A SPECIAL END-OF-THE-YEAR BRIEFING
By Joe Brancatelli
· What a Difference a Year Makes on China Routes
· Delta May Be Running on Empty in Cincinnati
· Meanwhile, Back at Minneapolis-St. Paul…
· To Sleep, Perchance to Overshoot the Airport
· Parker Should Only Do This Well by Customers
· At Alitalia, Everything Must Go, Even the Dalis
· This Is the Last Headline of a Crazy Year
What a Difference a Year Makes on China Routes
A year ago, the Big Six carriers were rushing to launch flights to China. Now, not so much. Just last week, Northwest Airlines became the latest carrier to ask the Transportation Department (DOT) to defer the launch of flights. It was due to begin Detroit-Shanghai and Seattle-Beijing flights in 2009. The airline's new plans, pending DOT approval, are to push back the Seattle service to 2010 and begin four weekly Detroit-Shanghai flights in June, 2009, three months later and with fewer frequencies than originally planned. If past is prologue, the DOT will approve Northwest's new plans because the agency has already permitted American to defer its Chicago-Beijing flights; United to delay its San Francisco-Guangzhou service; and US Airways to put off its Philadelphia-Beijing run. Moreover, Continental is cutting back on its Newark-Beijing and Newark-Shanghai service. Delta's Atlanta-Shanghai service has been scaled back this winter and United's Washington/Dulles to Beijing flights have been reduced to several times a week with smaller aircraft.
Delta May Be Running on Empty in Cincinnati
From the moment that Delta and Northwest announced their merger earlier this year, the carriers insisted that they would not close a hub. But anyone who looked at a route map and saw Northwest's hubs in Detroit and Memphis and Delta's hubs in Atlanta and Cincinnati knew that the airlines' claims made no sense. And despite its protestations to the contrary, it sure looks like Delta has decided that Cincinnati will be the big loser. In January, Delta and its commuter carriers will slash flights there by 12 percent. That'll bring Cincinnati down to 263 daily flights--and 85 percent of them will be flown by Comair and Delta's other commuter carriers. As recently as April, Delta and its commuter airlines operated about 380 flights a day at Cincinnati. At its peak in 2005, there were about 600 daily flights to and from Cincinnati and 22 million passengers used the airport, which is actually located in Covington, Kentucky. This year, local authorities say only about 10 million travelers will use the airport.
Meanwhile, Back in Minneapolis-St. Paul…
One perceived sticking point of the Delta-Northwest merger was a pair of agreements Northwest signed with the state of Minnesota. One was a $245 million bond issue from 1992 and the other was a 2007 agreement on airport rents. Both made concessions to Northwest in exchange for the airline's agreement that it would keep its worldwide headquarters and a hub in Minnesota. The merger moved the combined carrier's headquarters to Delta's hometown of Atlanta, however, so Delta had to go back to the state and renegotiate the deals. In an agreement reached in mid-December, Delta promises to keep 10,000 employees in Minnesota and maintain a hub in Minneapolis with at least 400 daily flights. (There are currently about 11,500 employees in the state and 450 daily flights at MSP.) Delta also agreed to pay off the bond issue by 2016, six years earlier than planned.
To Sleep, Perchance to Overshoot the Airport
When a go! jet overshot its landing in Hilo by 26 miles in February, it was immediately reported that the pilot and co-pilot fell asleep in the cockpit. That theory was supported by the fact that the crew stopped communicating with air-traffic control halfway through the flight from Honolulu, but the pilots always publicly denied they were snoozing. But the NTSB report, released late in December, confirms that the pilots were literally asleep at the stick. The 53-year-old captain, a 20-year veteran, "stated that he had never before inadvertently fallen asleep during a flight, but he had intentionally napped in the cockpit during previous flights." The 23-year-old first officer had no previous incidents in his eight months in the air. After the flight, the NTSB report adds, "the captain underwent an evaluation by a sleep medicine specialist and was diagnosed with severe obstructive sleep apnea. The evaluating physician wrote that the captain's condition provided 'an etiology for significant fatigue'."
Parker Should Only Do This Well by His Customers
At the height of the 2008 oil spike, some airline executives chose to defer all or part of their salaries. But not Doug Parker, the one-time airline wonder boy and chief executive of US Airways. Instead, he paid $551,000, the equivalent of a year's salary, for 197,000 shares of US Airways stock. As I said at the time, Parker "can claim to be on the side of the angels and sharing the pain as the airline piles up losses. If US Airways goes bankrupt and his investment is lost, he's no worse off than if he had given up his salary. And if US Airways does rebound and the stock soars, he makes a tidy profit." US Airways hasn't rebounded, of course, but its shares closed at $7.46 on Tuesday, December 30. That's a paper profit of more than $900,000 for Parker.
Everything Must Go! Dalis at Half Price!
The latest deal to "rescue" Alitalia, Italy's eternally troubled flag carrier, has gone pretty much as bailouts go: A private consortium of companies bought Alitalia's healthy assets for pennies on the dollar and the Italian taxpayers got stuck with the unprofitable leftovers. But nothing ever goes exactly as planned at Alitalia and one of the assets uncovered by the government's administrator was a cache of about 200 significant works of art. The airline's collection encompasses paintings by some of the 20th century's most bankable artists, including Dali, Giorgio de Chirico, Renato Guttuso and Giacomo Balla. There are also sculptures by Mario Ceroli and Giacomo Manzu and works by Giorgio Severini, the leading Futurist painter. The airline used the works in better times to decorate boardrooms, VIP lounges and even some aircraft. The value of the collection is unknown, although art experts say a quarter of the works are "extremely valuable" and a Severini sold at auction in London this year for 15 million pounds.
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.