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SriLankan Airlines’ new plan to be like Emirates

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In a bid to turn the loss making airline into a profitable venture, SriLankan Airlines has come up with a five-year strategic plan. Part of the plan will see them emulating industry leader Emirates, with a new hub and spoke network model.

In a statement SriLankan Airlines said:

“SriLankan Airlines has formulated a new five-year Strategic Business Plan for the period 2019-24 with the objective of transforming itself into a financially viable organization airline group with high brand visibility and a global reputation for excellence,”

They went on to say that the national carrier had an ‘enormous contribution’ to make to the GDP of Sri Lanka, including import, export and tourism.

What is SriLankan Airlines planning?

Their latest five year strategic business plan includes major development of the Colombo hub to make it a key connecting point for a variety of markets. SriLankan are targeting passengers connecting through Africa, Asia and the Middle East, in a bid to grow as big as rival airline Emirates.

As a member of Oneworld, SriLankan are hoping to leverage their membership to develop their network for the future. In contrast to their current point to point model, they plan to work on more of a hub and spoke model to develop new opportunities.

The plan is to be presented to the Government of Sri Lanka for approval shortly.

New routes and fleet

Currently, SriLankan Airlines operate with a fleet of 27 Airbus aircraft. Specifically, these are 13 A320 family aircraft and 14 A330s. As part of the five year plan, the carrier intends to select new fleet inclusions which match the requirement of their developing route network. They have also said they want to reconfigure their existing fleet to offer an enhanced business class service.

Already, the airline has announced a fifth weekly service between Colombo and Tokyo from July onwards, using its Airbus A330-300s. If the plan is formalized by the government, we expect to see many more new route announcements over the coming weeks.

As well as routes and fleet, the plan specifies that it will:

  • Enhance the customer experience by improving customer-centricity throughout the airline
  • Adopt best practices to improve productivity
  • Grow online sales to reach a wider market in a more cost effective manner
  • Improve employee engagement
  • Implement a competitive cost structure through a greater cost consciousness throughout the company

The plan is being headed up by Group Chief Executive Officer Vipula Gunatilleka, who was appointed to the airline in mid-2018. Prior to joining SriLankan, Gunatilleka was a board member and CFO of TAAG Angola. There, he worked closely with Emirates while they were managing TAAG, so no doubt knows his hub and spoke business very well already.

A loss-making airline

The airline is undergoing a major shakeup with a view to turning a profit. Over the last nine months, the carrier’s net loss more than doubled to a total loss of $135m. It is hoped that the five year strategic plan being tabled today will transform the airline by 2024.

 

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Oxford Economics: Brand USA’s marketing initiatives drove record international visitor spending

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Today, Brand USA, the destination marketing organization for the United States, announced that a study by Oxford Economics shows Brand USA’s marketing efforts are generating a high return on investment (ROI) and driving significant incremental international visitation and spend, which is helping to fuel the nation’s economy. The report shows Brand USA has consistently driven strong results over the past six years, including record results in Fiscal Year 2018 (FY2018) for incremental international visitor spending, tax revenues generated, and total economic impact.

Highlights of the study show Brand USA’s marketing efforts in FY2018 alone (October 1, 2017 – September 30, 2018) helped drive:

• 1.13 million incremental international visitors to the USA who spent
• $4.1 billion on travel and fare receipts with U.S. carriers, and generated
• $1.17 billion in federal, state, and local taxes and
• $8.9 billion in total economic impact, and supported
• 52,305 incremental U.S. jobs

The resulting FY2018 marketing ROI was 32:1—meaning that every $1 Brand USA spent on marketing generated $32 in spend by international visitors.

The study also shows that the cumulative results of Brand USA’s marketing efforts over the past six years (FY2013 through FY018) has helped bring:

• 6.6 million incremental visitors to the USA who spent
• $21.8 billion on travel and fare receipts with U.S. carriers, and generated
• $6.2 billion in federal, state, and local taxes, and
• $47.7 billion in total economic impact, which has supported, on average,
• Nearly 52,000 incremental U.S. jobs each year

The six-year results equate to an average marketing ROI of 28:1.

“International visitation is an important driver for the nation’s economy—benefiting a wide range of industries well beyond travel and tourism,” said Christopher L. Thompson, president and CEO of Brand USA.

According to the U.S. Department of Commerce, international travel to the United States is the nation’s top services export and represents 11 percent of all U.S. exports, contributing a $77.4 billion trade surplus.

“The FY2018 ROI study reinforces the effectiveness of our promotional campaigns and how our efforts are supporting communities and employment throughout the country. The United States provides international travelers more value in its diversity of experiences than any other place in the world, and we look forward to continuing to work with our partners to market the USA as the ultimate travel destination,” added Thompson.

Each year, Brand USA deploys a number of market-driven platforms and programs as part of its mission to increase incremental international visitation, spend, and market share for the United States in order to fuel the U.S. economy and enhance the image of the USA with worldwide travelers.

Brand USA also collaborates with federal partners to communicate U.S. visa and entry policies and correct misperceptions about those policies as required by the Travel Promotion Act.

The Oxford Economics study includes an analysis of Brand USA’s work in nine markets – Australia, Brazil, Canada, China, Germany, Japan, South Korea, Mexico, and the United Kingdom—and also considers the organization’s total impact in other international markets where Brand USA’s marketing was active during the year via consumer, trade outreach, and cooperative marketing programs.

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U.S. Travel honors its 2019 Travel Champions

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The U.S. Travel Association on Wednesday announced the recipients of the sixth annual Distinguished Travel Champion Award: Sen. Catherine Cortez Masto (D-NV), Chairman Peter DeFazio (D-OR), Sen. Rob Portman (D-OH), Rep. Tom Rice (R-SC) and Acting Under Secretary of State for Economic Growth, Energy, and the Environment Manisha Singh
Each is being honored for his or her exceptional leadership in advancing and protecting policies that strengthen travel to and within the United States.

U.S. Travel will present the awards today at U.S. Travel’s Destination Capitol Hill—the travel and tourism industry’s premier legislative fly-in event dedicated to educating policymakers about the power of travel and showcasing the industry as one of America’s most vital economic sectors.

“We always say that travel is neither a red or blue issue,” said U.S. Travel President and CEO Roger Dow. “This year’s Distinguished Travel Champions have a deep understanding of travel’s contributions to the American economy, and have consistently reached across the aisle to advance sensible policies that grow travel, enhance security and trade, and keep our economy moving.

“Our winners’ dedication to securing Brand USA’s long-term reauthorization, overhauling America’s infrastructure systems, preserving our national parks, rebranding and expanding the Visa Waiver Program, and upholding our nation’s Open Skies aviation agreements strengthen travel’s role as job creator and economic engine.”

Sen. Catherine Cortez Masto (D-NV)

Since entering Congress just two years ago, Cortez Masto has quickly become an advocate for the travel industry and a top congressional champion of Brand USA. Her tireless work and dedication to ensuring the reauthorization of Brand USA, a program crucial to the United States’ travel promotion and planning, is invaluable.

Said Cortez Masto: “I’m honored to receive the 2019 Distinguished Travel Champion Award. I say it all the time, Nevada is the gold standard for tourism and hospitality. We draw tourists to the Las Vegas Valley and from the pristine waters of Lake Tahoe to the scenic peaks of the Ruby Mountains. I’m so proud to support our $60 billion tourism economy and the jobs it supports in Nevada. As Senator, I’ll continue to fight for policies like Brand USA and those to increase efficient travel that strengthen our tourism industry for years to come.”

Chairman Peter DeFazio (D-OR)

DeFazio’s commitment to overhauling infrastructure systems within our country is crucial to increasing connectivity and facilitating travel growth across America. He has also undertaken laudable efforts to end the practice of diverting “9/11” security fees to other programs unrelated to air travel security.

DeFazio’s dedication to his home state’s $11.8 billion travel and tourism industry is commendable, as is his work to ensure local travel leaders have a voice in the state’s transportation planning.

Said DeFazio: “I am proud to be this year’s recipient of the U.S. Travel Association’s Distinguished Travel Champion Award. Travel and tourism promote economic prosperity, create jobs, and strengthen our national security through improved international relations. As Chairman of the Transportation and Infrastructure Committee, I am working hard to modernize our nation’s airports, increase federal investment in infrastructure, and ensure we remain on the cutting edge of innovation as it relates to transportation. All of these improvements will help encourage increased travel and tourism.”

Sen. Rob Portman (R-OH):

Portman’s leadership on national parks issues, as well as many other important fiscal issues facing the country, is vital to the preservation of our public lands and the continued growth of the American economy.

Portman led efforts to pass the Restore Our Parks Act and to establish a dedicated source of funding for the $12 billion deferred maintenance backlog that will help ensure the viability of our parks for generations to come. Our national parks are some of the biggest draws for domestic and international travelers, and countless “gateway” communities across the country rely on well-maintained parks and robust visitation.

“It is an honor to receive the U.S. Travel Association’s 2019 Distinguished Travel Champion Award,” said Portman. “If we want our national parks to be here for generations of travelers to come we must address the nearly $12 billion backlog in long-delayed maintenance projects at the National Park Service. I’ve seen this maintenance backlog firsthand at national park sites in Ohio, and it underscores why we must pass my bipartisan Restore Our Parks Act to ensure that that the National Park Service has the resources to continue preserving American treasures. I look forward to working to get this legislation across the finish line.”

Rep. Tom Rice (R-SC):

Rice’s co-sponsorship of the JOLT Act and commitment to strengthening and expanding the Visa Waiver Program is crucial to enhancing U.S. security and economic competitiveness.

Rice’s efforts to support towns and cities in his district devastated by Hurricane Florence, including tourism-dependent communities such as Myrtle Beach, have been critical.

“I am honored to receive the U.S. Travel Association’s 2019 Distinguished Travel Champion Award,” said Rice. “I will continue to advocate for policies that will support American jobs, strengthen national security, and grow South Carolina’s tourism economy.”

Acting Under Secretary of State for Economic Growth, Energy, and the Environment Manisha Singh:

Singh has undertaken crucial efforts to uphold our country’s vital Open Skies aviation agreements, increase financial transparency and protect the interests of all U.S. aviation stakeholders. She has worked hard to elevate the travel industry as an essential export and economic driver.

Said Singh: “I’m honored to receive U.S. Travel’s 2019 Distinguished Travel Champion Award. The U.S. State Department is pleased to support the U.S. travel industry and American jobs by negotiating and helping to enforce Open Skies aviation agreements that bring flights, travel, and business to the United States from around the world.”

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Air freight demand still spiraling down

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For the fourth consecutive month, global air freight performance has reported a negative year-on-year growth and the worst performance in the last three years. The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight ton kilometers (FTKs), decreased 4.7% in February 2019, compared to the same period in 2018.

Freight capacity, measured in available freight ton kilometers (AFTKs), rose by 2.7% year-on-year in February 2019. This was the twelfth month in a row that capacity growth outstripped demand growth.

Demand for air cargo continues to face significant headwinds:

  • Trade tensions weigh on the industry;
  • Global economic activity and consumer confidence have weakened;
  • And the Purchasing Managers Index (PMI) for manufacturing and export orders has indicated falling global export orders since September 2018.

“Cargo is in the doldrums with smaller volumes being shipped over the last four months than a year ago. And with order books weakening, consumer confidence deteriorating and trade tensions hanging over the industry, it is difficult to see an early turnaround. The industry is adapting to new markets for e-commerce and special cargo shipments. But the bigger challenge is trade is slowing. Governments need to realize the damage being done by protectionist measures. Nobody wins a trade war. We all do better when borders are open to people and to trade,” said Alexandre de Juniac, IATA’s Director General and CEO.

 

Regional Performance

All regions reported a contraction in year-on-year demand growth in February 2019 except for Latin America.

  • Asia-Pacific airlines saw demand for air freight contract by 11.6% in February 2019, compared to the same period in 2018. Weaker manufacturing conditions for exporters in the region, ongoing trade tensions and a slowing of the Chinese economy impacted the market. Capacity decreased by 3.7%.

 

  • North American airlines saw demand contract by 0.7% in February 2019, compared to the same period a year earlier. This was the first month of negative year-on-year growth recorded since mid-2016, reflecting the sharp fall in trade with China. North American carriers have benefited from the strength of the US economy and consumer spending over the past year. Capacity increased by 7.1%.

 

  • European airlines experienced a contraction in freight demand of 1.0% in February 2019 compared to a year ago. The decline is consistent with weaker manufacturing conditions for exporters in Germany, one of Europe’s major economies. Trade tensions and uncertainty over Brexit also contributed to a weakening in demand. Capacity increased by 4.0% year-on-year.

 

  • Middle Eastern airlines’ freight volumes contracted 1.6% in February 2019 compared to the year-ago period. Capacity increased by 3.1%. A clear downward trend in seasonally-adjusted international air cargo demand is now evident with weakening trade to/from North America contributing to the decrease.

 

  • Latin American airlines posted the fastest growth of any region in February 2019 versus last year with demand up 2.8%. Despite the economic uncertainty in the region, a number of key markets are performing strongly. Seasonally-adjusted international freight demand achieved growth for the first time in six months. Capacity increased by 14.1%.

 

  • African carriers saw freight demand decrease by 8.5% in February 2019, compared to the same month in 2018. Seasonally-adjusted international freight volumes are lower than their peak in mid-2017; despite this, they are still 25% higher than their most recent trough in late-2015. Capacity grew 6.8% year-on-year.

View full February freight results (pdf).

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London to Chengdu now direct

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panda

Heathrow today has welcomed Air China’s thrice-weekly service to Chengdu, home to the Giant Panda Breeding Research Base and Sichuan Cuisine.  The launch of the service comes as new CEBR research shows a remarkable rise in the value of Chinese exports via Heathrow.

Heathrow’s new route to Chengdu is the airport’s 12th direct connection to China. The number of Chinese connections via the UK’s hub airport has more than doubled since the start of 2018 when there were just five routes available. To fly to Chengdu, Air China will use an A330-200 aircraft facilitating the transport of 80,000 passengers a year and 3,744 tonnes of cargo between China and the UK.

Heathrow’s latest Trade Tracker, by economic analysts CEBR, shows that while China’s own exports have decreased, the exports to China from Heathrow are not showing any sign of slowing down. China is now the third most valuable export destination from the airport, following the US and the EU.  Exports via Heathrow to China have grown in value by 135% in 2018 compared to 2017, totaling over £7 billion. The same analysis shows that, on average, every operational hour at Heathrow sees nearly £10 million of exports fly out across the world.

An analysis of Heathrow cargo data value reveals the top exports flying via the airport to China in 2018. The top annual export, pharmaceuticals, was valued at an astounding US$461.05 million. Other top exports by value include:

1.      Aerospace materials –  US $334.24 million

2.      Art – US $151.9 million

3.      Computers – US $67.69 million

4.      Clothing and fashion accessories –  US $29.8 million

5.      Footwear – US $12.6 million

By identifying efficiencies and gaps in schedules, Heathrow has been able to accommodate new routes to China.  However, this is a limited and piecemeal approach.  Expansion of Heathrow, the UK’s only hub airport and biggest port by value, will allow Britain the opportunity to build and maintain the vitally important trade connections to China the country needs, especially with a future outside the EU.

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