The Tactical Traveler
A BUSINESS-TRAVEL BRIEFING
FOR MARCH 20 to MARCH 27, 2003
BY JOE BRANCATELLI
Don't expect a "war discount" on flights and hotels during the Iraq war; United Airlines admits liquidation is a possibility; Midwest Express' auditor questions the airline's long-term viability; airlines reduce international flight schedules; National Car Rental offers pick-your-own rentals to online bookers; and much more.
COUNTER INTELLIGENCE: Don't Expect a 'War Discount' for Travel
Business travelers expecting airlines and hotels to shower them with massive fare and room-rate discounts now that the war with Iraq has started are going to be bitterly disappointed. Rather than slashing rates to stimulate business, airlines and hotels are going to ground and keeping an extremely low profile in the coming weeks. There'll be very little public advertising and surprisingly few E-mail campaigns offering big price breaks. "Discounting doesn't make sense right now," one airline marketing executive told me. "We can't advertise without looking insensitive, so why lower fares? We'd only be cutting prices for people who are traveling anyway." A general manager at a full-service hotel told me essentially the same thing. "Secret rate cuts I don't promote won't put heads on beds," he said. "It only guarantees I'll lose money on guests who were already coming."
EXECUTIVE SUMMARY: The Big Six Count the Cost of Inaction
Thanks to their rigid refusal to change how they do business, the Big Six carriers were in dreadful financial shape even before the bombs began to fall in Iraq on Wednesday. A protracted conflict will deepen the financial crisis and surely lead to more bankruptcies and possible long-term collapse. ... Bankrupt United Airlines, for example, says it plans to report another staggering loss in the first quarter, this time in the neighborhood of $900 million. And, for the first time, it admitted in a bankruptcy-court filing this week that liquidation was a "distinct possibility." ... American Airlines, whose losses have actually been larger than United's in recent months, has hired a bankruptcy attorney and some of its unions say a Chapter 11 filing could occur within 30 days. ... US Airways reported good news earlier this week--its plan to emerge from bankruptcy at the end of the month was approved--then it promptly missed lease payments and pension negotiations with pilots collapsed. The airline also admitted it is not in compliance with some bankruptcy-financing conditions. ... Continental Airlines announced it was cutting another $500 million in costs and 1,200 more jobs. ... The financial chaos was hardly limited to the Big Six. Air Canada says it needs to shed 3,600 more jobs and find C$650 million more in labor-cost reductions. And Midwest Express is also in dreadful shape. Deloitte & Touche, the carrier's auditor, says it has substantial doubt about the airline's ability to continue as a going concern.
INTERNATIONAL ITINERARY: Beware of Falling Flight Schedules
The world's airlines began cutting their international flight schedules even before hostilities began against Iraq on Wednesday evening. This list is likely to grow substantially in the coming days, but here is what has been announced as of 7 p.m. on Thursday. Continental Airlines cut one of its two daily flights from Newark to both London/Gatwick and Paris/DeGaulle. It is also switching to smaller flights on its flights from Newark to Amsterdam and Rome. Those changes are effective April 6 to May 1. Also, Newark-Narita service will drop to four weekly flights until April 24. Schedules from its other hubs (Houston/Intercontinental and Cleveland) to London/Gatwick will also be reduced. ... Singapore Airlines has suspended all its flights from Las Vegas and Chicago/O'Hare and is reducing its worldwide schedule by 65 flights a week. ... Korean Air is reducing its schedule to most U.S. destinations, including New York, Chicago, San Francisco and Honolulu. ... Air Canada says its schedule for the remainder of March is down 8 percent compared to last year and its April and May schedules will be reduced by 15 percent. ... Northwest and KLM are dropping some flights from Detroit and New York/Kennedy to Amsterdam. ... American Airlines said it will reduce its schedule in coming days, but gave no details of the cuts. ... Service to the Middle East is in disarray as many European and Asian carriers juggle their schedules to accommodate dropping passenger demand and war realities. Flights to Kuwait have mostly disappeared and many carriers have slashed service to the United Arab Emirates; Jordan; Cairo; Damascus; Bahrain; and Tel Aviv.
FARE WATCH: The Airline Cartel Raises Prices Worldwide
IATA, the cartel that represents about 96 percent of the world's airlines flying international routes, says most of its member carriers have agreed to raise fares by 3 percent on April 15. ... Mexican carriers have added a $4.60-$10 fuel surcharge on most fares. ... Air Canada has raised its fuel surcharge for longer-haul domestic flights to C$25 each way. ... Los Angeles International Airport says it will increase its passenger-facility charge to $4.50 per segment beginning June 1.
ON THE FLY: Business-Travel News You Need to Know
Icelandair says its will resume service from New York/Kennedy on April 7. That's not a big deal, I admit, but I thought you'd want some good news this week. ... Cathay Pacific says half of its fleet is now wired for SMS (short message system) E-mail. The service is free until June, then will cost $9.95 plus 60 cents per kilobyte. ... National Car Rental says its new "QuickRent" system allows customers who book online to bypass the rental counter and choose any car from the class of vehicle they reserved. Until now, the pick-your-own car and counter-bypass services were only available to members of National's Emerald Aisle program. ... Sofitel, the French hotel chain, says it has pulled down the French flag at its U.S. properties. They fear a backlash from Americans annoyed by the French government's criticism of U.S. policy on Iraq.
This column originally appeared at JoeSentMe.com.
Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.