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Russian Aeroflot remains China’s ‘Favorite International Airline’

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Russia’s Aeroflot has been once again named the Favorite International Airline in China. The award was given to Aeroflot for the third consecutive year at the Flyer Award Ceremony 2019. The award ceremony was held today in Shanghai, the economic capital of China.

The awards are supported by the Civil Aviation Administration of China (CAAC). Winners are selected by the jury and by votes from frequent flyers and travelers.

The awards recognize outstanding participants in China’s dynamically developing tourism market. Previous winners include leading global airlines, including carriers that hold Skytrax 5-Star Airline status.

Aeroflot retained the title of Favorite International Airline at the competitive Flyer Awards due to its key competitive advantages: high service quality and flexible fare policy.

“The recognition of Aeroflot as the Favorite International Airline in China is confirmation of the effectiveness of our strategic efforts in China,” Aeroflot CEO Vitaly Saveliev said. “We offer our customers a wide route network and one of the youngest fleets in the world. Millions of Chinese passengers choose our airline for affordable ticket prices, convenient transit via our hub airport Sheremetyevo and high-quality service. Further development of service on Europe-Asia transit routes – one of the most competitive aviation markets globally – is one of Aeroflot’s key goals, along with the active expansion of the domestic route network.”

Aeroflot’s convenient routes encompass four key locations in China: Beijing, Shanghai, Hong Kong and Guangzhou. Aeroflot continuously adds new services oriented at the Chinese market. Earlier Aeroflot signed a partnership agreement with Alipay, China’s most popular payment system.

Aeroflot’s official website has a Chinese-language interface. Passengers receive menus in Chinese, and the in-flight entertainment system is available in Chinese. Onboard announcements are made in Chinese and the menu offers a special Asian set.

Aeroflot consistently enjoys wide recognition and popularity among consumers in the Chinese market. In January, Aeroflot was named Best China – Europe Transit Airline at the 2019 Stars Awards in China.

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Indian travelers expected to spend $136 billion by 2021

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The Indian traveler has come of age, spending approximately $94 billion in 2018, on around 2 billion domestic and international trips, helping the Indian travel and tourism industry achieve unprecedented scale.

The momentum is expected to continue and the industry will grow at a 13 percent CAGR to $136 billion by 2021, according to a report, ‘How Does India Travel’. The report outlines how India spends on travel, the influence of online channels in their purchase journey and potential growth opportunities for travel businesses till 2021.

Deep diving into the $136 billion spends, the report cites a 12 percent growth in transportation ($50 billion), 13 percent growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13 percent ($65 billion) over the next three years. Additionally, as more people come online, smartphone penetration improves and use of digital payments goes up, the report estimates that Indian travelers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 percent in 2018 to 35 percent in 2021.

Online is a significant source of research

Elucidating the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing. The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travelers spend their maximum time on search, travel tour provider websites, price comparison websites, and travel articles. Online video too plays a significant role with 21 percent of travelers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 percent of customers book transport and lodging online, and over 50 percent share feedback online with social media being the dominant platform.

Talking about the market opportunities for online travel players, Vikas Agnihotri, Country Director – Sales, Google India said, “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travellers; and existing travelers research online but the lack of trust in payments and booking experience make them end up booking offline. If travel players tap these online users through personalised marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”

“There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.” Arpan Sheth, partner Bain & Company said.

Decoding the Indian travelers

The report further identified the five cohorts of travelers in India, across business and leisure travel, and categorised each against their online research behavior:

Frequent flyers: Nearly 70 percent of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.

Budget business traveler: 86 percent of them researched online whereas only 60 percent book online, cumulatively spent $20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.

Experience-oriented traveler: Around 70 percent of their bookings were done online and cumulatively spent $22 billion in 2018. They extensively research both online and offline for ‘authentic’ experiences and convenience of options; display high loyalty towards preferred brand of airlines or hotels and actively share experiences.

Budget group traveler: 90 percent researched online and 55 percent booked online, cumulatively spent $29 billion in 2018. They make multiple decision-makers in the process and take the final decisions based on minimal cost.

Occasional travel visiting friends/relatives: 92 percent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.

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How does India travel? Let us count the 94 billion ways

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Bain & Company and Google India are together launching a report on “How Does India Travel.” According to the report, the Indian traveler has come of age, spending approximately $94 billion in 2018 on around 2 billion domestic and international trips. This has helped the Indian travel and tourism industry achieve unprecedented scale, and the momentum is expected to continue with the industry growing at a 13 percent CAGR to $136 billion by 2021, according to a report.

Fueled by digital, Indian travelers are expected to spend an additional $24 billion on online travel bookings over the next 3 years. The report outlines how India spends on travel, the influence of online channels in their purchase journey, and potential growth opportunities for travel businesses until 2021.

Deep diving into the $136 billion spends, the report cites a 12 percent growth in transportation ($50 billion), 13 percent growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13 percent ($65 billion) over the next three years. Additionally, as more people come online, smartphone penetration improves and use of digital payments goes up, the report estimates that Indian travelers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 percent in 2018 to 35 percent in 2021.

Online is a significant source of research

Elucidating the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing.  The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travelers spend their maximum time on search, travel tour provider websites, price comparison websites, and travel articles. Online video too plays a significant role with 21 percent of travelers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 percent of customers book transport and lodging online, and over 50 percent share feedback online with social media being the dominant platform.

Talking about the market opportunities for online travel players, Vikas Agnihotri, Country Director – Sales, Google India said, “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travelers; and existing travelers research online but the lack of trust in payments and booking experience make them end up booking offline. If travel players tap these online users through personalized marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”

“There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.” Arpan Sheth, partner Bain & Company said.

Decoding the Indian travelers

The report further identified the five cohorts of travelers in India, across business and leisure travel, and categorized each against their online research behavior:

  • Frequent flyers: Nearly 70 percent of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.
  • Budget business traveler: 86 percent of them researched online whereas only 60 percent book online, cumulatively spent $20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.
  • Experience-oriented traveler: Around 70 percent of their bookings were done online. and cumulatively spent $22 billion in 2018. They extensively research both online and offline for ‘authentic’ experiences and convenience of options; display high loyalty towards preferred brand of airlines or hotels and actively share experiences.
  • Budget group traveler: 90 percent researched online and 55 percent booked online, cumulatively spent $29 billion in 2018. They make multiple decision-makers in the process and take the final decisions based on minimal cost.
  • Occasional travel visiting friends/relatives: 92 percent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.

However, challenges remain in meeting the expectations of these travelers. Customers perceive online channels geared towards premium cohorts (frequent flyer and experience-oriented traveler), while mass cohorts, with $55 billion in spending, remain underpenetrated. There are about 160 million non-transacting active Internet users in India with only 5 percent of online travelers from Tier-2 or Tier-3 cities. There is a significant (20 percent) difference between the booking rates of premium cohorts and mass cohorts, the latter being also dissatisfied with online channels (~33 percent satisfied) vs. premium cohorts (~42 percent). The second challenge is in penetrating existing users who exhibit a marked distrust in use of online channels to make bookings, especially around payment and pricing terms and booking experience compared with offline channels. Consequently, their online usage drops between the research (>86 percent online influence) and booking phases (~40 percent offline bookings).

How travel businesses need to adapt to the needs of online consumers

The report cites five major shifts that marketers need to make to market to the online travelers – First, alleviate consumer concerns by improving the booking and payment experience to build a trusted brand and increase adoption. Second, they need to address the negative customer perception issues by mass customization to drive higher share in the segment. They also need to utilize consumer technology to penetrate mass segments (standardize, enable sharing), reach non-transactors (build offline presence), and create new user access.  Moreover, they need to find innovative and frugal ways to package the experience to increase both adoption and retention.  Finally, they need to create a robust digital backend to adapt to customer needs across the purchase journey.

“The contribution of travel and tourism’s spend in India has reached developed market levels, from 6.7percent of GDP in 2013 to 9.4 percent in 2018. This growth, combined with a rapidly growing internet user base and adoption of online bookings will lead to $24 billion in incremental revenues through online channels by 2021. In order to benefit from this trend, businesses need to actively increase new user adoption and increase penetration in the existing user base across the purchase journey.” Joydeep Bhattacharya, partner Bain & Company said.

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California-based Surf Air eyes profitability in 2019

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A turbulent year for Surf Air has finally come to an end. Exciting recent updates have already resulted in massive improvements to its scheduled service and membership growth.

A recent lawsuit against Encompass Aviation, its former flight operating partner, has been settled. Under the terms of the settlement, Surf Air has regained full access to its entire fleet of branded Pilatus PC-12s, an unfortunate consequence of negotiations that caused severe disruptions to the company.

“By doubling down on our most popular routes and eliminating non-core flying we have proven route profitability and that the fundamental business model works. Our plan for 2019 is to continue to invest further into these core markets and expand access to Surf Air through new, more flexible membership product offerings,” says Surf Air Chairman & CEO Sudhin Shahani.

Recent Club Updates:

A Robust Core Schedule

Surf Air has rebuilt a core schedule and added more flights across its most important routes: Los Angeles, San Francisco, Santa Barbara, and Lake Tahoe. The company will continue to add flights as it continues to acquire more members.

The company will also add back leisure weekend destinations as it makes sense (Las Vegas, Napa, Monterey, and Palm Springs).

Best-in-Class Reliability

With the help of Advanced Air, the company’s current third-party flight operator and long-time partner, they’ve restored operational reliability to its former best-in-industry levels of over 90% completion factor.

“Advanced Air has been a critical partner during this transitional period. With their proven professional and safety record, they’re the perfect, value-aligned partner to continue to scale our business,” says Sudhin Shahani.

Flexible, Per-Seat Membership

Perhaps Surf Air’s most promising opportunities for scaling membership growth is the new Express membership, allowing flyers to buy and fly on a per-seat basis. Meaning, for the first time, less frequent flyers can enjoy the time-savings benefits of zero hassle air travel.

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What airport is now busier than mega-hubs Frankfurt and Dallas Fort Worth?

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This airport has now become the world’s 12th busiest airport, moving up four places from the 16th spot in 2017. According to the preliminary world airport traffic rankings for 2018 released by the Airports Council International (ACI), it over took mega-hubs like Frankfurt, Dallas Forth Worth, Guangzhou and Istanbul Ataturk airports.

The four airports above the IGI Airport are Amsterdam Schiphol, Paris-Charles de Gaulle, Shanghai Pudong and Hong Kong, managing over 46 lakh passengers more than IGIA. The airport ranked busier than all these might surprise – it’s New Delhi’s Indira Gandhi International Airport (IGIA).

“India became the world’s third-largest aviation market in terms of passenger throughput, behind the US and China, in 2018. India’s move towards a more liberalized aviation market and the nation’s strengthening economic fundamentals have helped it become one of the fastest-growing markets with its traffic growing rapidly in a relatively short time,” read the statement by ACI.

The ACI’s World Airport Traffic Forecasts also predicts the country will represent the third largest aviation market in terms of passenger throughput after the US and China by 2020.

As per the rankings released by the ACI, the GMR-group-run airport has solidified its status as one of the fastest growing airports in the world for passenger traffic. Only Seoul’s Incheon International with 10 percent point growth was close to Delhi in terms of passenger growth. The Incheon International airport has secured the 16th place in 2018.

The ACI report said the IGI airport saw 69 million domestic and international flyers in 2018, which is 10.2 percent points higher than the combined passengers of 2017. Passenger traffic in advanced economies grew 5.2 percent while in emerging economies it rose 10.3 percent in 2017.

ACI World Director General-Angela Gittens said while strong competitive forces continue to drive innovation and improvements in efficiency and service for passengers, airports face the challenges of meeting the continuing global growth in demand for air services.

The ACI, founded in 1991, is the trade association of the world’s airports, currently serving 641 members operating from 1,953 airports across 176 countries.

“It is expected that rising incomes in emerging markets will help propel global traffic to new heights in the coming decades as new aviation hubs begin to overtake the more mature markets of Western Europe and North America,” ACI said.

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FlyersRights files lawsuit against US DOT for not enforcing flight delay compensation

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FlyersRights.org has filed a lawsuit against the US Department of Transportation (DOT) in the D.C. Circuit Court of Appeals over its refusal to enforce the Montreal Convention mandate that airlines must clearly disclose flight delay compensation rights.  See DOT-OST-2015-0256 at regulations.gov.

Under Article 19 of the Montreal Convention, the primary treaty governing international air travel, passengers can recover up to about $5,500 for flight delays on international trips on a nearly no-fault basis. And this little-known provision overrides any airline contract to the contrary. The treaty ratified by the US in 2003, explicitly requires (under Article 3) airlines to provide passengers with “written notice to the effect where [the] Convention is applicable it governs and may limit the liability of carriers for … delay.” Airlines currently only advise passengers of the airline’s liability limitations and omit any mention of delay compensation rights.

“The DOT continues to ignore express provisions of the Montreal Convention and U.S. law by allowing the airlines to engage in unfair, deceptive, anticompetitive, and predatory practices. Airlines continue to obscure with undecipherable legalese or outright deception delay compensation rights. See https://www.aa.com/i18n/customer-service/support/liability-for-international-flights.jsp vs  https://flyersrights.org/delayedcanceled-flights/ and 14 CFR 221.105, 106. Congress gave the DOT the exclusive power to protect consumers against such unfair and deceptive practices. The DOT’s refusal to require airlines to follow the treaty is itself a violation of U.S. law,” remarked Paul Hudson, President of FlyersRights.org

FlyersRights.org is represented in the court proceeding by Joseph Sandler, Esq. of Sandler, Reiff, Lamb, Rosenstein &Rosenstock of Washington, D.C.

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FlyersRights asking DOT to regulate airline change fees

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When Congress deregulated airline prices, routes, and schedules in 1978, Congress preserved the DOT’s responsibility to ensure that international prices and fees remained “reasonable.” This little-known provision of U.S. law means that the FAA should strike down any change fees that are unreasonable and have no relation to cost. See 49 U.S.C. § 41501, DOT-OST-2015-0031 at regulations.gov.

FlyersRights.org has filed a notice of appeal against the US Department of Transportation (DOT) in the D.C. Circuit Court of Appeals over its refusal to regulate international change fees – Flyers Rights Education Fund v. U.S. Department of Transportation (CADC).

Passengers are helpless when it comes these exorbitant change fees that can range up to $500 or more. Domestic consolidation and international alliances in the airline industry have combined to give passengers fewer options when travelling. As airline profits soar, the airlines continue to increase change fees by hundreds of dollars while publicly declaring that these fees are a major profit generator.

In 2015, FlyersRights.org filed a rulemaking petition demanding that the DOT enforce the Reasonableness Law for change fees on international flights. On February 1, 2019, the DOT denied this petition. In refusing to regulate despite the Reasonableness Law, the DOT said it relied on “market forces” to handle all air travel pricing and policy. See DOT-OST-2015-0031-0035. FlyersRights.org is represented in the court appeal by Joseph Sandler, Esq. of Sandler Reiff Lamb Rosenstein & Birkenstock P.C. of Washington, D.C.

Paul Hudson, President of FlyersRights.org, reflected on the past few years, “The DOT has demonstrated a tremendous ability to allow the airlines and airplane manufacturers to dictate enforcement policies. The DOT has ignored the law by failing to guarantee that international change fees are reasonable and related to cost. At a time when flights are routinely filled to capacity, airlines extort passengers into paying hundreds of dollars to change flights so that the airline can go back and sell the same ticket, usually at a higher price. The airlines reach into passengers’ checkbooks because the DOT refuses to follow the law.”

FlyersRights.org most recently took the FAA to federal court over the denial of its 2015 seat size rulemaking petition. The seat litigation has increased scrutiny on the FAA’s relationship with Boeing and other airplane manufacturers, has led to Congressional mandates to establish seat size standards and to review certification procedures, and has prompted a DOT Inspector General Investigation into the FAA’s oversight of emergency evacuation testing and certification.

Paul Hudson, member of the FAA Aviation Rulemaking Advisory Committee since 1993, noted “The DOT and FAA keep proving, time and time again, that they will allow Boeing and the airlines to dictate policy both in the safety and consumer protection realms. From ignoring concerns over the Boeing 737 MAX 8 and 787 Dreamliner, to rubber stamping manufacturers’ emergency evacuation testing, to decreasing enforcement of consumer protections to historical lows, the DOT has surrendered its duty to ensure safe air travel and reasonable protections for passengers.”

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