Travel: Mango: Trends in Travel and Aviation
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“Research and trending forms part of our ongoing internal process,” says Mango CEO Nico Bezuidenhout, who says that during Mango’s three and a half years of market participation, shifts in travel behaviour have been phenomenal. “Over the past 18 months consumers have been hit with a double whammy of rocketing oil prices followed by a recession. Spend has decreased and in some months average aviation commuter numbers have dropped by up to 20% year on year across the industry.” However, says Bezuidenhout, based on analyses it’s not all bad news for the South African travel, aviation and hospitality industries.
*South Africans are travelling for shorter periods:*
Analysis of thousands of Mango bookings show that periods of travel have shortened by approximately 13%. Whereas leisure travellers would have spent a fortnight at a destination, this has been cut back to ten days. Bezuidenhout says that this trend appeared at the beginning of the third quarter last year but was clearly illustrated during the April holiday season.
*More South Africans are opting for affordable travel:*
“The leisure market has markedly moved in favour of low cost travel,” says Bezuidenhout, who adds that most low cost airlines in the country continue to enjoy high average load factors over traditional leisure periods. Mango has maintained an average load factor of 85% this year.
Business travel budgets have also come under scrutiny and in the United States the Association of Corporate Travel Executives found that over 70% of corporate have trimmed their budgets by between 10 – 20%. “South Africa is no different with many companies opting for value driven low cost travel. Mango Plus, a business travel product developed late 2007 has seen a substantial increase in uptake while our Corporate Desk has increased its corporate agreement sales by more than 30% during the last quarter,” says Bezuidenhout.
According to the World Tourism Barometer (January 2009) tourism in Africa maintained its growth of around 5% while European tourism flat lined, Asia Pacific showed a 7% decline from the previous period. North America saw a 3% growth. “The potential to deliver affordable travel to the international market is now more relevant than ever,” says Bezuidenhout, who believes that South Africa remains well positioned to attract increasing numbers of tourists. “Mango will be communicating internationally during the next twelve months in order to share our value proposition with travellers,” he says, and notes Mango’s intention to capitalize on the large influx of foreign tourists expected during this period. “Low cost airlines are perfectly positioned to attract a significant slice of this market. We have already seen a sharp increase of international passengers on all our routes.” He says that it is Mango’s intention to become the domestic airline of choice in this sector.
*Anecdotal Survey Shows What South Africans Expect From Airlines*
In an anecdotal survey conducted aboard selected flights, South Africans were asked what their expectations are from airlines, in particular, low cost airlines. The sample size was 200 passengers.
The majority of respondents (87%) rate an airline’s on time performance as highly valuable with service standards coming in third place with 84% of travellers expecting reasonable levels of delivery. Surprisingly the quality of the in flight read ranked as an important aspect of domestic travel with more than half (57%) of those interviewed placing importance on magazine quality. Few expected complementary meals or snacks on board, preferring affordable fares which dominated South African’s expectation of low cost travel.
*South Africans Travel For Sport*
Despite the economic climate, South Africans continue to travel for sport. Bezuidenhout says that the recent Confederations Cup, IPL Cricket and Lions Tour as well as the current Tri-Nations Rugby has delivered full flights and, with several more large events in the near future, prospects are positive for domestic airlines.
*Mango Continues to Grow*
Bezuidenhout says that Mango continues to grow as the market swings toward low cost travel. He says that the low cost aviation model is enjoying increased traction as traditional airlines contract. “While it is expected that the global aviation industry will lost nearly US$ 9 billion this year, Mango has operated profitably over the past fiscal and present load factors are encouraging.” He adds that the airline’s focus on ancillary revenue continues to increase.
*Pricing During a Recession*
Bezuidenhout expects air travel prices to remain at present levels adding that price increases in travel will be minimal.
*Smart Business In A Recession*
“Channel distribution, payment options, amplified marketing and smart pricing strategies will ensure that airlines and other hospitality and travel businesses withstand the challenge of the recession,” says Bezuidenhout. This, he says, along with an increased emphasis on creating consumer value and the upcoming World Cup and sporting events should see the industry through.
He adds that while Mango and possibly some other domestic low cost carriers are bucking the trend, overall passenger numbers remain lower than recent years and further declines are a concern. “While the exchange rate and the fuel price have become more favourable to airlines in particular, the decline in traveller numbers may negatively affect bottom lines in travel for some time. With growing predictions of an L-shaped recession, we may be near the bottom of the period but it is expected to be a prolonged plateau prior to any significant growth.”
Bezuidenhout says that beyond intensive marketing, price strategy and accessibility it is also imperative for airlines to manage capacity in a contracting market.
Increasing levels of environmental concern will see consumer behaviour and purchase patterns become greatly influenced by Green Credentials. Bezuidenhout believes that the same holds true in aviation. “Ageing aircraft produce up to 30% more pollutants and consume far greater quantities of fuel more than, for example, the new generation Boeing 737-800 aircraft Mango operates.” He adds that as environmental and social consciousness among consumers increases, airlines or other producers whom operate responsibly will attract greater numbers within the next half-decade.
Business News Sector Tags: Travel|