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Sun 2 May 2010 04:00 AM

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Travel by Kanoo

ATN sits down with the outspoken deputy chairman of the Kanoo Group, Mishal Kanoo for his views on the travel industry.

Travel by Kanoo
Mishal Kanoo, deputy chairman, The Kanoo Group.

ATN sits down with the outspoken deputy chairman of the Kanoo Group, Mishal Kanoo for his views on the travel industry.

There’s probably few people better placed to talk about the rapid transformations happening in the travel industry than Mishal Kanoo. The multi-billion dollar Kanoo Group which Mishal is the driving force behind, pioneered the Gulf travel industry back in 1947 by being the first travel agency to register with IATA. Kanoo Travel has since mushroomed to become largest travel company in the Middle East, with a network of over 200 branches and a thousand employees across the region.

Online bookings

Today, things are changing, and the advent of the internet is threatening the traditional role of the agent. Kanoo however resolutely dismimisses the idea that travel agents are doomed by online bookings.

“There was a perception about five years ago that travel agents were going to suffer because of internet ticketing and I don’t see that happening,” he says. “I’m not saying that it doesn’t exist but I’m just saying it hasn’t become the dominant power that people perceived it to be, even though it is taking a bigger slice year by year.”

Kanoo argues that the fundamentals of being a good travel agency have not changed regardless of technology, and that’s to do with the focus on the customer.

“If tomorrow I have an issue or a problem with my ticket – like currently with this situation in Europe [the ash cloud] – what do I do? Who do I contact? At that point I think if I was to contact a 1800 or a toll free number they would be overwhelmed. What a travel agent does is act as an intermediary for the best benefit of the customer, that’s the whole purpose of having a travel agent. That’s what they’re supposed to do.”

Undercutting suppliers

Good customer service is all well and good, but how does an agent deal with undercutting suppliers targeting clients directly?
“First and foremost that will not happen because if our suppliers did that – and we have experienced it the past – we will immediately flag it to them and we will cut them off,” states Kanoo without hesitation.

He acknowledges that relations can be strained between airlines and agents, but hints that agents still have an upper hand, as even airlines who have been “belligerent” in the past “thinking we are number one and everyone will come to us, have now turned around and said, actually you know what, can we work with you again?”

He explains: “In the past certain airlines from Europe thought the world revolved around them - but they discovered very quickly that it doesn’t. An airline from this region – I won’t mention their name – also thought the world revolved around them, but they discovered they could be replaced. Another airline from the region picked up their banner and discovered that that’s not the case. And it will continue to be the case.”

Budget airlines

It’s clear that there is not much love lost between the travel boss and the region’s airlines. Kanoo has plenty more to add when asked about budget carriers, declaring:

“Let us address the ‘myth’ of budget airlines: there are no budget airlines.

“Just because you sell five or six or even a dozen seats at a very low price – does that make you a budget airline? In a plane that carries 300 people, if ten of them or even, let’s be generous, 30 are a really low price, you’re talking 90 percent that are not. And unless I’ve got my maths wrong, that means the majority is not budget so by default it is not a budget airline.”

Another issue is the lack of ‘secondary’ airports.

“Budget airlines survive on secondary airports.” explains Kanoo. “Where are my secondary airports in the region? Look at Ryan Air, Easy Jet and all these discount airlines in Europe – I’m talking about flying out of Luton versus flying out of Heathrow, I’m also talking about a £20 or £100 flight versus £200 with BA.”

Kanoo is convinced that a genuinely budget airline has no hope in taking off while governments around the region continue to build “monstrous” airports.

“It comes down to the issue of whether the governments here will open up the skies. Unfortunately the way I see it - Abu Dhabi, Qatar, Dubai - each one is targeting 40 to 50 million passengers. I’m sure the CEOs of these airlines will disagree with me, but if I was to say, what are the criteria to fulfill a budget airline and are they fulfilling it? No. We don’t have that in airlines here.”

Hotels

Some equally strong words are reserved for the region’s hoteliers. While the crisis forced hotels here to dramatically slash their rates to attract guests during the downturn, Kanoo remains unconvinced that they have learnt from past mistakes and with the tourism sector now reviving, hotels once again risk pricing themselves out of the market with inflated room rates.

“I would strongly suggest to the hotels in the region – they have this done in the past and I hope they learn from this – do not ‘gouge’ your customer. I know the number of hotels here is limited but then so is the entertainment that a hotel guest would have.

“Tourism is still young,” he adds. “There is still a lot to do here before it becomes a major attractions point. If you keep doing that to your customers, eventually you will lose them. The more discerning ones will find alternatives. If I was to charge the same rate as that of a hotel in London or Paris or New York, and I cannot provide them the same entertainment factor of London or Paris or New York – well what do you think?”

The future

Kanoo is optimistic that things are now picking up for the travel sector as those “silly policies” that companies put in place during last year’s reccession – otherwise known as corporate travel bans and travel spending cuts – are finally being rescinded.

“Fortunately some companies have looked at it and said, it was a silly policy, let’s go back to what is the norm, and I can see the trend is moving towards readjusting that aspect, so I’d say [the travel sector] has revived, to a certain degree it has recovered.”

But as to the future of the travel agency - well, with airlines no longer paying commission and the internet taking a bigger slice of bookings every year, Kanoo says its only the “serious travel agencies that will survive”. He predicts a rash of consolidation and smaller shop closures in the future. “Travel agencies that rely on making a living off commission - they are going to die a natural death,” he says. “In a zero commission environment, watch and see it won’t take very long. You should start seeing these smaller shops shutting down. Unless of course they are a front for something else...” he adds, (when I ask what that could be he suggests money laundering as one plausible option.)

For a “serious travel agency” like Kanoo Travel there are other concerns. With 96 percent of the company business now coming from corporate accounts, the focus going forward is to take ultimate care of these clients. “Our main concern – and this is paramount for us – is to service our current customer base and to ensure that they are satisfied and happy with the service they are getting. And to find out what do to keep them as happy customers – that’s our main goal.”