A BRIEFING FOR DECEMBER 4-18, 2008
By Joe Brancatelli
· So Much for That Airline-Capacity Crisis
· Guess What? More Hotels Are Opening
· Bangkok Airports Plan 'Normal' Ops Tomorrow
· Lufthansa Buys Austrian Airlines, Grows in Italy
· What's in An Airline Name? Plenty If It's 'Aloha'
· TSA Opens 'Self-Select' Lanes at 50th Airport
· Virgin America Has One Plane With Net Access
So Much for That Airline-Capacity Crisis
Remember those mindless talking heads who predicted a calamitous rise in airfares after Labor Day when the Big Six slashed their flights and seating capacity? And remember me saying that there'd be no such crisis because passenger demand was falling faster than the capacity cuts? If you didn't believe me then, you might want to take a gander at November's statistics. At American Airlines, available seat miles (ASMs) dropped by more than 9 percent compared to November, 2007. Yet American's load factor, the number of seats filled with paying customers, still declined by 4.6 points. A similar situation occurred at its American Eagle commuter subsidiary: Year-over-year seat capacity in November plummeted by 15.9 percent, but the load factor dropped 4.8 points. Meanwhile, United reported that its November ASMs fell by 14.2 percent, but its load factor declined by 2.7 points. At Continental, the seat-capacity decline was a more modest 7.3 percent, but its load factor still fell by 2.8 points. US Airways cut 6.1 percent of its seats in November and its load factor fell by seven-tenths of a point. The November load factor at Northwest and its regional carriers dropped 1.2 points even though they slashed seating capacity by 4.7 percent. Only Delta and its commuter airlines managed to eke out a higher November load factor: It rose by a meager three-tenths of a percent on 5.3 percent fewer seats. The largest of the low-cost carriers, Southwest Airlines, kept its seating capacity in November about equal to last year, but there were fewer passengers to fill the chairs. Southwest's load factor dropped 6.1 points.
Guess What? More Hotels Are Opening
The sharp fall in business travel is driving down occupancy rates and nightly rates at hotels around the world. But the hotel industry, which has a huge number of new properties in the pipeline, has no choice but to keep pumping out new locations. This week's notables include an 1,190-room Hilton on the San Diego waterfront and the 92-room Four Points across the street from the Philadelphia Convention Center. Meanwhile, Hampton Inn has opened a 108-room branch in Mexico City, located in a 19th-century landmark overlooking the Centro Historico. And Shangri-La has opened a 316-room hotel in Tainan, Taiwan. … On the reflagging front, the 222-room Beachside Resort in Key West is adding the Marriott brand beginning on December 15. It was once known as the Holiday Inn, but do not confuse it with the current Holiday Inn in Key West, which is located across North Roosevelt Boulevard from the Beachside.
Bangkok's Airports Expect 'Normal' Operations Tomorrow
I don't know what "normal" is in Bangkok anymore, but the city's airport authorities claim that both Don Muang and Suvarnabhumi International will resume normal operations tomorrow (December 5). The airports were closed late last month by anti-government protestors, who left the facilities earlier this week after the Thai courts toppled the ruling parties and the sitting prime minister. But beware: The ruling parties in Thailand, using a new name, will still choose the next prime minister. He's likely to be another ally of the last two ousted prime ministers--and that may drive the anti-government protestors back into the streets and the airports. In other words, don't assume Bangkok and the airports have much more than a very short-term respite from chaos.
Lufthansa Okays the Purchase of Austrian Airlines
The board of directors of Lufthansa this week approved the purchase of Austrian Airlines. Separately, Lufthansa officially launched its new Italian subsidiary, Lufthansa Italia, which is based at Milan's Malpensa Airport, a facility that Alitalia has all but abandoned in its rush to "save" itself. And speaking of the eternally hobbled Italian flag carrier, plans to sell the profitable parts of Alitalia to a private enterprise continue to be delayed. The deal, which will merge Air One and Alitalia into a "new" Alitalia, was supposed to be completed by December 1. The date was then pushed back until mid-December. Now the Italian government, which owns about half of the current Alitalia and will dump the airline's unprofitable remains on the Italian taxpayers, has pushed the plan back to early January. Needless to say, you are well-advised to continue to avoid Alitalia. And probably Air One, too.
What's in An Airline Name? Plenty If It's Aloha Airlines
Let me give it to you as fast as I can: Arizona-based Mesa Air, the regional carrier, launched go! on inter-island Hawaii routes in 2006. It was promptly sued by the two incumbent inter-island carriers, Hawaiian and Aloha. They claimed that Mesa misused proprietary information obtained when Mesa considered buying either or both of the Honolulu-based airlines. Mesa paid Hawaiian $52.5 million after it lost a trial, partially because Mesa claimed that its chief financial officer had erased company information from his computers while trying to delete pornography. Aloha Airlines folded earlier this year, but Aloha's largest shareholder, a California investment firm named Yucaipa, bought Aloha's lawsuit against Mesa from the bankruptcy court. Mesa last week settled the suit by agreeing to pay Yucaipa $2 million in cash and give it 10 percent of Mesa's shares. But there is another fillip: Mesa agreed to license the Aloha name from Yucaipa. And Mesa will pay big for the name: as much as 1 percent of ticket revenues and 30 percent of Mesa's profits on the inter-island routes. However, the re-branding rests on Yucaipa buying the Aloha name from the airline's estate. But Aloha's bankruptcy judge this week delayed a decision on the sale of the Aloha name to Yucaipa until February. "It takes the term Aloha and stands it on its head," grumbled Judge Lloyd King. "How about the people whose lives were devastated [by Aloha's bankruptcy]? Don't they count? Is it just money?" Needless to say, a bankruptcy proceeding is just about money, but it was nice to hear a judge raise the question of human costs. Of course, unless a better offer for Aloha's name surfaces, King will probably have to sell it to Yucaipa, thus clearing the way for Mesa to rebrand go! as Aloha Airlines.
Business-Travel News You Need to Know
Frontier Airlines has changed its same-day flight change policy. Travelers who wish to change flights on the same day now can switch to any available seat for $75. No fare difference will be charged. … Sixteen months after it first announced in-flight Internet, Virgin America this week got a plane with Internet access in the skies. The price is $9.95-$12.95 a flight, depending on travel time. … The Star Alliance has opened a lounge in Terminal 1 of Paris/CDG Airport. … Southwest Airlines got bankruptcy-court approval to buy the 14 slots that ATA Airlines once used at New York/LaGuardia Airport. … The Transportation Security Administration has opened its self-select security lanes at Norfolk Airport. It's the 50th airport in the country with "black diamond" lines for frequent flyers and separate lanes for families and casual travelers.
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.