A BRIEFING FOR JULY 3 TO JULY 17, 2008
By Joe Brancatelli
· Oh, By the Way, We're Flying Less a Lot Less
· More Fees, More Fares, More Fuel Surcharges
· Cuts As Far As You Can See (Domestic Division)
· Cuts As Far As You Can See (Overseas Division)
· BA Buys Up L'Avion for Its OpenSkies Subsidiary
· TSA Changes the Rules for Registered Travelers
· Delta Adds Flights From JFK to Latin America
Oh, By the Way, We're Flying Less a Lot Less
The airlines have been reporting their June statistics this week and, as I suggested in my Portfolio.com column a few weeks back, this is beginning to look a lot like the 1990 oil-fueled airline crisis. Specifically, traffic is falling faster than airlines are cutting capacity. That means we probably won't have a shortage of seats in the months to come, a scenario some sky-is-falling "experts" have been talking up in recent weeks. As usual, United is tanking fastest. Its June traffic plummeted 3.6 percent year-over-year, six times more than it cut capacity. Continental's traffic numbers were essentially flat, but a 2.5 percent increase in capacity drove down its load factor (the percentage of available seats filled) by more than two percent. Southwest Airlines also had essentially flat traffic and a falling load factor. American Airlines' passenger numbers fell 3.1 percent, almost three times more than its 1.2 percent decline in capacity. Its American Eagle commuter unit cut its capacity by 2.3 percent, but its traffic fell by more than 8 percent. Alaska's passenger volume was down 2 percent and Delta's overall traffic was flat. And British Airways, which flies to more places in the United States than it does in Britain, suffered a 3.7 percent decline in systemwide traffic. Not all of the airlines have reported yet, but the sole exception so far: AirTran Airways. Its passenger loads jumped 15.5 percent on 13 percent more capacity.
More Fees, More Fares, More Fuel Charges. Just More
It's been another week of price hikes. A blizzard of hikes, in fact. So let's trudge our way though the storm. Last Thursday (June 26), when Southwest Airlines loaded its fall/winter schedule, it also snuck in a $10-20 roundtrip price hike. The carrier's Big Six competitors didn't so much match the increase as match Southwest's fares, which, in many cases, actually led to fare decreases because they were charging much higher fares before Southwest published its schedule. Last Friday (June 27), Delta Air Lines slapped what it claimed was a "fuel surcharge" on SkyMiles award tickets. The $25 roundtrip fee for domestic awards and $50 fee for international awards exactly matches the non-fuel-surcharge award fees announced by US Airways several weeks ago. Amazing how those fuel surcharges work out, eh? Earlier this week, go!, the inter-island carrier operated by Mesa, said it would charge $25 for a second checked bag beginning July 15. Hawaiian Airlines responded by announcing a $17 second checked bag fee on its inter-island flights. First-class flyers and elite members of the Hawaiian frequent flyer program are exempt. On Tuesday (July 1), United Airlines and Delta raised the price of in-flight alcoholic beverages in coach to $6. United also said it would begin charging for drinks in coach on all of its Pacific and intra-Asia flights on August 1. Finally, United upped its fuel surcharge by $20 roundtrip today (July 3). Delta, Continental Airlines and American Airlines promptly matched. As of late today, we hadn't heard from the others.
Cuts As Far As the Eye Can See (Domestic Division)
Haul out that scorecard and see if your favorite domestic route is getting the axe as the airlines cut back in the face of record oil prices. US Airways is cutting back intra-Pennsylvania service. The Pittsburgh-Harrisburg route ends on September 1, while October 1 is the last day for Philadelphia-Williamsport flights. JetBlue Airways is dropping its West Palm Beach-Newburgh/Stewart route on September 2. Horizon Air is dropping flights from Portland, Oregon, to both Klamath Falls and North Bend/Coos Bay, Oregon. The flights end on October 11. Frontier Airlines is dropping flights from its Denver hub to Louisville, Kentucky. Up in Canada, Air Canada is pulling out of Hamilton. Effective July 31, its Jazz commuter operation is dropping its flights to Montreal and Ottawa.
Cuts As Far As the Eye Can See (International Division)
So much for traffic holding up on all those international routes the airlines have launched in recent years. Slumping load factors and rising oil prices have led carriers to pull in the reins there, too. El Al is dropping its Miami-Tel Aviv nonstops after September 1. Northwest Airlines is canceling two routes--Detroit-Dusseldorf and Hartford-Amsterdam--and suspending its Minneapolis-Paris run. It promises to revive the Paris flights in the spring. Speaking of suspensions, Air Tahiti Nui will stop flying New York/Kennedy-Tahiti nonstops between November and April. And more cuts from United Airlines: San Francisco-Taipei nonstops end on August 30; Chicago-Mexico City ends September 2; San Francisco-Nagoya and Denver-London nonstops end on October 25. United had only launched the Denver-London flights in the spring.
BA Gobbles Up L'Avion for Its OpenSkies Subsidiary
It's been rumored for several months, but it happened yesterday (July 2): British Airways is buying L'Avion, the French all-business-class airline. The deal is for €68 million. BA says it will integrate L'Avion into OpenSkies, the boutique carrier it launched on June 19. But the exact form that integration will take is an open question. Although both L'Avion and OpenSkies fly Boeing 757s to Paris/Orly, L'Avion operates from Newark and OpenSkies uses New York/Kennedy. L'Avion's aircraft are configured with 90 business-class seats while OpenSkies' plane has 82 seats in three classes. And, needless to say, L'Avion is a French flag carrier and OpenSkies is a British airline. Watch this one carefully, folks. Delta Air Lines' international passenger growth finally hit the wall this month (see Counter Intelligence), but the carrier continues to expand. It will soon add two more Latin American routes from its JFK hub: Flights to Bogota begin on August 19 and service to Buenos Aires launches on December 18.
Business-Travel News You Need to Know
A French judge has ordered Continental Airlines and five individuals to stand trial over the crash of an Air France Concorde in 2000 that killed 113 people. French prosecutors claim debris from a Continental aircraft was left on a runway at Paris/Charles DeGaulle and the debris punctured a tire on the Concorde. Continental denies culpability. The Transportation Security Administration has adjusted its policy for members of Clear and other registered traveler (RT) programs. Once RT members clear their proprietary lanes, they may proceed directly to the tables where travelers are removing shoes and laptops. RT members can no longer jump that line and go direct to the X-ray machines and magnetometers. Hertz has added self-service car-rental kiosks at 50 airports and is promising that renters can get their cars within 10 minutes. Continental Airlines has improved the ticket-change procedure for same-day flights, but it will cost you: $50 for most travelers and $25 for gold and platinum level frequent flyers. The window for same-day changes is now 12 hours. It used to be 3 hours, but did not carry a fee.
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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This column is Copyright © 2008 by Joe Brancatelli. JoeSentMe.com is Copyright © 2008 by Joe Brancatelli. All rights reserved.