CONTINUED FROM BACK COVER
record fuel efficiency and passenger capacity, forces its competitors to borrow more, just as the cost of capital starts to increase – pushing them into more debt. “All Carnival has to do now is cross its fingers and hope its surge in efficient new capacity can be paid for by increasing cashflow – hopefully 2014 will bring the expected surge in demand from the US, Europe and Asian markets. “I’m inclined to agree with the most
recent view from analysts at Goldman Sachs who, while recognising that Carnival faced structural challenges based on increased capacity, still believed it would benefit from a new management strategy and an upturn in Asia and Europe.” Stevenson said Carnival should “use
its strong balance sheet to power a sustained increase in capital spending” as the cost of borrowing money increases as the recovery takes hold. And he added: “Perhaps the biggest opportunity here is to spend big on new digital channels that allow Carnival to reach hundreds of millions of customers using simple social campaigns.” In the UK, the world’s second-largest cruise market, the focus of the major cruise lines, at least in the short term, appears to be coming back to the agent. With P&O Cruises preparing for
Britannia, its largest ship to date, and Royal Caribbean basing new vessel Anthem of the Seas in Southampton from 2015, there will soon be even more ex-UK capacity to sell. Agents have seen commission levels
increased, partly via ‘bonus payments’, and although they may not be back to previous levels, many in the trade now feel they can access a rate that is commercially viable. And while Carnival UK’s new
generation of bosses has carefully avoided admitting its new approach amounts to a total U-turn, many agents can see it for what it is and feel vindicated. The past two years have been a challenging period for the cruise sector. It will be hoping that new faces and settled strategies will allow it to chart calmer waters in 2014.
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travelweekly.co.uk — 16 January 2014
travelweeklybusiness
HEATHROWINVESTMENT ‘AT RISK’ AFTERCAA LIMITS RISE IN CHARGES TOSUB-INFLATION
Ian Taylor
The Civil Aviation Authority (CAA) has reversed a previous decision to allow Heathrow charges to rise with inflation over the next five years and instead pegged increases to 1.5% below the retail prices index (RPI) until 2019. The decision drew criticism from all sides. Heathrow warned it would review its investment plans, while Virgin Atlantic chief executive Craig Kreeger declared he was “baffled” by the failure to cut prices further. Heathrow suggested charges per passenger would fall from an average £20.71 in this financial year to £19.10 in 2018-19 and described the resulting return on investment as “unsustainable”. Chief executive Colin Matthews said: “The settlement leaves little spare resource to manage the consequences of potential disruption.”
The airport had proposed its charges rise
above £25 per passenger by 2019. The CAA previously proposed an annual rise of RPI minus 1.3% last April. It revised
ANDREWSWAFFIELD TO TAKE REINS AT MONARCH AIRLINES
Phil Davies
The Monarch Group has appointed Andrew Swaffield as managing director of Monarch Airlines. Swaffield, who has been managing
director of Avios Group, the loyalty scheme run by British Airways parent IAG, since 2006, will take up the post on April 1. Swaffield has over 25 years’ management experience in the travel, aviation and airline loyalty sectors, having worked for Thomas Cook and British Airways. Iain Rawlinson, executive chairman of the Monarch Group, had assumed interim responsibility in November 2013. Monarch Airlines reported a 37% year-on-
year rise in bookings over the festive season, claiming this outperformed the market, which was down by 5.5%.
The CAA has limited rises in Heathrow’s airline charges to 1.5% below inflation until 2019
this to level with the RPI rate in October following lobbying by Heathrow, leading to fierce criticism from carriers, led by Willie Walsh, head of British Airways’ parent IAG. The CAA suggested the latest revision was possible because “passenger traffic forecasts have strengthened since October”. However, Kreeger described the decision
as “a far cry from the reduction needed to mitigate the steep price rises customers have seen in the last few years”.
The carrier said it had seen growing demand for destinations across its network. Monarch added it had also seen positive demand for its new routes in 2014, which include Gatwick-Nice, Luton-Naples and Manchester-Naples.
Rawlinson said: “2014 has taken off well
for Monarch Airlines, with demand for our flights over the holiday period well ahead of the marketplace, and ahead of last year. “Our investment in mobile technology and our app is also paying dividends, with bookings significantly ahead of last year.”
Swaffield: 25 years’ experience
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