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A BRIEFING FOR JULY 30-AUGUST 13, 2009
By Joe Brancatelli
· Falling Sales Mean Big International Route Cuts
· American Raises Bag Fees Again and Lies About It
· No One Wants to Bid on the Old Watergate Hotel
· Southwest Will Bid for Bankrupt Frontier Airlines
· Bank of America Will Occupy Half of a Ritz-Carlton
· US Airways Will Install In-Flight WiFi--Next Year
· One Airline Is Still Opening City Ticket Offices
Watch Your Feet. A Lot More International Shoes Will Drop.
IATA, the airline trade group, reported this week that June revenues from international flights fell a startling 25-30 percent compared to last year. So you can understand why some of the following route cuts are happening. American Airlines is dropping its Chicago/O'Hare-Moscow flights, mirroring a decision by Delta to drop its Atlanta-Moscow service. (Both carriers claim the service will be seasonal, but don't bet on it.) Meanwhile, OpenSkies, the boutique carrier owned (at least for now) by British Airways, has dropped its New York-Amsterdam route. That leaves the all-business-class airline with an all-Paris network, with flights to Orly from New York/Kennedy and Newark. But the big changes, as you might expect, are happening on routes to London, by far the largest transatlantic market. US Airways will drop its Philadelphia-London/Gatwick route on September 7. (It still flies to Heathrow from Philadelphia.) Virgin Atlantic is dropping its Chicago-Heathrow flights (again). And British Airways is making huge cuts. This fall, it will drop two of its eight daily Kennedy-Heathrow flights and one of its three daily Newark flights. It will also drop its Kennedy-Gatwick route (again) and eliminate three of its 10 weekly flights between Seattle and London. Up in Canada, BA is switching its twice-daily Toronto-Heathrow service to B767s. That means many fewer seats each day and the end of first-class cabins between Toronto and London. On the flip side, however, BA is launching a Las Vegas-London route this fall and still says it will pioneer two all-business-class flights from London/City Airport to Kennedy.
American Raises Baggage Fees Again--and Lies About It, Too
In what the news media calls a "bad-news dump," American Airlines said late last Friday (July 24) that it would raise domestic checked-bag fees again. Beginning August 14, American will charge $20 for the first bag and $30 for the second bag. (Elite AAdvantage members and full-fare flyers are exempt.) It's one thing for American to try to bury bad news late on a summer Friday, but then the airline fibbed about it, too. Its announcement claimed that the fees mean "American remains competitive with other airlines." That's a bald-faced lie on two counts. Other legacy carriers charge $15 or $25 if you pay online, an option American doesn't offer. Why not? Because American's data systems are so archaic that AA.com can't process those payments. (And, of course, "other" airlines like JetBlue and Southwest allow passengers to check one or two bags free.) So despite its specious claim, American isn't competitive on price or technology. Way to highlight your inadequacy and mendacity, guys. People tend to notice that kind of corporate chicanery even if you bury it on a summer weekend.
The Hotel Industry Takes Some Curious (and Ominous) Turns
The near-collapse of the worldwide hotel industry continues apace and it has led to some curious developments. Let's start with the birthplace of modern craziness: The Watergate Hotel in Washington. Closed four years ago, the property was due to become condos, but the owners defaulted on a $40 million loan and the empty hotel went on the auction block last week. But not a single bidder stepped up to make an offer on the property, which had an upset price of $25 million. Meanwhile, let's turn our attention to the St. Regis Monarch Beach in California. It was where AIG sponsored a lavish, $450,000 trip last year just weeks after the insurance giant received an $85 billion taxpayer-funded bailout. Now the property itself, about $300 million in debt, has been returned to the lead lender. And who might that lender be? None other than Citibank, which itself continues to teeter on the brink of fiscal disaster despite receiving $45 billion in TARP bailout funds. But wait, there's more. Bank of America, which also got a $45 billion taxpayer bailout, is just about to open a hotel. Not any hotel, mind you, but a 146-room Ritz-Carlton that just happens to be across the street from BofA's world headquarters in Charlotte. BofA says it will use about half of the rooms for employees, vendors and other bank-related guests. The rest of us will have to pay rates starting at $249 a night when the hotel officially opens around October 1. But there is one small happy note: The Ilikai in Waikiki has reopened under new management two weeks after the lenders who seized the property had closed the doors of the iconic hotel.
Southwest Says It'll Bid for Bankrupt Frontier Airlines
Watch this one, folks: Southwest Airlines said today (July 30) that it will bid for the assets of bankrupt Frontier Airlines. Denver-based Frontier agreed to sell itself to Republic Airways--see June 25's Tactical Traveler--for $108.75 million and that offer was approved by the bankruptcy court. But late bidders are allowed in and Southwest, which has been building up its route network in Denver over the last few years, says that it will offer $113.6 million. Expect to see some jockeying between the parties before the bankruptcy court date of August 11. Southwest has made savvy buys in the past: it picked up the bones of Muse Air, created by one of its co-founders, and purchased Salt Lake City-based Morris Air. And it recently used clever bankruptcy court moves to grab the Chicago/Midway hub and best assets of ATA Airlines, which collapsed early last year. But there are some red flags worth noting: Frontier operates an all-Airbus fleet and Southwest only flies Boeing 737s. And some Frontier routes are flown by regional jets operated by Republic.
Business-Travel News You Need to Know
US Airways says it'll install WiFi on its fleet of Airbus A321s--next year. … Of more immediate interest, Continental Airlines and Alaska Airlines are ending their frequent flyer program partnership. You can continue to earn until October 24. You must claim award seats by October 24 for travel within one year. … Here's something you haven't heard in a while: an airline is opening city ticket offices. Of course, the carrier is Qatar Airways, the free-spending airline owned by the Qatari government. The offices will be in Washington, Houston and New York, the three cities Qatar serves from its hub in Doha. … Delta Air Lines has split the baby on its soft drinks and snacks providers. It settled on Coca Cola beverage products for in-flight service. But it will serve Frito Lays branded snacks. Frito Lays is owned by Pepsi. … American Airlines is offering double miles to New York area flyers until December 31. You must register before you fly.
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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 © 2009 by Joe Brancatelli. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.