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THE BRIEFING FOR OCTOBER 14-28, 2010
By Joe Brancatelli
· Why the Airlines Don't Make Long-Term Money
· Meanwhile, More International Flights Planned
· New Hotels in New York, Waikiki ... and Lagos
· Pittsburgh Is a Hot Airport Town Again. Really. · Do Frequent Guest Programs Work? Duh ...
· TSA Adds 200th Whole-Body Airport Scanner
· Long Tarmac Holds Have Almost Disappeared
This Is Why the Airlines Don't Make Long-Term Money
The airlines report third-quarter earnings starting next week and there will be earnings. The leading alternate carriers--Southwest, JetBlue and AirTran--will turn in nifty numbers, of course. And for the second consecutive quarter, so will the legacy carriers. But the legacy carriers simply can't leave well enough alone. The minute they start making money, they ramp up the stupidity again. Want a perfect example? Consider the new Los Angeles-Shanghai route. Earlier this month, American Airlines asked the Transportation Department for the right to operate daily flights beginning April 5. The DOT took just six days to say yes since airlines haven't been flying all of the service that the 2008 and 2009 bilateral agreements with China allow. In fact, some China routes have gone seasonal and several others (US Airways' Philadelphia-Beijing, United's San Francisco-Guangzhou and American's Dallas/Fort Worth-Beijing routes) never launched at all. So what happened after American got the okay to launch LAX-Shanghai? United Airlines applied for the same route. The DOT took a day to approve that request and United's daily flights begin on May 21. The chances either carrier can make money? Zero. Meanwhile, the DOT has the right to grant at least three more daily routes to China. The number of takers so far? Zero.
Meanwhile, Elsewhere in Bizarro Airline World
IATA, the global airline trade group, this week said the following about travel conditions: "There are clear signs now that the post-recession rebound of international air travel is slowing." It added that there hasn't been any real month-to-month traffic growth in five months and that premium-class business is still 11 percent below its 2008 peak. So what do airlines do? I mean, besides adding 14 flights a week between Los Angeles and Shanghai? They expand, of course. Delta Air Lines, for example, begins Memphis-Mexico City flights in January. And Continental Airlines says that it will launch daily Los Angeles-Leon, Mexico, flights on November 1. It'll also start weekly flights to Cancun from three cities: Austin, San Antonio and Raleigh-Durham. Think we're done? 'Course not. SAS Scandinavian adds New York-Oslo flights on March 27. And Icelandair will launch four weekly flights between Washington/Dulles and Reykjavik beginning on May 17.
Lest You Think the Hotel Industry Is Any Smarter…
Four in ten hotel rooms are empty on an average night, which means the lodging industry hasn't necessarily been any smarter than the airlines. But no reason to let demand catch up with supply when there are always new rooms you can throw at the surplus. So get ready for this week's newbies: Marriott opened the first of its Edition hotels, the brand it is launching with Ian Schrager. It's located in what once was the Ala Wai Tower of the old Ilikai hotel just outside of Waikiki in Honolulu. … On another island, the Staten Island borough of New York, Holiday Inn Express has opened a 95-room property. … Elsewhere in New York, Starwood has opened a 369-room Sheraton on Canal Street, where three Manhattan neighborhoods meet. ... Also from Starwood: a 222-room Four Points in Lagos, Nigeria, and a 150-room Four Points near Tucson Airport.
A Hot Airport Town? Pittsburgh. Really. Pittsburgh.
You'd be surprised where airport traffic is growing. Pittsburgh, for example. Traffic has risen for three consecutive months, fueled largely by growth in the 50 percent range by AirTran Airways and double-digit increases registered by most of the other airlines serving the Steel City. The one down note? US Airways, Pittsburgh's former hub carrier. Its traffic is down 13 percent in Pittsburgh so far this year. Of course, Pittsburgh has a long way to go to get back to the glory days. It hit a peak of 20 million flyers in 2000, when Pittsburgh was still a US Airways hub. These days, Pittsburgh International serves only about 8 million passengers.
Do Hotel Frequent Guest Programs Work? Duh…
Have any doubt that hotel frequent guest programs drive lodging traffic? You shouldn't. On average, about "50 percent of guests in our hotels are Marriott Rewards members," says Ed French, the chain's senior vice president of rewards. And hotel plans are nowhere near the peak of their effectiveness. "We can get more incremental usage [of Marriott brands] even from our Platinum customers," he believes. The power of Marriott Rewards and other frequent guest programs goes a long way to explain why hotel plans are proliferating. Several dozen independent properties recently created Stash Rewards. Marriott itself launched the Autograph Collection, which brings independent properties into Marriott's reservation system and Marriott Rewards. And, of course, Marriott took the inevitable step last month of adding its Ritz-Carlton properties to Marriott Rewards. It also launched a mirror-image program called Ritz-Carlton Rewards for travelers who prefer to carry a loyalty card with the Ritz name. "A significant number of our customers are aligning with the Ritz-Carlton Rewards brand," French says.
Business-Travel News You Need to Know
The Transportation Security Administration plans to deploy 450 of its controversial whole-body image security scanners and it's almost halfway there. The 200th machine was placed in Nashville Airport several weeks ago. … End of discussion: The Transportation Department says only one flight was stuck on the tarmac for longer than three hours in August. That's down from 66 in August, 2009, before the DOT imposed new rules that would penalize carriers financially for long tarmac holds. … The Palace Kamp Hotel at Helsinki-Vantaa Airport has been rebranded as the Hotel Glo. That's Palace Kamp's new boutique brand. The Glo is the only hotel located inside Vanta's terminal building.
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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 © 2010 by Joe Brancatelli. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.