A BRIEFING FOR MARCH 12-26, 2009
By Joe Brancatelli
· Is Virgin America Really an American Airline?
· Delta Will Slash Its International Route Network
· American Airlines Bails on Dallas/Love--Again
· Your Scorecard for This Week's Hotel Openings
· Florida Pays to Restore Some Intra-State Service
· US Airways: Worst to (Sort of) First to Mediocre
· The Political Bully and the Airline Blind Eye
Is Virgin America Really an American Airline?
After passing on a chance to invest in the start-up of JetBlue Airways, Sir Richard Branson took his brand name (Virgin America) and his bombast and frittered away seven years as the domestic U.S. market changed without him. When Virgin America finally launched in August, 2007, it was only after some funding gimmicks that just barely passed Transportation Department (DOT) muster. The airline has won pretty good reviews from passengers, but it's a financial disaster. According to figures released this week, Virgin America lost $27 million in the fourth quarter on sales of $110 million, bringing its total 2008 loss to about $200 million on sales of just $370 million. That red ink apparently spooked the hedge funds that owned 77 percent of the airline and they have cashed out, selling their stake back to Branson for the full investment amount plus a guaranteed return of 8 percent. (As I said, Branson's funding was gimmicky.) The problem with that sale? By law, foreign citizens such as Branson can only own 25 percent of a U.S. carrier and U.S. interests must control the airline. Virgin America, now run by a respected former American Airlines executive, insists that it remains in full compliance with DOT rules because of other peculiar clauses in the funding agreements. But Alaska Airlines certainly doesn't think so and it has asked the DOT to investigate Virgin America's "citizenship." Branson is urgently seeking other investors, but if the DOT decides the carrier isn't under U.S. control, it can order Virgin America to shut down. That is if it doesnt run out of cash first. Virgin America said it had just $68 million on hand at the end of 2008.
Delta Comes to Its Senses on International Routes (Sort of)
From the moment it declared bankruptcy in 2005, Delta Air Lines began shifting massive amounts of capacity to international routes. It has launched dozens of logical routes and almost as many insane ones. Most recent entry in the insane ledger: three weekly flights between its Atlanta hub and Brasilia, Brazil, scheduled to begin on December 11. With its recent merger partner, Northwest Airlines, Delta's operations are now 40 percent overseas. But the worsening economy is finally catching up with Delta's international plans. Starting in September, Delta is dropping 10 percent of its overseas service. Although it has yet to offer details, watch for the airline to eliminate marginal routes, thin out frequencies on some of its most heavily serviced routes and switch to seasonal service on routes that can't support year-round service. On April 1, American Airlines moves its Shanghai flights to Terminal 2 of Pudong International. Several U.S. hotel brands have made their first appearances on the international scene. The first Four Points by Sheraton in Southeast Asia has opened in Kuching, Malaysia. Europe's first Hampton Inn has opened in Corby, Northamptonshire, England. And the first W Hotel in the Middle East has opened in Doha, Qatar.
American Airlines Bails on Dallas/Love--Again
I've lost count of the number of times the peevish bosses at Dallas/Fort Worth-based American Airlines have launched flights at Dallas/Love Field. Whenever a competitive threat appears at Love, American begins flying suicidally cheap, competitive service. And as soon as the threat disappears, so does American. But this time American ran into Love-based Southwest Airlines, a competitor it couldn't push around. After a change in the Wright Amendment permitted Southwest to fly to new cities from Love in 2006, American piled in, too, launching flights to Chicago/O'Hare, Kansas City and St. Louis. The St. Louis and Kansas City flights disappeared almost immediately and American announced this week that it'll drop the O'Hare service on June 11. But don't worry, American says it'll be back at Love in 2013, when a new terminal is due for completion. Delta Air Lines is resuming some intra-Florida flights it dropped last year. Thanks to a $1.5 million subsidy from Florida taxpayers, Delta's commuter operation will fly daily service from the state capital of Tallahassee to Tampa, Fort Lauderdale and Orlando. The nonstop routes, using 32-seat turboprops, resume April 1.
Get Out the Scorecard for This Week's Openings
The disastrous state of the global hotel industry may make new properties seem superfluous, but it takes times to shut down the development pipeline. So get out your scorecard for these newbies: In Toronto, a 394-room Hyatt Regency on King Street. In New York, another Hilton Garden Inn, this one in Herald Square. In Paris, a 45-room Radisson in the 16th arrondissement. In Tampa, a 222-room Crowne Plaza on the site of the two-years-closed Westshore Hotel. In Tokyo, a 202-room Shangri-La hotel atop the Marunouchi Trust Tower. In Hamilton, Ohio, a 120-room Courtyard by Marriott, a renovation of the 25-year-old Hamiltonian. And seven miles from Milwaukee Airport, a 118-room Staybridge Suites. Meanwhile, Hilton HHonors members take note: Three well-known Puerto Rico hotels are adopting the Waldorf Astoria Collection. Now available for award stays are the El Conquistador, the El San Juan and the Condado Plaza.
US Airways: Worst to (Sort of) First to Mediocre
The government's on-time arrivals figures for January were released this week and guess which carrier was not Number 1? US Airways, which has been heavily advertising its 2008 on-time title and its worst-to-first comeback last year. US Airways was always fudging on the numbers, of course, since it had padded its flight schedules to make its flights appear to perform better. Not only that, its "number one" status was a fantasy because US Airways only considered the Big Six carriers, not perennially punctual carriers such as Hawaiian and Southwest airlines. In January, US Airways slumped to ninth place among the 19 rated carriers. Worse, it finished fourth among the Big Six airlines, trailing United, Delta and Continental. For the month, in fact, US Airways was stunningly average, ringing up a 77.3 percent on-time rating, fractionally above the industry standard of 77 percent. Hawaiian Airlines, which finished first again, was 90.8 percent on-time in January. Southwest Airlines finished second with an 83.3 percent rating.
Business-Travel News You Need to Know
The commuter operation of United Airlines is adding two new routes from Chicago/O'Hare. Beginning June 4, there will be daily flights from ORD to Bismarck, North Dakota, and Saskatoon, Saskatchewan. Priority Pass, the membership plan that allows travelers to access 600 airport clubs worldwide, has added a slew of new lounges. Among the new facilities: the Relax Lounge at LAX; lounges in Toronto/Pearson, Gothenburg, Sweden, and Manchester, England; eight TAM Airlines clubs in Brazil; a lounge in Chennai, India; three lounges in Indonesia; two clubs in South Africa; and two clubs in Vietnam. Oh, also the lounge at Tehran's Khomeini International Airport. Clear members take note: The troubled airport security line cut program has begun slashing operating hours at some of its lanes. Check the Clear Web site before assuming any facility is open at any airport. Best Western hotels has joined the Southwest Airlines Rapid Rewards program.
The Political Bully and the Airline Blind Eye
You've heard that Sen. David Vitter (R-La) got into a tussle this week with a gate agent at Washington's Dulles Airport after he arrived late for a United Airlines flight. The Transportation Security Administration is investigating the incident. But what is most fascinating is the reaction of United Airlines. Like most carriers, United's public relations machine is usually quick to decry the action of the passengers and defend the honor of airline employees. But now that a high-profile pol is involved, United is suddenly the deaf, dumb and blind kid. All the airline knows, says a credulous United spokesperson, is that "someone attempted to open a door that was closed." It wouldn't even confirm that Vitter was involved.
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 © 2009 by Joe Brancatelli. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.