The Tactical Traveler
A BUSINESS-TRAVEL BRIEFING
FOR DECEMBER 20, 2000
BY JOE BRANCATELLI
This week: how to find lower fares next year; the 2001 outlook for the dollar's value against the Yen and the Euro; a look at next year's crop of aviation regulators; and handicapping the chances (and the timing) of a United-USAirways merger.
COUNTER INTELLIGENCE: Watch for Falling Fares in 2001
Domestic airlines raised business-travel fares at least six times this year, but their arrogance is coming back to haunt them. With the economy softening and the slowest period for business travel just ahead, major carriers are reporting extremely weak advance bookings for the first quarter of 2001. "We're empty going forward in most business markets," one airline pricing executive told me recently. "The double whammy of fares and nervousness about the economy has a lot of companies slamming on the brakes." How will the airlines react? Not necessarily with big, across-the-board, nationally advertised fare wars. Barring a total collapse of traffic, public "percent off" sales in 2001 will be brief, not too deep, and heavily restricted. Frequent flyers should watch instead for more selective initiatives: tactical price promotions offered only through private Internet sales; the restoration of cheaper, less restrictive one-way fare levels; 2-for-1 companion offers; buy coach/fly first deals; and generous mileage incentives aimed at luring travelers back on board.
DOLLAR WATCH: Follow the Bouncing Buck Next Year
The U.S. dollar's two-year surge against the Euro has stalled and 2001 may be the year that the put-upon Euro regains at least a modicum of strength. The U.S. economic slowdown and election uncertainty has helped the Euro claw its way back to about 90 cents from its recent low near the 82-cent mark. "The Euro could be back to parity [$1=1 Euro] within the next six months," explains one currency analyst. Meanwhile, on the other side of the world, the dollar is bouncing up against the Japanese Yen. The buck hit a 16-month high of 112 Yen in recent days and some experts think it can continue gaining throughout 2001. "Our downturn will hurt Japanese imports and that will weaken the Yen further," another currency sage suggests. The bottom line for business travelers? Slightly costlier travel next year in Germany, France, Italy, Spain and other countries whose currencies are tied to the Euro. And marginal relief from the oppressive cost of doing business in Japan.
EXECUTIVE SUMMARY: Who'll Regulate Air Travel Next Year?
Who will regulate the nation's air-travel system next year? Meet the new boss. In many cases, despite a change in the Presidency and a Senate shake-up, it'll be same as the old boss. Consider, for starters, that the recently concluded elections did virtually nothing to alter the composition of the House Aviation Subcommittee. There will be a change in chairmen, but control of the committee will remain in Republican hands. On the other hand, there will be four new faces on the Senate Aviation Subcommittee. That's because three Republican members--Slade Gordon of Washington, Spencer Abraham of Michigan and John Ashcroft of Missouri--were all defeated in November. A fourth Senate subcommittee member, Democrat Richard Bryan of Nevada, is retiring. But here's the next twist. Who's on President-elect George W. Bush's short list for Secretary of Transportation? Two of those defeated Republican senators, Slade Gordon and Spencer Abraham.
MERGER UPDATE: Will the United-US Airways Deal Get the Nod?
It's been seven months since United Airlines first announced it would try to gobble up US Airways, but the Department of Justice may not make a decision before the end of the Clinton Administration. Supposedly informed industry insiders had been blithely predicting that the merger would be approved before Christmas. Now, they admit, Clinton's Justice Department may not rule at all. "If that's the case," one merger supporter admits, "we could be well into spring before we get an okay. Bush's appointees won't even be in place at Justice before then." Also standing in the way of the merger: The European Community. Their legal eagles had set a December 21 deadline for concluding a preliminary review, but that date has slid until at least January 12. Any delay is good news for business travelers, who are almost unanimously opposed to any airline mergers. "I don't necessarily think United-USAirways is a slam-dunk approval," one airline executive told me last week. "The Justice Department and the EC have both been told that United's competitors would react by merging, too. If you ask me, neither agency seems eager to set such a dramatic consolidation into motion."
ON THE FLY: Business-Travel News You Need to Know
Airlines can talk all they want about their new goliath--the double-decked, 550-passenger A-3XX--but those planes are at least five years from commercial service. Besides, there isn't an airport on the planet that can currently handle the plane. So what'll be happening while we're waiting for the 21st Century's first mega-jet? … For one thing, there will be more long-haul flying as airlines put new versions of the passenger-favorite Boeing 777 into service and add more workhorse 747-400s. For example: both United and Continental have announced plan to begin non-stop New York-Hong Kong service. Continental's 777 flight from Newark will take 16 hours and 30 minutes. … At the other end of the spectrum, look for more "regional jets" to replace the turbo-props that business travelers love to hate. American Eagle at O'Hare and Comair at Cincinnati, for instance, have already switched to all-commuter-jet flying. … Another trend in 2001: More point-to-point flying that will circumvent the nation's overcrowded hubs. Why? Practical considerations, of course. But also the fact that airlines have found business travelers will pay more to fly nonstop and avoid hubs. … Also watch the East Coast Corridor between Washington and Baltimore. Amtrak hopes to roll out as many as two dozen Acela Express trains that travel at speeds up to 150 miles per hour. Also under consideration: A New York-Washington non-stop train that could accomplish the run in about 2 hours and 30 minutes.
This column originally appeared at biztravel.com.
Copyright © 1993-2007 by Joe Brancatelli. All rights reserved.