A BRIEFING FOR AUGUST 7 TO 21, 2008
By Joe Brancatelli
· Stop Worrying About a Shortage of Seats
· The New Hotels Just Keep on Coming
· The Next Tranche: Secondary International Cuts
· United Selling (Almost) Anything Not Bolted Down
· Pillows and Upgrades and Surcharges, Oh My!
· Delta Says It'll Install In-Flight WiFi Fast
· The TSA Tells Clear: No New Members
Stop Worrying About a Shortage of Seats
Too many so-called "experts" out there are bloviating about the impeding seat shortage we'll face when the airlines make their deep schedule cuts immediately after Labor Day. But the hard facts tell a completely different story. As the economy slows and travelers stay home, airlines are actually having a harder time than ever filling the seats they are flying. According to the July traffic statistics the airlines released during the week, load factors are falling both domestically and internationally. Southwest Airlines, for example, saw its load factor (the number of seats occupied) fall 5.1 points in July compared to July, 2007. US Airways' load factor dropped a more modest 1.1 points. At American Airlines, load factors at the mainline operation fell 2 points while American Eagle, the commuter airline, experienced a 6.5-point drop. Systemwide load factors dropped 2.3 points at United Airlines and its Pacific service suffered a 5.8-point decline. The passenger loads at JetBlue, Frontier, Northwest and Delta were essentially even year-over-year, but Midwest Airlines' load factor fell 4.3 points and Continental Airlines' loads were down by 2.2 points. The only carrier to be in positive territory this July compared to last year was AirTran Airways. Its system grew by about 10 percent and its passenger traffic increased by 14 percent. That resulted in its load factor increasing to 89.2 percent compared to last July's 86 percent.
The New Hotels Just Keep on Coming
Travel is slowing, but the new-hotel pipeline continues to gush with new properties. Hilton has opened three new properties overseas, for example. Two are in Beijing--the 235-room Hilton Wangfujing Beijing and a 547-room Doubletree Beijing--and the 155-room Hilton Garden Inn is near London's Luton Airport. … At home, InterContinental has opened two new properties: a 75-unit Candlewood Suites on the outskirts of downtown Sheridan, Wyoming, and a 92-room Hotel Indigo near Ontario Airport in California. And Hampton Inn opened more than a dozen new hotels last month. Most notable: a 105-room hotel at Oakland Airport and a 123-room property in downtown Saratoga Springs, New York.
The Next Tranche: Secondary International Cuts
Now that the U.S. and major international carriers have pretty much laid the cutbacks into their schedules, it's time for the alternate airlines to start dumping. Consider: Air Berlin, which took over LTU, is dropping one of LTU's signature international routes. The airline is closing down its New York/Kennedy-Dusseldorf run. ... Israir is permanently droppings its Kennedy-Tel Aviv service. The Israeli carrier has been on and off the route for several years, but now is blaming high fuel costs for the definitive end of the flights. … Kingfisher Airlines of India is apparently having second thoughts about the launch of its San Francisco-Bangalore route. The service was due to begin late this month, then was extended to sometime in October. But the airline isn't selling seats yet and hasn't officially applied to offer the service.
Selling (Almost) Anything That Isn't Bolted Down at United
The fast, hard fall of the Big Six is fastest and hardest at United Airlines, which is losing twice as much money as its competitors. The result: a fire sale. What's United selling now? Double and triple Mileage Plus credit. The carrier's new Award Accelerator lets you buy double or triple miles for any flight. The additional miles cost about 3 cents each. Next up for sale: food service in coach on its long-haul transpacific flights. The carrier recently asked select Mileage Plus members how much they'd pay for food and beverage service on transpacific flights. Travelers were sent an array of prices, but they were asked to rate their willingness to pay as much as $15 for a "premium" sandwich or $39 for a "restaurant-style meal." In other words, United is now trying to sell anything that isn't bolted down. Oh, wait, that's a bad turn of phrase. A United flight departing from Seattle on Sunday (August 3) made an emergency landing when a row of seats moved after the bolts securing it to the cabin floor gave way. In fairness to United, there was no indication that the airline charged the customers extra for sitting in the movable seats.
Pillows and Upgrades and Surcharges, Oh My!
Crude oil has dropped more than $25 a barrel in the last few weeks, but that still leaves it hovering around $120 a barrel, about 50 percent higher than the unprepared airlines can profitably swallow. So the ups and extras keep coming. American Airlines, for example, is running up the co-pay on AAdvantage upgrades. Effective October 1, a domestic upgrade will cost 15,000 miles and a $50 fee. Most international upgrades will now cost 25,000 miles and $350. And upgrades to India will cost 40,000 miles and $350. … Aer Lingus is boosting its fuel surcharge again. The fee on North American flights rises by another $10-$25. … And, of course, you have heard that JetBlue Airways has eliminated free blankets and pillows. On flights longer than two hours, you can now buy a $7 eco-friendly kit that includes a blanket, a pillow and a $5 coupon that can be used at Bed, Bath and Beyond.
Business-Travel News You Need to Know
The Clear registered-traveler program has run into a new patch of bad road. The Transportation Security Administration (TSA) has suspended its right to sign up new members. The program claims 200,000 members, but the TSA says that Clear has fewer than 140,000. The current snafu began on July 26 when Clear reported that a laptop with the pre-enrollment information of 33,000 travelers went missing at San Francisco Airport. On Tuesday (August 5), Clear said it found the laptop and that it was never stolen at all. But the big problem was that the information on the laptop wasn't encrypted, a violation of TSA rules. Current Clear members can continue to use Clear lanes, but there's no indication of when (or whether) the program will be able to begin processing new members again. … The European Union has approved a Delta-Northwest merger. The potential combination still awaits clearance from the U.S. Justice Department and the Transportation Department; it also faces a lawsuit due to go to trial in October. … Delta Air Lines says it will offer WiFi access on many of its aircraft. It promises a fast rollout and claims that it will have more than 330 aircraft wired by next summer. The service will cost $9.95-$12.95 per flight. Despite massive publicity this week, however, there was no actual timetable released. In other words, don't think about this until Delta actually gets some WiFi-enabled planes into the skies.
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.
THE FINE PRINT All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.
This column is Copyright © 2008 by Joe Brancatelli. JoeSentMe.com is Copyright © 2008 by Joe Brancatelli. All rights reserved.