Midscale Hotel Brands Get Smarter and 4 Other Hospitality Trends This Week

Hotel Indigo London – Paddington, IHG’s boutique hotel brand. IHG just announced a new unnamed midscale brand.

Skift Take: This week in hospitality, we saw midscale hotels getting more sophisticated about tech and design, which is great for the customer so long as the brand actually has a name.

— Sarah Enelow

Throughout the week we post dozens of original stories, connecting the dots across the travel industry, and every weekend we sum it all up. This weekend roundup examines hospitality.

For all of our weekend roundups, go here.

>>Travelers won’t be happy about Marriott’s new cancellation policy but investors and operators will: Marriott Joins Competitors in Extending Cancellation Deadline From 24 to 48 Hours

>>The hotel company that started the boutique hotels movement in the U.S. wants to set a precedent for scaling up — without losing its soul in the process: Interview: Kimpton CEO Sees IHG Helping to Propel Its International Expansion

>>What’s in a name? Well, for IHG, that’s the next big and pretty crucial step in rolling out its 13th hotel brand. Another big step needed? Making sure it’ll stand out from all the other value-driven midscale brands out there: IHG Announces New Midscale Hotel Brand — Without a Name

>>It’s a relatively small deal from one of Europe’s smallest hotel companies but Scandic’s acquisition of Restel will certainly help shore up its position in the Nordics market: Scandic Hotels Bolsters Nordics Strategy With $127 Million Finnish Acquisition

>>If you’re a hotel company planning to launch and/or reinvest in a midscale brand, please make it interesting: Midscale Hotel Brands Are Getting Smarter About Not Being Boring

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American Airlines CEO Learned of Qatar’s Investment Interest at IATA Conference

Qatar Airways  / Flickr.com

Akbar Al Baker, CEO of Qatar Airways, wants his airline to be able to invest in American Airlines. Qatar Airways / Flickr.com

Skift Take: Don’t look for this Qatar Airways investment in American Airlines to ever come to fruition. The American board would have to approve it, and both American’s management and its unions are against it. Nice try, though.

— Dennis Schaal

Qatar has a feel-good slogan for its flagship airline: “Going places together.” But for the moment, the energy-rich Middle Eastern country seems to be getting exactly nowhere with American Airlines Group Inc.

State-owned Qatar Airways Ltd.’s surprise overture to acquire a major stake in American, a partner in the Oneworld alliance but an archrival on lucrative long-distance routes, was met with skepticism in the stock market after initial enthusiasm. American reacted with bewilderment, if not hostility, to the company’s interest.

“Puzzling at best and concerning at worst,’’ Chief Executive Officer Doug Parker said. The airline’s pilots union went further, calling it an act of “financial aggression” while flight attendants said it was a threat to their jobs.

The development marks a new twist in a long battle between U.S. carriers and their Persian Gulf rivals over accusations of unfair competition. The move is playing out against the backdrop of renewed efforts by President Donald Trump’s administration to mediate the simmering crisis between Qatar and some of the closest U.S. allies in the region, notably Saudi Arabia.

The brash proposal of American’s would-be investor also underscores the efforts of Qatar Airways to bolster its portfolio of global airline interests and expand its U.S. footprint. While CEO Akbar Al Baker once taunted his U.S. rivals, he’s now angling for an equity stake in American similar to the one held by Warren Buffett’s Berkshire Hathaway Inc.

Cancun Meeting

Al Baker told Parker of the Gulf carrier’s interest in American when the two men met during an airline industry conference this month in Cancun, Mexico, said Matt Miller, a spokesman for the Fort Worth, Texas-based company.

“While anyone can purchase our shares in the open market, we aren’t particularly excited about Qatar’s outreach,” Parker said in a letter to staff Thursday. “Of course, it may just be that Qatar Airways views American Airlines as a solid financial investment,” he cheekily ended the memo, crediting his employees.

Qatar responded in kind. The Gulf carrier is happy to see that Parker agrees with Qatar “that American Airlines is a solid financial investment,” it tweeted Friday.

Even with the potential investment, Parker vowed to continue a campaign against Qatar Airways, Emirates and Etihad Airways PJSC. American, Delta Air Lines Inc. and United Continental Holdings Inc. have railed against the three Persian Gulf carriers for years, saying that $50 billion in government support have enabled them to compete unfairly.

‘Driving Buy-In’

Another obstacle for any American-Qatar rapprochement is opposition by the U.S. carrier’s labor unions, said Hunter Keay, an analyst at Wolfe Research. The threat of lower-paying, non-union jobs at Qatar Airways would roil American’s employees, upsetting Parker’s overriding goal of winning the trust of employees.

“We don’t see it happening,’’ Keay said in a note to clients. Parker’s “single biggest thing right now is driving buy-in and trust from his employees.”

Qatar Airways is interested in buying a 10 percent stake, American said in a regulatory filing. That would be worth about $2.4 billion based on American’s current market value. In a statement after the filing, the Doha-based airline said it planned to make a passive investment of as much as 4.75 percent, saying it saw “a strong investment opportunity.”

American rose only 1.1 percent to $48.97 at the close in New York after surging as much as 4.4 percent in earlier trading, the biggest intraday gain in six weeks.

Purchasing Stakes

Establishing a holding in American would extend an investment strategy in which the Qatari airline has purchased significant stakes in IAG SA, the parent of British Airways, and Latam Airlines Group SA, which are both close allies of the the U.S. carrier.

Accumulating American shares via the open market would parallel Qatar’s approach to building its IAG holding, which stands at 20 percent, making the Gulf carrier the No. 1 investor in a group that also owns Spain’s Iberia and Aer Lingus of Ireland. Qatar, American, IAG and Latam are all members of the Oneworld global alliance.

“This may buy a little bit of silence in the sense of complaints about Middle Eastern carriers’ expansion and growth,” said Robert Mann, an aviation consultant. He added that the move may also help Qatar get a bigger chunk of trans-Atlantic business travel dollars following its investment in IAG.

An investment in American could also serve as “a stepping stone to more access to the U.S.,” Cowen & Co. analyst Helane Becker said in a note. Still, given the “political overhang,” Gulf carriers may also consider deals with smaller U.S. airlines such as Alaska Air Group Inc. or JetBlue Airways Corp., she said.

Qatar Airways has remained bullish on the U.S., even after Trump’s attempt to block travel from six predominantly Muslim nations and a U.S. ban on carrying laptop and tablet computers onto flights from some Middle Eastern airports, including Doha.

The airline vowed to continue its global expansion even as its state owner gets punished by an escalating political standoff that’s threatening to choke Qatar’s economy. A move this month by Saudi Arabia, Bahrain, Egypt and the United Arab Emirates to shut down flights to Qatar forced Qatar Airways to ground more than 50 daily departures — or about 10 percent of its total — according to scheduling firm OAG.

Parker’s Resolve

For their part, the big U.S. airlines show no signs of softening their opposition.

Delta held a rally Wednesday for employees in Atlanta, featuring a new documentary outlining the threat from the Gulf airlines. Delta canceled its sponsorship of Atlanta’s Fox Theatre last year after the venue hosted a Qatar Airways event with an appearance by Jennifer Lopez, to celebrate the opening of a route between the U.S. city and Qatar. At the time, Al Baker said the route would “rub salt in the wounds’’ of Delta.

Parker vowed to redouble lobbying efforts against the Gulf carriers even after Qatar Airways’ interest in buying a stake.

“We will not be discouraged or dissuaded from our full court press in Washington, D.C., to stand up to companies that are illegally subsidized by their governments,’’ Parker said in a letter to employees. “If anything, this development strengthens our resolve to ensure the U.S. government enforces its trade agreements regarding fair competition with Gulf carriers.”

–With assistance from Deena Kamel Yousef and Christopher Jasper

 

©2017 Bloomberg L.P.

This article was written by Richard Clough and Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Messaging App Line to Open Digital Theme Park in Thailand

Sakchai Lalit  / Associated Press

Customers take a selfie with merchandise at Line Village in Bangkok, Thailand, June 22, 2017. Thailand’s most popular text-messaging service opened its doors to the public Friday with an extravagant digital theme park called Line Bangkok Village. Sakchai Lalit / Associated Press

Skift Take: If you build it they will come — and text. Is Line Village Bangkok a next-generation theme park? We’ll see.

— Dennis Schaal

The text-messaging service Line plans to inaugurate an indoor digital theme park in Thailand’s capital, seeking to squeeze maximum advantage from its popularity in the country, its second biggest market after Japan.

Line Village Bangkok will begin operating Friday as a retail store, selling dolls and similar merchandise, but later this year will expand to a three-story amusement complex with virtual reality rides. Line stores already exist in Japan, South Korea, China and Taiwan, but the Thai location will be the first with an indoor park.

Kampanart Wonghongkul, the project’s chief executive, said he hopes the 500 million baht ($14.7 million) theme park will attract more than 12 million visitors a year. Tourism is a major revenue earner in Thailand, bringing in $71.4 billion last year.

Much of Line’s appeal comes from its stickers that can be attached to messages, especially the company’s anthropomorphic animal figures, such as Brown the bear and Cony the rabbit. Line Village is located in Siam Square, for decades a hangout for young Thais enthralled with fashion and the culture of cute — there is already a Hello Kitty cafe located there.

Since its launch in 2011, Japan-based, Korean-owned Line has amassed more 200 million users worldwide. Thailand has around 44 million cellphone users and 94 percent of them have the Line application installed on their phones, Kampanart said.

Sakdipat Thanee, a 27-year-old lawyer, was one of several shoppers invited for a special store preview Thursday.

“I think it’s hard to find Line merchandise in Thailand,” he said. “You can only buy them from aboard or ask someone to bring them in. For people who love Line characters like me, having a Line store here means that I can easily shop here. I can meet Brown and Cony much more easily.”

This article was written by Kankanit Wiriyasajja and Kaweewit Kaewjinda from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Online Travel Agencies Battle Partners and 7 Other Digital Trends This Week

Sean O'Neill

A photo of Expedia’s Bellevue, Washington, headquarters in 2016. Many online travel agencies are trying to become a one-stop shop to attract more consumers. Sean O’Neill

Skift Take: This week in digital news, besides TripAdvisor helping to identify a robocall scandal, we concentrated on online travel agencies jockeying for a bigger share of the market and trying to offer more things to more consumers.

— Sarah Enelow

Throughout the week we post dozens of original stories, connecting the dots across the travel industry, and every weekend we sum it all up. This weekend roundup examines digital trends.

For all of our weekend roundups, go here.

>>A successful TripAdvisor transformation into ecommerce would go down as one of the smartest pivots in online travel history: TripAdvisor: Non-Hotel Revenue Could Reach One-Third of Total by 2020

>>Etraveli was sold for more than twice what it fetched just a year and a half ago. That’s an impressive trajectory — and it looks like all parties are invested in continuing that kind of growth: Etraveli Gets New Owner in Push to Dominate European Online Booking

>>There is pomp and circumstance, and plenty of bluster, but most negotiations between online travel agencies, on the one hand, and hotels and airlines, on the other, eventually end up in signed contracts. That’s because the two sides usually need each other, like it or not: A Timeline of Online Travel Agency Battles With Hotels and Airlines

>>As it gets easier to book on your phone, mobile could overtake traditional computer bookings as the most popular way U.S. travelers plan and book their trips: Mobile Travel Bookings Will Reach 40 Percent of Online Sales in 2017

>>TripAdvisor’s bold platform approach gives it a leg up on building deeper relationships with its customers, compared to single-use sites. On the other hand, relationships can be hard work and expensive: TripAdvisor in the Age of Platforms Tries the Full-Service Model

>>These fraudulent robocalls touting over-the-top and fraudulent travel deals are a scourge. Maybe a lot of them will stop now — but there are assuredly other scammers out there so travel brands, which are victims in addition to consumers, aren’t home free yet: TripAdvisor’s Review Investigators Discover a Huge Travel-Robocall Scam

>>Smaller players in the expense management marketplace are gearing up to take on Concur despite Concur’s commanding lead in the sector: A Corporate Expense Giant in the Making — Skift Corporate Travel Innovation Report

>>Investors used to be skittish about hospitality-tech startups. But this week’s multi-million dollar investment rounds in Keypr, Pillow, and Cloudbeds suggest that the lodging software sector is maturing and isn’t just about hotels anymore: Keypr Unlocks $19 Million for Hotel Keyless Entry: Travel Startup Funding This Week

 

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The Low-Cost, Long-Haul Revolution and 8 Other Aviation Trends This Week

Norwegian

A Norwegian Dreamliner. Low-cost carriers are gradually moving into the long-haul market. Norwegian

Skift Take: This week in aviation, we thought about customer desires. Flyers want low-cost options, comfortable cabins, and probably flight attendants who aren’t getting sick from their uniforms.

— Sarah Enelow

Throughout the week we post dozens of original stories, connecting the dots across the travel industry, and every weekend we sum it all up. This weekend roundup examines aviation.

For all of our weekend roundups, go here.

>>The low-cost, long-haul revolution is only just starting to take off. Will full-service carriers be able to adapt to this new reality or are we about to see a total realignment? The Low-Cost, Long-Haul Carrier Revolution In 3 Charts

>>Not every airline can be a global behemoth. Finnair mostly focuses on its niche — connecting Europe with Asia, including secondary Chinese cities: CEO Interview: How Finnair Plans to Crack the Potentially Lucrative Chinese Market

>>Economy class fares from Asia to the United States and Europe are already low, because there’s so much competition. The market probably doesn’t need another entrant — at least for now: AirAsia X CEO Takes to Twitter to Call Off Plans to Fly to Europe and California

>>The move for Virgin’s most loyal customers will be a hard one. But in return they get an airline that will take them so many more places: Business of Loyalty: How Virgin America Is Quietly Winding Down its Loyalty Program

>>Does the UK have the resources to set up an aviation safety framework on its own or will it seek to stay in the European Aviation Safety Agency? The former would be unwise and the latter is seemingly at odds with the desire of Leave campaigners: FAA Boss Outlines Brexit Safety Concerns for UK Aviation

>>Is this a game-changer? No. But let’s give Airbus some credit for making short-haul travel a little more pleasant: Airbus Is Making Some of Its Most Popular Jets More Passenger-Friendly

>>American has defended its uniforms, but it received a lot of bad press for months. It finally decided to try to change the narrative by switching uniform providers. That was probably the right decision: American Airlines to Drop Contentious Uniforms Within Three Years

>>Most passengers would love it if British Airways could keep flying a full schedule even while many of its flight attendants are on strike. But will regulators let British Airways wet-lease nine planes registered in Qatar? British Airways Seeks Planes and Crew From Qatar During Proposed Flight Attendant Strike

>>Although Gatwick is strategically important for Norwegian, its multiple subsidiaries’ model means that it should be largely immune, and might even benefit, if the pound continues to struggle: Norwegian Air CEO Is More Worried About UK Passenger Taxes Than Brexit

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SeaWorld Is Under Federal Investigation for Post-Blackfish Commentary

Suzanne Allee  / Magnolia Pictures/MCT

The killer whale Tilikum is shown in a scene from the documentary “Blackfish.” SeaWorld said it is cooperating with an investigation by federal authorities for statements made about the film’s impact.
Suzanne Allee / Magnolia Pictures/MCT

Skift Take: SeaWorld has been trying hard to assure shareholders that it is moving beyond the controversy and financial woes that followed the Blackfish documentary. This investigation — whatever it entails and however it turns out — is a major setback.

— Hannah Sampson

For a while after the 2013 release of the documentary “Blackfish,” which excoriated SeaWorld over its treatment of killer whales, the theme park company refused to talk about the film or discounted the idea that it had any impact.

It wasn’t until August 2014 that the company admitted that the negative attention had hurt attendance and earnings.

And now federal authorities are asking questions. In a filing with the U.S. Securities and Exchange Commission late Friday afternoon [see below], SeaWorld Entertainment said it had received a subpoena this month “in connection with an investigation by the U.S. Department of Justice concerning disclosures and public statements made by the company and certain executives and/or individuals on or before August 2014, including those regarding the impact of the ‘Blackfish’ documentary, and trading in the company’s securities.”

In addition to the Department of Justice, the SEC has also sent subpoenas to the company on the same topic, the filing said. The company also revealed that the board of directors had formed a special committee on June 16 “with respect to these inquiries” and had hired legal counsel for advice. Information about the federal inquiries was paired with other news and buried in the middle of the filing under the heading “Other Events.”

A representative for an external strategic communications firm said SeaWorld had nothing to add.

“The filing covers everything the company has to say regarding the government inquiries,” she wrote in an email. “We would note that the filing states, ‘The Company has cooperated with these government inquiries and intends to continue to cooperate with any government requests or inquiries.’”

Reached by email, the SEC and Justice Department declined to comment late Friday.

“Blackfish” centered around Tilikum, an orca that dragged a trainer into its tank at SeaWorld Orlando and killed her; the same whale had been involved in the deaths of two other people.

The documentary was shown in limited release in theaters but got a much wider audience through airings on CNN starting in October 2013. SeaWorld ultimately lost partnerships, attendance, and money, and the tide has been tough to turn. Attendance fell in 2016 to its lowest number since the company went public in 2013.

In the filing where SeaWorld disclosed the investigation, the company also revealed news about a more recent issue.

Earlier this month, shareholders voted not to re-elect chairman David D’Alessandro amid fallout over a controversial bonus payout. As per company bylaws, D’Alessandro — on the board for seven years — offered to resign immediately. The board had 90 days to consider that and decide on a plan.

It only took a week for the board to announce its decision: They want to keep the chairman around — but only until December 31, they said in the late Friday filing. Part of the reason for keeping him around is to help deal with the investigation, the board said.

“…[T]he committee and the board took into account the potential impact of Mr. D’Alessandro’s immediate departure on the board’s and the company’s ability to successfully address certain challenges that the company now faces, including, without limitation, the matters set forth…below,” the filing said, referring to the DOJ and SEC subpoenas.

The federal subpoenas means SeaWorld will continue to be mired in the scandal that arose over the documentary, despite taking steps to distance itself from some of the practices that were the target of the film. The company announced last year it would end its orca breeding program and would transition the killer whale shows to more natural and educational “encounters.”

Tillikum, the whale at the center of the controversy, died in January. The final orca conceived through the breeding program before it was ended was born in April.

SeaWorld’s new leadership — CEO Joel Manby was hired in 2015 —  has been eager to refocus attention on new rides, family friendly attractions, and rescue work by staffers. The company owns 12 theme and water parks in the U.S. under brands including SeaWorld, Busch Gardens, and Sesame Place and has announced plans to expand internationally.

“We made enormous progress last year addressing our challenges with our three major initiatives aimed at redirecting our focus consistent with our mission and our brand: ending orca breeding, transitioning from a Shamu theatrical show to the ‘Orca Encounter,’ and partnering with the Humane Society of the United States on animal welfare and rescue efforts,” Manby told analysts in February. “Creating guest experiences that are fun and meaningful is the cornerstone of attracting guests to our parks.”

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U.S. Supreme Court Likely Ruled on Travel Ban But Hasn’t Publicized it Yet

Associated Press

At the U.S. Supreme Court, the justices will likely announce their ruling on President Trump’s travel ban sooner rather than later. Associated Press

Skift Take: The high court has likely decided Trump’s travel ban already but now the justices’ opinions on both sides of the argument need to get written. We should find out the fate of the ban shortly after the writing gets wrapped up.

— Dennis Schaal

The Supreme Court has almost certainly decided what to do about President Donald Trump’s travel ban affecting citizens of six mostly Muslim countries.

The country is waiting for the court to make its decision public about the biggest legal controversy in the first five months of Trump’s presidency. The issue has been tied up in the courts since Trump’s original order in January sparked widespread protests just days after he took office.

The justices met Thursday morning for their last regularly scheduled private conference in June and probably took a vote about whether to let the Trump administration immediately enforce the ban and hear the administration’s appeal of lower court rulings blocking the ban.

The court’s decision could come any time and is expected no later than late next week, after which the justices will scatter for speeches, teaching gigs and vacations.

Exactly when could depend on whether there are justices who disagree with the outcome and want to say so publicly. It might take time for such an opinion to be written — and perhaps responded to by someone in the majority.

It takes five votes to reinstate the ban, but only four to set the case for argument. Justice Neil Gorsuch, Trump’s nominee who was confirmed in April, is taking part in the highest-profile issue yet in his three months on the court.

The case is at the Supreme Court because two federal appellate courts have ruled against the Trump travel policy, which would impose a 90-day pause in travel from citizens of Iran, Libya, Somalia, Sudan, Syria and Yemen.

The 4th U.S. Circuit Court of Appeals in Richmond, Virginia, said the ban was “rooted in religious animus” toward Muslims and pointed to Trump’s campaign promise to impose a ban on Muslims entering the country as well as tweets and remarks he has made since becoming president.

The San Francisco-based 9th U.S. Circuit Court of Appeals said the travel policy does not comply with federal immigration law, including a prohibition on nationality-based discrimination. That court also put a hold on separate aspects of the policy that would keep all refugees out of the United States for 120 days and cut by more than half, from 110,000 to 50,000, the cap on refugees in the current government spending year that ends Sept. 30.

Trump’s first executive order on travel applied to travelers from the six countries as well as Iraq, and took effect immediately, causing chaos and panic at airports over the last weekend in January as the Homeland Security Department scrambled to figure out who the order covered and how it was to be implemented.

A federal judge blocked it eight days later, an order that was upheld by a 9th circuit panel. Rather than pursue an appeal, the administration said it would revise the policy.

In March, Trump issued a narrower order, but it too has been blocked.

The justices have a range of options. They could immediately allow the administration to stop travel from the six countries and hear arguments on the administration’s broader appeal in October. That’s the path the administration has urged.

But the 90-day ban will have run its course by then, and there might be little left for the court to rule on.

The government has said the ban was needed to allow for an internal review of the screening procedures for visa applicants from the six countries.

That too should be complete before the Supreme Court reconvenes for its new term on October 2.

The administration also could issue a new ban that includes more countries or is permanent, or both. That might make the current case go away and also could give rise to new legal challenges.

The high court also might keep the ban on hold, but set the case for argument in October. This course might be palatable both to justices who object to the ban and those who don’t like the breadth of the lower court rulings against the president.

But it also could mean that a new policy is in effect before the court ever hears the case.

The justices also could keep the ban from being reinstated and, at the same time, decline to review the lower court rulings. That outcome would essentially end the case.

One barrier to that option could be that the court usually likes to have the last word when a lower court strikes down a federal law or presidential action.

This article was written by Mark Sherman from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Airbus Sales Boss on Boeing’s Gains: ‘Every Dog Gets His Day’

Bloomberg

Airbus sales chief John Leahy will be retiring soon. The company didn’t do particularly well at the Paris Air Show in 2017 but Leahy and Airbus have had quite a run. Bloomberg

Skift Take: Boeing did well at the Paris Air Show. Airbus will still very much be around for the next one.

— Dennis Schaal

Airbus SE sales chief John Leahy conceded defeat to Boeing Co. at his last European air show, marking a rare show of humility from the American who confirmed his plans to retire after racking up $1.7 trillion of jet orders over two decades.

The time-frame for Leahy’s exit isn’t yet clear, and the executive will work on a smooth transition to deputy Kiran Rao, he said at Airbus’s closing press conference at the Paris Air Show. Airbus had no new civil models coming to market at the expo, unlike Boeing, which racked up more than 300 sales and commitments for the Max 10 stretch of its 737 single-aisle workhorse.

“The fact is, this is a slower year for orders than previous years,” Leahy said at the briefing Thursday. “Are we conceding that Boeing sold a few more airplanes than we did? Yes. Every dog gets his day.”

Airbus secured $39.7 billion of new jetliner business at the show, Leahy said, comprising firm orders for 144 aircraft worth $18.5 billion at list prices and looser commitments for 182 planes valued at $21.2 billion. In terms of firm deals — those that can be included in the manufacturers’ backlogs — it came out roughly neck-and-neck with Boeing, he added.

Toulouse, France-based Airbus will “work out a good time” to make the sales transition, Leahy, 66, told journalists. Rao, executive vice president of strategy and marketing at the commercial-plane unit, has already been bloodied at the sharp end of the sales process, having led talks with AirAsia Bhd. CEO Tony Fernandes that secured an order for 14 A320ceo aircraft valued at $1.4 billion and led a late order spurt for his company.

Deal Maker

Rao, 53, “spent all night negotiating with Tony until he got it done,” Leahy said. The Indian-born executive — who joked that his boss plans to take up yoga in retirement — has a tough act to follow, with Leahy having racked up more than 15,500 orders since becoming commercial chief more than two decades ago, catapulting Airbus from an 18 percent share of the jetliner market to a 50-50 balance with Boeing.

Airbus isn’t overly concerned about the U.S. company’s plans to develop a new middle-of-market model to replace its defunct 757 and soon-to-go 767, Leahy said, reiterating his assessment that the European company has an 80 percent share of the market that the new plane will address.

“We don’t see it as a major threat,” said the executive, predicting the plane, dubbed the 797 by some, will cost $12 billion to develop. “If you’re sitting in Toulouse you don’t see the need to develop something in that market.”

‘Flying Kites’

Rao said that Boeing is “flying all these kites” to suggest it will have a game-changing aircraft for 2025 in part to disrupt A321neo sales, when in reality it won’t be able to make the aircraft as cheaply as suggested because 70 percent of its cost lies with suppliers and outside of the airframer’s direct control.

He compared the Boeing plane to the Sonic Cruiser, a model that the U.S. company sought to develop in the late 1990s but later scrapped when it became clear that airlines wanted lower operating costs rather than more speed. Boeing subsequently came up with the best-selling 787 Dreamliner.

Leahy said that Dubai-based Emirates, the world’s biggest long-haul airline, is “very interested” in an enhanced version of Airbus’s superjumbo, dubbed the A380plus. The New Yorker added that he held 90 minutes of talks with the carrier’s president, Tim Clark, during the show and found him very receptive to the improvements, which include 4.7-meter (15-foot) winglets designed reduce drag and pare fuel consumption by as much as 4 percent.

Emirates is in early talks about the purchase of 20 A380s to add to the 140 it ordered previously, people familiar with the discussions said earlier month. With the next main air show to be held in Dubai in November, that raises the prospect of Leahy going out with a flourish in the form of a near $9 billion order, though landing a deal will also be tough after Clark said he’s concerned about Airbus’s commitment to sticking with the slow-selling A380 program.

Leahy wouldn’t specify if he’ll still be in charge then, saying only “This is definitely my last big air show. I’m going to leave before the end of the year.”

 

©2017 Bloomberg L.P.

This article was written by Christopher Jasper and Phil Serafino from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Etihad To Let Passengers Bid for Adjacent Seats Among Series of Revenue Moves

Bloomberg

Etihad Airways will let economy passengers coveting more elbow room bid online for adjacent seats as the Abu Dhabi-based carrier explores new ways to generate revenue in a tough market. Bloomberg

Skift Take: Etihad may be able to squeeze some extra revenue by giving passengers the option of stretching out a bit more in the seats next to them but selling the seats would be a lot better.

— Dennis Schaal

Etihad Airways will let economy passengers coveting more elbow room bid online for adjacent seats as the Abu Dhabi-based carrier explores new ways to generate revenue in a tough market.

The long-haul airline is offering a “neighbor-free seat” option for economy-class passengers allowing them to bid for as many as three seats next to their own, Etihad said Thursday in an emailed statement. Economy passengers can also pay up to $250 for access to business-class lounges at the carrier’s Abu Dhabi hub and as much as $75 at airports in Europe, the U.S. and Australia, the company said.

“With all the difficulties Etihad is facing with its equity partners, Etihad is looking at lessons from low-cost models to charge for extra services,” John Strickland, director of JLS Consulting, said by phone from London. The seat-bidding system “is a neat way to gain a bit of revenue. It’s opportunistic: If they see in their booking trends that they can honor this, then why not?”

Etihad is in the middle of a strategic review that includes an evaluation of its investments in struggling affiliates Alitalia SpA and Air Berlin Plc. The government-run carrier faces intensified competition on routes to Europe and North America, and low oil prices have crimped demand for premium bookings in the Gulf. Etihad cut as many as 3,000 jobs last year to reduce costs, people with knowledge of the matter said at the time.

Following Emirates

By charging fees for additional services, Etihad can keep ticket prices “as low and as competitive as possible,” Mohammad Al Bulooki, Etihad’s executive vice president commercial, said in the statement.

Emirates, Etihad’s Dubai-based rival, introduced fees for seat-selection last September and access to its premium lounges in February, amid slowing growth for airlines in the Gulf region.

“Especially in the Middle East, with major carriers facing a challenging business environment and falling yields, the focus on ancillary revenue streams is now a priority,” Diogenis Papiomytis, director of aerospace and defense at consultant Frost & Sullivan Inc., said by email from Dubai.

Etihad is also introducing fees to upgrade services on the ground, it said. Business-class passengers can pay to use first-class lounges and a spa when flying from or transiting through Abu Dhabi. Starting July 3, premium customers in other cities will have the option of paying for chauffeur service at discounted rates. Passengers on the Residence, Etihad’s opulent cabins on Airbus A380s, will continue to get chauffeured for free, according to the statement.

Economy-class passengers can pay for access to business lounges in London, Manchester, Dublin, Paris, Washington, New York, Sydney and Melbourne for fees ranging from 45 pounds ($57) at London’s Heathrow to $75 at New York’s JFK. In Abu Dhabi, the fees reach 920 dirhams ($250) for an eight-hour stay, the airline said.

©2017 Bloomberg L.P.

This article was written by Deena Kamel Yousef from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Ryan Wolkov

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Tour Operator That Brought American to North Korea Has Unprofessional Reputation

Christopher Barbara  / Associated Press

In this May 30, 2009 photo, Young Pioneer Tours founder Gareth Johnson poses while wearing a traditional costume during a visit to the Pyongyang Film Studio in Pyongyang in North Korea. Christopher Barbara / Associated Press

Skift Take: The founder of Young Pioneer Tours left the company to form GN Tours, which at one point stood for Gross Negligence tours. That about says it all.

— Dennis Schaal

Beer-soaked “booze cruises” down North Korea’s Taedong River. Scuba diving trips off the country’s eastern coast. Saint Patrick’s Day pub crawls in Pyongyang featuring drinking games with cheery locals.

Since 2008, the Young Pioneer Tours agency built up a business attracting young travelers with a competitively priced catalog of exotic-sounding, hard-partying adventures in one of the world’s most isolated countries.

But the death on Monday of 22-year-old American student Otto Warmbier, who was arrested during a Young Pioneer tour to North Korea in late 2015 and fell into a coma while in detention, has renewed questions about whether the company was adequately prepared for its trips into the hard-line communist state.

Although many details of Warmbier’s fateful trip are unknown, interviews with past Young Pioneer customers or those who have crossed paths with the tour operator describe a company with lapses in organization, a gung-ho drinking culture and a cavalier attitude that has long troubled industry peers and North Korea watchers.

Founded in 2008 by Briton Gareth Johnson in the central Chinese city of Xi’an, Young Pioneer’s fun and casual style was seen precisely as its calling card, a counterpoint to North Korea’s reputation as a draconian hermit kingdom. “Budget tours to destinations your mother would rather you stayed away from,” its website touts, while describing North Korea as one of the safest places on Earth.

But the agency also known as YPT has been associated with a string of cautionary tales, including of the tourist who performed a handstand outside the most politically sensitive mausoleum in Pyongyang where two generations of the Kim family are buried, resulting in a North Korean guide losing her job.

In a July 2016 interview on the travel podcast Counting Countries, Johnson boasted of gaining notoriety after once stepping off a moving North Korean train while drunk on soju. That stunt resulted in Johnson breaking his ankle, leading to a stay at a Pyongyang hospital and visits from the British Embassy and United Nations doctors, who told Johnson he risked losing his foot within a week.

“I didn’t make (the jump), but I became a legend,” he said.

In the podcast, Johnson described himself as a 36-year old university dropout from London who traveled through Eastern Europe and lived in the Cayman Islands before arriving in North Korea for the first time a decade ago. He was immediately hooked.

“The first time you go to North Korea, it’s just an amazing experience, like nothing you’ve ever seen,” Johnson said. “After that first trip I knew I wanted to take people to North Korea.”

Adam Pitt, a 33-year old British expatriate who formerly lived in Beijing and went on a 2013 trip, described to the AP a party atmosphere led by Johnson, who was often heavily inebriated and “almost unable to stand and barely understandable when he did speak” at a tense border crossing where he needed to hand wads of cash to officials as bribes.

While it’s expected for tourists to relax and enjoy a few drinks while traveling, tour operators and tourists say YPT has long stood out for its party-hearty tour groups. In respective interviews with Fairfax Media and the Independent newspaper, Nick Calder, a New Zealander, and Darragh O Tuathail, an Irish tourist, both recalled the New Year’s Party tour group Warmbier traveled with in Pyongyang in late December 2015 carousing until early morning. O Tuathail declined to discuss his recollections of the trip with the AP, saying he wanted to let Warmbier’s family grieve in peace.

On the return leg from that YPT trip, a YPT guide pulled a prank on a customer taking the train back to Beijing by helping hide her husband’s passport from border agents. That resulted in a scramble to find the passport and a confrontation with irked North Korean soldiers who briefly held the husband.

In an emotional news conference last week after Warmbier was medically evacuated from North Korea, his father, Fred Warmbier, lashed out at tour agencies that “advertise slick ads on the internet proclaiming, ‘No American ever gets detained on our tours’ and ‘This is a safe place to go.’”

After Warmbier’s death in an Ohio hospital, YPT issued a statement saying it would no longer accept American customers because “the assessment of risk for Americans visiting North Korea has become too high.”

Pitt, who is Mormon and does not drink, said the company’s statement appeared to shift blame onto tourists rather than examining its own laissez-faire culture.

“It’s not about who goes, it’s about how their groups behave that causes problems,” said Pitt.

In response to multiple requests for comment, Johnson sent two brief emails discussing only his experiences outside of North Korea.

YPT co-owner Rowan Beard said most reviewers have attested to the company’s professionalism and preparation.

“Frankly everyone has different perceptions on things like drinking and what concerns it raises,” Beard wrote in an email. “With the recent tragedy it’s human nature for some people to over-emphasize certain aspects of their experience.”

Beard noted that the mausoleum incident did not involve alcohol and that YPT had warned all customers about the political sensitivities of the site.

He added that YPT has taken over 8,000 tourists to North Korea with only one incident, and boasts a 5-star rating and certificate of excellence on the TripAdvisor review website. Beard said Johnson was in North Korea on business when Warmbier was detained but was not part of his tour.

John Delury, a North Korea expert at Yonsei University in Seoul, said tour groups barely existed 10 years ago, and any sliver of “responsible engagement” between the U.S. and North Korea is valuable. But he worried about tours that do not educate customers on the nuances and political realities of what they’re seeing.

“Hipster adventure tourism, where it’s like going to a zoo and staring at North Koreans, is problematic,” said Delury, who is familiar with several of the companies running tours into North Korea. “It seems like the framing of Warmbier’s trip was ‘go party and have a good time in Pyongyang.’ That is obviously not how responsible tour companies would frame what they’re about.”

YPT has in recent years expanded its North Korea tours and boasts of other so-called “dark tourism” offerings, ranging from trips to the Chernobyl nuclear disaster site in Ukraine to jaunts through Iraq’s largely autonomous Kurdish region.

In another instance Johnson described on the June 2016 podcast, he led a YPT tour group into the Eastern European breakaway state of Trans-Dniester, where a confrontation with authorities escalated into a policeman pulling out a gun. Johnson talked his way out of the situation because “luckily I had my vodka overcoat on at that point, so I wasn’t that scared,” he said, referring to his drunken state.

“I really shouldn’t have as many stories about being arrested or robbed, but I’ve got quite a lot,” Johnson said in the interview.

Christopher Barbara, a legal consultant who splits his time between Montreal and Shanghai, said he joined a YPT trip to North Korea in 2009 headed by Johnson.

“It was so laid back that it was hard to take seriously,” Barbara said. “The way Young Pioneers managed the trip made it feel like the priority was having fun, not staying safe.”

One morning after they arrived, Barbara told the group’s North Korean minders who were looking for Johnson that he was ill, when he was in fact hungover and asleep after a long night.

“I was worried that Gareth’s behavior was going to get us in trouble,” Barbara said.

Johnson has since stepped back from leading YPT tours to found another business called GN Tours — which used to be short for Gross Negligence Tours, according to cached Facebook and Google pages. Johnson said GN Tours is not associated with YPT.

GN Tours advertises itself as the leading planner of bachelor parties in Southeast Asia featuring: “Beaches, babes, bullets and booze (all cheap).”

 

This article was written by Gerry Shih from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Ryan Wolkov

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Author: Ryan Wolkov

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