ALTERNATE AGENDA: American Rethinks Its Attack on JetBlue
The biggest bully in the skies, American Airlines, has apparently changed its mind and scaled back its transcontinental attack on JetBlue Airways. American announced earlier this month that it would begin flying twice-daily between New York/Kennedy and Oakland and Los Angeles/Ontario, two routes pioneered by the two-year-old start-up carrier. Last week, however, it abruptly cancelled plans to launch the JFK-Ontario route, claiming research now indicated the market wouldn’t be profitable. “They huffed and puffed and realized they’d blow their own financial house down if they launched,” an executive at one of American’s mainline competitors said with a smirk after hearing the news. … Sun Country Airlines, which was on the verge of liquidation earlier this year, found new investors and resumed scheduled service this week. From its hub in Minneapolis/St. Paul, Sun Country is now flying to Laughlin and Las Vegas, Nevada; San Antonio, San Jose and Pensacola. During the next week, it will add flights to three more Florida destinations (Ft. Myers, Miami and Orlando), Phoenix and Seattle.
AIRPORT REPORT: Splitting the Baby on Elite Security Lines
Immediately after taking control of airport security ten days ago, the federal Transportation Security Administration ordered the airlines to end preferential security lines for elite frequent flyers. Then the airlines went to work, bitching and moaning and lobbying on behalf of their handiwork. The result: A confusing, split-the-baby solution that permits the airlines to continue to offer some expedited service to their most frequent flyers, but doesn’t divert government security machinery and personnel to discriminatory waiting lines. In essence, all government security checkpoint “lanes” and machines are open to all passengers regardless of the airline they fly or their frequent-flyer status. However, airlines are free to organize the waiting “lines” that reach the checkpoints. Special lines for elite flyers are permitted, so long as the elite lines merge with the general lines before they reach the security checkpoints.
EXECUTIVE SUMMARY: Airline Value Is Where You Find It
If you have any doubt that the market is talking loud and clear about its air-travel preferences, consider this: On some days in February, tiny Frontier Airlines, whose Denver hub competes with United Airlines, had a higher market capitalization than United Airlines, the nation’s second-largest carrier. Even after a recent rally that has driven United’s shares up to their Thursday (February 28) closing price of $12.82, United’s market cap is only $698.6 million. On Thursday, Frontier shares closed at $21.06, giving it a market cap of $615.4 million. United had sales of $16 billion and losses of $2.1 billion last year. Frontier’s sales last year were slightly less than $500 million, but it showed a profit of $23.8 million.
MONEYLINE: The Euro Rules the Roost in Europe
The Euro is now the only legal tender in all 12 Euro-zone countries. The last of the nations in the monetary union kicked over to Euro-only business on Thursday (February 28). So-called “legacy” currencies such as the German mark, French franc and Italian lira can now only be changed at banks, and the banks are no longer required to offer fee-free exchanges. Most currency-exchange booths will also decline to change legacy currencies. In fact, some pundits are predicting the eventual demise of most exchange booths in Europe. More than half of their business had been exchanging European currencies for Europeans and most of that trade has now disappeared. “That’s actually bad for Americans,” one currency trading expert explains. “Americans are used to exchange shops on every corner of every major European city. There just won’t be enough business changing Euros and dollars for all of them to prosper. And those that do survive will be charging much higher rates for changing dollars into Euros.”
IN THE LOBBY: Hotel News You Need to Know
Four Seasons has opened a 443-room hotel in Shanghai. The 37-story property is located in the Puxi business district. … Regent Hotels has taken over management of a 54-room hotel in Berlin that had previously been operated as the Ritz-Carlton. The property’s claim to fame is that it is housed in a mansion restored by designer Karl Lagerfeld. … Slow business brings out the creative (and the cash) in hotel operators. The creative: The “Spring into Homewood” promotion at Homewood Suites (800-CALL-HOME) offers weekend rates as low as $69 on weekends during “National Housecleaning Month” in March. The promotion also includes discount coupons from two leading housecleaning services. The cash: the “Invitation to Experience” promotion at the Small Luxury Hotels group (800-525-4800). You’ll get a $100 gift voucher toward a future two-night Small Luxury Hotel stay when you stay at a participating property before May 24.