our efforts and resources to ensuring we do all we can to assist them with their travel planning during this challenging period. As the national airline, we stand in full support of the UAE government’s decision and are confident that we’re well prepared to weather the commercial and operational impact this suspension will have on our services.”
Etihad Airways continues to follow UAE and international government and regulatory authority directives and is applying a contingency plan to assist affected customers. The airline will announce the resumption of services through its usual channels once restrictions are lifted.
With COVID-19 spreading pan India, travel, tourism and hospitality industry is set to witness a massive unemployment in the sector. According to FAITH, “As a result of this pandemic, Indian Tourism industry is looking at pan India bankruptcies, closure of businesses and mass unemployment. It is believed that around 70 per cent out of a total estimated workforce of 5.5 crores (direct and indirect) could get unemployed (~ 3.8 crores). This effect of job losses and layoffs has already begun throughout the country.”
As per the latest report by WTTC the global travel could be adversely impacted by up to 25 per cent in 2020. This is the equivalent to a loss of three months of global travel. This could lead to a corresponding reduction in jobs of between 12 and 14 per cent.
Commenting on the situation, Rajeev Kohli, Joint MD, Creative Travel and President of Euromic, said, “The situation emerging out of the COVID-19 is quite grave on the health of the Indian travel fraternity. Business has come to a zero. I respect and agree with the move taken by the Government on stopping the visas. But I do believe that government needs to come out with a rescue plan for the Indian travel trade by providing working capital with no interest, moratorium on all loans for the next six months. he govt needs to come with some measures otherwise Indian travel industry will collapse and they would end up with a lot of non-performing assets on the banking sector. We have lost 30-40 per cent of the inbound business for the year. If things do not turn around in the next 6-8 weeks, we will lose out another 30-40 per cent of the inbound business.”
Jyoti Mayal, President TAAI, said that there is a zero business. “90 per cent of the cancellations are coming from airlines. We are doing US$29 bn of forex earnings and we expect 50 per cent hi. IATA agents are booking Rs. 1300 cr in a month and if it continues for 3-4 months, it will be a huge loss for the industry. It will take time even after the situation gets normal for the revival. Cruise business is badly hit. China, South East Asia and Europe will take longer time to revive. This is a huge setback for the industry. We have sought a lot of exemption and relief from the government and waiting for a favorable support,” she added.
Subhash Goyal, Chairman, ASSOCHAM Tourism and Hospitality Council and Honorary Secretary of Federation of Association in Indian Tourism and Hospitality, says that the total tourism business in India is estimated at US$28 bn including Rs 2 lakh crore in domestic tourism activity. “We have lost about 15 lakh foreign tourists in the month of March and April and we are not sure of the future business. Tourism industry will go into big loss of Rs 15,000 crores of foreign exchange. This has cause lot of our members business going into big losses and some small companies are on the verge of closing their business as they are not in the position to meet the expenses and survive. Hence, we have requested Hon’ble Prime Minister, Finance Minister directly and through the Tourism Minister for a bail out package for the travel and tourism industry,” Goyal said.
The National Restaurant Association of India (NRAI) has urged the government to support the industry amidst the Coronavirus outbreak. NRAI has requested the government to relax certain rules and regulations in dire times when COVID-19 is fast spreading across the world. The onslaught of coronavirus has taken the world by storm and has brought the economy down on its knees. "Looking at the current scenario, what people are going through is much more serious and they need all the support. Though these are testing times for the Industry, it is secondary amidst the circumstances. However, we will definitely need the support from the government once everything is under control and we are ready to bounce back,” Arjun Raj Kher, Brand Head, Hitchki and Bayroute said.
Aviation industry is also badly hit as all international flights have been cancelled and domestic flights are also being curtailed. According to CAPA (Centre for Asia Pacific Aviation India) "The new advisories and restrictions that are being announced every day, along with the Indian government urging people to avoid all non-essential travel, demand is expected to weaken substantially, with a drop of 40-50 per cent or quite possibly even higher being possible in the near-term, as is being seen in other markets."
Amidst the Covid-19 pandemic, countries have shut borders, issuing visas and welcoming any travellers temporarily. This scenario has drastically reduced the demand for air travel. The aviation players globally are now cutting its capacity bases on alarmingly low seat factors and travel restrictions.
Singapore Airlines (SIA) is suspending additional services across its network and the airline will operate only 50 per cent of the capacity that had been originally scheduled up to end-April. Given the growing scale of the border controls globally and its deepening impact on air travel, SIA expects to make further cuts to its capacity.
Goh Choon Phong, CEO, SIA, said, “We have lost a large amount of our traffic in a very short time, and it will not be viable for us to maintain our current network. Make no mistake – we expect the pace of this deterioration to accelerate. The SIA Group must be prepared for a prolonged period of difficulty.”
Cathay Pacific and Cathay Dragon carried a combined total of 1,008,644 passengers in February 2020, or 4,735,301,000 RPKs (revenue passenger kilometres), a decrease of 54.1 per cent when compared to February 2019. Passenger load factor decreased by 28.6 per centage points to 53.1 per cent. The airline is set to reduce capacity by 90 per cent.
Ronald Lam, Chief Customer and Commercial Officer, Cathay Pacific Group said, “We are facing an unprecedented challenge as the COVID19 pandemic continues to cause widespread disruption to our operation and business. In February alone, we made a significant unaudited loss of more than HK$2 billion at the full-service airline level (Cathay Pacific and Cathay Dragon). We have already announced around 65 per cent passenger flight capacity reduction for March. Given the expected further drop in travel demand we are planning to only operate a bare skeleton passenger flight schedule for April, which represents up to 90 per cent capacity reduction. If we do not see a relaxation of travel restrictions in the near future, we expect the same arrangement will have to continue into May.”
Also, Lufthansa has reduced flight schedules of its passenger airlines for the period from March 29 to April 24. The flight cancellations will be implemented successively in the booking systems, and affected passengers will be informed of the changes and rebooking options as of today.
A statement from Lufthansa said, “For all passenger airlines in the Group, a total of 23,000 flights must be cancelled. Further cancellations are expected in the coming weeks. The capacity adjustments mainly affect Europe, Asia and the Middle East.”
Also, Austrian Airlines from the Lufthansa Group will temporarily suspend scheduled flight operations as of March 19, 2020. Initially Austrian Airlines will cancel all flights until March 28th 2020, and passengers who have booked a flight with Austrian Airlines during this period will be rebooked on other airlines if possible.
Overall, the Lufthansa Group's seating capacity on long-haul routes will be reduced by up to 90 per cent. A total of 1,300 weekly connections were originally planned for summer 2020.
Carsten Spohr, Chairman of the Executive Board of Deutsche Lufthansa AG, said, "Now it is no longer about economic issues, but about the responsibility that airlines bear as part of the critical infrastructure in their home countries.”
Air New Zealand has decided to further reduce capacity across its network. On its long-haul network, Air New Zealand will be reducing its capacity by 85 percent over the coming months and will operate a minimal schedule to allow Kiwis to return home and to keep trade corridors with Asia and North America open.
Greg Foran, Chief Executive Officer, Air New Zealand said, “The resilience of our people is exceptional and I am consistently amazed by their dedication and passion for our customers. We are a nimble airline with a lean cost base, strong balance sheet, good cash reserves, an outstanding brand and a team going above and beyond every day. We also have supportive partners. We are also in discussions with the Government at this time.”
Finnair is set to cut capacity by 90 per cent from April 1, maintaining what it calls "critical air connections for Finland". As of April 1, Finnair will temporarily operate only approximately 20 routes and will start transitioning to the limited network immediately, cancelling between 1,500 to 2,000 flights by March 31.
Topi Manner, CEO, Finnair said, “The coronavirus epidemic has decreased air travel dramatically, but we want to maintain the most critical air connections for Finland also in this exceptional situation. We continue to follow the situation closely, adding routes and frequencies to the traffic program as demand returns. We are extremely sorry about the disruption and uncertainty the situation is causing to our customers and their travel plans. In this situation, the capacity cuts are unavoidable – we cannot fly customers in a situation where we may not be able to fly them back home.”
United Airlines has announced that due to the continued drop in travel demand as a result of the COVID19 outbreak and government mandates or restrictions in place prohibiting travel, the airline has cut its US and Canada schedule in April by 42 per cent and its international flights by 85 per cent.
A statement from United Airlines said, “However, it should be noted that this is a rapidly changing situation and the airline is closely monitoring demand as well as changes in state and local curfews and government restrictions across the U.S. and will adjust its schedule accordingly throughout the month.”
Virgin Atlantic will reduce its schedule by approximately 80 per cent in terms of flights per day by March 26th. The move comes following a rapid acceleration of the impact of Covid-19 on global aviation and tourism. As a direct consequence Virgin Atlantic said it would be grounding three quarters of its fleet by the end of the month.
A statement from Virgin Atlantic said, “At points in April this could go up to 85 per cent. The situation is deteriorating at pace and the airline has seen several days of negative bookings, driven by a huge volume of cancellations as customers choose to stay at home.”
Further updates to continue....
The Indian hospitality industry had witnessed a steady growth with a healthy demand in 2019. On an average, the industry also witnessed a positive growth in ARRs in 2019 and were hoping for a positive year ahead. Coronavirus pandemic has played a spoilsport in the early quarters for the industry. Despite challenges industry see a ray of hope that more Indians will now look at domestic travel.
Speaking about the impact Ajay Bakaya, MD, Sarovar Hotels and Resorts said, “For the immediate quarter, growth number in terms of occupancies and revenue will see a dip. We are looking at the positives too. Every disaster throws up fresh opportunity. Reducing outbound travel from India means more Indian will holiday within our shores. Ditto for destinations weddings. Sarovar’s significant dependence (70 per cent), on its business hotels- with an 80:20 India: foreign mix means we are somewhat shielded from the impact of any future reduced inbound travel. Importantly, we’ve gone throw a successful 19-20 winter season. We are optimistic COVID-19 would be overcome before the onset of 2020 winter season.”
The luxury segment is one of the most affected during these times, as this segment is fairly dependent on the inbound traffic.
Jaideep Dang, Managing Director- Hotels & Hospitality Group, JLL said, “Business-wise, it will likely have an impact on the hospitality sector, especially on luxury hotels. Luxury chains have about 60-65 per cent foreign travellers in their total guest composition and a large chunk of their business will potentially be impacted this season. Luxury hotel rates are also likely to decline in both quarter one and two as result. A full rebound may take time, but we could see some recovery signs in the third quarter depending on the wider situation. Mid-scale brands on the other hand, derive more business from local tourists but even for those chains two quarters are going to be challenging as domestic travel restrictions come into force. Occupancies will be hit for sure but given the fluidity of this global situation, assessing the impact is a challenging proposition.”
Most of the domestic locations has been hit severely with as high as double digit degrowth. The ground reality remains that due to temporary panic situation leisure travel has become negligible and corporates have started avoiding inessential travel.
Punish B Sharma, Vice President – Operations, The Fern Hotels & Resorts said, “COVID-19 has had an undeniable impact on the Indian hotel industry, which has so far seen a dip in occupancy levels of about 17 per cent on average. However, the industry will revive itself gradually and be back on track once the ongoing pandemic comes to an end. The announcement of an official global pandemic, cancellations of global travel marts, sporting events; now cancellation of Indian entry visas has only added the impact. The situation remains dynamic, changing almost by the hour, making it hard to quantify the actual impact on our business and industry at large.”
He further added, “Domestic tourism is also affected as people are taking precautions in travelling either domestically or internationally, avoiding crowded areas and staying close to home. The corporate segment has restricted both international as well as their domestic travel, allowing their staff to travel only on essential business, if at all. Some leisure travellers are beginning to take advantage of special deals for staycation experiences and people are still going outside for meals, so there is some domestic traffic still moving.”
Whereas some players feel that the impact is short-lived, and this temporary phase will fade out soon. The further quarters are expected to be business as usual.
Roop Pratap Choudhary, Managing Director, Noor Mahal added, “The coronavirus outbreak has certainly impacted outbound travel, but domestic tourism is slightly affected, and the impact is temporary. This impact will also fade away as travelers are gradually picking domestic travel and staycations over international travel. There is no long-term impact on the Indian luxury hospitality segment. Also, with the shift in focus towards domestic tourism, there is a huge opportunity for independent hotel brands and boutique hotels in less explored destinations to shine. As people are avoiding air travel, exceptional properties in and around key metro towns of the country are in demand. At Noor Mahal, we have witnessed no decline in wedding bookings or staycations. Although MICE segment is experiencing the heat and we expect it to gear up for the next two months.”
Elliott L. Ferguson, II, President and CEO, Destination DC and National Chair, U.S. Travel Association speaks about changing perception about Washington DC
Destination DC recently organized successful roadshow in New Delhi, Mumbai, and Chennai. India is now Washington DC’s third largest overseas market with a doubling of arrivals in last five years with 117,000 visitors in 2018 which accounts to a market share of 8.5 per cent.
How would you explain the overall performance of the tourism in 2019?
There was a lot of ups and down in 2019 but overall the international outlook to Washington DC and the USA continue to remain strong. While some markets were down, others rebounded. China is our number one market and there was some slippage. We have data for 2017-18 as of now, but all indications for 2018-19 were optimistic and there has been a lot of rebound in some of the key markets. India is our third largest inbound market and we did see a slight slippage from 2017 to 2018. However, there has been strong growth from India market in the last five years. There is a lot of interest in the India market to travel to the US. We are here to include Washington DC as a part of the Indian itinerary.
Initially, there was a perception that Washington DC was all about museums. How the ‘DC Cool’ campaign has helped change the opinion of travelers?
Washington as a city is perceived as a day trip destination. Travelers wanted to take a picture in front of the White House and visit one museum. The reality is we have 16 free museums. The whole DC Cool campaign was created to focus on the other aspects of what we offer which may not resonate so easily such as nightlife, theatres, sporting events, restaurants, shopping, outdoor activities, etc. The latest innovation of the campaign is ‘Discover the Real DC’, which allows us to take DC Cool to another level.
Last year, there was a slight slippage in inbound to US. You recently launched ‘Stay Local DC’ campaign. Is this a strategy to increase domestic traffic to compensate for inbound decline?
This campaign is to attract people who are local and living in a close radius. We are looking to influence people to take advantage of lower hotel rates and enjoy sporting event, concert, theatre and want people to take a vacation at home. The campaign was launched in January and tied to the months where tourism is significantly slower. The campaign works well for us as it has been received very well. We had a campaign in February earlier during Valentines, that was the Date Nights DC, which has been revamped.
As a destination, have you added any new attraction or introduced any new festival?
We are excited about two new memorials and two museums. We have a new memorial to celebrate the accomplishments of President Dwight Eisenhower which will open this year. Another memorial in front of the American Indian Smithsonian Museum, which is to celebrate the efforts by the American Indian community during the global wars. We have two new museum, The Children’s Museum and The Planet Word Museum. Also, the metro system which runs across DC, will expand to Dallas Airport. Those who are flying Air India, can come easily and cost effectively by Metro to downtown Washington within an hour.
US witnessed a decline of close to 1.5 per cent in arrivals last year. Experts feel that it’s a result of the so called ‘Trump Slump’. What is your take on this?
People make decisions for variety of reasons. There was an economic slowdown in many countries. In UK, we saw decrease when Brexit was announced. With a lot of political turmoil and economic issues in Brazil, we saw a downturn, but now we see a change in pace of the visitation. Some of it can be tied to politics, but lot of it is other variables. Currently, the Canadian Dollar is weaker than US Dollar, which is bad for tourism as it is not much affordable due to exchange rate. Interest remains, we market our efforts through Brand USA to make sure that the global community travels to the USA.
Earlier, a lot of destinations from USA were aggressive in their promotions in India, but now there has been a slowdown in their approach. Is India not an attractive market anymore?
We all have to take very conscious decisions when there is a downturn in visitation in certain markets. A lot of the funding are tied to hotel taxes, if these taxes are not generated, we have to make temporary cuts. I say temporary as Brand USA sees the value of being relevant in India market and those destinations must have perhaps decided to focus on domestic travel for whatever reason and specific markets will be back. We all are waiting to see what happens to the economy here and want to benefit from how the Indian traveler is more and more travelling outbound. The process of obtaining visa has to be easier. The options in terms of flights has to be there.
As the US Presidential Elections are around the corner, as an industry leader what are your three major demands from your future Government?
Specifically, we want the process of receiving a visa to become more seamless, we want a focus on long term visa as we now have in Brazil and China for certain markets. We would like the Government to focus on visa waiver countries. We want more focus on infrastructure from transportation, airports to roads and public transport. All administration understands the importance of tourism, but we want them into conversations and narratives from our elected representatives for 2021 and beyond.
Goa witnessed a modest growth in 2018. The state welcomed 8.01 million tourists (0.93 mn overseas) in 2018 as compared to 7.78 million tourists (0.89 mn overseas) in 2017. The destination is on a mission to increase the inbound traffic and touch one million in 2019.
However, Goa’s travel and tourism industry questions these numbers and urges the government to have a better mechanism in place. Savio Messias, President, Travel and Tourism Association of Goa (TTAG), feels that these numbers may be misleading as currently these figures also include the VFR and NRI segment who are not tourists. “There is no way we can accept these figures reported by the tourism board as there is no proper study conducted. We need to do a systematic study of over a period of at least three months of all routes like railways, roads, airlines and see what the footfall is. We have to separate tourists from the VFR and business travellers. We need Government support to do this study,” Messias said.
Goa has witnessed de-growth in the charter business over the last couple of years. In 2016-17, the destination welcomed 988 charter flights with 232,679 arrivals, which in 2017-2018, was stagnant with 981 flights with 247,365 tourists. In 2018- 2019, the destination has drawn only 813 charters with 218,776 travellers.
“Currently the only accurate figures we have are of the charters. The charters have been declining in the recent years. Government needs to give some incentives to charters. Our Neighbouring countries like Sri Lanka compensate for every unsold seat, some countries subsidise the visa cost, airport tax or offers reduction in landing rates, etc. Charter companies need such incentives to survive. Furthermore, the Thomas Cook UK closure is a big blow for us in terms of the charter business,” Messias added.
Today, the travel and tourism industry in India is majorly driven by the domestic tourism. Messias sees a need for a mix of both domestic and inbound tourists for tourism to sustain in Goa. “Domestic market is doing very well, but we need inbound tourists. We cannot deny the fact that domestic tourists started coming only due to the foreign tourists. We need a mix of both to sustain our tourism. Government has to take some control on the domestic front to further boost arrivals. I feel that domestic tourism is somewhat driving away the international footfall who come to Goa just to relax and unwind,” he further added.
The hospitality industry in the state has also witnessed stagnation in Average Room Rate (ARR) in last couple of years. In Goa, the branded chains and upscale hotels have witnessed growth due to MICE and weddings business. But overall there has been a slowdown.
“The real estate in Goa is a booming sector and a lot of people have invested in villas and big houses. Today, they are renting these villas through aggregators and disruptors, which in a way is threat to the industry. The ARR has gone down in the lower segment hotels; the upper segment has been stable as they are more focused into MICE and weddings,” he informed.
As a new offering in their product portfolio, Goa has started promoting medical tourism to the state. The state has been successful in promoting its wellness tourism over the years. “We have been talking about medical tourism, but it won’t happen for many years. We first need to improve our infrastructure. The kind of hospital, services and facilities must be upgraded. Goa can be a very good destination for wellness tourism. But, for medical tourism, we have strong competition like Maharashtra, Kerala and Karnataka in our neighbourhood,” he opined.
Qatar National Tourism Council (QNTC), which opened its office in India last year, has witnessed a growth of 20 per cent in 2018. The destination has witnessed a slight dip in arrivals in 2019, but looks to achieve its numbers by the year end. With a large Indian expat population, Qatar has been a popular destination amongst the VFR segment.
“India is a key source market for us, and our commitment to the market is evidenced by the opening last year of a dedicated office to tailor our offerings to this market. Visitor numbers in 2018 grew by 20 per cent from the year before, while 2019 has seen a dip. We are also home to a large expat population from India, so we have existing ties which we continue to nourish. Qatar and India have historical ties as well. The Indian market thus remains important for Qatar, and short travel times as well as a host of offerings in hospitality, retail and beyond, aligned with Indian visitors’ preferences,” Rashed AlQurese, Chief Marketing & Promotion Officer, QNTC, said.
With an increase in awareness about the destination in India, Qatar is now looking to tap the luxury travellers segment from India. Qatar also is home to some of the finest MICE venues in the region, and is now keen to target Indian MICE.
AlQurese added, “Historically, most Indian visitors to Qatar have been visiting friends and relatives. When we opened our office, our intent was to expand this segment apart from growing the FIT and leisure visitor segments. In particular, we target those seeking to experience Qatar’s luxury hospitality and unique cultural offerings. We work closely with Indian event planners and business events professionals to build awareness of Qatar’s growing portfolio of cultural, hospitality and MICE products and services for both business and leisure travellers. With 128 properties in the luxury and affordable luxury space, and visa free entry for Indian citizens, we are witnessing increasing interest from Indian planners looking for a novel destination to host their events.”
Also in the recent years, Indians are looking for unique destinations to tie nuptial knots; Qatar has been one of the new destinations in this segment. “We have seen great interest in Qatar as a wedding destination. A couple looking to tie the knot in magnificent ballrooms or against a backdrop of manicured vistas will find whatever they want in Qatar’s hassle-free locations which regularly cater to clients who have an appetite for modern luxury, grand entertainment and mouth-watering delights,” he added.
The year 2019 has been the Qatar-India Year of Culture, and throughout the year, Qatar hosted several cultural events. There was an AR Rahman concert, followed by a summer-time Bollywood musical show as well as the South Indian International Movie Awards (SIIMA) and numerous exhibits featuring Indian artefacts and artists.
Speaking about the new products for India market AlQurese said, “Some of the major projects that were opened this year are the National Museum of Qatar, Doha Metro and a revamped Doha Port that will serve as a waterfront tourist hub. New hotels, attractions, and experiences are under development, making the country an increasingly attractive destination for visitors of all stripes – whether stopover, weekend trips, or long-stay visitors.”
One of the biggest events for the destination is the upcoming FIFA World Cup in 2022. The destination is gearing up and opening new football stadiums and hotels to cater to the global football fans.
Speaking about promotional campaigns for FIFA World Cup 2022, he said, “The previous FIFA World Cups have yielded an average of one million visitors in the host countries, and we are expecting similar numbers. Naturally, there will be promotional campaigns globally, as it is the first FIFA World Cup to be held in the Middle East, and will coincide with the winter holidays. Qatar is also the most compact destination to host the World Cup, with fans being able to access multiple matches in a single day. We expect all these factors will help make this an attractive World Cup for everyone around the region to attend.”
To further make travel seamless, Qatar has opened its visa-free services for 80 countries, including India. “Qatar’s strategic location makes it easily accessible. Qatar’s visa waiver system, which allows citizens of more than 80 nationalities to enter Qatar visa-free, makes the country the most open in the region. Qatar Airways has 102 direct flights connecting 13 major cities in India to Doha to every week, making it easier than ever to travel between the two countries. An additional 100 flights per week connect Qatar and India via the Indian carriers; IndiGo and Air India.”
Travel trade has been a key driver for the tourism growth from India to Qatar. The destination is organising a series of engagement programmes to further connect with the travel trade segment.
“We have a comprehensive engagement plan, with roadshows and FAM trips to raise awareness among the Indian travel trade, along with many initiatives directed at consumer engagement. We also work closely with the Indian media, bloggers and influencers to showcase various facets of our tourism offering and promote the destination through various platforms to drive consumer conversion. Our office in India is responsible for a wide range of promotional initiatives, including workshops, sales visits, travel agent destination training through QNTC’s online Tawash programme,” he added.
Mahesh Iyer, Chief Executive Officer, Thomas Cook India clears misconception, and speaks about the growth and challenges
Promoted by Fairfax Company, Thomas Cook India which has been a separate entity since 2012 has faced heat during the recent downfall of Thomas Cook Plc. However, the group has faced negligible impact during this season.
There has been a negative sentiment in the industry about Thomas Cook India post the collapse of Thomas Cook Plc. How has it impacted Thomas Cook India? What is the current financial position of Thomas Cook India?
Thomas Cook India has got no correlation with Thomas Cook Plc., the company which went to the liquidators on September 21, 2019. We are an independent company since 2012 when Fairfax acquired us. They took a 77 per cent stake in us and continue to be our primary promoter. The only similarity which we have is the sharing of the name ‘Thomas Cook’, which is governed by the Brand Licence Agreement which allows us for the usage till November 2024. We have the luxury of using the brand name at our own will and peril till 2024.
We are a profit making group and we continue to make a profit of over Rs. 100 crore ever year. We generate more than Rs. 250 crore free cash every year. We hardly have any debts in the book. Our cash position as of 30th June was in excess of Rs.1390 crore. We are doing business as usual. We launched our summer products a bit late due to the noise of the Thomas Cook Plc closure in the market. We are quite buoyant about the coming season and stepping into 2020 we see growth.
Fosun has recently acquired the brands of Thomas Cook in perpetuity for close to £11 million, which exclude brands in India, Sri Lanka, and Mauritius as we have the brand licence. We have the first right of refusal when the brand is put up for sale.
Are you planning to unveil a new brand name, as being a different entity the existing brand name can be damaging?
We always had a plan in place to come out with a new brand in our strategy. We were preparing for a transition. Thomas Cook was a well established brand and we wanted to build on that. Also, the customer preferences have been changing over the years and we were toying with the plan of creating a much vibrant, young looking brand. But, what happened to Thomas Cook Plc. got us to think about how to place that game. We have not gone to say that we would change the brand name; we have four to five years to think about it. A little bit of customer confidence has shaken in the market, but Thomas Cook is a 200 year old brand and we would like to milk the brand to our benefit, nothing has gone wrong with the brand. We are paying a small sum of money as royalty fee to use the brand name. There is good brand equity available with us and we would like to use that as much as we can before we come up with new brand.
As Fosun has taken over Thomas Cook Plc. they are very clear about not using the brand name, so I feel the problem has been contained to an extent. We are not worrying as of now. We have some more legroom to plan. We were supposed to unleash the new brand somewhere in mid 2020. Any brand migration is a bit expensive and risky, so we need to weigh our decisions.
Recently, two big names i.e. Thomas Cook Plc. And Cox & Kings have gone down, how is the travel business in general? Do you see a strong negative sentiment in the market?
I think it’s a double edge sword, on one side it bring an issue of trust in the industry. There are negative sentiments, markets are not doing well. Secondly, there were two large brands Thomas Cook UK and C&K, both going under, clearly it kind of puts a question on trust. For, Thomas Cook India, nothing has changed as our partners understand who we are. In the B2C space, we are spreading awareness and letting know consumers who we are and what are we doing. We haven’t seen impact in B2B space, as customers know us very well. In the consumer space, the week immediately preceding the collapse of Thomas Cook UK, did show slowness in demand. I would be a bit sceptical in attributing this slowdown only to the downfall of Thomas Cook UK as there were multiple factors in economy which are also responsible.
But there is a big opportunity I see; now there are only two to three national players in the space, SOTC and Thomas Cook are amongst them. We can now raise the bar in terms product offerings, reducing the discount and increasing the yields of business that we operate. The trust issue is temporary and short lived.
In the current market scenario, do you see an increase in market share or is the business going to smaller players and fragmented segment?
The organised market represents less than five per cent of the overall outbound travel from India, close to 95 per cent of the business is under the unorganised segment including OTAs and other space. In this five per cent space, we can fight for business, but the actual opportunity is that 95 per cent. The cream lies in that space. The slowdown we see and talk is always in this five per cent. As an industry if we work towards growing from five to six per cent, still there is a huge legroom for everyone to grow. There is space and business for everyone to coexist and grow.
India will need 2,380 new commercial airplanes, valued at US$330 billion, to handle the growing demand for air travel over the next 20 years, as per Boeing’s annual India Commercial Market Outlook (CMO).
Speaking about the India market, Darren Hulst, Deputy Vice President, Commercial Marketing, The Boeing Company, said, “India will be amongst the world leaders in aviation sector in the coming years. Over 200 million households will be above US$ 20,000 income by 2035; this rise in middle class is the key for growth. Indian economy will grow by five times in next 30 years and by 2045, India will be the third largest economy. Over 9.2 per cent of Indian GDP is driven by the travel and tourism segment. India is the fastest growing aviation market with a delivery demand of 2,380 aircrafts and a traffic demand of close to eight per cent.”
Globally, aviation sector has maintained a steady growth and Asia has been the centre of growth. Overall, airlines will need 44,000 new aircrafts in the next 20 years with 32,420 single aisle; 2,240 regular jets and 1,040 freighters. Last year, the global fleet size was 28,830 which will almost double in 2028 at 50,660, with half of the aircrafts being used for growth, and rest to replace the existing fleet.
“20 years ago, the concentration of flights was in the North America and Western Europe. Today, Asia market has evolved drastically. Last year, the size has doubled to 110,000 flights per day in Asia. Today, around 12 million passengers board an aircraft every day. In 1988, 1.1 billion passengers travelled by air, in 2019 this number has grown to 2.6 billion. Almost 300 million passengers are added each year. Aviation adds US$ 2.7 trillion to the global economy, supports 65.5 million jobs and 3.6 per cent of the global GDP. The aviation market is resilient, sustainable and productive. Despite global slowdown and slow growth, aviation has grown strongly,” Hulst added.
In India, Boeing serves to Spice Jet, Air India, Vistara, and Jet Airways. Out of the demand of 2,380 planes, the Indian fleet basically consists of large requirement for further growth. Close to 79 per cent of the fleet is for growth and expansion and 20 per cent is for replacement.
Speaking about Jet Airways being grounded and further confirmed orders, Salil Gupte, President, Boeing India said, “Current confirmed orders from India market is for 205, B737 Max aircrafts and six B787-9 aircrafts. Jet Airways going down is a big loss as it was a very important customer for us. But as of now, all our contractual agreements with Jet Airways remain in place. India is the biggest investment for Boeing outside USA in the future. We are committed to the India market and the investment in the eco-system will be continuous.”
One of the interesting insight and a big opportunity to the Indian aviation industry is that currently India serves to only 35 per cent of the overall outbound capacities from India. “Indian carriers are in a very unique place for future. Out of the overall outbound traffic from India, only 35 per cent capacities are served by Indian carriers. Also on the India-Europe routes, only 37 per cent of the traffic is served by Indian carriers, rest of the business is done by foreign carriers. Hence, there is a huge scope and opportunity for the Indian carriers,” Hulst revealed.
Also, the domestic market has tripled in last 10 years and has almost doubled in last four years. In India, the airports served in 2008 were 81 which have grown by 37 per cent in 2018 with a total of 111 airports served.
Maharashtra is set to strengthen tourism infrastructure in the state to further boost numbers. In 2019-20, the state has received a budget of Rs 188 crore to develop the infrastructure and add new tourist amenities.
Speaking about the development, Dilip Gawade, Director, Directorate of Tourism, Government of Maharashtra, said, “In terms of infrastructure development, for the year 2019-20, we have got a budget of Rs. 188 Crore under the regional tourism scheme. We are now processing and strengthening infrastructure, water supply, roads and other necessary amenities in the state.”
Maharashtra Tourism recently hosted a roadshow in Kolkata, to showcase their new flexible packages designed and tailored by Maharashtra Tourism Development Corporation, including their resorts. The state is now looking to enhance their visibility in the domestic market by expanding their outreach by connecting with travel and trade industry across the country.
“We recently organised a roadshow in Kolkata to showcase our product offerings. As a part of our continuous endeavour to promote tourism in the state, we are inviting our brothers and sisters from the East to come and visit the state and be a part of the magnificent experience that the region will offer. Going forward, we will look to organise roadshows in New Delhi and Chennai,” Gawade added.
Maharashtra Tourism has been majorly showcasing tourism sectors like wildlife, beaches, heritage and religious tourism, along with niche sectors like wine tourism which are popular with international tourists.
On the product offerings, he further said, “In Maharashtra, we are looking to promote a variety of region and products. In Vidarbha, Tadoba and Pench, tiger tourism will be our major priority to promote aggressively. We are promoting scuba diving and beaches in the Konkan region. Sahyadri is another region which we have been promoting extensively. We are also looking to popularise our trekking trails such as Kalsubai Peak. Maharashtra has a unique diversity of landscape. We have one of the oldest Crater Lake, Lonar, which is yet to be explored by global travellers. We are now keen on attracting travellers to the Buddhist circuit.”
Also in a recent bid to develop Maharashtra as a world class destination, the newly appointed Maharashtra Chief Minister Uddhav Thackeray recently advised the Tourism Department to draft a proposal for developing a high-end aquarium in Mumbai. The CM also stated that Mumbai is now attracting several foreign dignitaries and investors, and therefore, tourist places in Mumbai needs to be developed, for which a separate action plan needs to be put into place.
The CM also has discussed various tourism concepts, such as sea tourism, night safari in the Sanjay Gandhi National Park, and flamingo tourism. Since Mumbai is surrounded by sea, the minister is majorly focussing on water based tourism activities, which will be implemented in phases. Moreover, existing caves, such as the Mahakali Caves, Kanheri Caves, and Elephanta Caves etc., will also be developed.
Sign up for the T3 Newsletter
02 Nov 2020 To: 04 Nov 2020
19 Aug 2020 To: 20 Aug 2020
22 Jul 2020 To: 23 Jul 2020
28 Jun 2020 To: 01 Jul 2020
22 Jan 2020 To: 26 Jan 2020