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 The Tactical Traveler

joe JOE BRANCATELLI'S BUSINESS-TRAVEL
BRIEFING FOR SEPTEMBER 1 - 15, 2005



Assessing the Effect of Hurricane Katrina
Hurricane Katrina, the catastrophic storm that all but demolished the Gulf Coast this week, is going to scramble lives and regional economies for many years to come. It will also severely impact business travel for months, if not years. Here's a quick snapshot of news you need to know:
  • New Orleans Airport will be closed to commercial traffic for upwards of three months. In the interim, Baton Rouge is your closest alternate. It's about 70 miles away and several airlines say they may move some of their New Orleans capacity to Baton Rouge.
  • Major hotels in New Orleans and the suburbs are closed indefinitely, but logic dictates it could be 6-9 months before New Orleans itself opens for business. Experts say it could take three months to restore power and perhaps four months to clean the water. There are no estimates as to when New Orleans' major convention venues, the Superdome and the Convention Center, both of which are being used as shelters, will be repaired and reopened.
  • Hotels in many areas of northern Louisiana, eastern Texas, Mississippi and Alabama are sold out because residents of New Orleans and the Gulf Coast evacuated there and now are either homeless or unable to return to their cities and towns.
  • Expect dramatic fare increases in the next few days. Jet-fuel prices soared more than 20 percent after Hurricane Katrina passed and now supply is stretched because refinery capacity has been reduced. United Airlines raised prices by $10-$30 a roundtrip on Wednesday evening. Other carriers are sure to follow.
  • Some carriers have told me that they may cancel a large number of routes after Labor Day. As fuel prices soar and airlines continue to grapple with costs and four years of losses, the poorest-performing routes might be cut. One caveat: The Big Six carriers worry that profitable airlines such as Southwest, JetBlue and AirTran may move in to offer replacement flights if they cut marginal routes and cities.
American Continues to Avoid DFW's Terminal D
More than a month after it opened its $1.7 billion Terminal D, created to handle international flights, Dallas-Fort Worth continues to be boycotted by its largest tenant. American Airlines says it won't move its international flights to the new facility until the baggage-handling system is working properly. American is slated to control about two-thirds of the terminal. Speaking of balky baggage systems, Denver International has finally closed its disastrous automated bag lines. US Airways flyers using Philadelphia take note: The airline, which has been fouling up baggage handling in Philadelphia for years, is now demanding passengers check bags at least 45 minutes before domestic flights and one hour before international flights. ... San Francisco, one of five airports chosen for a test of private security screening after the federal government took over nationwide in 2002, is dropping out of the program. The airport says that the Transportation Security Administration (TSA) will not protect the airport from liability in the event of a terrorist incident, so it will switch to TSA screeners next May.

United Gets Another Extension--And a Judicial Warning
United Airlines last week got still another extension to file its first reorganization plan. The airline's management now has until November 1 to present a plan to the bankruptcy court without interference of pesky creditors, who've been owed money since December, 2002. But Judge Eugene Wedoff, whose conduct of the case has come under increasing scrutiny by the federal appeals court, warned United management not to expect any more time. He insisted that the extension would be the last "in the absence of compelling and unforeseeable circumstances." US Airways dumped more than $2.5 billion in pension funds on the quasi-public Pension Benefit Guarantee Corp. (PBGC) and the organization has settled for pennies on the dollar. The PBGC will get a $13.5 million cash payment, a $10 million note and 70 percent of the stock available to unsecured creditors under US Airways' bankruptcy-reorganization plan. But it agreed not to claim a piece of a new stock offering that US Airways is contemplating. Delta Air Lines stands to lose millions as a result of Hurricane Katrina because it is the strongest carrier in the Southeast. Also likely to be heavily affected: strike-bound Northwest Airlines, which continues to fly a huge fleet of gas-guzzling DC-9s. Chances are that both carriers will be in bankruptcy before Chapter 11 laws are tightened in mid-October.

Another Katrina Casualty: The Dollar Overseas
Some bad economic numbers and the widening crisis in the wake of Hurricane Katrina sent the dollar tumbling on world markets this week. As of Thursday afternoon, the dollar had dropped back to US$1.24 against the euro and US$1.81 against the British pound. In Japan, the dollar was down to about ¥111. MasterCard has backed off plans to charge all U.S. cardholders a fee when they make an overseas purchase. At least until next April, MasterCard will retain the existing formula of charging 1 percent on foreign-currency transactions. Visa backed off its overseas-transaction charge earlier this year. Both moves are part of the flap over how and how much credit card companies charge when travelers use their cards overseas.

Business-Travel News You Need to Know
United Airlines is joining Northwest Airlines and Continental Airlines in lowering the free baggage allowance on international flights. Effective September 7, United will limit bags to 50 pounds. Bags between 51 and 70 pounds, the old limit, will cost $25 each. Premium-class flyers and elite Mileage Plus members are exempt from the new limit. Mexicana Airlines begins weekend service between San Jose and Mexico City tomorrow (September 2). American Airlines has quietly raised more of its fees. The surcharge to book a paid ticket or AAdvantage award through AA telephone reservations or at the airport is now as high as $15. Hilton has joined the hotel chains hawking room amenities and other trinkets. Most notably, the new dual-speaker Hilton Family Clock Radio with an MP3/CD player interface sells for $50. The products are available on the Web or by phone (877-3HILTON).

Copyright 1993-2005 by Joe Brancatelli. All rights reserved.