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 The Tactical Traveler

joe JOE BRANCATELLI'S BUSINESS-TRAVEL
BRIEFING FOR SEPTEMBER 15 - 29, 2005


Forget the Bankruptcy Platitudes. Here's What's Next…
The double-bankruptcy filings by Delta and Northwest yesterday (September 14) unleashed a cacophony of "business as usual" claims by the carriers and less-sophisticated analysts. But most of the platitudes you're reading are off the mark: The real impact of these bankruptcy filings isn't today or tomorrow or even next week, but in the coming months. Forget the claim that service won't be affected: As both carriers slash their workforces, you'll be confronted with longer lines at airports and longer telephone hold times. As both carriers reduce frequencies and capacity, it'll be harder for you to cash your frequent-flyer miles. Route cuts are inevitable, too. Northwest runs a huge fleet of old, gas-guzzling DC-9s. Many of those planes--and the routes they serve--will disappear. Don't be surprised if Northwest also cuts flights to Tokyo, too. It's dumping its New York/Kennedy-Narita flights and service from other non-hub U.S. destinations may also go. And many Northwest routes to Europe are also suspect because they rely on aging and inefficient DC-10s. Delta had already announced massive cuts in Cincinnati, but the airline's plan to dramatically increase international service may flounder because demand for overseas flights is falling. Oh, one other matter: Northwest and Delta pensions plans are underfunded by more than $16 billion. In fact, one of the reasons Northwest filed yesterday was so it could duck a $65 million pension contribution due today. How long do you think it'll be before both carriers try to dump their pensions on the Pension Benefit Guarantee Corporation, the quasi-public agency that has already been stuck with the United and US Airways pension shortfalls?

How to Play the Bankruptcy Game at Home
Want the home version of Northwest and Delta's bankruptcy court proceedings? Thanks to the Internet, you can follow along wherever you are in the world. Northwest's filings and related documents are available at the Northwest Restructuring site. Delta's court filings and related documents are at the Delta Docket site.

Everybody Is Raising Fares Now
The rising price of oil is driving transportation companies to play catch-up. Lufthansa more than tripled its fuel surcharge on long-haul routes to €52, which is about $64. The surcharges on intra-Europe flights were hiked to €12. Both increases are effective on September 26. Several other Asian and European carriers have raised their fuel surcharges in recent days, but none as dramatically as Lufthansa. … Amtrak is raising its fares next week. The average fare in the Northeast Corridor will increase by $4 while prices nationwide will rise by $3. However, the big bump is reserved for Amtrak's Smart Pass purchasers. Those monthly and 10-trip buyers in the Northeast will see their prices rise by 20-30 percent. …. The Internal Revenue Service is raising the driving reimbursement rate to 48.5 cents a mile for the rest of the year. It had been 40.5 cents a mile for the first eight months of the year. … The dollar has firmed up on world markets and is selling at $1.22 against the euro and $1.80 against the British pound. It's up to about 110.5 Japanese yen.

Do You Know What It Means to Return to New Orleans?
On the surface, it seems that New Orleans is bouncing back much more quickly than the pundits predicted after the levees broke last month. One example: Louis Armstrong International Airport reopened on Tuesday (September 13) despite the initial prediction of a three-month closure. Several carriers have resumed flights, too. Another example: New Orleans mayor Ray Nagin announced today (September 15) that some dry parts of the city will reopen for business next week and the French Quarter will reopen on September 26. However, from the business traveler's perspective, the progress is largely illusory. Many hotels were heavily damaged and won't open until late in the fall or even next year. And the New Orleans Convention and Visitor's Bureau has cancelled all city-wide events until March 31. The definition of "city-wide"? Any function that uses the city's trashed Convention Center and three or more hotels. Moreover, at least a third of New Orleans remains submerged and the city's infrastructure--electricity, water and sewage--is still down or largely untested. The bottom line: Unless you are directly related to recovery and reconstruction efforts, you won't have much business in New Orleans any time soon.

Get Out Your Scorecard and Check Your Frequency Plans
The massive shifts in the hotel industry don't get the publicity of airline bankruptcies, of course, but they have a huge impact on the day-to-day lives of business travelers. So let's pay attention to this week's moves. … The Wyndham brand, purchased last month by the Blackstone Investment Group, is being licensed to Cendant, which owns the franchising rites to Avis and a wide range of lower-priced hotel names. That means Wyndham hotels will undoubtedly become part of the Trip Rewards program. … Starwood is getting the Le Meridien brand name and management contracts. That means Le Meridien properties will undoubtedly join the Starwood Preferred Guest program. … The Essex House in New York has been sold so the bifurcated hotel--some of it is a Westin and some of it is a St. Regis--is getting new management and both Starwood brands are out. … Shangri-La has opened a 323-room property in New Delhi. … In The Hague, the 92-room Hotel Des Indes has reopened after a $35 million renovation.

Business-Travel News You Need to Know
America West and British Airways are ending their 10-year code-share and frequent-flyer arrangement. The last day for earning FlightFund miles on BA is December 31. Requests for awards on BA via America West must be made by February 15. Travel must be completed by January 31, 2007. … Meanwhile, the board of directors of America West and the creditors of US Airways have approved the merger of the two carriers. … Speaking of British Airways, the airline has expanded its Sleeper Service to the 9:55 p.m. departure from Washington/Dulles to London/Heathrow. Business-class passengers are served a meal in the lounge before departure and there is limited in-flight service so sleep time is maximized. … Ford has sold Hertz to a group of private equity firms.

They'd Also Appreciate Our Paying Their Grocery Bills...
If you thought that the airlines had any sense of shame, what with this week's double-bankruptcy filing, Hurricanes Katrina and Ophelia and all the other woes of the world, forget it. They want still another bailout, this time in the form of a rollback of the 4.3-cent federal tax on a gallon of jet fuel. The airlines' trade group made the request in front of the Senate Commerce Committee on Wednesday, but only Republican committee members were in attendance. (Maybe all the Democratic senators were on late-arriving flights at Washington/National airport.) And aren't you glad to know that the airlines pay just 4.3 cents a gallon in taxes on their gas?

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