China’s Juneyao Airlines has become the first connecting partner under Star Alliance’s partnership model that allows regional low-cost or hybrid airlines to link to its network without having to become a full member.

This model has enabled Star Alliance to achieve “two important goals”, stated the alliance’s CEO Jeffrey Goh. “First, as an alliance we can offer regional airlines an attractive way to connect to our global alliance network, without requiring full membership. Going forward, this will enable us to strategically enhance our network,” he said.

“Second, with Juneyao Airlines we strengthen our market position in Shanghai, a city which is already served by 17 of our member airlines
and which will now offer even better connectivity to our customers.”

As a connecting partner, Juneyao Airlines now offers Star Alliance members transfer opportunities at either of Shanghai’s two airports and through check-in in both directions.

Qualifying Star Alliance Gold Status passengers can enjoy the following privileges on their Juneyao Airlines connecting flights: lounge access; fast track security; additional baggage; and priority for check-in boarding, standby and baggage delivery.

Juneyao Airlines has sealed agreements with Star Alliance member airlines, enabling frequent flyer members of Air Canada, Air China, EVA Air, Singapore Airlines and United to earn and use miles when travelling on the Chinese airline.

Dusit International has invested US$1 million in exchange for a 9.3 per cent stake in Thai condo and villa rental platform, favstay.

Part of a US$2.9 million Series A investment round, Dusit’s investment will fund the startup’s aggressive expansion to increase listings sixfold and foray into Vietnam, Myanmar, Indonesia, and Cambodia in 2017, as well as other Asian markets in subsequent years.

(From left) Favstay’s Natavudh Pungcharoenpong; Dusit International’s Suphajee Suthumpun; and FavStay’s Suchada Taechotirote

Established in 2015, favstay currently has over 11,000 properties in Thailand listed on its platform.

Favstay will continue providing a range of services such as property photo shoots, property management, housekeeping, and room maintenance for property owners; and for renters, a customer service platform with location-specific information and services like check-in and check-out.

Dusit’s investment is in line with its strategy to balance its portfolio of hotels such that half of its operations are outside of Thailand by 2022, and diversify its business lines so approximately 10 per cent of total revenue comes from new investments in hospitality-related industries.

The poor performing ringgit has proven to be a weak deterrent to longhaul travel plans among middle and upper middle class Malaysians, who have continued to book trips to Europe for the two-week school holidays starting later this month.

However, buying habits have changed, outbound agents told TTG Asia.

Paris

The ringgit, which has depreciated by some 8.1 per cent over the euro compared with 23 per cent over the US dollar from two years ago, has made Europe a favoured longhaul destination.

Kerry Tam, director, Parlo Tours Malaysia, said her company has developed more affordable packages to Central Europe, which are selling well for the May school holidays, in addition to exclusive group tour options.

She said both tours have received equal demand but the profile of customers are different. The more affordable tours attract those in their 30s and early-40s, as well as those from outside the cities. Exclusive tour packages attract city-dwellers and consumers in their late-40s and up.

Tam explained: “An example of an exclusive tour is a five-country combination covering France, Belgium, the Netherlands, Germany and Switzerland, costing around RM12,000 (US$2,756). Such tours attract (older travellers) with big disposable incomes. Those with smaller budgets tend to opt for a nine-day/six-night package covering the same countries but costing only RM6,500, inclusive of miscellaneous charges.”

The difference in pricing for tours covering the same destinations comes from the number of sightseeing tours featured, hotel locations and the number of meals.

Mita Lim, managing director of Ice Holidays, a B2B wholesaler in Malaysia, said he was targeting a 15 per cent growth in longhaul sales for this coming school holidays. He said: “Seven-day/four-night all-inclusive tours to Central Europe and nine-day/six-night tours to the Balkans are selling very well as savvy travellers know they can save more by joining a group tour rather than going FIT and paying separately for transport and hotels.”

Desmond Lee, group managing director of Apple Vacations & Conventions, said while demand for Europe this holiday season is projected to rise 15 per cent year on year, FIT travellers on a budget are increasingly taking mono-destination trips and forgoing multiple-destination ones. These travellers are also booking three- and 3.5-star properties, and going for promotional airfares.

Malaysian parents with children studying in Europe have also cut down on the number of times they visit, coinciding their trips with important occasions, said outbound agents.

Preliminary figures from the Association of Asia Pacific Airlines (AAPA) revealed the region’s airlines made US$6.9 billion in aggregate net earnings, with passenger demand growing 6.4 per cent to alleviate yield pressures and a fall in jet fuel prices ameliorating operating costs.

Asia-Pacific airlines saw revenue dip 0.2 per cent to US$126.4 billion, as lower airfares saw a 5.5 per cent decline in average passenger yields to 7.9 US cents per RPK. Total operating revenue was down 0.3 per cent to US$165.3 billion in 2016.

Combined operating expenses totalled US$151.8 billion, unchanged from 2015. Reflecting the 17.7 per cent drop in global jet fuel prices to an average of US$52.6 per barrel, fuel expenditure fell by 16.8 per cent to US$33.7 billion and its share of total operating costs declined by 4.5 percentage points to 22.2 per cent. This was offset by non-fuel expenditure, which rose 6.1 per cent to US$118 billion.

Commenting on results, Andrew Herdman, AAPA director general, said: “Asia-Pacific carriers achieved another year of respectable earnings in 2016, with an average 8.2 per cent operating margin and net profits of around US$6 per passenger, reflecting the still very competitive market environment.

“(However), the strengthening of the US dollar against many Asian currencies affected revenue performance and increased the burden of dollar obligations for a number of carriers.”

Looking ahead, Herdman said the operating environment remains challenging, against a backdrop of stiff competition, higher oil prices and other cost pressures.

“Nevertheless, Asia-Pacific airlines are focused on enhancing business performance and investing effectively in new technologies and aircraft, with the aim of strengthening resilience and further improving long-term profitability,” he noted.