Category: personal_noteS

Since 2017, three major airlines in US have made changes to their boarding process, in the face of different layers/tiers, ticket types and other privileges.

Here is a description of the mess before – “Under American’s old boarding call, Group 1 actually was the fifth group called for boarding, trailing the carrier’s elite frequent-fliers and first- and business-class customers who were subdivided into five groups of their own that all boarded earlier.”

 “Group 1 actually was the fifth group called for boarding”

What are the “new” procedures and how airlines value their customers?

American Airlines – 10 segments

Group	Boarding pass type
ConciergeKey℠ members	ConciergeKey℠
Group 1	First Active duty U.S. military with military I.D. (Business on a 2-class international plane)
Group 2	Executive Platinum oneworld® Emerald℠ (Business on a 3-class plane)
Group 3	Platinum Pro Platinum oneworld® Sapphire℠
Group 4	Gold oneworld® Ruby℠ AirPass Premium Economy Citi® / AAdvantage® Executive cardmembers Travelers who bought Priority boarding
Group 5 (Preferred boarding)	Main Cabin Extra (excluding Basic Economy) Eligible AAdvantage® credit cardmembers* Eligible corporate travelers**
Group 6	Group 6
Group 7	Group 7
Group 8	Group 8 Basic Economy to / from Europe
Group 9	Basic Economy within the U.S., Canada, Central America, Mexico & Caribbean

Delta Airlines – 7 segments

Pre-Boarding	Customers needing assistance or additional time to board, including families with car seats or strollers Active Duty U.S. Military personnel with ID
Premium Boarding Zone	Delta One® customers First Class customers Delta Premium Select customers Diamond Medallion® Members
Sky Priority Boarding Zone	Platinum Medallion® Members Gold Medallion® Members Delta Comfort+® customers Flying Blue Platinum and Gold members Virgin Atlantic Flying Club Gold members Virgin Australia Platinum and Gold members GOL Smiles Diamond members SkyTeam® Elite Plus members
Zone 1	Silver Medallion® Members Delta Corporate Travelers Priority Boarding Trip Extra customers Gold, Platinum and Reserve Delta SkyMiles® Credit Card Members Flying Blue Silver members Virgin Australia Velocity Silver members GOL Smiles Gold members Sky Team® Elite
Zone 2	Main Cabin Passengers
Zone 3	Main Cabin Passengers booked in T, X and V fares
Zone 4	Basic Economy Passengers (E)

United Airlines – 6 segments

Pre-boarding

• Unaccompanied minors
• Customers with disabilities
• Active members of the military
• United Global Services® members
• Families traveling with children age 2 and younger
• Premier® 1K® members

Group 1

• Premier Platinum members
• Premier Gold members
• Star Alliance™ Gold members
• Customers seated in premium cabins: United Polaris®, United First® and United Business®

Group 2

• Premier Silver members
• Star Alliance Silver members
• Customers who have purchased Premier Access® or Priority Boarding
• United℠ Explorer, Club, Presidential Plus℠ and Awards Cardmembers

Groups 3 – 5

• Economy Plus®
• United Economy®
• Basic Economy*

* Customers who have purchased a Basic Economy ticket will be in the last boarding group, except for Premier members, Chase Cardmembers of qualifying cards and Star Alliance Gold members, who will still receive their priority boarding.

..

Just a reflection on the complicated business development efforts and corporate strategies… think about the internal slides behind the schemes

What Google can tell us

• holiday season is king and this year is strong (as expected)
• Walmart is living well; and it becomes more competitive in Thanksgiving shopping
• Apple’s iPhone in 2018 not as attractive

*Amazon may have lots of volume directly through its own platform

India

Walmart first announced its acquisition of a 77% stake in Flipkart in May 2018, with a consideration of $16 bn including $2 bn of new equity funding. The deal closed in August.

According to QZ, “in the fiscal year ended March 31, Flipkart had net sales of $4.6 billion, over 50% higher than the previous year, Walmart said. Its gross merchandise value (GMV, or the total value of goods sold from its platform) was $7.5 billion during the period.”

“Amazon India is currently worth $16 billion and has the same 30% marketshare as local competitor Flipkart”, source: Forbes, Citi

Valuation multiple ~4.5x of net sales in FY2017.

China

Walmart chose JD as its partner in China in June 2016 when it used its China business for an initial 5.9% stake in JD (newly issued shares)

Then it doubled the stake in Oct. 2016 to 10.8%; and in Feb. 2017, the ownership level was increased to 12.1% (289.1 mn shares).

Walmart also invested $500mn Aug. 2018 with JD in the Dada-JD JV Daojia, which claimed to have 20 million monthly active users at that time.

Latin America

In June, 2018, Walmart sold 80% of its Brazil business to Advent International, a PE firm and recorded a $4.5 bn loss. In connection with the deal, Advent would also invest 1.9 billion reais ($485.66 million, in three installments; the first two capital raises will total 750 million reais each; the first was already completed in 2018 and the second is expected for 2019; the remaining amount will be invested by 2021, according to Reuters)

Walmart acquired Latin American (Mexico and Chile focused) grocery-delivery marketplace Cornershop for $225 million in Sep. 2018 (WSJ report).

UK

Walmart sold a majority stake in its UK business Asda in Apr. 2018 for $4 bn. Asda was valued at $10 bn (valuing Asda at approximately £7.3 billion on a cash-free, debt-free and pension-free basis, implying an EV / FY17 EBITDA multiple of 5.8x).

 

China’s passenger vehicle sales has been through 6 month of yoy decline (Jun – November) and will post the first yoy annual decline in 2018, after 26 years of boom

Two sources: CAAM and CPCA, passenger car sales down 16-18% yoy in November.

There are two factors to consider here:

1. Long-term: the market is reaching maturity.
   a. Although there may be another few years before China finds its stable level of car ownership, it has become a fairly high level of –  an average Chinese household has around 0.58 cars. (China’s household number has been estimated to be ~455 mn and China has ~310 mn automobiles by the end of 2017, assuming 6/7  of which are passenger cars)
   b. The second half of China’s car ownership boom is at the beginning of shared vehicles & an era of transportation-as-a-service.  Therefore, China may never reach a stable level of ownership as high as major industrial countries’.
   c. China’s cities are more condensed. Population is so centralized that high car ownership rate in cities may not be possible
   c. an average US household has 1.968 cars
2. Short-term: consumer confidence & tariffs
   a. The tariff was proposed to be decreased from 25% to 15% in May, but due to trade war the tariff for US produced cars were raised to 40% since July.
   b. Consumer confidence is damaged while financing may also be limited

Read More On…

• China’s car sales drop for sixth straight month with November’s 18 per cent decline a further sign of slowing economy
• China’s Slowing Car Sales Show The Harsh Realities Facing Global Automakers