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prospects for 2018 at launch of Travel Weekly Insight Report 2017-18. Ian Taylor reports
EasyJet to add capacity despite big drop in yields
EasyJet has increased load factors at the expense of yield in the past year, but will continue to add capacity in 2018.
Sophie Dekkers, easyJet UK country director, told the Travel Weekly Business Breakfast: “We reported a record [annual] load factor of 92.6% at the end of September, which is incredible given what has happened with sterling, with the Paris attacks, Nice and so on. However, it has been at the expense of yield. “On some key routes our yield has come down 30%. We’ve had too much capacity. We had to slash fares, particularly on beach routes into Europe.” Yet Dekkers insisted: “We would
rather be a problem to ourselves than let someone else do it. Demand is still there.” She described Monarch’s failure in October as “not surprising” and
“We’ve had to slash fares, particularly on beach routes into Europe”
DEKKERS: ‘Demand is still there’
said: “We certainly benefited from capacity coming out of the market. Over half of Monarch’s capacity was on five routes – Malaga, Alicante, Palma, Faro and Tenerife. We had 15% of our capacity on those routes and yields down 30%. Given Monarch’s massive exposure, the impact wasn’t surprising. “Some capacity will be backfilled, but I don’t think it will be like for like. In destinations such as Tenerife and Palma there wasn’t enough accommodation for the number of flights going in.” Dekkers told the breakfast: “We’ve seen a switch away from
Turkey and Egypt towards safer destinations, with people flooding into Spain and Portugal. We’ve tried to find new destinations, so Seville is really popular now. Granada and Croatia have performed well. Split airport is pretty well full next summer.” But she insisted: “When destinations go through political disruption or terrorist activity, the UK bounces back quickly. As soon as Egypt [Sharm el-Sheikh] reopens we expect demand. Hotels will be cheap and UK consumers are open to that. Other markets take a lot longer to recover.”
Tui predicts rise in all-inclusive and cruise
Tui foresees all-inclusive and cruise demand growing this year after strong growth in both sectors in 2017. Helen Caron, Tui UK and Ireland distribution and
cruise director, told the Travel Weekly Breakfast: “We’re seeing a much stronger demand for all-inclusive – 60% of the holidays we sold [in the UK] in 2017 were all-inclusive packages. We’re also seeing strong demand for all-inclusive cruising. We decided two years ago to offer an all-inclusive product, with drinks included, on new ships coming into the Tui fleet [and] we’ve seen really strong demand for that.” She described cruise as “one of the best-kept secrets in the UK market for the Tui Group”, saying: “We see demand for cruise growing in 2018.” Caron added: “We want to focus attention where we
believe we can drive strong margins. We see continued demand for our differentiated hotels – holidays available exclusively to Tui. Our fixed air capacity [for 2018] is broadly in line with 2017, but we’re using other airlines to offer destinations we don’t serve on our own aircraft, or departures from regional airports where we don’t have a flying programme. “We see strong growth for Croatia, Montenegro and
Bulgaria. We have significant capacity going into Spain, the Balearics and Tenerife. There is pressure on beds and in some cases that drives up the price. So we’re seeing some consumers look at value destinations such as Bulgaria, and we’ll start to grow in those. “We’re looking at where we can open dedicated Tui hotels in some of those destinations.”
Carrier trumpets new retail system as ’game changer’
EasyJet believes its new retail platform, due to launch this year, will prove “a game changer”. UK country director Sophie
Dekkers described the existing platform as “really old”, saying: “It’s unique to us, created when easyJet first set up, and we’ve had to tack things on around the edges. When we introduced allocated seating, it took us 18 months.” EasyJet has worked with German technology firm SAP Hybris on the new platform. Dekkers said: “We’re going back to what some retailers do. Relevance is one of the key things. For us, that is being able to tailor the package offered as a customer goes through the booking process. “We want to offer people a
bundle of things relevant to the booking [and] trip type and be able to recognise patterns of behaviour. We had 80 million passengers last year [and] 60 million had flown with us before, so we can start to learn about their behaviour. That will be a game changer.”
Read the report
Alistair Pritchard of report partner Deloitte
To view a digital edition of the Travel Weekly Insight Report 2017-18, visit:
go.travelweekly.co.uk/insight18
4 January 2018
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