Only 42% of travellers properly insured

I am often surprised at the confidence even experienced travellers have in free travel insurance. “I book everything through my card and insurance is part of the deal – it’s as simple as that,” I was told in Cambodia recently. I had been talking to a doctor who specialises in travel medicine only a few days before who outlined the cost of a recent medical evacuation from Phnom Penh. The person concerned did not have the cover for a private aircraft and was evacuated on commercial flights – at a cost exceeding $100,000. But that’s peanuts to the cost of hospitalisation and then evacuation out of say America, my doctor friend warned. In the US, just a hospital bed will cost $12,000 a day.

According to Talbot Henry, national sales director, SureSave Insurance, a recent Department of Foreign Affairs and Trade (DFAT) survey revealed that 20% of travellers in 2016 took advantage of ‘free’ credit card travel insurance compared to one third of all travellers who purchase via travel agencies. “We believe that a large number of travellers are missing out on adequate cover when purchasing through alternative insurance providers,” he says. “ In fact, DFAT research estimates that only 42% of travellers were properly insured in the last 12 months.

Talbot lists several challenges with ‘complimentary’ travel insurance:
Generally, travel insurance policies available via credit cards require customers to first ‘activate’ their cover; if customers assume cover is automatic, they may later find that they have limited or no cover. The criteria required for activation can vary between different providers, however in most cases a certain amount of the customer’s trip must be pre-paid on their credit card, although there can be other criteria, too.

Often, credit card insurance policies have age restrictions that are not always stated up front.

It is also important to check whether a policy covers a traveller’s existing medical condition(s) – and what restrictions apply.
Customers should check what excess payments are required when claiming on a credit card policy. Travel insurance specialists often allow travellers to choose their own excess amount to best suit their needs.

Travel insurance is not ‘one size fits all’, but most ‘complimentary’ credit card travel insurance assume that travellers are. SureSave encourages travellers to find cover that meets their needs, and activities, with the ability to tailor their policy to suit their trip. For example, travellers wishing to participate in winter sports and water sports should check that their travel insurance covers these activities.

Finally, travellers relying on credit card insurance should also consider the quality of assistance they will receive, Henry adds. His recommendation to travellers is to leave the task of evaluating and buying travel insurance to the experts – travel agents. “Agents play a critical role when it comes to travel safety, ensuring that their customers are not left under-insured, paying too much or missing out on key benefits.”


Good news for 2017 as travellers flock to the skies

Airlines will make a net profit of about USD 30 billion and fares will continue to fall during 2017, according to latest projections. A healthy airline industry is one of the cornerstones of a healthy travel industry.

Airfares are already 63% cheaper in real terms than they were 22 years ago. On average, airlines will retain USD 7.54 for every passenger carried in 2017, according to International Air Transport Association (IATA) estimates.

While airline industry profits are expected to have reached a cyclical peak in 2016 of USD 35.6 billion, a soft landing in profitable territory is expected in 2017 with a net profit of USD 29.8 billion. 2017 is expected to be the eighth year in a row of aggregate airline profitability, illustrating the resilience to shocks that have been built into the industry structure.

IATA expects the global airline industry to make a net profit in 2017 of USD 29.8 billion. On forecast total revenues of USD 736 billion, that represents a 4.1% net profit margin. This will be the third consecutive year (and the third year in the industry’s history) in which airlines will make a return on invested capital (7.9%) which is above the weighted average cost of capital (6.9%).


Expected higher oil prices will have the biggest impact on the outlook for 2017. In 2016 oil prices averaged USD 44.6/barrel (Brent) and this is forecast to increase to USD 55.0 in 2017. This will push jet fuel prices from USD 52.1/barrel (2016) to USD 64.9/barrel (2017). Fuel is expected to account for 18.7% of the industry’s cost structure in 2017, which is significantly below the recent peak of 33.2% in 2012-2013.

IATA estimates that the demand stimulus from lower oil prices will taper off in 2017, slowing traffic growth to 5.1% (from 5.9% in 2016). Industry capacity expansion is also expected to slow to 5.6% (down from 6.2% in 2016). Capacity growth will still outstrip the increase in demand, thus lowering the global passenger load factor to 79.8% (from 80.2% in 2016).

The negative impact of a lower load factor is expected to be offset somewhat by a strengthening of global economic growth. World GDP is projected to expand by 2.5% in 2017 (up from 2.2% in 2016). Along with structural changes in the industry, this is expected to help stabilize yields for both the cargo and passenger businesses. This is a welcome development as yields (calculated in dollar terms) have fallen each year since 2012.

IATA revised slightly downward its outlook for 2016 airline industry profitability to USD 35.6 billion (from the June projection of USD 39.4 billion) owing to slower global GDP growth and rising costs. This will still be the highest absolute profit generated by the airline industry and the highest net profit margin (5.1%).

“Airlines continue to deliver strong results,” said IATA’s director general and chief executive, Alexandre de Juniac.

“This year we expect a record net profit of USD 35.6 billion.  Even though conditions in 2017 will be more difficult with rising oil prices, we see the industry earning USD 29.8 billion. That’s a very soft landing and safely in profitable territory.

“These three years are the best performance in the industry’s history – irrespective of the many uncertainties we face. Indeed, risks are abundant –  political, economic and security among them. And controlling costs is still a constant battle in our hyper-competitive industry.”

Edited by Peter Needham


Six Chinese airlines in Sydney herald new era in 2017

Travel between China and Australia received an historic boost yesterday. In an unprecedented partnership between Chinese airlines and Australia’s tourism industry, six Chinese airlines met in Sydney to sign a Memorandum of Understanding to join forces on tourism marketing and promotional activities.

The agreement will see the airlines – Air China, China Southern, China Eastern, Hainan Airlines, Sichuan Airlines and Xiamen Air – take a coordinated approach towards increasing capacity between China and Australia. An announcement on new routes and additional China-Australia capacity is expected in February.

Also coming is a grand trip around China for 100 Australian tourism stakeholders and media representatives.

Tourism Australia was there at the signing yesterday, as was its Chinese counterpart, the China National Tourist Office. Bother are champions of increased air links between the two countries, serving to open up tourism in both directions.

The signing should usher in a new era of bilateral tourism exchange between Australia and China in 2017. Next year is set be another record year for Chinese tourists coming to Australia in both visitor numbers and total spend within the travel and retail sector.

The China-Australia Year of Tourism 2017, a joint initiative between Australia and China, coordinated by the China National Tourist Office, was officially launched in Sydney by  Luo Weijian, Director of the China National Tourist Office,  and John O’Sullivan, General Manager of Tourism Australia.

The increase in both carriers and direct routes into China is also boosting Australian visits to China. More than 720,000 Australians have travelled to China in the past year, that number representing total growth of more than 40% over the past five years. Australia has consistently ranked among the top 15 source nations for overseas visitors to China.

“This is one of the most significant tourism exchange initiatives ever undertaken between China and another country,” Luo said.

“Designating 2017 as the China-Australia Year of Tourism recognises just how important tourism is, not just in terms of export income, but in cultural exchange between Australia and China.”

A large number of cultural activities will be staged in Australia and across major tourist destinations in China over the coming year. In addition, there will be a host of promotions and airfare deals for Australian travellers to China.

The promotion will run throughout 2017 but Luo says the positive spin-off will continue for years to come.

“One of the most exciting aspects of this year of tourism is the coming together of six major Chinese airlines, all working together towards building one market.”

Though China’s major airlines are all government-owned, they operate as separate business entities and compete across a number of routes and markets.

“What we’ve recognised,” Luo said, “is that the Australian market lends itself more towards cooperation. Rather than six Chinese carriers competing to get a bigger slice of the pie, if we grow that pie everybody will get a bigger slice.

“One of our key objectives is to add greater capacity and more routes between Australia and China. This will attract more Australian visitors to China and it will facilitate continued growth in a market that is currently generating more than AUD 9 billion in export revenue for Australia.”

Together the six Chinese airlines represented in Sydney yesterday operate 1739 aircraft. All have received the maximum 7-Star Safety Rating by top airline industry analysts,

According to Kathy Zhang, General Manager of China Eastern Airlines, “Travel between Australia and China is booming. We have seen rapid growth in both Chinese visitors coming to Australia and Australians visiting China, and it is one of the key drivers for China Eastern Airlines’ international business.”

Speaking at the launch, Tourism Australia boss, John O’Sullivan, praised the role China’s airlines had played in facilitating Chinese arrivals, which he said had consistently grown at annual rates over 20% in recent years.

Direct flights operate between Australia and 13 mainland Chinese cities,  encompassing major hubs such as Beijing, Shanghai and Guangzhou. In recent times other routes have been added, opening up tourist destinations such as Xi’an, famed for its Terracotta Warriors, and Sichuan province, home to China’s great panda sanctuaries and world famous for its spicy food.

The first major event of the China-Australia Year of Tourism will be a launch at Sydney’s Opera House on 5 February 2017. This gala event will be attended by 2000 tourism stakeholders from both China and Australia. Chinese Airlines expect to make an announcement about new routes and additional China-Australia capacity at this time.

A similar gala event, organised and hosted by Tourism Australia, will be held in Beijing in the second half of 2017.

Over the coming year, the China National Tourist Office (CNTO) will host 100 Australian tourism stakeholders and media representatives on an extensive trip taking them right around China.

CNTO will also take part in the Australia China youth exchange inviting Australian university students and young entrepreneurs on special study tours of China.

Edited by Peter Needham