City Insider: Aviation and tech in focus on WTTC day two

City Insider - A City perspective on the travel industry from FT journalist David Stevenson

The second day of the WTTC’s tenth annual global Travel and Tourism summit touched on a typically wide range of subjects including the role of governments in helping – and hindering – the industry, and the importance of new technologies in transforming business models.

Antony Tyler, chair of IATA and chief executive of Cathay Pacific launched a stinging attack on the new Conservative/Liberal government’s travel and air policy, lambasting it as ‘not very aviation friendly’.

In particular Tyler singled out the decision not to build a third run way and the move to switch the aviation fuel tax duty to a per-plane basis which would “favour short haul over long haul” carriers such as his.

He also suggested that the move by governments worldwide to load new taxes on aviation was at odds with the marginal profit structure of an industry whose average profit margin is just 0.3% and 3% at peak levels.

Tyler also contrasted the UK’s policies with those of Asian countries and in particular China, where there was still “a belief and faith in progress and growth”.

He pointed to the ‘awesome’ growth of the Chinese aviation sector as an example, noting that according to some estimates the number of commercial airplanes in China was set to rise from the current 1,600 (against just 94 in 1990) to 4,000 by the next decade.

This massive increase was paralleled by the growth in airports (now 270) and the four-fold increase in routes. If estimates were to be believed, Tyler said, China could be expecting 1,500 million passengers on its routes by 2030.

In interview after the conference Christopher Rodrigues, chairman of VisitBritain, defended the incoming government against charges that it was anti-growth and anti-travel.

He said: “I don’t believe it’s gone anti-growth consciously and they are committed to growing both domestic and international tourism”.

“Tourism is an industry that touches many [cabinet] portfolios…most of the things that matter for tourism aren’t controlled by the Minister of Tourism”.

But Rodrigues believed that the government did understand the economic value of tourism. “I think the government does support this,” he said.

Pointing to the £3bn brought into the country by foreign visitors every year in extra spending, Rodrigues also suggested that some of the money raised from green aviation taxes might be used to help a move to sustainable domestic tourism.

It would, the boss of VisitBritain suggested, “be nice to think of some those funds being raised by APD being used to make sure Britain is a vanguard nation” in building green tourism.

He also said his agency was keen to address another concern voiced at the summit – the increasingly tortuous international visa regime.

He said that efforts were currently underway with the Borders Agency to ‘simplify the process’ and look at making technology a more positive force.

He even suggested that working with the WTTC and other global organisations we might look at building a global, co-ordinated biometric data system where all information was standardised across nations.

Later sessions returned to the subject of technology and the need for the industry to embrace change and new innovations.

Dara Khosrowshahi, president and chief executive of travel aggregator Expedia, reminded the audience that his company already services two clients every second.

But he argued that the pace of change was intensifying, and that it was sensible to expect changes in mobile technology to produce ‘another Expedia’ as the take-up of apps exponentially increases.

“You can’t avoid technology…..the rate of technological change will accelerate” said Khosrowshahi.  “Mobile and social technologies are hitting us in the face at the same time,” he warned, adding that even Expedia didn’t always know how to react.

In particular he pointed to one project which involved users placing a pin on a visited location through Facebook. In a short time Expedia already had 1 billion ‘pins’, tiny packets of information the company didn’t ” know what to do with”.

Charles Petruccelli, President of American Express travel echoed Khosrowshahi’s views suggesting that business travel was in the throws of a third revolution. The move to mobile, he contended, was just as important as the emergence of zero commission and of the internet.

“Mobile technology brings to the traveller the ability to have information immediately, to decide on that information and to act on it – it gives the user the ability to navigate through to flexible decisions while they travel”. 

This enthusiasm for new technologies was tempered by Cathay Pacific’s boss Antony Tyler who questioned “Who’s going to make any money out of it?”.

Tyler also questioned who owns customer data: “Whose customer is it, and how can value be extracted out of it?”

The boss of Whitbread, the UK’s biggest hospitality provider, also told the audience not to forget that the mature, developed world economies had plenty of growth in them if only companies focus on some business basics.

Noting how his company had managed to increase profits last year he suggested the winning formula consisted of a focus “on cash…on costs…and [on] market share”.

The focus on growth in core mature markets didn’t mean, though, that Whitbread was ignoring China. Pointing to the growth opportunities in China he told the audience that he would be opening 100 new outlets in China by the end of the year.

 >WTTC day one: Improving world economy bodes well

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