Pundits make predictions at Phocuswright Europe
IT’S hard to see any challengers emerge in the post-pandemic landscape to take on the big three travel giants – Booking, Expedia and Trip – which control 75% of the global OTA market, predicted pundits at Phocuswright Europe in Amsterdam this week.
Speaking on the panel on “Pundits and Predictions”, moderated by Phocuswright’s Lorraine Sileo, Timothy O’Neil-Dunne, principal at T2Impact, said, “The only possible contender could be someone coming from China to a non-China world, it is not going to happen the other way round, that’s been tried, so China is the only source where it could come from.”
Timothy Hughes, vice president of corporate development for Agoda, noted that the pandemic gave life to local players who focused on domestic markets. “They thought they’d be under pressure from the global brands but they had the best years of their lives,” he said.
The other two names mentioned as possible contenders were Google and Amazon Web Services.
As for lessons from the pandemic, Rod Cuthbert, founder of Viator, said, “We realised how much people really want to travel and that there is never-ending desire to do so.” He added it’s been interesting watching “the elasticity of prices”.
“I paid a ridiculous amount of money to get here, that didn’t bother me. It’s either people saying, I’ve got two years of travel budget or travel is worth more to me than what I had thought.”
Hughes said the way “markets would turn on and off in Asia” along with changing travel restrictions was interesting. “Everytime it turned on, we saw instantaneous demand, at all levels of price point.”
He expressed concern that in the rush for travel recovery – “Europe is straining at the seams”, he said – the sustainability issue will be forgotten. To which O’Neil-Dunne said the “big lie” in the industry was net zero by 2050. “It’s not going to happen, we are not going to be able to do that,” he said.
“We made bad decisions early on and are continuing to make bad decisions,” he added, citing the abolition of large aircraft like the A380 as one of them. “The scarcest resource in the travel world are runways. It takes 10-15 years to build one. We cannot have large airports with only small to medium size aircraft.”
At the IATA AGM in Doha this week, Emirates president Sir Tim Clark expressed concern about the lack of “very new large aircraft project on the horizon” and said if he had his way, he would build a new A380 design – but twice the size – to tackle growth and sustainability issues.
Looking into the mid-2030s, quoting this article, he said if you “extrapolate growth and recapture the pre-2019 growth curve, take it out to the mid-2030s, unconstrained, 4% growth per annum, where does it get you? Eight billion people travelling. How are you going to accommodate that eight billion if you leave it to the single aisles and the small twins? You won’t be able to accommodate it and you suppress demand and the prices will rocket for airfares, so the days of cheap airfares will go because prices will be so high because that’s all we can do.”
He said, “ The trick is to come up with an aeroplane that does all of that but is technologically so advanced it can embrace synthetic fuels and work on them in the mid-2030s,” adding, ““I hope that collectively, we can find a way, to get our minds together to decide what is that aircraft going to look like? Lighter, faster, and cheap to operate, you then have the propulsions which possibly work off synthetic fuel, partly or 100% eventually. I would build another A380 twice the size because of the zero-emissions engines we have now, with four, possibly three engines.”
O’Neil-Dunne said it would be a challenge to keep travel robust in the face of consumer trends. This week, the Dutch government announced it would cut Schiphol flights by 20% by November 2023. “What will that do to the Netherlands?”
Airports are a huge constraint going forward, said O’Neil-Dunne, as has been proven in Europe in the current travel rush with reports of long delays, lost baggage, cancelled flights, mounting passenger frustration. “The top 200 airports in the world, 95% of them are slot constrained. We need to solve the airport problem bigtime,” he said.
Hughes noted that Covid shone the light on cancellation policies and he forsaw “spectrum of different conditions” and “different creative ways of cancellations” going forward.
He also commented that the gap between data and insights needed to be fixed. “We are sitting on so much data and we are pushing this data without insights.” He cited an example of him searching for a flight for Sydney to Milan in which he got served a 50-hour flight. “How is that an option even if it’s cheaper?” The second cheapest he got was 82 hours. “We need to build the products that take the data and turn into insights.”
The good news, said Hughes, was that some calm had returned to the industry in Asia. Money had been swirling around in Asia in the past decade, he said, and in the last nine months, valuations of companies such as Coupang, Paytm, Gojek and Grab had lost much of their valuation. This has created some calm in the industry and allowed those in travel to have oxygen.
Breathe and watch session here.
