A BRIEFING FOR MARCH 20 - APRIL 3, 2008
By Joe Brancatelli
· They Guessed Wrong on Oil, So Here Come Cuts
· The Next to Go: Longer-Haul International Flights
· Delta and United Slash Airport-Club Networks
· JetBlue Adds More Room in Coach--For a Fee
· Doubletree Opens Hotel in Bentonville, Arkansas
· Aloha Airlines Flies Into Bankruptcy Court--Again
· Airlines Pile on the Price Increases and New Fees
They Guessed Wrong on Oil, So Here Come the Cuts
As mentioned in last week's Brancatelli File, most of the legacy carriers reduced fuel hedging programs in the first quarter. So now that oil prices have settled in at the $100-a-barrel mark, they face additional fuel bills of about $10 billion this year. That has sent them into a frenzy of fleet and staff reductions. This week, Delta, United and US Airways announced that they would dump dozens of less fuel-efficient planes and slash domestic seat capacity by as much as 5 percent. Delta also offered a buyout to 30,000 employees and hopes that 2,000 people will accept. Next on the chopping block: many of the longer-haul international flights the carriers have rushed to add in recent months. Why drop the long ones? The physics of flying. An Airbus A330 carrying 200 people burns 30 tons of fuel when it flies 5 hours and 40 minutes, about the distance between the U.S. East Coast and Europe. But the same aircraft with the same passenger load burns 56 tons of fuel on a 9-hour, 30 minute flight, about the distance between the West Coast and Europe. That is a fuel-burn rate of 5.3 tons per hour from the East Coast and 5.8 tons per hour from the West Coast. The more startling number: The longer flight burns fuel at a rate of 6.84 tons per hour during the extra hours it is in the air--or 29 percent more per hour than during the shorter flight. So watch for carriers to begin junking nonstops to Asia from the East Coast and nonstops to Europe from the West Coast.
Meanwhile, Back at the Price Increases…
While they were hastily playing catch-up with route cuts and fleet reductions this week, the carriers were also busy imposing a new round of fare hikes, fuel-surcharge increases and junk fees. The most notable was a domestic fare hike of up to $50 roundtrip last weekend launched by United Airlines. Despite the steep nature of the rise, most other Big Six carriers matched in select markets. On Wednesday (March 19), Delta added a $10 roundtrip bump in the domestic fuel surcharges. As of Thursday evening, however, only one carrier had matched. Separately, American and Northwest airlines raised the fuel surcharge on their European flights. Singapore Airlines and Aer Lingus also increased their surcharges. And while it has not officially posted the change, a top Delta Air Lines executive told an investment conference this week that it would begin charging passengers to check a second bag. The second-bag fee, $25 each way, matches the charge already imposed by United and US Airways, and will go into effect in May.
Delta and United Slash Their Airport-Club Networks
Delta Air Lines is closing nine Crown Room Clubs beginning next month. What's going? The clubs in Seattle, Honolulu, San Juan, Phoenix, Denver, London/Gatwick, Kansas City, the old lounge at Boston/Logan and one of the clubs at Delta's Cincinnati hub. The airline is also closing the separate lounges it has been operating for BusinessElite international passengers. Meanwhile, United Airlines is dumping two clubs. It already has closed the Red Carpet Club in Sydney, Australia. Beginning April 1, United will close the Arrivals Suite for premium-class customers arriving at Paris/DeGaulle Airport. … Clear, the struggling registered-travel program that is trying to reposition itself as a security line-cut plan, has opened at Washington/National and Washington/Dulles airports. … How bad were the storms in Texas on Tuesday, March 18? They virtually wiped out the schedule at American's Dallas/Fort Worth and Continental's Houston/Intercontinental hub. At DFW, 603 of 928 scheduled departures were cancelled and 333 of 1,000 arrivals were dumped. At IAH, 316 of 860 departures were cancelled and 290 of 853 were dropped. According to FlightStats.com, more than half of the flights that did operate at the airports were "excessively" late, which means more than 45 minutes off schedule.
JetBlue Adds Even More Room in Coach--For a Fee
JetBlue Airways has reconfigured its fleet of Airbus A320s for the third time in its eight years of operation. In the summer of 2003, the airline removed a row of seats, reducing capacity to 156 seats and increasing the legroom at some chairs to 34 inches. Late in 2006, JetBlue removed another row. That left 150 seats and pitch of 34 to 36 inches at every chair. Now JetBlue has created a virtual premium-class section. Beginning on April 1, six rows (2-5 up front and 10-11, the emergency rows) will offer 38 inches of seat pitch. All of the other rows will offer 34 inches. How do you snare a seat in those 38-inch rows? Pay a $10-to-$20 fare premium each way, depending on the length of the flight. As your knees most surely know, the industry standard pitch in coach is 31 or 32 inches. ... Aloha Airlines filed for Chapter 11 bankruptcy protection on Thursday (March 20). It's the second time since 9/11 that Aloha has entered bankruptcy. Aloha blamed "predatory pricing" from go!, the start-up inter-island carrier owned by Mesa Air. A federal bankruptcy judge last year ordered Mesa to pay $80 million to Hawaiian Airlines because it used proprietary data to launch go! in 2006.
Business-Travel News You Need to Know
Attention travelers to Vendorville: Doubletree has opened a new property in Bentonville, Arkansas. The 140-suite operation also has a 24-hour business center, a restaurant and a bar. … Effective April 1, Singapore Airlines will reduce the checked-bag allowance for passengers to and from the United States. The airline says bags cannot weigh more than 50 pounds each, down from the current 70-pound limit. The change affects flyers in all cabins. … Air France-KLM has finally made an official offer for eternally troubled Alitalia. But union resistance and opposition from Silvio Berlusconi, the former Italian prime minister currently leading the polls in next month's elections, may doom any deal. At this point, Alitalia looks as likely to go bankrupt as end up a part of the French-Dutch air conglomerate. … Speaking of ill-fated mergers, the Delta-Northwest deal looks dead for now since pilots could not agree on the combination of their seniority lists.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
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